<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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The Vantagepoint Funds
----------------------
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<PAGE> 2
THE VANTAGEPOINT FUNDS
GROWTH FUND
777 North Capitol Street, N.E.
Suite 600
Washington, D.C. 20002
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a special meeting of shareholders (the
"Meeting") of the Growth Fund (the "Fund") of The Vantagepoint Funds (the
"Trust") will be held at the headquarters of the ICMA Retirement Corporation,
777 North Capitol Street, N.E., Suite 600, Washington, D.C. 20002, on Thursday,
September 30, 1999, at 9:30 a.m., Eastern Time, for the following purposes:
I. To consider and vote upon a proposal to approve a new subadvisory
agreement between the Fund, Vantagepoint Investment Advisers, LLC
(the "Investment Adviser") and Tukman Capital Management, Inc.
II. To consider and vote upon a proposal to approve a new subadvisory
agreement between the Fund, the Investment Adviser and Brown Capital
Management, Inc.
III. To consider and vote upon a proposal to approve a new subadvisory
agreement between the Fund, the Investment Adviser and TCW Funds
Management, Inc.
IV. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Shareholders of record on July 31, 1999, are entitled to receive
notice of and to vote at the Meeting and any adjournment thereof.
While you are, of course, welcome to join us at the meeting, most
shareholders cast their votes by completing and signing the enclosed proxy card.
Whether or not you plan to attend the meeting, we need your vote. Please mark,
sign and date the enclosed proxy card and return it promptly in the enclosed
postage paid envelope.
The persons named as proxies are authorized to vote on such other
business as may properly come before the Meeting in accordance with their own
discretion.
Your vote is important to us. Thank you for taking the time to
consider these important proposals.
August 25, 1999 By Order of The Board of Directors
Paul F. Gallagher
Secretary
<PAGE> 3
THE VANTAGEPOINT FUNDS
GROWTH FUND
777 North Capitol Street, N.E.
Suite 600
Washington, D.C. 20002
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 30, 1999
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of The Vantagepoint Funds (the
"Trust") on behalf of the Growth Fund (the "Fund"), for use at the Special
Meeting of Shareholders to be held at 9:30 a.m. on Thursday, September 30, 1999,
at the offices of ICMA Retirement Corporation, 777 North Capitol St. N.E., Suite
600, Washington, D.C. 20002, and at any adjourned session thereof (this meeting
and any adjournment thereof are herinafter referred to as the "Meeting").
Shareholders of record of the Fund as of the close of business on July 31,
1999, ("Shareholders") are entitled to vote at the meeting.
As of July 31, 1999 there were 230,323,387 shares of beneficial
interest of the Fund issued and outstanding.
Each whole share is entitled to one vote and each fractional share
is entitled to a proportionate fractional vote on the proposal. In addition to
the solicitation of proxies by mail, directors and officers of the Trust and
employees of ICMA Retirement Corporation and officers of Vantagepoint Investment
Advisers, LLC (the "Investment Adviser"), may solicit proxies in person. The
proxy card and this proxy statement are being mailed to shareholders on or about
August 30, 1999.
Proxies may be revoked at any time before they are exercised by a
written revocation received by the President of the Trust at 777 North Capitol
St., N.E., Washington, D.C. 20002. Proxies also may be revoked by delivering a
duly executed proxy bearing a later date or by attending the Meeting and voting
in person.
INTRODUCTION
The Trust is organized as a Delaware business trust and is not
required to hold annual meetings of Shareholders. The Meeting is being called in
order to permit the Shareholders of the Fund to vote on the selection of three
new subadvisers, and to approve the forms of subadvisory agreement (attached as
Exhibit A, B and C to this Proxy Statement) between the Fund, the Investment
Adviser and each subadviser (the "Proposed Subadvisory Agreements").
The Investment Adviser employs a "multi-management" strategy under
which it has general oversight responsibility for the investment advisory
services provided to the Fund, including formulating investment policies,
managing the allocation of the assets of the Fund among multiple subadvisers,
and directing and evaluating the investment services provided by the
subadvisers, including their adherence to the Fund's investment objectives and
policies and the overall investment performance of the Fund. Cadence
<PAGE> 4
Capital Management ("Cadence") and Neuberger & Berman LLC ("N&B") and Fidelity
Management Trust Company(1) ("Fidelity") currently serve as subadvisers to the
Fund pursuant to subadvisory agreements, each of which is dated March 1, 1999
(the "Current Agreements"). The Current Agreements were approved by the sole
shareholder of the Fund on February 2, 1999. The terms of the Current Agreements
are substantially similar to the terms of the Proposed Subadvisory Agreements,
discussed below, except for the dates of execution and the fee arrangements.
According to the terms of the Current Agreements, Cadence, Fidelity and N&B are
entitled to subadvisory fees at the annual rates set forth below. Such fees are
based on the average daily net assets of that portion of the Fund under
management.
<TABLE>
<CAPTION>
Subadviser Assets Managed Fee
---------- -------------- ---
<S> <C> <C>
Cadence First $100 million 0.45%
Next $400 million 0.20%
Over $500 million 0.15%
Fidelity First $25 million 0.80%
Over $25 million 0.60%
N&B Flat Fee 0.45%
</TABLE>
The Fund commenced operations on March 1, 1999, and will not have
its first fiscal year end until December 31, 1999. However, for the period from
March 1, 1999 through June 30, 1999, investment subadvisory fees for Cadence,
Fidelity and N&B amounted to approximately $452,421; $364,937 and $155,834
respectively. Prior to that time, Cadence, Fidelity and N&B served as advisers
to the Fund's predecessor the Growth Stock Fund of the ICMA Retirement Trust, an
unregistered commingled fund which holds and invests the assets of public sector
retirement plans. For the 1998 fiscal year, Cadence, Fidelity and N&B received
advisory fees of $1,349,790; $1,611,793 and $524,342, respectively, for
services provided to the ICMA Retirement Trust.
On July 29, 1999, the Board of Directors of the Fund, including a
majority of the non-interested Directors, voted to terminate the current
subadvisory agreements for Cadence, Fidelity and N&B based on the Board's
determination that the selection of the subadvisers listed below to provide
investment subadvisory services is in the best interests of the Fund.
While the Fund's current subadvisers have provided sound
management, the Board of Directors and the Fund's management believe that the
three recommended subadvisers in combination with the Fund's three remaining
subadvisers may provide a better opportunity for future returns. In addition,
the new managers, in combination with the three remaining subadvisers, are
expected to enhance the Fund's ability to reflect its growth objective both in
fundamental characteristics and performance.
