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EXHIBIT (d)(27)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made as of the 1st day
of December, 2000, by and between VANTAGEPOINT INVESTMENT ADVISERS, LLC, a
Delaware limited liability company (hereafter "Client"), XXXXXX & RYGEL
INVESTMENT COUNSEL (hereafter "Subadviser"), and THE VANTAGEPOINT FUNDS, a
Delaware business trust, and is effective as of December 1, 2000 (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 Subadviser wish to enter into a
sub-advisory agreement pursuant to which Subadviser will provide such
assistance to Client.
AGREEMENTS:
In consideration of the performance by the Subadviser as
Investment Subadviser of certain assets held by the Funds, the Client has
authorized the Subadviser to manage the securities and other assets as
follows:
1. ACCOUNT
The account with respect to which the Subadviser shall perform
its services shall consist of those assets of the Vantagepoint Income
Preservation Fund that the Client determines to assign to an account with the
Subadviser, 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 Subadviser,
make additions to or withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF SUBADVISER
(a) Purchase and Sale. Client hereby appoints Subadviser 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, Subadviser
shall supervise and direct investment of the Account. Client hereby grants the
Subadviser 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 Subadviser 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, Subadviser 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 Subadviser in managing
the assets of the Vantagepoint Income Preservation 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, Subadviser
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.
Subadviser will report annually to Client regarding such voting.
(d) Key Personnel. Subadviser 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
Subadviser must give Client written advance notice, or prompt notice within
three (3) business days, of the name of the person designated by the
Subadviser to replace or supplement the individual(s). In addition, the
Subadviser will give Client written notice of the replacement of any employee
of the Subadviser who has direct supervisory responsibility for the key
personnel or who has responsibility for setting investment policy as soon as
reasonably practicable.
Key Personnel: XXXXX XXXXXXXX
3. ACCEPTANCE OF APPOINTMENT
Subadviser accepts the appointment as an investment Subadviser
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 Subadviser under
the provisions of this Agreement.
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4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the
Fund's Board of Directors and the Client, the Subadviser 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 Subadviser or as set forth in SCHEDULE A. Client shall give Subadviser
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 Subadviser
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
Subadviser of any amendments to the Agreement and Declaration of Trust or
Registration Statement, which amendments, upon their receipt by the
Subadviser, shall be binding on the Subadviser.
(c) Investment Subadviser Guidelines. The Subadviser shall act
in accordance with the Fund's Prospectus and Statement of 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 Subadviser.
The Client retains the right, on written notice to the Subadviser, 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.
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 Fund (including the Account), and the Subadviser shall
have no authority, responsibility or obligation with respect to the custody,
receipt or delivery of securities or other assets of the Fund (including the
Account). In the event that any cash or securities of the Fund are delivered
to the Subadviser, it will promptly deliver the same over to the custodian, in
the name of the Fund.
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(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 Fund of cash or securities due to or from the
Account. The Subadviser 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 Subadviser 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. Subadviser 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 Subadviser 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, Subadviser and Client shall keep confidential the
records and other information obtained by reason of this Agreement. Upon
termination of this Agreement, Subadviser shall promptly, upon demand, return
to Client all records Client reasonably believes are necessary in order to
discharge its responsibilities to the Funds. Subadviser shall be entitled to
retain originals or copies of records pursuant to the requirements of
applicable laws or regulations.
(b) Reconciliations. Subadviser 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. Subadviser shall reimburse the Account
for any material error to the Fund's net asset value caused by Subadviser'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.
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(d) Reports. Subadviser 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 subadvisory agreement
between Client and Subadviser with respect to the assets of the Vantagepoint
Income Preservation Fund.
(e) Other Reports on Request. Subadviser shall provide to
Client promptly upon request any information available in the records
maintained by Subadviser relating to the Account.
(f) Review of Materials. During the term of this Agreement, the
Client shall furnish to the Subadviser 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
Subadviser or its clients in any way, prior to the use thereof, and the Client
shall not use any such materials if the Subadviser 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
Subadviser or its clients in any way are consistent with those materials
previously approved by the Subadviser 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 Subadviser is
responsible to any broker that Client may see fit), Subadviser shall place all
orders for the purchase and sale of securities on behalf of the Client with
brokers or dealers selected by Subadviser, but not with a person affiliated
with Subadviser, 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 lOf-3 under the 1940 Act, as applicable, and
the Fund's policies and procedures thereunder, copies of which shall be
provided to Subadviser.
