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EXHIBIT (d)(14)
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
CAPITAL GUARDIAN TRUST COMPANY, a California corporation, with offices at 000
Xxxxx Xxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (hereafter "Sub-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 Sub-Adviser wish to enter into an
agreement pursuant to which Sub-Adviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Sub-Adviser as
Investment Sub-Adviser of certain assets of the Vantagepoint Growth and Income
portfolio of the Funds, the Client has authorized the Sub-Adviser to manage the
securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Sub-Adviser shall
perform its services shall consist of those assets of the Funds which the Client
determines to assign to an account with the Sub-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 Sub-Adviser, make additions to the Account
and may, upon reasonable advance notice to the Sub-Adviser, make withdrawals
from the Account.
2. APPOINTMENT STATUS, POWERS OF SUB-ADVISER
(a) Purchase and Sale. Client hereby appoints Sub-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, Sub-Adviser
shall supervise and direct investment of the Account. Client hereby grants the
Sub-Adviser complete, unlimited and
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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 Sub-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, Sub-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, Sub-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. Sub-Adviser
will report annually to Client regarding such voting, provided, however, Client
may terminate Sub-Adviser's discretion as above by providing written notice to
Sub-Adviser.
(d) Key Personnel. Sub-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 Sub-Adviser must give Client
written advance notice if practicable, or prompt notice within three (3)
business days, of the name of the person designated by the Sub-Adviser to
replace or supplement the individual(s). In addition, the Sub-Adviser will give
Client prompt written notice of the replacement of any employee of the
Sub-Adviser who has direct supervisory responsibility for the key personnel or
who has responsibility for setting investment policy.
Key Personnel:
Xxxxxxxxx Xxxxxx
Xxx Xxxxxxx
Xxxx Xxxxx
Xxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx Xxxxxx
3. ACCEPTANCE OF APPOINTMENT
Sub-Adviser accepts the appointment as an investment
Sub-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 Sub-Adviser under
the provisions of this Agreement.
4. INVESTMENT POLICIES
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(a) Investment Objectives. The Sub-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 advance written notice to the
Sub-Adviser of at least ten (10) business days, subject to the Sub-Adviser's
review.
(b) Funds' Agreement and Declaration of Trust. The Sub-Adviser
will adhere to all applicable provisions established in the Funds' Agreement and
Declaration of Trust and Registration Statement as filed with the Securities and
Exchange Commission on Form N-1A ("Registration Statement) as are identified to
be the Sub-Adviser's specific duties under the Fund Compliance Manual (if any)
or as mutually agreed upon between Client and Sub-Adviser, all of which are
hereby incorporated by reference and made a part of this Agreement. The Client
shall give written notice to the Sub-Adviser of any amendments to the Agreement
and Declaration of Trust or Registration Statement, which amendments, upon their
receipt and acknowledgement by the Sub-Adviser, shall be binding on the
Sub-Adviser.
(c) Investment Sub-Adviser Guidelines. The Sub-Adviser shall
act in accordance with the specific statement of Investment Sub-Adviser
Guidelines, SCHEDULE B, as restated or modified from time to time by the Client
in written notice to the Sub-Adviser. The Client retains the right, on advance
written notice to the Sub-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 Sub-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 Sub-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 or in accordance with local market
practices. The Sub-Adviser will notify the Custodian of all orders to brokers
for the Account by 9:00 am EST on the day following the trade date and will
affirm the trade within one (1) business day after the trade date (T+1).
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6. RECORD KEEPING AND REPORTING
(a) Records. Sub-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, Sub-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 Sub-Adviser).
Upon termination of this Agreement, Sub-Adviser shall promptly, upon demand,
return to Client all records Client reasonably believes are necessary in order
to discharge its responsibilities to the Funds. Sub-Adviser shall be entitled to
retain originals or copies of records pursuant to the requirements of applicable
laws or regulations.
(b) Quarterly Valuation Reports. Sub-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 be determined as per the provisions of Schedule C.