Although a single investment manager can produce a desirable
long-term performance record, an examination of the short-term typically reveals
wide movements relative to other managers or a market index. The reason is that
every successful manager has an investing approach (typically called a "style")
that swings from being in favor to out of favor in the market. Experienced
managers stick to their styles over the years because they know that doing
what they do best is the only successful method of investing. But doing so
creates in-between performance gyrations.
Multi-management seeks to reduce short run performance variation by
combining different managers practicing dissimilar styles. The goal is to have,
in various market environments, at least one style that is in favor to offset
one that is temporarily out of favor. Thus, multi-management offers the
opportunity to not only capture a successful manager's desirable long-term
returns, but also to reduce an individual manager's short-term performance
volatility.
Thus, the Board and management feel that this change will provide
the Fund's shareholders with an improved opportunity for sound and consistent
investment performance over time.
- --------
(1) The agreement relating to the Small Company Account managed by Fidelity will
be terminated if these proposals are approved. Fidelity will continue to manage
the Aggressive Equity Account as described in the Fund's registration statement.
<PAGE> 5
PROPOSALS FOR APPROVAL OF SUBADVISERS FOR THE FUND
At the July 29, 1999 meeting, the Board of Directors approved the
replacement of the current subadvisers with Tukman Capital Management, Inc.
("Tukman"), Brown Capital Management, Inc. ("Brown"), and TCW Funds Management,
Inc. ("TCW"), effective upon Shareholder approval of the subadvisers and the
corresponding subadvisory agreements for each subadviser. Further details about
each proposed subadviser and the terms of the Proposed Subadvisory Agreements
are set forth below.
The objective of the Fund is to seek long-term, stable growth of
capital by investing primarily in common stocks that are considered to have
above average potential for growth. The benchmark against which the performance
of the Fund is measured has been changed from the S&P Barra Mid-Cap Growth to
the Wilshire 5000 Index, which is a more accurate reflection of the Fund's
investment objective and growth funds in general. Although the investment style
of each of the proposed subadvisers is different, it is expected that the
combination of the styles will result in investment characteristics that will be
similar to those of the Wilshire 5000 Index and therefore will be consistent
with the Fund's objective.
I. APPROVAL OF A SUBADVISORY AGREEMENT BETWEEN THE INVESTMENT ADVISER
AND TUKMAN
The Board of Directors is recommending that the Shareholders of the
Fund approve Tukman as a subadviser for the Fund and approve the new subadvisory
agreement between the Fund, the Investment Adviser and Tukman relating to the
Fund.
DESCRIPTION OF TUKMAN. Tukman is a registered investment adviser
with its principal place of business at 60 E. Sir Francis Drake Boulevard #204,
Larkspur, California 94939. Tukman was founded in 1980 and as of June 30, 1999
it had approximately $8 billion under management. Tukman will employ a
CONCENTRATED investment style on behalf of the Fund. This means that Tukman will
select a concentrated portfolio of larger companies that Tukman believes exhibit
strong fundamentals and catalysts for change, but are currently undervalued
relative to their prospects, primarily from investor neglect or anxiety. Tukman
provides investment services to investment companies, individuals, pension and
profit-sharing plans and other institutional and individual investors.
Tukman's portion of the Fund's assets will be managed by Melvin T.
Tukman and Daniel L. Grossman. Mr. Tukman founded the firm in 1980. He has over
30 years of portfolio management experience. He is a graduate of Hunter College
and holds an M.B.A. from Harvard Business School. Mr. Tukman is the President
of the firm. Mr. Grossman has over 20 years of investment experience and joined
the Firm in 1982. Mr. Grossman has a
<PAGE> 6
B.A. from Yale University and an M.B.A. from Stanford Business School. Mr.
Grossman is Vice President of the Firm. The officers of Tukman are listed in
Exhibit D.
COMPENSATION. Under the proposed subadvisory agreement, the Fund
will pay Tukman a subadvisory fee at the annual rate 0.50%. This fee will be
calculated and paid quarterly based on the average daily market value of that
portion of the Fund managed by Tukman. Tukman will manage approximately 10% of
the Fund's assets.
Tukman also serves as investment adviser to Vanguard Windsor II
Fund, which has similar investment objectives to the Fund. Tukman's portion of
Windsor II is approximately $3.6 billion and Tukman is paid a basic fee based on
the following schedule, which is adjusted pursuant to an incentive/penalty fee
arrangement based on performance:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ASSETS FEE RATE
- --------------------------------------------------------------------------------
<S> <C>
First $25 million 0.400%
- --------------------------------------------------------------------------------
Next $125 million 0.350%
- --------------------------------------------------------------------------------
Next $350 million 0.250%
- --------------------------------------------------------------------------------
Next $500 million 0.200%
- --------------------------------------------------------------------------------
Over $ 1 billion 0.150%
- --------------------------------------------------------------------------------
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL I.
II. APPROVAL OF A SUBADVISORY AGREEMENT BETWEEN THE INVESTMENT ADVISER
AND TCW.
The Board of Directors is recommending that the Shareholders of the
Fund approve TCW as a subadviser for the Fund and approve the new subadvisory
agreement between the Investment Adviser and TCW relating to the Fund.
DESCRIPTION OF TCW. TCW is a registered investment adviser and a
California trust company with its principal place of business at 865 S. Figueroa
Street, Suite 1800, Los Angeles, California 90017. TCW is a member of the TCW
Group which was founded in 1971, and as of June 30, 1999 the TCW Group had over
$54 billion of assets under management. TCW will employ a CONCENTRATED GROWTH
investment style on behalf of the Fund. This means that TCW will select stocks
of larger companies that TCW believes have superior business models, potential
for improvement in profitability, acceleration of earnings growth, and/or
broadening industry position that can result in growth superior to that of the
market.
TCW's portion of the Fund's assets will be managed by Glen
Bickerstaff, who has over 19 years of experience as a portfolio manager and
joined the TCW Group in 1998. Mr. Bickerstaff has a BS degree from the
University of Southern California. Prior to joining TCW, Mr. Bickerstaff was a
Senior Portfolio Manager of Transamerica Investment Services.
The officers of TCW are listed in Exhibit E. Marc I. Stern serves
as Chairman of TCW and Thomas E. Larkin, Jr., serves as Vice Chairman.