(b) Best Execution. In placing such orders, the Subadviser 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 the Fund and in
selecting brokers and dealers to execute such transactions, the Subadviser 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
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the Securities Exchange Act of 1934, as amended) provided by brokers and
dealers. Subadviser 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 Subadviser 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 Subadviser may aggregate
sales and purchase orders of Account with similar orders being made
simultaneously for other accounts managed by Subadviser, if in Subadviser'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 Subadviser represents Subadviser'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 Subadviser in a manner
the Subadviser considers to be most equitable and consistent with its fiduciary
obligations to the Fund and to its other clients.
(d) Delivery of Part II of Form ADV. Concurrently with the execution
of this Agreement, the Subadviser is delivering to the Client a copy of Part II
of its Form ADV, as revised, on file with the Securities and Exchange
Commission. The Client acknowledges receipt of such copy.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Subadviser 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 this section 8 and Schedule C, all payments due
to Subadviser shall be solely made from the assets of the Vantagepoint Income
Preservation Fund, a portfolio of the Vantagepoint Funds.
(c) Pro Rata Fee. If the Subadviser 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 Subadviser hereunder.
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9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Subadviser shall devote its best efforts and such time as it deems
necessary to provide prompt and expert service to the Client. The services of
Subadviser to be provided to Client hereunder are not to be deemed exclusive and
Subadviser 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 Subadviser and its members, Affiliates and employees, and
Subadviser'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. Subadviser
shall have no obligation to acquire or dispose of a position in any investment
pursuant to this Agreement simply because Subadviser, 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
Subadviser 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 Subadviser 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, Subadviser 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 Subadviser for Client and for the
Subadviser's other clients.
12. LIABILITY
In the absence of any negligence, malfeasance, or willful violation of
this Agreement, Subadviser 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
Subadviser reasonably believes to be in the best interests of the Client or the
Fund. However, neither this
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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 Subadviser upon sixty (60) days' written notice to the
Client or by Client upon 30 days' written notice to Subadviser, 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
Subadviser'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.
15. REPRESENTATIONS
(a) Subadviser hereby confirms to Client that Subadviser 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
Subadviser has been duly authorized and, upon execution and delivery, this
Agreement will be binding upon Subadviser in accordance with its terms.
(b) Client hereby confirms to Subadviser 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.
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(c) Subadviser 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. Subadviser
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 Subadviser,
Client, and the Vantagepoint Funds to comply with such requirements.
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: Xxxx Xxxxxxxxx, Legal Department
c/o ICMA Retirement Corporation
000 Xxxxx Xxxxxxx Xxxxxx, XX, Xxx. 000
Xxxxxxxxxx, X.X. 00000-0000
SUBADVISER:
Xxxxxx and Rygel Investment Counsel
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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.
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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. Subadviser 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.
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.
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IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON DECEMBER 1,
2000, and make it effective on the date set forth.
CLIENT SUBADVISER
Vantagepoint Xxxxxx & Rygel Investment Counsel
Investment Advisers, LLC
by: by:
[SIG] [SIG]
---------------------------- -------------------------------
(signature) (signature)
/s/ XXXXX XXXXXXX, MANAGING PRINCIPAL
---------------------------- -------------------------------
Xxxxxx Xxxxxx, President (name, title)
Date: 12/1/00 Date: 12/4/00
FUNDS
The Vantagepoint Funds
by:
/s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx, President
Date: 12/1/00
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SCHEDULE A
THE VANTAGEPOINT FUNDS
VANTAGEPOINT INCOME PRESERVATION FUND
STATEMENT OF POLICIES AND GUIDELINES
These investment policies and guidelines have been adopted by the Vantagepoint
Funds (the "Funds") to govern the management and administration of the
Vantagepoint Income Preservation Fund by the Vantagepoint Investment Advisers,
LLC ("VIA"). They may be Funds reviewed and revised at the discretion of the
Directors of the Vantagepoint (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. FUND INVESTMENT OBJECTIVE AND GENERAL DESCRIPTION
The Vantagepoint Income Preservation Fund (the "Fund") seeks to provide
investors with a high level of current income while preserving principal
and maintaining a stable net asset value per share. Investments will
include fixed income instruments and investment contracts (wrappers)
with financial institutions designed to stabilize the Fund's net asset
value.
II. FUND STRUCTURE
The assets of the Vantagepoint Income Preservation Fund are managed by
VIA, which selects investment subadvisers and wrapper contracts for the
Fund. 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. Such obligation
shall not extend to ERISA's prohibited transaction or cross-trading
prohibitions. The subadvisers' only obligation hereunder shall be to
apply ERISA's general fiduciary duty of care to the Fund. To the extent
that any such obligation shall conflict with any provisions of the
Investment Company Act of 1940, the latter shall control.