(d) Loss Reimbursement. Sub-Adviser shall reimburse the
Account for any material loss caused by Sub-Adviser's breach of the standard of
care set forth in Section 12 that directly and proximately causes delay in the
accurate daily pricing of the Fund(s), 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 Sub-Adviser. It is expressly
understood that Sub-Adviser has no responsibility with respect to the daily
pricing of the Fund(s).
(e) Monthly Reports. Sub-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 TEN (10) business days after the
end of each Calendar Month. The Sub-Adviser shall also use best efforts to
provide, in writing, preliminary performance numbers within FIVE (5) business
days after the end of each Calendar Month. A brief explanation of such results
will be provided quarterly. The requested format will be as mutually agreed by
Sub-Adviser and Client.
(f) Reports on Request. Sub-Adviser shall provide to Client
promptly upon request any information available in the records maintained by
Sub-Adviser relating to the Account.
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7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise
instructed by Client, (it being understood that Client may direct portfolio
transactions for which Sub-Adviser is responsible to any broker that Client may
see fit, subject to best execution), Sub-Adviser shall place all orders for the
purchase and sale of securities on behalf of the Client with brokers or dealers
selected by Sub-Adviser, but not with a person affiliated with Sub-Adviser, as
the term "affiliated person" is defined in the Investment Company Act of 1940
(hereafter an "Affiliate"). Client shall provide a list of "Affiliated Persons"
of Client which Sub-Adviser may rely upon.
(b) Best Execution. In placing such orders, the Sub-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 Sub-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. Sub-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 Sub-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 Sub-Adviser may
aggregate sales and purchase orders of Account with similar orders being made
simultaneously for other accounts managed by Sub-Adviser, if in Sub-Adviser's
reasonable judgment such aggregation shall result in an overall economic benefit
to the Account over a reasonable period of time, 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
Sub-Adviser represents Sub-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
over a reasonable period of time.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Sub-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 Sub-Adviser
shall send a written
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invoice to the Client within 30 days of the quarter end and shall be duly
compensated from the assets of the Account.
(b) Fee Computation. The Sub-Adviser's fee for each calendar
quarter shall be calculated as provided in SCHEDULE C.
(c) Fee Amendment. Fee rates may be changed from time to time
by agreement between the Client and the Sub-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 Sub-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 Sub-Adviser
hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Sub-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 Sub-Adviser to be provided to Client hereunder are not to be deemed
exclusive and Sub-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 Sub-Adviser and its members, Affiliates and
employees, and Sub-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. Sub-Adviser shall have no obligation to acquire or dispose of a
position in any investment pursuant to this Agreement simply because
Sub-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. XXXXXXX XXXXXXX POLICIES AND CODE OF ETHICS
Sub-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 violation of such policies by personnel of the Sub-Adviser shall be reported
to the Client.
11. INSURANCE
At all times during the term of this Agreement, Sub-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 reasonable within the financial
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services industry for an investment adviser managing the amount of aggregate
assets managed by Sub-Adviser for Client and for the Sub-Adviser's other
clients.
12. LIMITATION ON LIABILITY AND INDEMNIFICATION
Notwithstanding anything to the contrary herein, in the
absence of willful misconduct, bad faith, or gross negligence in the performance
of its obligations and duties under this Agreement, the Sub-Adviser shall not be
subject to liability to Client or any shareholders of Client or any other person
for any act or omission in the course of rendering services under this Agreement
or for losses sustained in connection with the matters to which this Agreement
relates. 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.
Sub-Adviser agrees to indemnify and hold harmless Client, any
affiliated person within the meaning of Section 2(a)(3) of the Investment
Company Act of 1940 ("affiliated person" and the "1940 Act", respectively) of
Client (other than the Sub-Adviser) and each person, if any, who, within the
meaning of Section 15 of the Securities Act of 1933 (the "1933 Act"), controls
the Client ("controlling person") against any an all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses) to
which the Client, or such affiliated person or controlling person may become
subject under the 1933 Act, the 1940 Act, the Investment Advisers Act of 1940
(the "Advisers Act"), or under any other statute, at common law or otherwise,
which may be based upon the willful misconduct, bad faith or gross negligence by
the Sub-Adviser, provided, however, that no indemnity by the Sub-Adviser is
required for any matter which requires the Client to provide an indemnity under
the paragraph directly below.