<PAGE> 7
COMPENSATION. Under the proposed subadvisory agreement, the Fund
will pay TCW a subadvisory fee at the annual rate set forth below. This fee will
be calculated and paid monthly based on the average daily market value of that
portion of the Fund managed by TCW. TCW will manage approximately 25% of the
Fund's assets.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
ASSETS FEE RATE
- ------------------------------------------------------------------------
<S> <C>
First $25 million 0.70%
- ------------------------------------------------------------------------
Next $25 million 0.50%
- ------------------------------------------------------------------------
Next $50 million 0.45%
- ------------------------------------------------------------------------
Next $400 million 0.40%
- ------------------------------------------------------------------------
Over $500 million 0.35%
- ------------------------------------------------------------------------
</TABLE>
TCW also serves as investment adviser to the SEI Institutional Managed Trust
and SEI Institutional Investment Trust, which have similar objectives to the
Fund. SEI pays TCW a flat fee of .20% for each Fund. This fee is substantially
lower than the fee charged to the Fund, however, the fee was negotiated by Mr.
Bickerstaff's prior firm and does not represent TCW's normal fee structure.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL II.
III. APPROVAL OF A SUBADVISORY AGREEMENT BETWEEN THE INVESTMENT ADVISER
AND BROWN.
The Board of Directors is recommending that the Shareholders of the
Fund approve Brown as a subadviser for the Fund and approve the new subadvisory
agreement between the Investment Adviser and Brown relating to the Fund.
DESCRIPTION OF BROWN. Brown is a registered investment adviser and a
Maryland corporation with its principal offices at 809 Cathedral Street,
Baltimore, Maryland 21201.
Brown was founded in 1983, and as of June 30, 1999 had approximately
$4.5 billion under management. Brown's clients include other investment
companies, employee benefit plans and other institutional investors. Brown will
employ a GROWTH-AT-A-REASONABLE-PRICE investment style on behalf of the Fund.
This means that Brown will select stocks of mid- to large- sized companies that
Brown believes have the potential for earnings growth and are selling at a price
to earnings ratio that is below the expected earnings growth rate.
Brown's portion of the Fund's assets will be managed by Eddie Brown,
CFA and Stephon Jackson. Mr. Brown has over 28 years experience as a portfolio
manager and founded the firm in 1983. Mr. Brown is a Chartered Financial Analyst
and a Chartered Investment Counselor. He has a BS from Howard University and a
MS from New York University. Mr. Brown is the President of the firm. Mr. Jackson
has 11 years of portfolio management experience and has been with the firm since
1997. He has a B.S. from the University of North Carolina and an M.B.A. from the
Wharton School of Business of the University of Pennsylvania.
COMPENSATION. Under the proposed subadvisory agreement, the Fund
will pay Brown a subadvisory fee at the annual rate set forth below. This fee
will be calculated and paid quarterly based on the average daily market value of
that portion of the Fund managed by Brown. Brown will manage approximately 10%
of the Fund's assets.
<TABLE>
<CAPTION>
- ----------------------------------------------------
ASSETS FEE RATE
- ----------------------------------------------------
<S> <C>
First $50 million 0.45%
- ----------------------------------------------------
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
- ----------------------------------------------------
<S> <C>
Next $50 million 0.40%
- ----------------------------------------------------
Next $100 million 0.30%
- ----------------------------------------------------
Next $300 million 0.25%
- ----------------------------------------------------
Over $500 million 0.20%
- ----------------------------------------------------
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR PROPOSAL III.
Brown also serves as investment adviser to the Brown Capital Equity
Fund, which has similar objectives to the Fund. The fee structure under which
Brown is compensated is as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------
ASSETS FEE RATE
- ----------------------------------------------------
<S> <C>
First $25 million 0.65%
- ----------------------------------------------------
Over $25 million 0.50%
- ----------------------------------------------------
</TABLE>
CONTRACTUAL AND FEE CONSIDERATIONS
The Board of Directors is recommending that the Shareholders approve
each subadviser recommended in Proposals I through III as subadvisers to the
Fund and approve the Proposed Subadvisory Agreements between the Investment
Adviser and each subadviser.
DIRECTOR'S CONSIDERATIONS. The Board of Directors of the Trust,
including those Directors who are not "interested persons" within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act"), unanimously approved, subject to shareholder approval, the Proposed
Subadvisory Agreements with respect to the Fund at a meeting held on July 29,
1999. The Directors received written and oral information from both the
Investment Adviser and the proposed subadvisers. The Investment Adviser
recommended the selection of the proposed subadvisers and reviewed the
considerations and the search process that had led to the recommendation. The
Directors also met with representatives of the proposed subadvisers and
considered information about key personnel, investment philosophy and process
and performance track record, among other factors. In recommending that the
Shareholders approve the Proposed Subadvisory Agreements, the Directors
carefully evaluated the investing experience of each proposed subadviser's key
personnel and the quality and quantity of services each proposed subadviser can
be expected to provide to the Fund, including, but not limited to: (1) the fee
and expense ratios of comparable mutual funds; (2) the performance of the Fund
since commencement of operations; (3) the nature and quality of the services
expected to be rendered to the Fund by each proposed subadviser; (4) the
distinct and complementary nature of the investment styles of the proposed
subadvisers; (5) the amount of compensation payable to each proposed subadviser
by the Fund under the Proposed Subadvisory Agreements, and the impact of such
compensation on the overall fees and expenses of the Fund; (6) the history,
reputation, operational and administrative expertise (including mutual fund
investment management expertise), qualification and background of each proposed
subadviser as well as the qualifications of their personnel and their respective
financial conditions; (7) their performance records; (8) the benefits expected
to be realized as a result of the multi-management strategy employed by the
Investment Adviser; and (9) other factors deemed relevant. The Directors also
reviewed the fees to be paid to each subadviser in comparison to those currently
being charged by the Fund and its existing subadvisers in the relevant segment
of the mutual fund business, including any benefits received by any subadviser
or its affiliates in connection with soft dollar payments.
Should shareholders approve two of the proposed subadvisers but not
the other, the Board of Directors will meet to consider what steps should be
taken in order to meet the Fund's objective while a new subadviser is selected
and approved by shareholders. For example, that portion of the Fund might be
invested in a manner that is designed to match the performance of the Wilshire
5000 Index.
<PAGE> 9
IMPACT OF SUBADVISER COMPENSATION ON TOTAL EXPENSES OF THE FUND. As
discussed above, the terms of the Current Agreements are substantially similar
to the terms of the Proposed Subadvisory Agreements, except for the dates of
execution and the fee arrangements. The subadvisers are entitled to their
respective fees based on the portion of the assets of the Fund that are
allocated to them. These subadvisory fees are borne directly by the
Shareholders. If the proposed subadvisory changes are approved the subadvisory
expenses of the Fund are expected to increase from .28% to .34% if the
Shareholders approve the proposed subadvisers. For the reasons described herein
the Fund's Board of Directors and management believe that the proposed change
will be beneficial to the Fund's shareholders.
