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(d)(3)
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 MFS INSTITUTIONAL
ADVISORS, INC., at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereafter
"Adviser") and is effective as of March 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;
WHEREAS, Client is party to an Investment Adviser Agreement with the Funds for
management of the investment operations of the Funds including the establishment
and operation of investment portfolios for the Funds and the entering into of
contracts with sub-advisers to assist in managing the investment of the Funds
property;
WHEREAS, Client and Adviser wish to enter into an agreement pursuant to which
Adviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Adviser as Investment Adviser of
certain assets held by the Funds, the Client has authorized the Adviser to
manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Adviser shall perform its services shall
consist of those assets of the Funds which the Client determines to assign to
an account with the Adviser, together with all income earned by those assets
and all realized and unrealized capital appreciation related to those assets
(hereafter "Account"). From time to time, the Client may, upon notice to the
Adviser, make additions to the Account and may, upon notice to the Adviser,
make withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF ADVISER
(a) Purchase and Sale. Client hereby appoints Adviser to manage the Account on
the terms and conditions set forth in this Agreement. Subject to the
restrictions set forth in this Agreement, and acting always in conformity with
the Investment Policies provided in Paragraph 4, Adviser shall supervise and
direct investment of the Account. Client hereby grants the Adviser complete,
unlimited and unrestricted discretion and authority to select portfolio
securities with respect to the Account including the power to acquire (by
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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:
Xxxxxx X. Xxxxxxx, President
Xxxxx X. Xxxxx, Portfolio Manager
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. The Adviser will adhere to the
investment objectives, guidelines, restrictions, and liquidity requirements of
the Funds as specified by the Client on SCHEDULE A hereto, and as restated or
modified from time to time by the Client in written notice to the Adviser.
(b) Funds' Agreement and Declaration of Trust. The Adviser
will adhere to all specific provisions established in the Funds' Agreement and
Declaration of Trust and
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Registration Statement as filed with the Securities and Exchange Commission on
Form N-1A ("Registration Statement) which relate to the activities of the
Adviser as set forth in 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 use 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). No
cash or securities of the Funds shall be accepted by the Adviser.
(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 use best 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 make a best effort to affirm the trade within
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. All records
maintained
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pursuant to this Agreement shall be subject to examination by Client and by
persons authorized by it at all times upon reasonable notice. Except as
expressly authorized in this Agreement or as required by applicable law,
regulation or order of court or as directed by other party in writing, Adviser
and Client shall keep confidential the records and other information obtained
by reason of this Agreement (including, with respect to Client, the investment
information and transactions executed by Adviser). Upon termination of this
Agreement, Adviser shall promptly, upon demand, return to Client all records
pertaining to the Fund Client reasonably believes are necessary in order to
discharge its responsibilities to the Funds. Adviser shall be entitled to
retain originals or copies of records pursuant to the requirements of
applicable laws or regulations.
(b) Quarterly Valuation Reports. Adviser shall use best efforts to provide to
the Client within TEN (10) business days after the end of each calendar quarter
a statement of the fair market value of the Account as of the close of such
quarter together with an itemized list of the assets in the Account.
(c) Valuation Methodology. For purposes of this Agreement, fair market value
shall mean, as of a particular date, the value of the Account (determined in
accordance with generally accepted accounting principles consistently applied),
plus income accrued thereon less the liabilities related to the assets in the
Account. Adviser shall reconcile security and cash positions, and market
values, and report discrepancies to the Client.
(d) Loss Reimbursement. Adviser shall reimburse the Account for any loss
directly caused by Adviser's negligent actions that cause delay in the accurate
daily pricing of the Fund(s), with the understanding that Adviser will not be
responsible for the negligent actions of other service providers on the
Account, including broker-dealers, nor is Adviser responsible for the daily
pricing of the Fund(s).
(e) Monthly Reports. Adviser shall provide the Client an itemized report as to
the securities in the account, the fair market value thereof and the accrued
income thereon within FOUR (4) business days after the end of each Calendar
Month. The Adviser shall also use best efforts to provide, in writing,
preliminary performance numbers and a brief explanation of these results within
FIVE (5) business days after the end of each Calendar Month. The requested
format will be as mutually agreed by Adviser and Client. For purposes of this
Agreement, fair market value shall mean, as of a particular date, the value of
the Account plus income accrued thereon less the liabilities related to the
assets in the Account.