Client agrees to indemnify and hold harmless Sub-Adviser, its
affiliates and their respective directors, officers, employees and affiliated
persons and controlling persons (collectively, the "Indemnified Sub-Adviser
Parties") against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) to which any of the Indemnified
Sub-Adviser Parties may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, or under any other statute, at common law or otherwise, which does
not require the Sub-Adviser to provide an indemnity under the paragraph directly
preceding this one, provided that none of the Indemnified Sub-Adviser Parties
has acted in a manner that involves willful misconduct, bad faith or negligence
in the performance of its duties and obligations under this Agreement or under
any law applicable to Sub-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 those members of
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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 Sub-Adviser upon sixty (60) days' written notice to the Client or
by Client upon 30 days' written notice to Sub-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
Sub-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) Sub-Adviser hereby confirms to Client that Sub-Adviser is
a "bank" under Section (202)(a)(2) of the Investment Advisers Act of 1940, and
is therefore exempt under that Act from the registration and annual Form ADV
filing requirements for investment advisers, 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 Sub-Adviser has been duly
authorized and, upon execution and delivery, this Agreement will be binding upon
Sub-Adviser in accordance with its terms.
(b) Client hereby warrants and represents to Sub-Adviser that
(a) it has obtained all applicable licenses, permits, registrations and
approvals that may be required in order to serve in its designated capacities
with respect to the Funds, and shall continue to keep current such licenses,
permit, registrations and approvals for so long as this Agreement is in effect;
(b) it is not prohibited by the 1940 Act or other applicable laws and
regulations from performing the services contemplated by this Agreement; (c) it
will immediately notify that Sub-Adviser of the occurrence of any event that
would disqualify it from serving in its designated capacities with respect to
the Funds; and (d) this Agreement has been duly and validly authorized, executed
and delivered on behalf of Client and is a valid and binding agreement of the
Client enforceable 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
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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
SUB-ADVISER:
Capital Guardian Trust Company
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Treasurer
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.
19. ASSIGNMENT AND OWNERSHIP CHANGE
This Agreement shall automatically terminate in the event of
its assignment. Sub-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. USE OF NAME
The parties agree that the name "Capital Guardian Trust
Company", the names of the Sub-Adviser's affiliates within the Capital Group
Companies, Inc., and any
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derivative or logo or trade or service xxxx, are valuable property of the
Sub-Adviser and its affiliates are the valuable property of the Sub-Adviser and
its affiliates. Except as may otherwise be required by applicable law or
regulation, the Funds and the Client shall have the right to use such name(s),
derivatives, logos, trade or service marks only with the prior written approval
of the Sub-Adviser, which approval shall not be unreasonably withheld so long as
this Agreement is in effect. Upon termination of this Agreement, the Funds and
the Client shall forthwith cease to use such name(s), derivatives, logos, trade
or service marks. The Funds and the Client agree that they will review with the
Sub-Adviser any advertisement, sales literature, or notice prior to its use that
makes reference to the Sub -Adviser so that the Sub-Adviser may review the
context in which it is referred to, it being agreed that he Sub-Adviser shall
have no responsibility to ensure the adequacy of the form or content of such
materials for purposes of the 1940 Act or other applicable laws and regulations.
If the Funds or the Client makes any unauthorized use of the Sub-Adviser's
name(s), derivatives, logos, trade or service marks, the parties acknowledge
that the Sub-Adviser shall suffer irreparable harm for which monetary damages
are inadequate, and thus the Sub-Adviser shall be entitled to injunctive relief.
21. COUNTERPARTS
This Agreement may be executed in counterparts each of which
shall be deemed to be an original and all of which, taken together, shall be
deemed to constitute one and the same instrument.
22. CHOICE OF LAW
This Agreement shall be governed by, and the rights of the
parties arising hereunder construed in accordance with, the laws of the State of
Delaware without reference to principles of conflict of laws.
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23. YEAR 2000 READINESS
Adviser represents that it has taken, and during the term of
this Agreement will continue to take, commercially reasonable steps designed to
ensure that all mission-critical software or other information technology used
by Adviser in the performance of Adviser's obligations under this Agreement will
be Year 2000 compliant in all material respects prior to the end of 1999.