The table below compares the current expense ratio of the funds to
the proposed level of fees that would be borne by the Shareholders, assuming the
Shareholders approve the new subadvisers.
Annual Fund Operating Expenses (Deducted from Fund Assets)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
ADVISORY SUBADVISER OTHER TOTAL
FUND FEE EXPENSE EXPENSES* EXPENSES
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth Fund
(current subadvisory structure) 0.10% 0.28% 0.39% 0.77%
- ------------------------------------------------------------------------------------------------------
Growth Fund
(proposed subadvisory structure) 0.10% 0.34% 0.39% 0.83%
- ------------------------------------------------------------------------------------------------------
</TABLE>
*Amounts shown are estimates for the Fund's first full fiscal year.
Example
This example is intended to help Shareholders compare the cost of investing in
the Fund with the cost of investing in other mutual funds. This example assumes
that a Shareholder invests $10,000 dollars for the time periods indicated and
then redeems all of its shares at the end of those periods. The example also
assumes that a Shareholder's investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although actual costs may be higher
or lower, based on these assumptions, a Shareholder's costs would be:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
FUND 1 YEAR 3 YEARS
- -----------------------------------------------------------------------------
<S> <C> <C>
Growth Fund
(current subadvisory structure) $79 $247
- -----------------------------------------------------------------------------
Growth Fund
(proposed subadvisory structure) $88 $275
- -----------------------------------------------------------------------------
</TABLE>
DUTIES UNDER THE PROPOSED SUBADVISORY AGREEMENTS. Under each
Proposed Subadvisory Agreement, the subadviser makes the investment decisions
for the assets of the Fund allocated to it by the Investment Adviser, and
continuously reviews, supervises, and administers the Fund's investment program
with respect to these assets. Each subadviser is independent of the Investment
Adviser and discharges its responsibilities subject to the supervision of the
Investment Adviser and the Board of Directors of the Fund and in a manner
consistent with the Fund's investment objectives, policies and restrictions. The
Proposed Subadvisory Agreements provide that the subadviser shall not be
protected against any liability, damages or expenses to the Fund arising out of
the subadviser's gross negligence or malfeasance or willful violation
<PAGE> 10
of the Subadvisory Agreement or a violation of applicable law by the subadviser
or any of its officers, employees, or affiliates in providing management under
the subadvisory agreement.
DURATION AND TERMINATION. Unless terminated earlier, each Proposed
Subadvisory Agreement shall continue in effect for two years from its execution,
and thereafter, for periods of one year for so long as such continuance is
specifically approved at least annually by the vote of the holders of a majority
of the outstanding shares of the Fund or by a majority of the members of the
Board of Directors of the Fund who are not parties to the investment advisory
agreement or the investment subadvisory agreement or who are not "interested
persons" (as that term is defined in the 1940 Act) of any party thereto, cast in
person at a meeting called for the purpose of voting on such approval.
Each Proposed Subadvisory Agreement will terminate automatically in
the event of its assignment. Each Proposed Subadvisory Agreement is terminable
by either party without the payment of any penalty, immediately upon notice to
the other in the event of a breach of any provision of the subadvisory
agreement, or otherwise by the subadviser upon sixty (60) days' written notice
to the Investment Adviser, or by the Investment Adviser upon thirty days written
notice to the subadviser.
The Vantagepoint Funds Board of Directors has authorized its
Officers to file an application for exemptive relief with the U.S. Securities
and Exchange Commission which, if granted, would permit the Board to replace
subadvisers without shareholder approval.
In the event Shareholders of the Fund do not approve the adoption of
a Proposed Subadvisory Agreement at the Meeting to which this Proxy Statement
relates, or any adjournment thereof, the Directors will consider the appropriate
course of action.
GENERAL INFORMATION ABOUT THE FUND AND OTHER MATTERS
DISTRIBUTION. RC Services, LLC, a wholly-owned subsidiary of ICMA
Retirement Corporation acts as the Distributor of the Trust's shares pursuant to
a Distribution Agreement dated March 1, 1999. Girard Miller serves as President
and Chief and Chief Executive officer of ICMA Retirement Corporation and
president of RC Services, LLC.
PORTFOLIO TRANSACTIONS. The Fund commenced operations as a
registered investment company on March 1, 1999 and has not completed its first
fiscal year. Therefore, no information on brokerage commissions paid the Fund is
available.
5% SHAREHOLDERS. As of July 31, 1999, the following persons
were the only persons who were, to the knowledge of the Fund's management,
beneficial owners of 5% or more of the shares of the Fund.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Name and Address of Beneficial Owner Number of Shares Percentage of Fund's shares
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ICMA Retirement Trust
777 N. Capitol St., NE
Washington, DC 20002 211,546,059 91.8%
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
Girard Miller, President of The Vantagepoint Funds, holds as part of
his portfolio approximately $57,000 worth of units in the VantageTrust Funds
through an ICMA Retirement Trust 457 plan with a former public sector employer,
which is thus invested in the Vantagepoint International and Core Bond Index
Funds. The Fund's other Directors and Officers do not beneficially own any
shares of the Fund and do not receive any compensation from the Fund for their
services.
ADJOURNMENT. In the event that sufficient votes in favor of the
proposal set forth in the Notice of Special Meeting are not received by the time
scheduled for the Meeting, the persons named as proxies may propose or more
adjournments of the meeting for a reasonable period of time to permit further
solicitation of proxies with respect to the proposals. Any such adjournment will
require the affirmative vote of a majority of the votes cast on the question in
person or by proxy at the session of the Meeting to be adjourned, whether or not
a quorum is present. The persons named as proxies will vote in favor of such
adjournment those proxies which are entitled to vote in favor of the proposals.
They will vote against any such adjournment those proxies required to be voted
against any such proposals. The costs of any additional solicitation will be
borne by the Investment Adviser.
REQUIRED VOTE. Although 50% of the outstanding shares entitled to
vote on a proposal must be present in person or by proxy to have a quorum to
conduct business at the Meeting, approval of each proposal requires the
affirmative vote of a majority of the outstanding shares of the Fund. As defined
in the 1940 Act, "majority of the outstanding shares" means the vote of (i) 67%
or more of the Fund's outstanding shares present at a meeting, if the holders of
more than 50% of the outstanding shares of the Fund are present or represented
by proxy, or (ii) more than 50% of the Fund's outstanding shares, whichever is
less.