(f) Reports on Request. Adviser shall provide to Client promptly upon request
any information available in the records maintained by Adviser relating to the
Account.
7. PURCHASE AND SALE OF SECURITIES
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(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"). Client agrees that if it instructs or directs the Adviser with
respect to the selection of brokers that the Adviser will not be responsible
for obtaining best execution as set forth in Section 7(b) of this Agreement.
(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 and to Adviser's other clients.
(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.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Adviser for its services under this
Agreement shall be calculated and paid by the Client from the assets of the
Account in accordance with SCHEDULE C hereto. The Adviser shall send a written
invoice to the Client within 30 days of the quarter end and shall be duly
compensated from the assets of the Account.
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(b) Fee Computation. The Adviser's fee for each calendar quarter shall be
calculated as set forth in Schedule C.
(c) Fee Amendment. Fee rates may be changed from time to time by agreement
between the Client and the Adviser; provided, however, that no increase in such
rates shall be made during the first calendar year of this Agreement.
(d) Pro Rata Fee. If the Adviser should serve for less than the whole of any
calendar quarter, its compensation shall be determined as provided above on the
basis of the ending market value of the Account in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Adviser hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Adviser shall devote its best efforts and such time as it deems necessary
to provide prompt and expert service to the Client. The services of Adviser to
be provided to Client hereunder are not to be deemed exclusive and Adviser
shall be free to provide similar services for its own account and the accounts
of other persons and to receive compensation for such services. Client
acknowledges that Adviser and its members, Affiliates and employees, and
Adviser's other clients may at any time, have, acquire, increase, decrease, or
dispose of positions in the same investments which are at the same time being
held, acquired for or disposed of under this Agreement for the Client. Adviser
shall have no obligation to acquire or dispose of a position in any investment
pursuant to this Agreement simply because Adviser, its directors, members,
Affiliates or employees invest in such a position for its or their own accounts
or for the account of another client.
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10. XXXXXXX XXXXXXX 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
the Adviser's Code of Ethics shall be delivered to the Client, and any material
violation of such policies by personnel of the Adviser with respect to the Fund
shall be reported to the Client.
11. INSURANCE
At all times during the term of this Agreement, Adviser shall maintain, at its
own cost and expense, professional liability insurance for errors, omissions,
and negligent acts, in an amount and with such terms as are standard in the
financial services industry for an investment adviser managing the amount of
aggregate assets managed by Adviser for Client and for the Adviser's other
clients.
12. LIABILITY
Adviser shall not be liable to Client for honest mistakes of judgment or for
action or inaction taken in good faith for a purpose that the Adviser
reasonably believes to be in the best interests of the Client. Adviser shall be
liable to Client for any liability, damages or expenses of Client arising out
of the gross negligence, malfeasance or violation of applicable law by Adviser
or any of its officers, employees or Affiliates in providing management under
this Agreement. However, neither this provision nor any other provision of this
Agreement shall constitute a waiver or limitation of any rights which Client
may have under federal or state securities laws.
13. TERM
This Agreement shall be in effect for an initial term of two years beginning on
the Effective Date. This Agreement may be renewed thereafter for successive
one-year periods if such renewal is approved annually by the majority of those
members of the Funds' Board of Directors who are not "interested persons" as
that term is defined in the Investment Company Act of 1940.
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
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Agreement shall automatically terminate in the event of its assignment, as
provided in Paragraph 19, at the discretion of the Client in the event of
Adviser's ownership change as provided in Paragraph 19, or upon the termination
of the Funds. Any termination in accordance with the terms of this Agreement
shall not cause the payment of any penalty. Any such termination shall not
affect the status, obligations or liabilities of any party hereto to the other.
15. REPRESENTATIONS
(a) Adviser hereby confirms to Client that Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into and perform fully the terms of this Agreement
and that the execution of this Agreement on behalf of Adviser has been duly
authorized and, upon execution and delivery, this Agreement will be binding
upon Adviser in accordance with its terms.
(b) Client hereby confirms to Adviser that it has full power and authority to
enter into this Agreement and that the execution of this Agreement on behalf of
Client has been fully authorized and, upon execution and delivery, this
Agreement will be binding upon Client in accordance with its terms.
16. 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
000 Xxxxx Xxxxxxx Xxxxxx, XX, Xxx. 000
Xxxxxxxxxx, X.X. 00000-0000
ADVISER:
MFS Institutional Advisers, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxx
Each party may change its address by giving notice as herein required.