Adviser represents that it has taken or is taking steps to obtain assurances
from its major service providers that similar efforts were or are being made by
those service providers. Adviser further represents that it will continue
periodically to update Client, upon request, on its Year 2000 readiness efforts.
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON March 1, 1999
and make it effective on the date set forth.
CLIENT SUB-ADVISER
Vantagepoint Capital Guardian Trust Company
Investment Advisers, LLC
by: by:
/s/ XXXXXX XXXXXX /s/ XXXXXXX XXXXX
--------------------------- -----------------------------
(signature) (signature)
President Vice President
--------------------------- -------------------------
(name, title) (name, title)
Date: Date:
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ADDENDUM DATED _______________ TO THE
INVESTMENT ADVISORY AGREEMENT DATED March 1, 1999
This addendum modifies and forms a part of the Investment Advisory Agreement
(the "Agreement") dated March 1 1999, between Vantagepoint Investment
Advisers, LLC, a Delaware corporation ("Client"), and Capital Guardian Trust
Company ("Adviser"), relating to the Vantagepoint Funds ("VF").
All terms used in this Addendum have the same meaning given to them in the
Agreement unless specifically noted otherwise.
1. The assets of the Account to be managed by the Adviser under the Agreement
and this Addendum are assets of the International Fund (the "Fund"), a portfolio
of VF. For purposes of Section 8 (Fees) and Schedule C, all payments due to
Adviser shall be solely made from the assets of the Fund.
2. All references in the Agreement and this Addendum to the Investment Policies
to be followed by Adviser in managing the assets of the Fund are hereby deemed
to include the Investment Policies set forth in the Agreement and any Schedules
to the Agreement, as well as the Fund's current prospectus and statement of
additional information as on file with the Securities and Exchange Commission.
This paragraph is not intended to supersede Section 4 of the Agreement.
3. The activities of the Client and the Adviser in managing the assets of the
Fund pursuant to the Agreement and this Addendum shall in all instances be
conducted subject to the supervision and direction of the Board of Directors of
VF.
4. For purposes of Sections 8 (Fees), 12 (Limitation on Liability and
Indemnification), 13 (Term), 14 (Termination), 15 (Representation), 16
(Notices), 18 (Waiver or Modification), 19 (Assignment and Ownership Change),
and 23 (Year 2000 Readiness) 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.
5. For purposes of the Agreement and this Addendum, Client and Adviser hereby
agree to maintain all books and records relating to VF that are required to be
maintained in accordance with good practice, applicable federal and state
securities laws, including the Investment Company Act of 1940 and or the
Investment Advisers Act of 1940, and such reasonable instructions as shall be
provided to Adviser by Client from time to time.
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6. Adviser shall furnish Client and the Board of Directors of VF such periodic
and special reports and information as either of them may reasonably request,
including such information as shall be reasonably necessary to evaluate the
terms of any advisory agreement between Client and Adviser with respect to
assets of VF.
7. For purposes of the Agreement and this Addendum, the value of the assets of
the Fund managed by Adviser shall be calculated in accordance with the
procedures for determining net asset value per share ("NAV") set forth in the
Fund's prospectus and statement of additional information.
8. Section 6 is hereby amended as follows:
a. 6(a) is amended beginning on line 8 and ending on line 9 by
deleting the parentheses and all language with in the
parentheses;
b. 6(b) is deleted in its entirety;
c. 6(c) is deleted;
d. 6(d) is changed to 6(b); and
e. 6(e) is deleted and 6(f) is changed to 6(c).
9. Section 8, Investment Fees, is amended by deleting 8(b) and 8(c) in their
entirety and by redesignating 8(d) as 8(b).
10. Section 15, Representations, is amended by the insertion of 15(c) below:
"(c) Adviser hereby acknowledges that VF 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.
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SCHEDULE A
THE VANTAGEPOINT FUNDS
GROWTH & INCOME 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 Growth &
Income Fund by Vantagepoint Investment Advisers, 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 Growth & Income Fund seeks long-term capital growth by investing
primarily (at least 65 percent) in common stocks that offer the
potential for high total return through a combination of capital
appreciation and current income. The Fund may also invest in other
equity-type securities (e.g., convertible securities and preferred
stocks) and in bonds.