Shares represented by duly executed proxies will be voted in
accordance with the instructions given. Proxies received before the Meeting on
which no vote is indicated will be voted "FOR" the proposal as to which it is
entitled to vote. Abstentions and proxies signed without voting on a proposal
("broker non-votes") will not be counted for or against the proposals, but will
be counted for purposes of determining whether a quorum is present. Abstentions
will be counted as votes present for purposes of determining a "majority of the
outstanding voting securities" present at the Meeting.
SHAREHOLDER PROPOSALS. The Fund does not hold regular shareholder
meetings. Shareholders wishing to submit proposals for inclusion in a proxy
statement for a subsequent meeting should send their written proposals to the
Secretary of the Fund, 777 North Capitol Street, N.E., Suite 600, Washington,
D.C. 20002.
REPORTS TO SHAREHOLDERS. The Fund's First Semi-Annual Report to
shareholders will be mailed on or about August 30, 1999. As
LITIGATION. The Fund is not involved in any litigation.
OTHER MATTERS. The Directors know of no other matters to be brought
before the Meeting. However, if any other matters properly come before the
Meeting, it is their intention that proxies which do not contain specific
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 12
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
This Investment 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 TUKMAN
CAPITAL MANAGEMENT, INC., at 60 East Sir Francis Drake Boulevard, Larkspur,
California 94939 (hereafter "Adviser") and is effective as of October 1,1999
(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 (the "1940 Act");
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 a sub-advisory
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 Vantagepoint Growth Fund 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
<PAGE> 13
investment of the Account. Client hereby grants the Adviser complete,
unlimited and 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. The activities of Client and Adviser in managing the assets of the
Account shall in all instances be conducted subject to the supervision and
direction of the Board of Directors of 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 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 as soon as reasonably practicable.
Key Personnel: Melvin T. Tukman
Dan Grossman
2
<PAGE> 14
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.
4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the Fund's
Board of Directors and the Client, the Adviser shall direct the investments of
the Account in accordance with the Fund's investment objectives, policies, and
restrictions as provided in the Fund's Prospectus and Statement of Additional
Information as filed with the Securities and Exchange Commission on Form N-1A
("Registration Statement"), as currently in effect and as amended or
supplemented from time to time, and such other limitations as the Fund or Client
may reasonably impose by written notice to the Adviser or as set forth in
SCHEDULE A. Client shall give Adviser copies of the Fund's Prospectus and
Statement of Additional Information, and any amendments or supplements thereto,
as soon a practicable after such documents become available.
(b) Funds' Agreement and Declaration of Trust. The Adviser will
adhere to all specific provisions relating to the investment of the Account
established in the Funds' Agreement and Declaration of Trust and 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 Fund's Prospectus and Statement or Additional Information,
and in accordance with the limitations set forth in 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
as may be allowed pursuant to the 1940 Act.
(d) Conflict in Policies. If a conflict in policies or guidelines
referenced herein occurs, the Registration Statement shall govern for purposes
of this Agreement.
3
<PAGE> 15
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. Unless otherwise required by local
custom, 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 make all reasonable efforts to 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 the close of business one (1)
business day after the trade date (T+1).
(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 that are required of an investment adviser to a registered investment
company pursuant to the 1940 Act and the Investment Advisers Act of 1940, and
the rules thereunder, and in accordance with such reasonable instructions as
shall be provided to Adviser by Client from time to time. All records maintained
pursuant to this Agreement shall be subject to examination by Client and by
persons authorized by it during normal business hours 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. 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
4
<PAGE> 16
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) Reconciliations. Adviser shall reconcile security and cash
positions, and market values on a monthly basis to the Custodian's records and
report discrepancies to the Client by ten (10) business days after the end of
the month.
(c) Loss Reimbursement. Adviser shall reimburse the Account for any
damages, losses or expenses directly caused by a material error (as currently
interpreted by the Securities and Exchange Commission's staff) to the Fund's net
asset value caused by Adviser's breach of its standard of care set forth in
Section 12, provided such loss was not the result of action or inaction of
other service providers to the Client or the Fund in failing to observe the
instructions of the Adviser.
(d) Reports. Adviser shall furnish Client and the Board of Directors
of the Funds such periodic and special reports and information as either of them
may request, including such information as shall be reasonably necessary to
evaluate the terms of any advisory agreement between Client and Adviser with
respect to the assets of the Account.
(e) Other Reports on Request. Adviser shall provide to Client
promptly upon request any information available in the records maintained by
Adviser relating to the Account.
(f) Review of Materials. During the term of this Agreement, the
Client shall furnish to the Adviser at its principal office all prospectuses,
statements of additional information, proxy statements, reports to shareholders,
advertising and sales literature or other material prepared for distribution to
Fund shareholders or the public, which refer to the Adviser or its clients in
any way, prior to the use thereof, and the Client shall not use any such
materials if the Adviser reasonably objects in writing within ten (10) business
days (or such other time as may be mutually agreed) after receipt thereof. The
Client shall ensure that materials prepared by employees or agents of the Client
or its affiliates that refer to the Adviser or its clients in any way are
consistent with those materials previously approved by the Adviser as referenced
in the preceding sentence.
7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise instructed
in writing by Client in acting on behalf of the Fund, (it being understood that
Client, acting on behalf of the Fund, may, in its absolute discretion and
consistent with the requirements of the 1940 Act and applicable federal
securities laws, direct portfolio transactions for which Adviser is responsible
to any broker that Client may see fit), Adviser shall place all orders
5
<PAGE> 17
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"), unless the transaction is in compliance with Rules
17e-1 or 10f-3 under the 1940 Act, as applicable, and the Fund's policies and
procedures thereunder, copies of which shall be provided to Adviser.
(b) Best Execution. In placing such orders, the Adviser will give
primary consideration to obtaining the most favorable price and efficient
execution reasonably available under the circumstances. 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 in good faith 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 or to other client accounts as to which it exercises investment
discretion.
(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 or more efficient
execution 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 the Fund by Adviser
represents Adviser's evaluation that the Account is benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions or a combination of these and other factors. In such event,
allocation of the securities so purchased or sold, as well as expenses incurred
in the transaction, will be made by the Adviser in a manner the Adviser
considers to be most equitable and consistent with its fiduciary obligations to
the Fund and to its other clients.
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.
6
<PAGE> 18
(b) For purposes of this section 8 and Schedule C, all payments due
to Adviser shall be solely made from the assets of the Account.
(c) 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 Fund. 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.
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 upon request, and any material
violation of such policies by personnel of the Adviser who are "access persons"
with respect to the Account 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
7
<PAGE> 19
for an investment adviser managing the amount of aggregate assets managed by
Adviser for Client and for the Adviser's other clients.