17. SOLE INSTRUMENT
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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.
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.
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22. YEAR 2000 WARRANTY
Adviser warrants that it has taken steps that it believes are reasonably
designed to address the problems related to the process and calculation of
date-related information and data from and after January 1, 2000 (commonly
known as the "Year 2000 Problem"). While the Adviser does not anticipate any
material disruption with respect to its information systems or those of its
vendors, there can be no assurance that these steps will be sufficient to avoid
any adverse impact.
IN WITNESSWHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON , 1999 and make
it effective on the date set forth.
CLIENT ADVISER
Vantagepoint MFS Institutional Advisors, Inc.
Investment Advisers, LLC
by: by:
(signature) (signature)
Xxxxxx Xxxxxx, President (name, title)
Date: Date:
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SCHEDULE A
THE VANTAGEPOINT FUNDS
AGGRESSIVE OPPORTUNITIES FUND
STATEMENT OF INVESTMENT POLICIES
These Investment Policies and Guidelines have been adopted by the Vantagepoint
Funds (the "Funds") to govern the management and administration of the
Aggressive Opportunities Fund by Vantagepoint Investment Advisors, LLC ("VIA").
They may be reviewed and revised at the discretion of the Directors of the
Vantagepoint Funds (the "Directors"). VIA is responsible for the monitoring and
appointment of subadvisers to handle the day-to-day investment of assets
assigned to them.
I. GENERAL DESCRIPTION AND GOALS
The Aggressive Opportunities Fund seeks high, long-term capital
appreciation by investing in a variety of flexible investment
approaches and techniques. Investments may include U.S. and foreign
equity securities, options, financial derivatives, and short selling.
II. STRUCTURE
The assets of the Aggressive Opportunities Fund shall be managed by two
or more subadvisers. The subadvisers may be retained to manage separate
accounts under discretionary investment advisory contracts. Each
subadviser will be selected for its individual investment management
expertise and each will operate independently of the others. Each
subadviser must either be registered with the Securities and Exchange
Commission (SEC) under the Investment Advisers Act of 1940 or a Bank,
Insurance Company or Trust Company exempt as such from registration.
Each subadviser shall exercise complete management discretion over
assets of the Fund allocated to its account in a manner consistent with
these Investment Policies and Guidelines and with such further
investment limitations and conditions as may be recommended by VIA and
approved by the Directors. subadvisers will be obligated to manage Fund
assets as if they were subject to the fiduciary duty of care that
applies under the Employee Retirement Income Security Act of 1974
(ERISA) governing pension and profit sharing assets.
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III. INVESTMENT STRATEGY
VIA shall select subadvisers that represent a variety of portfolio
management approaches and investment disciplines. These investment
approaches will be combined in a complementary manner to effectively
achieve the investment objective of the Fund. The Fund as a whole will
be more diversified than each individual subadviser's portfolio.
Investment strategies employed by the subadvisers included in the
Aggressive Opportunities Fund may include:
- equity securities of U.S. issuers including small and micro-
capitalization growth stocks,
- securities issued by companies that are "distressed" or "out of
favor",
- securities issued by foreign companies including companies
located in or doing business in emerging markets,
- commodities,
- securities of companies that fluctuate with the value of
commodities such as precious metals,
- short selling,
- purchasing and writing options,
- futures contracts, and
- leverage.
Certain of the above strategies are not permitted or their use is
limited under the Investment Guidelines for the individual subadvisers.
IV. PERFORMANCE BENCHMARKS
Performance benchmarks will be established for the Fund. These
benchmarks will be recommended by VIA and adopted by the Directors and
will be reviewed and revised as appropriate from time to time. The
current performance benchmarks for the Fund are appended to this
document as Exhibit I.
V. DIRECTOR REVIEW
VIA will report periodically to the Directors on performance of the
Fund against benchmarks and on subadviser results and will evaluate for
the Directors the overall performance of the Fund relative to its
objectives. The Directors will consider such reports and other relevant
factors in appraising the investment objectives and performance of the
Fund.
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INVESTMENT GUIDELINES
I. ELIGIBLE INVESTMENTS
A. EQUITY SECURITIES: U.S. and Non-U.S. common stock, preferred
stock, common stock equivalents (units of beneficial
interest), American Depository Receipts, convertible preferred
stocks, warrants, and other rights.