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III. INVESTMENT STRATEGY
A. FUND LEVEL STRATEGY
VIA will seek requisite yield, interest rate responsiveness,
diversification, liquidity and principal preservation through high
quality investments. The Fund's assets will be allocated in a manner
that achieves these objectives. The selected subadvisers are expected to
add value over passive benchmarks selected by VIA on a net of fee basis.
B. PORTFOLIO LEVEL STRATEGY
VIA will select subadvisers that represent a variety of applicable fixed
income management approaches and investment disciplines to obtain a
complementary commingling of styles that will effectively achieve the
investment objective of the Fund.
Investment strategies employed in portfolios underlying the contracts
will involve active fixed income management.
Active management strategies may include:
- Core strategies which encompass the entire investment
grade universe,
- Tactical management in which attractive sectors of the
bond market are identified and undervalued securities
within those sectors are owned,
- Duration management, which adjusts duration, based on
the most undervalued sectors of the yield curve or on
expected changes in interest rates.
IV. PERFORMANCE BENCHMARKS
Performance benchmarks will be established for the Fund. These
benchmarks will be recommended by the VIA and will be subject to review
and revision by VIA. Current performance benchmarks are included in
Section VIII. below.
V. DIRECTORS REVIEW
VIA will report periodically to the Directors on performance of the Fund
against benchmarks and on manager results and will evaluate for the
Directors the overall performance of the Fund and 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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VI. FUND INVESTMENT GUIDELINES
A. ELIGIBLE INVESTMENTS
- Cash/Cash Equivalents
- Fixed Income: Security types included in the Fund's
benchmark and other securities explicitly approved by
VIA that meet credit and liquidity guidelines
- Derivatives: Financial futures, to be used to obtain
exposure to fixed income sectors within the benchmark
without incurring leverage. Other derivatives may be
used with the explicit approval of VIA and that meet
volatility guidelines.
- Wrapper contracts: Contracts that enable book value
accounting and simultaneously ensure benefit
responsiveness. The wrappers will be selected from an
approved list maintained by VIA's credit analysis
department.
B. PORTFOLIO ASSET ALLOCATION: Characteristics of the VIP Fund
should conform to the following asset allocation limitations
outlined below.
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ASSET TYPE TARGET MINIMUM MAXIMUM
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Cash and Cash 10% 5% 100%
Equivalents
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Enhanced Cash 30% 0% 100%
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Xxxxxx Intermediate Gov't/Credit 30% 0% 50%
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Xxxxxx Aggregate 30% 0% 50%
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C. PORTFOLIO DURATION: The target duration for the overall Fund is
2.5 YEARS. At any given time the duration of the Fund may
deviate from the target within a range of PLUS OR MINUS 1 YEAR.
D. PORTFOLIO QUALITY: The target overall quality of the Fund is AA.
Investment guidelines at the Fund and manager level are designed
to achieve this target. The minimum quality for any issue in the
portfolio is BBB-.
E. ELIGIBLE PRACTICES: There are no restrictions on subadvisers as
to the following:
- Portfolio Turnover
- Realized Gains and Losses
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F. SECTOR DIVERSIFICATION: Sector diversification will vary
depending on the subadviser's style and investment approach.
These limits will be set by VIA with each subadviser.
G. PROHIBITED PRACTICES AND SECURITIES:
- Use of leverage
- Short Sales
- Securities for which there is no established trading
market
- Margin purchases and other forms of borrowing; granting
of pledges or other security interests in assets of the
Fund
- Securities issued by the subadvisers, wrappers or their
affiliates
- Equity securities and their derivatives.
H. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in the Fund Level
Investment Guidelines Section may be used but only if explicitly
approved in advance by VIA and reported to the Directors.
VII. SECURITIES LENDING
VIA will deem the securities in the synthetic fixed income portfolios as
eligible for the VIA's securities lending program.
VIII. PERFORMANCE EVALUATION
The performance of the fund at the subadviser, Fund and RC External
Product level is outlined as follows:
1. VANTAGEPOINT INCOME PRESERVATION FUND-FUND LEVEL
BENCHMARK: The Fund's overall benchmark will be a
composite consisting of 10% 90-Day T-Xxxx plus a 90%
wrapped portion consisting of 30% 90-Day T-Xxxx plus 30%
Xxxxxx Brothers Intermediate Government/Credit Index
plus 30% Xxxxxx Brothers Aggregate Index.
2. VANTAGEPOINT INCOME PRESERVATION FUND PEER GROUP: The
Institute of Management and Administration (IOMA) Stable
Value Pool. VIA may select any benchmark considered
suitable for the Fund.