12. LIABILITY
In the absence of any gross negligence, malfeasance, or willful
violation of this Agreement, 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
or the Fund. 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. Adviser shall not be liable for
actions or inactions of Client, other advisers or service providers to the Fund.
Client shall indemnify Adviser for any liabilities or costs related to any
alleged or actual misstatements or omissions in the Fund's Registration
Statement that were not based on information provided by Adviser.
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 the Fund's Board of Directors, provided that in such event, continuance shall
also be approved by a vote 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.
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
material breach of any provision thereof by the party so notified if such breach
shall not have been cured within a twenty (20) day period after notice of such
breach, 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 change in control as provided in Paragraph 19, upon the termination of
the Funds, or upon termination of Client's advisory agreement with 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.
8
<PAGE> 20
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 is registered as an
investment adviser under the Investment Advisers Act of 1940, 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.
(c) Adviser hereby acknowledges that the Vantagepoint Funds is
registered as an open-end investment company under the 1940 Act and is subject
to taxation as a regulated investment company under Subchapter M and the
regulations promulgated thereunder of the Internal Revenue Code. Adviser hereby
represents that it is familiar with the requirements of such laws and the rules
and regulations thereunder as they apply to the Funds and has systems and
procedures in place reasonably designed to permit Adviser, Client, and the Funds
to comply with such requirement.
16. 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 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:
Tukman Capital Management, Inc.
9
<PAGE> 21
Attention: Mel Tukman
60 East Sir Francis Drake Boulevard
Larkspur, California 94939
Each party may change its address by giving notice as herein
required.
17. 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.
18. 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. It is understood that
certain material amendments may require approval of the Funds shareholders.
19. ASSIGNMENT AND CHANGE IN CONTROL
This Agreement shall automatically terminate in the event of its
assignment. Adviser agrees to provide immediate written notice in the event of a
change in control. Such a change in control will entitle, but not require, the
Client to terminate the Agreement immediately or upon notice.
20. 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.
10
<PAGE> 22
21. 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 and the 1940 Act.
To the extent that the applicable laws of the State of Delaware conflict with
the applicable provisions of the 1940 Act, the latter shall control.
22. YEAR 2000 STATEMENT
Adviser certifies that it has taken the steps to address the Year
2000 problem that are set forth in Adviser's SEC Form ADV-Y2K, a copy of which
has been filed with the SEC and provided to Client. Any subsequent SEC filings
regarding this issue shall be provided to Client.
23. VANTAGEPOINT FUNDS AS PARTY TO AGREEMENT
For purposes of Sections 8 (Fees), 12 (Liability), 13 (Term), 14
(Termination), 15 (Representations), 16 (Notices), 18 (Waiver or Modification),
19 (Assignment and Change in Control), and 22 (Year 2000 Statement) of the
Agreement, as well as for purposes of Schedule C of the Agreement, the
Vantagepoint Funds is hereby made a party to the Agreement and shall be entitled
to all notices, protections and rights set forth in those Sections and in
Schedule C to which Client is entitled.
11
<PAGE> 23
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON , 199
and make it effective on the date set forth.
<TABLE>
CLIENT ADVISER
Vantagepoint Tukman Capital Management, Inc.
Investment Advisers, LLC
<S> <C>
by: by:
- ---------------------- ---------------------------------
(signature) (signature)
- ---------------------- ---------------------------------
Girard Miller, President (name, title)
Date: Date:
FUNDS
The Vantagepoint Funds
by:
- -------------------
Girard Miller, President
Date:
</TABLE>
12
<PAGE> 24
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
This Investment 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 TCW FUNDS
MANAGEMENT, INC., at 865 S. Figueroa Street, Los Angeles, California 90017
(hereafter "Adviser") and is effective as of October 1,1999 (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, as amended (the "Investment Company Act");
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 Vantagepoint Growth Fund 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> 25
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:
[names]
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.
2
<PAGE> 26
4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the Fund's
Board of Directors and the Client, 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) Agreement. The Adviser will adhere to all specific provisions
established in the Agreement and in the Registration Statement as filed with the
Securities and Exchange Commission on Form N-1A ("Registration Statement), which
is 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
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 11:00 am EST on the day following the
trade date and will affirm the trade or fax trade authorization within one (1)
business day after the trade date (T+1).
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<PAGE> 27
(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. 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) Reconciliations. Adviser shall reconcile security and cash
positions, and market values, and report discrepancies to the Client.
(c) Loss Reimbursement. Adviser shall reimburse the Account for any
material loss directly caused by Adviser's breach of the standard of care set
forth in Section 12 that causes a material delay in the accurate daily pricing
of the Fund, providing such material loss was not the result of action or
inaction of other service providers to the Client or the Fund in failing to
observe the instructions of the Adviser. It is expressly understood that Adviser
has no responsibility for performing the daily pricing of the Fund(s).
(d) Reports. Adviser shall furnish Client and the Board of Directors
of the Vantagepoint Funds such periodic reports and special reports and
information as either of them may request, including such information as shall
be reasonably necessary to evaluate the terms of any advisory agreement between
Client and Adviser with respect to the assets of the Vantagepoint Funds.
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<PAGE> 28
(e) Other 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 sales prices, lower
commission expenses and beneficial timing of transactions or a combination of
these and other factors.
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<PAGE> 29
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.
(b) For purposes of Section 8 and Schedule C, all payments due to
Adviser shall be solely made from the assets of the Vantagepoint Growth Fund.
(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.
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. 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.
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<PAGE> 30
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.
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. In the event of termination for a
breach of this
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<PAGE> 31
Agreement, any trades executed but not yet settled at the time of notice of
termination shall be settled.
15. REPRESENTATIONS
(a) Adviser hereby confirms to Client that Adviser is registered as
an investment adviser under the Investment Advisers Act of 1940, as amended,
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.
(c) Adviser hereby acknowledges that Vantagepoint Funds is
registered as an open end investment company under the Investment Company Act of
1940 and is subject to taxation as a regulated investment company under the
Internal Revenue Code; Adviser hereby represents that it is familiar with the
requirements of such laws and the rules and regulations thereunder as they apply
to Vantagepoint Funds and has systems and procedures in place reasonably
designed to permit Adviser, Client, and Vantagepoint Funds to comply with such
requirement.
16. 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 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
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<PAGE> 32
ADVISER:
TCW Funds Management, Inc.
865 S. Figueroa Street
Los Angeles, CA 90017
Attn: Mr. Don Benson (with a copy to General Counsel)
Each party may change its address by giving notice as herein
required.
17. 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.
18. 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.
19. 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. Such an ownership change will entitle, but not require, the
Client to terminate the Agreement immediately or upon notice.