B. CASH/CASH EQUIVALENTS: Fixed income obligations with maturity
less than one year, or short-term accounts or securities
managed by a custodian institution.
C. FIXED INCOME: Fixed income and convertible fixed income
securities with maturities greater than one year.
D. FINANCIAL FUTURES: Equity index futures.
E ELIGIBLE PRACTICES: There are no restrictions on subadvisers
as to the following:
- Portfolio turnover.
- Realized gains and losses.
F. ELIGIBLE INVESTMENT LIMITS
MINIMUM NORMAL MAXIMUM
------- RANGE -------
-----
U.S. equity securities 65% 80-100% 100%
Non-U.S. equity securities 0% 0-10% 20%
Cash and cash equivalents 0% 0-20% 35%
Fixed income securities
except derivatives 0% 0-5% 25%
Convertible securities 0% 5-15% 25%
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II. PROHIBITED PRACTICES AND SECURITIES
A. Securities for which there is no established trading market.
B. Securities issued by the subadvisers of the Fund or their affiliates.
C. General partner interests.
D. Direct investments in oil, gas, or other mineral exploration or
development programs.
E. Direct investments in real estate or interests in real estate; this does
not preclude investment in purchases of securities of real estate
investment trusts and other companies holding real estate or interests in
real estate.
F. Commingled funds; this does not preclude investment in mutual funds up to
10% of the Fund's market value at the time of purchase.
G. Acquisition of securities that would cause exposure to non-equity holdings
to exceed 35% of the Fund's market value at the time of purchase.
H. Acquisition of securities that would cause exposure to a single industry to
exceed 25% of the Fund's market value at the time of purchase.
I. In the absence of prior consent of VIA, acquisition of securities of an
issuer that would cause more than 5% of the Fund to be invested in such
securities.
J. In the absence of prior consent of VIA, acquisition of more than 5% of the
outstanding shares of any class of equity securities.
III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
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IV. SECURITIES LENDING
Nothing herein shall prevent loans of securities in the Aggressive
Opportunities Fund pursuant to an established securities lending
program conducted by the Fund's custodian.
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EXHIBIT I
TO THE
STATEMENT OF INVESTMENT POLICIES AND GUIDELINES OF
THE AGGRESSIVE OPPORTUNITIES FUND
MARCH 1, 1999
The following standards will be used to measure the performance of the
Aggressive Opportunities Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is the XXXXXXX 2000
INDEX. This benchmark will be used to measure the Fund's
performance net of subadviser fees.
2. A peer group benchmark for the Fund will consist of mutual
funds with characteristics similar to the Fund. The peer group
will be used to measure the Fund's performance relative to
other funds with a similar investment approach. The peer group
benchmark will measure Fund performance net of all fees and
expenses except for the plan administration fee.
3. The Lipper Capital Appreciation Index, selected by Lipper
Analytical Services, will serve as the performance benchmark
for participant returns, net of all fees and expenses. In
assessing performance against this benchmark, it will be taken
into consideration that Lipper Analytical Services may change
the composition of the Index.
B. TIME HORIZON
The time horizon for performance measurement will be one, three, and
five years.
One Year:
Performance relative to any benchmark established for the Fund will
vary widely over one-year periods; such variance over short time
periods is expected and acceptable. However, if such variance is
determined to be caused by systemic issues, action may be appropriate.
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Three and Five Years:
Performance of the Fund should track market and universe benchmarks
more closely as the evaluation period lengthens. The ideal performance
objective for the Aggressive Opportunities Fund is to exceed the
returns of all relevant benchmarks; however, shortfalls over various
time periods should be expected in some cases. Underperformance against
a single benchmark over an extended period may be acceptable,
particularly if other benchmarks have been exceeded.
C. INVESTMENT CHARACTERISTICS
The Fund may have investment characteristics which differ from the
general market, as measured by the Standard & Poor's 500 Index..
Because of the broad mandate given to the subadvisers in the Aggressive
Opportunities Fund, investment characteristics may be expected to vary
widely. For the total Fund, these would include, but are not limited
to:
CHARACTERISTIC RELATIVE TO S&P 500 INDEX
Beta Higher
Capitalization Lower
Dividend Yield Lower
Hist. 5 year EPS Growth Higher
Price to Earnings Ratio Higher
Standard Deviation Higher
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SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
AGGRESSIVE OPPORTUNITIES FUND
INVESTMENT GUIDELINES
FOR
MFS INSTITUTIONAL ADVISORS, INC.