II. STRUCTURE
The assets of the Growth & Income 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 established 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.
III. INVESTMENT STRATEGY
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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
Growth & Income Fund may involve:
- a focus on past patterns as well as future prospects
for growth in corporate earnings per share.
- an emphasis on securities that pay current dividends
and offer potential earnings growth
- debt and equity securities which may not currently
pay dividends, but offer prospects for capital
appreciation or future income.
- production of long-term capital growth by investing
in securities that the subadviser believes to be
undervalued at the time of purchase where the
production of income is a secondary objective,
- the ability to emphasize a growth or income-oriented
strategy opportunistically.
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: 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% 0-15% 25%
Fixed income securities 0% 0-15% 25%
Convertible securities 0% 0-20% 35%
II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales
B. Options
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C. Commodities (excluding financial futures).
D. Securities for which there is no established trading market.
E. Margin purchases and other forms of borrowing; granting of
pledges or other security interests in assets of the Fund; use
of futures to obtain market leverage.
F. Securities issued by the subadvisers of the Fund or their
affiliates.
G. General partner interests.
H. Direct investments in oil, gas, or other mineral exploration
or development programs.
I. 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.
J. Commingled funds; this does not preclude investment in mutual
funds up to 10% of the Fund's market value at the time of
purchase.
K. 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.
L. 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.
M. 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.
N. 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.
IV. SECURITIES LENDING
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Nothing herein shall prevent loans of securities in the Growth & Income
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 GROWTH & INCOME FUND
MARCH 1, 1999
The following standards will be used to measure the performance of the Growth &
Income Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is the S&P 500 INDEX
("S&P 500 Index"). The 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 Growth & Income Fund 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.
Three and Five Years:
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20
Performance of the Fund should track market and universe benchmarks
more closely as the evaluation period lengthens. The ideal performance
objective for the Growth & Income 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. For the
total Fund, these would include, but are not limited to:
CHARACTERISTIC RELATIVE TO S&P 500 INDEX
Beta Similar
Capitalization Somewhat Lower
Dividend Yield Similar
Hist. 5 year EPS Growth Similar
Price to Earnings Ratio Similar
Standard Deviation Similar
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SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
GROWTH & INCOME FUND
INVESTMENT GUIDELINES
FOR
CAPITAL GUARDIAN TRUST COMPANY
MARCH 1, 1999
Capital Guardian Trust Company seeks to achieve long-term growth of capital and
income. Capital Guardian's investment approach is a blend of value and growth,
offering the opportunity for superior returns primarily through stock selection,
including special situations.
A team methodology is used to manage the portfolio, which allows the portfolio
managers to run concentrated portfolios. Since the managers and research
analysts have different areas of expertise, the overall portfolio is well
diversified.
The firm uses only its own, independent research. The managers focus on a
long-term outlook (four to five years) that allows them to take advantage of
short-term price moves.
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.
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D. ELIGIBLE INVESTMENT LIMITS:
MINIMUM NORMAL RANGE
------- ------------
MAXIMUM
-------
Equity securities 65% 80%-100% 100%
Cash and cash equivalents 0% 0%-10% 15%
Fixed income securities 0% 0%-10% 15%
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. 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. Acquisition of more than 5% of the outstanding stock of any
issuer.
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M. 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.
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 by VIA as
and when appropriate.
A. PERFORMANCE BENCHMARKS
The market benchmark for measuring investment performance for
the Adviser is the STANDARD & POOR'S 500 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.
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The current peer group consists of the following managers:
(under review)
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FEE SCHEDULE
FOR
CAPITAL GUARDIAN TRUST COMPANY
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.
Growth & Income*
$25 million 0.55 percent
Next $25 million 0.40 percent
Over $50 million 0.23 percent
International*
$25 million 0.75 percent
Next $25 million 0.60 percent
Next $200 million 0.43 percent
Over $250 million 0.38 percent
* For purposes of calculating the fee, all accounts under management will be
aggregated and a fee discount shall be applied.
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
26