20. 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.
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<PAGE> 33
21. 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.
22. YEAR 2000 WARRANTY
Adviser will use commercially reasonable efforts to prevent any
material problems from and after January 1, 2000 relating to the date function
or functions impacted by the date in its computer systems, auto-dialer system or
other date processing or information management systems used by it with respect
to the Client and the Account.
23. VANTAGEPOINT FUNDS AS PARTY TO AGREEMENT
For purposes of Sections 8 (Fees), 12 (Liability), 13 (Term), 14
(Termination), 15 (Representation), 16 (Notices), 18 (Waiver or Modification),
19 (Assignment and Ownership Change), and 22 (Year 2000 Warranty) of the
Agreement, as well as for purposes of Schedule C of the Agreement, VF is hereby
made a party to the Agreement and shall be entitled to all notices, protections
and rights set forth in those Sections and in Schedule C to which Client is
entitled.
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<PAGE> 34
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON , 199
and make it effective on the date set forth.
CLIENT ADVISER
Vantagepoint TCW Funds Management, Inc.
Investment Advisers, LLC
by: by:
- ------------------------ -------------------
(signature) (signature)
- ------------------------ -------------------
Girard Miller, President (name, title)
-------------------
(signature)
-------------------
(name, title)
Date: Date:
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<PAGE> 35
EXHIBIT C
INVESTMENT ADVISORY AGREEMENT
This Investment 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 BROWN CAPITAL,
INC., at [address] (hereafter "Adviser") and is effective as of October 1,1999
(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 (the "1940 Act");
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 a sub-advisory
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 Vantagepoint Growth Fund 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
<PAGE> 36
investment of the Account. Client hereby grants the Adviser complete, unlimited
and 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. The activities of Client and Adviser in managing the assets of the
Vantagepoint Growth Fund shall in all instances be conducted subject to the
supervision and direction of the Board of Directors of the Vantagepoint 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 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 as soon as reasonably practicable.
Key Personnel:
[names]
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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.
4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the Fund's
Board of Directors and the Client, the Adviser shall direct the investments of
the Account in accordance with the Fund's investment objectives, policies, and
restrictions as provided in the Fund's Prospectus and Statement of Additional
Information as filed with the Securities and Exchange Commission on Form N-1A
("Registration Statement"), as currently in effect and as amended or
supplemented from time to time, and such other limitations as the Fund or Client
may reasonably impose by written notice to the Adviser or as set forth in
SCHEDULE A. Client shall give Adviser copies of the Fund's Prospectus and
Statement of Additional Information, and any amendments or supplements thereto,
as soon a practicable after such documents become available.
(b) Funds' Agreement and Declaration of Trust. The Adviser will
adhere to all specific provisions relating to the investment of the Account
established in the Funds' Agreement and Declaration of Trust and 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 Fund's Prospectus and Statement or Additional Information,
and in accordance with the limitations set forth in 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
as may be allowed pursuant to the 1940 Act.
(d) Conflict in Policies. If a conflict in policies or guidelines
referenced herein occurs, the Registration Statement shall govern for purposes
of this Agreement.
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<PAGE> 38
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. Unless otherwise required by local
custom, 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 make all reasonable efforts to 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 the close of business one (1)
business day after the trade date (T+1).
(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 that are required of an investment adviser to a registered investment
company pursuant to the 1940 Act and the Investment Advisers Act of 1940, and
the rules thereunder, and in accordance with such reasonable instructions as
shall be provided to Adviser by Client from time to time. All records maintained
pursuant to this Agreement shall be subject to examination by Client and by
persons authorized by it during normal business hours 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. 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
4
<PAGE> 39
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) Reconciliations. Adviser shall reconcile security and cash
positions, and market values on a monthly basis to the Custodian's records and
report discrepancies to the Client by ten (10) business days after the end of
the month.
(c) Loss Reimbursement. Adviser shall reimburse the Account for any
material error to the Fund's net asset value caused by Adviser's breach of its
standard of care set forth in Section 12 that is a direct cause of a delay in
the accurate daily pricing of the Fund(s), provided such loss was not the result
of action or inaction of other service providers to the Client or the Fund in
failing to observe the instructions of the Adviser.
(d) Reports. Adviser shall furnish Client and the Board of Directors
of the Vantagepoint Funds such periodic and special reports and information as
either of them may request, including such information as shall be reasonably
necessary to evaluate the terms of any advisory agreement between Client and
Adviser with respect to the assets of the Vantagepoint Equity Income Fund.
(e) Other Reports on Request. Adviser shall provide to Client
promptly upon request any information available in the records maintained by
Adviser relating to the Account.
(f) Review of Materials. During the term of this Agreement, the
Client shall furnish to the Adviser at its principal office all prospectuses,
statements of additional information, proxy statements, reports to shareholders,
advertising and sales literature or other material prepared for distribution to
Fund shareholders or the public, which refer to the Adviser or its clients in
any way, prior to the use thereof, and the Client shall not use any such
materials if the Adviser reasonably objects in writing within ten (10) business
days (or such other time as may be mutually agreed) after receipt thereof. The
Client shall ensure that materials prepared by employees or agents of the Client
or its affiliates that refer to the Adviser or its clients in any way are
consistent with those materials previously approved by the Adviser as referenced
in the preceding sentence.
7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise instructed
in writing by Client in acting on behalf of the Fund, (it being understood that
Client, acting on behalf of the Fund, may, in its absolute discretion and
consistent with the requirements of the 1940 Act and applicable federal
securities laws, direct portfolio transactions for which Adviser is responsible
to any broker that Client may see fit), Adviser shall place all orders
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<PAGE> 40
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"), unless the transaction is in compliance with Rules
17e-1 or 10f-3 under the 1940 Act, as applicable, and the Fund's policies and
procedures thereunder, copies of which shall be provided to Adviser.
(b) Best Execution. In placing such orders, the Adviser will give
primary consideration to obtaining the most favorable price and efficient
execution reasonably available under the circumstances. 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 in good faith 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 or to other client accounts as to which it exercises investment
discretion.
(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 or more efficient
execution 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 the Fund by Adviser
represents Adviser's evaluation that the Account is benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions or a combination of these and other factors. In such event,
allocation of the securities so purchased or sold, as well as expenses incurred
in the transaction, will be made by the Adviser in a manner the Adviser
considers to be most equitable and consistent with its fiduciary obligations to
the Fund and to its other clients.
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.
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<PAGE> 41
(b) For purposes of this section 8 and Schedule C, all payments due
to Adviser shall be solely made from the assets of the Vantagepoint Growth Fund.
(c) 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 Fund. 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.