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SCHEDULE B-1
VANTAGEPOINT INCOME PRESERVATION FUND
INVESTMENT GUIDELINES
FOR
XXXXXX & RYGEL INVESTMENT COUNSEL
MONEY MARKET MANDATE
Xxxxxx & Rygel Investment Counsel manages the 10% cash portfolio of the
Vantagepoint Income Preservation (VIP) Fund which will be used to provide
liquidity. Xxxxxx & Rygel seeks to generate a high level of current income while
providing preservation of capital and liquidity.
I. ELIGIBLE INVESTMENTS
A. CASH/CASH EQUIVALENTS: Securities with maturities less than 397
days at time of purchase that are "First Tier" as defined in
Rule 2a-7 under the Investment Company Act of 1940.
II. PROHIBITED PRACTICES AND SECURITIES
A. Acquisition of securities that would cause the average maturity
of the portfolio to exceed 90 days. The calculation of the
average portfolio maturity will be determined by Rule 2a-7.
B. Acquisition of securities of an issuer (other than obligations
of the U.S. government, its agencies, and instrumentalities)
that would cause more than 5% of the portfolio to be invested in
such securities.
C. Acquisition of securities that would cause exposure to a single
industry to exceed 25% of the portfolio at the time of purchase
with the exception of the financial services industry. This
restriction does not apply to investment in obligations issued
or guaranteed by the U.S. government, its agencies or
instrumentalities and bank instruments such as certificates of
deposit, bankers acceptances, time deposits, and bank repurchase
agreements.
D. Short Sales
E. Options
F. Commodities
Investment Guidelines -- Payden&Rygel:Money Market -- November 20, 2000
17
G. Securities for which there is no established trading market
H. Foreign securities unless issued and traded in the U.S. All
securities will be denominated in U.S. dollars.
I. 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.
J. Securities offered by the Adviser or its affiliates
K. Commingled and registered mutual funds.
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
when and appropriate.
A. PERFORMANCE BENCHMARK
The market benchmark for measuring investment performance for the
Adviser is the IBC ALL TAXABLE INSTITUTIONAL MONEY FUND AVERAGE. The
Adviser is expected to outperform the benchmark net of Adviser fees over
rolling one-, three-, and five-year periods.
Investment Guidelines -- Payden&Rygel:Money Market -- November 20, 2000
18
SCHEDULE B-2
VANTAGEPOINT INCOME PRESERVATION FUND
INVESTMENT GUIDELINES
FOR
XXXXXX & RYGEL INVESTMENT COUNSEL
ENHANCED CASH MANDATE
Xxxxxx & Rygel Investment Counsel manages the 30% Enhanced Cash portfolio of the
Vantagepoint Income Preservation (VIP) Fund. The purpose of the Enhanced Cash
portion of the Fund is to provide a measure of overall Fund interest rate
responsiveness and liquidity. Xxxxxx & Rygel Investment Advisors, Inc. seeks to
add value over the benchmark through active management of the portfolio within
the following guidelines.
I. ELIGIBLE INVESTMENTS
A. FIXED INCOME SECURITIES:
- Money market instruments including CDs, Commercial
Paper, Bankers Acceptances, Time Deposits, Repurchase
and Reverse-repurchase agreements, Floating rate
instruments, US money market funds and bank STIFs
- Securities issued by the US Government or its Agencies
- Dollar denominated fixed-income securities of US and
foreign issuers including corporations and
quasi-government entities
- Mortgage Pass-Throughs and Collateralized Mortgage
Obligations
- Commercial Mortgage-Backed Securities
- Asset --backed securities
B. FINANCIAL DERIVATIVES: Financial derivative instruments such as
futures, options and swaps will be permitted to manage interest
rate exposure.
C. ELIGIBLE INVESTMENT LIMITS
The following limits encompass the intended enhanced cash
portfolio mandate.
Maximum
-------
CASH AND CASH EQUIVALENTS
-------------------------
Cash and cash equivalents 100%
Investment Guidelines -- Payden&Rygel Xxx.Xxxx -- November 20,2000
19
FIXED INCOME SECURITIES MAXIMUM
----------------------- -------
Money market equivalents; Commercial Paper, T-Bills,
Agency Debentures,
Overnight repurchase agreements 100%
US Gov't and Agency securities 100%
Corporates 75%
Mortgage pass-through securities 50%
issued by GNMA, FNMA, FHLMC
Asset-Backed Securities 75%
No more than 25% of the portfolio will be invested in a single
industry with the exception of financial services. This
restriction does not apply to investment in obligations issued
or guaranteed by the US government, its agencies or
instrumentalities and bank instruments such as certificates of
deposit, bankers acceptances, time deposits, and bank repurchase
agreements.
