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THE VANTAGEPOINT FUNDS
VANTAGEPOINT EQUITY INCOME FUND
VANTAGEPOINT ASSET ALLOCATION FUND
VANTAGEPOINT INCOME PRESERVATION FUND
SUPPLEMENT DATED JANUARY 5, 2001
TO THE PROSPECTUS DATED MAY 1, 2000
AS REVISED DECEMBER 1, 2000
THIS SUPPLEMENT PROVIDES NEW AND ADDITIONAL INFORMATION BEYOND THAT WHICH IS
CONTAINED IN THE PROSPECTUS, AND SHOULD BE READ IN CONJUNCTION WITH SUCH
PROSPECTUS.
SOUTHEASTERN ASSET MANAGEMENT, INC. APPOINTED AS SUBADVISER
The Board of Directors (the "Directors") of The Vantagepoint Funds (the
"Company"), including a majority of the Directors who are not "interested
persons" of the Company as defined in the Investment Company Act of 1940
("Independent Directors"), appointed Southeastern Asset Management, Inc.
("Southeastern"), to replace Wellington Management Company LLP ("WMC") as a
Subadviser to the Company's Equity Income Fund (the "Fund"). WMC had served as
Sub-Adviser to the Fund since August 1999. Southeastern was approved as a
Sub-Adviser at a meeting of the Directors held on December 4, 2000 (the
"Meeting"), effective December 14, 2000. The appointment and termination do not
require Shareholder approval under the terms of an exemptive order issued to the
Company by the Securities and Exchange Commission on May 8, 2000.
The terms of the Sub-Advisory Agreement between VIA and Southeastern (the
"Agreement") are substantially identical to the terms of the previous
Sub-Advisory Agreement between WMC and VIA, except for the rate of the fee
payable by the Fund to Southeastern for sub-advisory services. Under the
Sub-Advisory Agreement, Southeastern makes investment decisions for the assets
of the Fund allocated to it, and continuously reviews, supervises and
administers the Fund's investment program with respect to these assets.
Southeastern is independent of VIA, and discharges its responsibilities subject
to the supervision of VIA and the Directors, and in a manner consistent with the
Fund's investment objectives, policies and limitations. The Agreement will
remain in effect until December 14, 2002 (unless earlier terminated), and will
have to be approved annually thereafter by a majority of the Independent
Directors.
In evaluating Southeastern, the Directors received information from VIA and
Southeastern. VIA recommended the selection of Southeastern and participated in
the search process that led to its recommendation. The search process included
on-site interviews of Southeastern's key personnel by a search team composed of
VIA representatives [and representatives of an independent consulting firm
engaged to assist with the search.] The Directors considered information about
portfolio managers, investment philosophy, strategies and process, as well as
Southeastern's performance track record, among other factors. In appointing
Southeastern, the Directors carefully evaluated: (1) the nature and quality of
the services expected to be rendered to the Fund by Southeastern; (2) the
distinct investment process of Southeastern; (3) the history, reputation,
qualification and background of Southeastern's personnel and its financial
condition; (4) its performance record; and (5) other factors deemed relevant.
The Directors also reviewed the fees to be paid to Southeastern, including any
benefits to be received by Southeastern or its affiliates in connection with
soft dollar arrangements.
SUB-ADVISORY FEES
In return for providing sub-advisory services to the Fund, Southeastern will
receive a fee based on the average daily net assets of the portion of the Fund
managed by Southeastern at the following annual rate:
First $50 million 0.75%
Over $50 million 0.50%
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Based on the assets under management on the effective date of the Agreement, the
Fund will pay a blended sub-advisory fee of 0.58% to Southeastern.
In return for providing sub-advisory services to the Fund, WMC has been entitled
to a fee based on the average daily net assets of the portion of the Fund
managed by WMC at the following annual rate:
First $50 million 0.40%
Next $50 million 0.30%
Over $100 million 0.25%
For the fiscal year ended December 31, 1999, the aggregate fee payable by the
Fund to WMC for investment sub-advisory services for the Fund was $221,273. If
its fee had been in effect, Southeastern would have received $415,352, which
equals an 88% increase relative to the fee that WMC received under its
Sub-Advisory Agreement.
In connection with the appointment of Southeastern, the "Sub-Advisers" Section
on page 21 of the Prospectus is amended by removing the description of WMC and
inserting the following disclosure relating to Southeastern:
SOUTHEASTERN ASSET MANAGEMENT, INC.
Southeastern Asset Management, Inc. ("Southeastern"), acts as a Sub-Adviser for
a portion of the assets of the Equity Income Fund. Southeastern currently has
approximately $14 billion in assets under management. The principal business
address of Southeastern is 6410 Poplar Avenue, Memphis, TN 38119.
O. Mason Hawkins and G. Staley Cates head an investment team at Southeastern
that serves as portfolio manager for the portion of the Fund's assets managed by
Southeastern. Mr. Hawkins has served in various investment management capacities
with Southeastern for the past 25 years. Southeastern was founded in 1975 and is
owned by its principals.
Listed below are the names and principal occupations of the principal executive
personnel of Southeastern. The business address of the principal executives at
Southeastern is Memphis, TN.
<TABLE>
<CAPTION>
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NAME TITLE
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<S> <C>
O. Mason Hawkins Chairman
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G. Staley Cates President
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</TABLE>
AGGREGATE FEES PAID BY THE EQUITY INCOME FUND
The aggregate subadvisory fee the Fund will pay as a result of the appointment
of Southeastern is 0.43%, based on assets as of November 30, 2000.
AVATAR ASSOCIATES: REALLOCATION
At a meeting of the Directors held by written consent. VIA's allocation of Asset
Allocation Fund assets to Avatar Associates was reduced to zero, pending formal
termination of Avatar by the Fund's Directors at a future meeting. Avatar
provides Fund-level asset allocation advice. No replacement for Avatar has been
identified, and the Fund's assets formerly allocated to Avatar Associates will
be allocated to Mellon Capital Management until further notice.
As a result of this change, the Fund will pay an aggregate fee of 0.24% to
Mellon Capital for tactical allocation services.
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VANTAGEPOINT INCOME PRESERVATION FUND
The Income Preservation Fund may enter into options transactions as described in
the Statement of Additional Information.
The Prospectus is hereby amended to reflect these changes.
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PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