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 upon request, and any material
violation of such policies by personnel of the Adviser who are "access persons"
with respect to the Account 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
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<PAGE> 42
for an investment adviser managing the amount of aggregate assets managed by
Adviser for Client and for the Adviser's other clients.
12. LIABILITY
In the absence of any gross negligence, malfeasance, or willful
violation of this Agreement, 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
or the Fund. 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 the Fund's Board of Directors, provided that in such event, continuance shall
also be approved by a vote 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.
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
material breach of any provision thereof by the party so notified if such breach
shall not have been cured within a twenty (20) day period after notice of such
breach, 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 change in control as provided in Paragraph 19, upon the termination of
the Funds, or upon termination of Client's advisory agreement with 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.
8
<PAGE> 43
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 is registered as an
investment adviser under the Investment Advisers Act of 1940, 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.
(c) Adviser hereby acknowledges that the Vantagepoint Funds is
registered as an open-end investment company under the 1940 Act and is subject
to taxation as a regulated investment company under Subchapter M and the
regulations promulgated thereunder of the Internal Revenue Code. Adviser hereby
represents that it is familiar with the requirements of such laws and the rules
and regulations thereunder as they apply to the Vantagepoint Funds and has
systems and procedures in place reasonably designed to permit Adviser, Client,
and the Vantagepoint Funds to comply with such requirement.
16. 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 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
9
<PAGE> 44
ADVISER: "
Brown Capital, Inc.
Attention:
[address]
Each party may change its address by giving notice as herein
required.
17. 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.
18. 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. It is understood that
certain material amendments may require approval of the Funds shareholders.
19. ASSIGNMENT AND CHANGE IN CONTROL
This Agreement shall automatically terminate in the event of its
assignment. Adviser agrees to provide immediate written notice in the event of a
change in control. Such a change in control will entitle, but not require, the
Client to terminate the Agreement immediately or upon notice.
20. 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.
10
<PAGE> 45
21. 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 and the 1940 Act.
To the extent that the applicable laws of the State of Delaware conflict with
the applicable provisions of the 1940 Act, the latter shall control.
22. YEAR 2000 STATEMENT
Adviser certifies that it has taken the steps to address the Year
2000 problem that are set forth in Adviser's SEC Form ADV-Y2K, a copy of which
has been filed with the SEC and provided to Client. Any subsequent SEC filings
regarding this issue shall be provided to Client.
23. VANTAGEPOINT FUNDS AS PARTY TO AGREEMENT
For purposes of Sections 8 (Fees), 12 (Liability), 13 (Term), 14
(Termination), 15 (Representations), 16 (Notices), 18 (Waiver or Modification),
19 (Assignment and Change in Control), and 22 (Year 2000 Statement) of the
Agreement, as well as for purposes of Schedule C of the Agreement, the
Vantagepoint Funds is hereby made a party to the Agreement and shall be entitled
to all notices, protections and rights set forth in those Sections and in
Schedule C to which Client is entitled.
11
<PAGE> 46
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON , 199
and make it effective on the date set forth.
CLIENT ADVISER
Vantagepoint Brown Capital, Inc.
Investment Advisers, LLC
by: by:
- ------------------------- ----------------------
(signature) (signature)
- ------------------------- ----------------------
Girard Miller, President (name, title)
Date: Date:
FUNDS
The Vantagepoint Funds
by:
- ---------------------------
Girard Miller, President
Date:
12
<PAGE> 47
EXHIBIT D
TUKMAN CAPITAL MANAGEMENT
PRINCIPAL EXECUTIVE OFFICERS
NAME TITLE
Melvin T. Tukman President
Daniel Grossman Vice President
Cary Zellerback Director, Client Services
<PAGE> 48
EXHIBIT E
TCW FUNDS MANAGEMENT, INC.
PRINCIPAL EXECUTIVE OFFICERS
NAME TITLE
Marc I. Stern Chairman
Thomas E. Larkin, Jr. Vice Chairman
Alvin R. Albe, Jr. Executive Vice President
Michael E. Cahill Secretary & General Counsel
Hillary Gillion Darcylord Managing Director
William C. Sonneborn Managing Director, Chief Financial Officer
<PAGE> 49
EXHIBIT F
BROWN CAPITAL MANAGEMENT, INC.
PRINCIPAL EXECUTIVE OFFICERS
NAME TITLE
Eddie C. Brown President
Robert E. Hall Senior Vice President
Noreen A. Frost Vice President
Stephon A. Jackson Vice President
Keith A. Lee Vice President
Edward Ramos Vice President
<PAGE> 50
THE VANTAGEPOINT FUNDS
GROWTH FUND
SPECIAL MEETING OF THE SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF THE SHAREHOLDERS, SEPTEMBER 30, 1999
The undersigned, revoking previous proxies with respect to the
Shares (defined below), hereby appoints Girard Miller and Paul Breault as
proxies and each of them, each with full power of substitution, to vote at the
Special Meeting of Shareholders of the Growth Fund (the "Fund") of The
Vantagepoint Funds ("The Trust") to be held in the headquarters of the ICMA
Retirement Corporation, 777 North Capitol Street, NE, Suite 600, Washington, DC
20002, on Thursday, September 30, 1999, at 9:30 am (Eastern Time), and any
adjournments or postponements thereof (the "Meeting") all shares of beneficial
interest of the Fund that the undersigned would be entitled to vote if
personally present at the Meeting ("Shares") on the proposals set forth below
respecting the proposed subadvisory agreements (the "Subadvisory Agreements")
between Vantagepoint Investment Advisers, LLC, ("VIA"), the Fund, and Tukman
Capital Management, Inc. ("Tukman"), Brown Capital Management ("Brown") and TCW
Funds Management, Inc. ("TCW"), respectively, and in accordance with their own
judgement, any other matters properly brought before the Meeting.
THE BOARD OF DIRECTORS OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:
Proposal 1: Approve the Subadvisory Agreement between the Fund, VIA
and Tukman:
For [ ] Against [ ] Abstain [ ]
Proposal 2: Approve the Subadvisory Agreement between the Fund, VIA
and Brown:
For [ ] Against [ ] Abstain [ ]
Proposal 3: Approve the Subadvisory Agreement between the Fund, VIA
and TCW:
For [ ] Against [ ] Abstain [ ]
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER(S). IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
<PAGE> 51
The undersigned acknowledges receipt with this Proxy of a copy of
the Notice of Special Meeting and the Proxy Statement of the Board of Directors.
Your signature(s) on this Proxy should be exactly as your name(s) appear on the
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated: ___________________________, 1999
--------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint Owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