No more than 5% of the portfolio's market value will be invested
in securities of any one issuer (except US Governments and
Agencies).
D. ELIGIBLE PRACTICES: There are no restrictions on Advisers as to
the following:
1. Portfolio turnover.
2. Realized gains and losses.
3. The portfolio may use US Treasury note and bond
financial futures as a means of obtaining interest rate
exposure. Futures transactions must be made on national
exchanges where purchases and sales transactions are
regularly executed and regulated. At no time shall the
notional value of futures contracts exceed 10% of the
fair market value of the Adviser's portfolio.
4. The portfolio may enter into repurchase agreements
collateralized at least 102% with US Treasury
securities. The maximum term-to-maturity of any one
agreement shall not more than seven days and the
collateral must be marked to market daily.
Investment Guidelines -- Payden&Rygel Xxx.Xxxx -- November 20,2000
20
5. The portfolio may enter into reverse repurchase
agreements with qualified brokers, dealers, banks, or
other financial institutions only for the purpose of
realizing additional net investment income. The maximum
term-to-maturity shall not be more than thirty days. The
proceeds of the transaction can be invested in only the
highest quality securities that have a holding period
equal to the term of the Agreement.
6. In all repurchase agreements/reverse repurchase
agreements, delivery of collateral must be made to the
custodian against payment.
II. PROHIBITED PRACTICES AND SECURITIES
A. Derivative securities including the following mortgage-related
derivatives: Leveraged Inverse Floaters, IOs, POs, Jump Zs but
not including approved financial futures.
B. Private Placements (not including 144As).
C. Transactions resulting in a leveraged position.
D. Equity securities and their derivatives, including preferred
stock; convertible bonds before conversion are eligible.
E. Short sales.
F. Commodities other than approved financial futures.
G. Investments in foreign currencies.
Exceptions to the above listed eligible investments and prohibited
securities or practices may be permitted with prior consent from VIA.
III. CREDIT CRITERIA
At the time of purchase, all securities must be rated by Xxxxx'x,
Standard & Poor's, Duff and Xxxxxx or Fitch. The lower of the Xxxxx'x or
Standard & Poor's ratings shall be used in assigning an issue's rating.
Purchases will be made only of publicly traded securities, with the
following minimum ratings at time of purchase:
- The minimum average portfolio quality for the Xxxxxx
&Rygel-managed portfolio will be AA (market-value weighted).
Investment Guidelines -- Payden&Rygel Xxx.Xxxx -- November 20,2000
21
- The minimum quality at purchase per security is BBB.
1. Mortgage-backed Securities A
2. Corporates BBB
3. Asset-Backed Securities BBB
4. Commercial-Mortgage Backed Securities AA
5. Money Market Instruments A-1/P-1
In the event a portfolio investment is downgraded below the credit
quality guidelines, including a downgrading which makes the credit
quality below investment grade by both Xxxxx'x and Standard &
Poor's, the Adviser shall notify VIA within TWO business days of
notice of downgrade. The Adviser shall provide an evaluation and
recommend a course of action that requires approval by VIA.
IV. DURATION
The normal effective duration range for the overall enhanced cash
portfolio will be 0.25 TO 0.75 YEARS, NOT TO 1.5 EXCEED YEARS.
For securities with put dates, the average maturity to the put date
will be used for guideline purposes instead of the final maturity.
For securities with reset dates, the reset date will be used for
guideline purposes instead of the final maturity.
V. 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 the
VIA.
VI. PERFORMANCE BENCHMARK AND MONITORING CRITERIA
The standards outlined in this section are subject to review by VIA
with revisions when appropriate.
A. PERFORMANCE BENCHMARKS
The market benchmark for measuring investment performance for the
Adviser is 3-MONTH LIBOR. The Adviser is expected to outperform the
benchmark net of Adviser fees over rolling one, three and five-year
periods.
Investment Guidelines - Payden&Rygel Xxx.Xxxx - November 20, 2000
22
SCHEDULE C
VANTAGEPOINT INCOME PRESERVATION FUND
FEE SCHEDULE
FOR
XXXXXX & RYGEL INVESTMENT COUNSEL
The Adviser's quarterly fee shall be calculated based on the average daily net
assets of the assets under management (the sum of both Enhanced Cash and Money
Market accounts) as provided by the Custodian, based on the following annual
rate.
First $200 million 0.10 percent
Next $100 million 0.09 percent
Over $300 million 0.08 percent