MARCH 1, 1999
MFS Institutional Advisors, Inc. invests primarily in securities of rapidly
growing companies that have the potential to become leaders in emerging
industries. Selected companies are expected to experience earnings growth over
time well in excess of the growth rate of the overall economy and the rate of
inflation. The portfolio tends to remain fully invested at all times.
I. ELIGIBLE INVESTMENTS
A. EQUITY SECURITIES: Common stock, preferred stock, common
stock equivalents (units of beneficial interest), American
Depository Receipts, convertible preferred stocks, warrants,
and other rights.
B. CASH/CASH EQUIVALENTS: Fixed income obligations with
maturities less than one year, or short term accounts or
securities managed by the custodian institution.
C. FIXED INCOME: Fixed income and convertible fixed income
securities with maturities greater than one year.
D. ELIGIBLE INVESTMENT LIMITS:
MINIMUM NORMAL RANGE MAXIMUM
------- ------------- -------
Equity securities 80% 90%-100% 100%
Cash and cash equivalents 0% 0%-10% 15%
Fixed income securities 0% 0%-5% 10%
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II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales.
B. Options.
C. Commodities (including financial futures).
D. Securities for which there is no established trading market.
E. Foreign securities unless listed and traded in the U.S.
F. Margin purchases and other forms of borrowing; granting of pledges
or other security interests in assets of the portfolio; use of
futures to obtain market leverage.
G. Securities offered by the Adviser or its affiliates.
H. General partner interests.
I. Direct investments in oil, gas, or other mineral exploration or
development programs.
J. Direct investments in real estate or interests in real estate;
this does not preclude investment in purchases of securities
of real estate investment trusts and other companies holding
real estate or interests in real estate.
K. In the absence of prior consent of VIA, acquisition of
securities of an issuer that would cause more than 5% of the
portfolio at the time of purchase to be invested in such
securities.
L. In the absence of prior consent of VIA, acquisition of more than
5% of the outstanding stock of an issuer.
M. In the absence of prior consent of VIA, acquisition of securities
that would cause exposure to a single industry to exceed 25% of
the portfolio at the time of purchase.
N. Commingled and registered mutual funds.
Exceptions to the above listed eligible investments and prohibited
securities or practices may be permitted with prior consent from VIA.
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III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
IV. PERFORMANCE BENCHMARK AND MONITORING CRITERIA
The standards outlined in this section are subject to review and
revision by VIA as and when appropriate.
A. PERFORMANCE BENCHMARKS
The market benchmark for measuring investment performance for
the Adviser is the XXXXXXX 2000 INDEX. The Adviser is expected
to outperform the benchmark net of Adviser fees over rolling
three and five-year periods.
B. PEER GROUPS
VIA will develop an appropriate peer group against which to
compare investment performance. The peer group will consist of
other managers with a similar investment approach. The
managers within the peer group will be reviewed periodically
for consistency of style and may be changed as and when deemed
appropriate by VIA. Such changes will be communicated to the
Adviser.
1. The peer group will consist primarily of mutual funds, however
separate account managers may be included.
2. VIA will track relative net-of-fee performance quarterly and
evaluate performance on a trailing one, three and five-year
basis.
3. VIA will compare the Adviser's net performance with the
one-year mean return of the peer group.
The current peer group consists of the following managers:
(under review)
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SCHEDULE C
VANTAGEPOINT INVESTMENT ADVISERS, LLC
FEE SCHEDULE
FOR
MFS INSTITUTIONAL ADVISORS, INC.
The Advisor's quarterly fee shall be calculated based on the average daily
market value of the assets under management as provided by the Custodian, based
on the following annual rate.
0.75 percent flat fee
EXAMPLE OF FEE CALCULATION (HYPOTHETICAL AMOUNTS)
January 1, 1999 $190,000,000 End-of-Day Market Value
January 2, 1999 $190,678,462 End-of-Day Market Value
January 3, 1999 $190,796,123 End-of-Day Market Value
. . .
March 29, 1999 $194,512,214 End-of-Day Market Value
March 30, 1999 $194,720,978 End-of-Day Market Value
March 31, 1999 $194,901,556 End-of-Day Market Value
Quarterly Daily Average $192,601,555
$100 million 0.50 percent $500,000
Next $100 million 0.45 percent $416,707
Over $200 million 0.40 percent -------
Annual Fee $916,707
One-Fourth Annual Fee $229,177
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