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EXHIBIT (d)(12)
INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement is made as of the 30th day of
September, 1999, by and between VANTAGEPOINT INVESTMENT ADVISERS, LLC, a
Delaware limited liability company (hereafter "Client"), and XXXXX CAPITAL,
INC., at 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (hereafter "Adviser")
and is effective as of October 1,1999 (the "Effective Date").
WHEREAS, the Vantagepoint Funds (the "Funds") is a Delaware
Business Trust registered as an open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, Client is party to an Investment Adviser Agreement with
the Funds for management of the investment operations of the Funds including the
establishment and operation of investment portfolios for the Funds and the
entering into of contracts with sub-advisers to assist in managing the
investment of the Funds property;
WHEREAS, Client and Adviser wish to enter into a sub-advisory
agreement pursuant to which Adviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Adviser as Investment
Adviser of certain assets held by the Funds, the Client has authorized the
Adviser to manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Adviser shall perform its
services shall consist of those assets of the Vantagepoint Growth Fund which the
Client determines to assign to an account with the Adviser, together with all
income earned by those assets and all realized and unrealized capital
appreciation related to those assets (hereafter "Account"). From time to time,
the Client may, upon notice to the Adviser, make additions to the Account and
may, upon notice to the Adviser, make withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF ADVISER
(a) Purchase and Sale. Client hereby appoints Adviser to manage
the Account on the terms and conditions set forth in this Agreement. Subject to
the restrictions set forth in this Agreement, and acting always in conformity
with the Investment Policies provided in Paragraph 4, Adviser shall supervise
and direct
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investment of the Account. Client hereby grants the Adviser complete, unlimited
and unrestricted discretion and authority to select portfolio securities with
respect to the Account including the power to acquire (by purchase, exchange,
subscription or otherwise), to hold and dispose (by sale, exchange or
otherwise). The Adviser will consult with Client, upon the request of the
Client, concerning any transactions it makes with respect to the investment of
the Account.
(b) Limitation on Authority. Except as expressly authorized
herein or hereafter from time to time, Adviser shall for all purposes be deemed
an independent contractor and shall have no authority to act for or to represent
the Client or the Funds in any way or otherwise to be an agent of the Client or
the Funds. The activities of Client and Adviser in managing the assets of the
Vantagepoint Growth Fund shall in all instances be conducted subject to the
supervision and direction of the Board of Directors of the Vantagepoint Funds.
(c) Voting. Unless otherwise instructed by Client, Adviser shall
have discretion to take any action or render any advice with respect to the
voting of shares or the execution of proxies solicited from time to time by, or
with respect to, the issuers of securities held in the Account. Adviser will
report annually to Client regarding such voting.
(d) Key Personnel. Adviser agrees that the following key
personnel have primary responsibility with respect to the investment management
of the Account. If the(se) individual(s) is unable to devote sufficient time to
maintain primary responsibility of the Account, the Adviser must give Client
written advance notice, or prompt notice within three (3) business days, of the
name of the person designated by the Adviser to replace or supplement the
individual(s). In addition, the Adviser will give Client written notice of the
replacement of any employee of the Adviser who has direct supervisory
responsibility for the key personnel or who has responsibility for setting
investment policy as soon as reasonably practicable.
Key Personnel: Xxxxx X. Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxx X. Xxxx
Xxxx Xxxxxxxxx III
Xxxxxx Xxxxx
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3. ACCEPTANCE OF APPOINTMENT
Adviser accepts the appointment as an investment adviser and
agrees to use its best efforts and professional judgment to make timely
investment transactions for the Client with respect to the investments of the
Account, and to provide the other services required of the Adviser under the
provisions of this Agreement.
4. INVESTMENT POLICIES
(a) Investment Objectives. Subject to the supervision of the
Fund's Board of Directors and the Client, the Adviser shall direct the
investments of the Account in accordance with the Fund's investment objectives,
policies, and restrictions as provided in the Fund's Prospectus and Statement of
Additional Information as filed with the Securities and Exchange Commission on
Form N-1A ("Registration Statement"), as currently in effect and as amended or
supplemented from time to time, and such other limitations as the Fund or Client
may reasonably impose by written notice to the Adviser or as set forth in
SCHEDULE A. Client shall give Adviser copies of the Fund's Prospectus and
Statement of Additional Information, and any amendments or supplements thereto,
as soon a practicable after such documents become available.
(b) Funds' Agreement and Declaration of Trust. The Adviser will
adhere to all specific provisions relating to the investment of the Account
established in the Funds' Agreement and Declaration of Trust and Registration
Statement, both of which are hereby incorporated by reference and made a part of
this Agreement. The Client shall give written notice to the Adviser of any
amendments to the Agreement and Declaration of Trust or Registration Statement,
which amendments, upon their receipt by the Adviser, shall be binding on the
Adviser.
(c) Investment Adviser Guidelines. The Adviser shall act in
accordance with the Fund's Prospectus and Statement or Additional Information,
and in accordance with the limitations set forth in the specific statement of
Investment Adviser Guidelines, SCHEDULE B, as restated or modified from time to
time by the Client in written notice to the Adviser. The Client retains the
right, on written notice to the Adviser, to modify any such objectives,
guidelines, restrictions, and liquidity requirements in any manner at any time
as may be allowed pursuant to the 1940 Act.
(d) Conflict in Policies. If a conflict in policies or
guidelines referenced herein occurs, the Registration Statement shall govern for
purposes of this Agreement.
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5. CUSTODY, DELIVERY, RECEIPT OF SECURITIES
(a) Custody Responsibilities. The Client shall designate one or
more custodians to hold the Account. The Custodian, as designated by the Client
will be responsible for the custody, receipt and delivery of securities and
other assets of the Funds (including the Account), and the Adviser shall have no
authority, responsibility or obligation with respect to the custody, receipt or
delivery of securities or other assets of the Funds (including the Account). In
the event that any cash or securities of the Funds are delivered to the Adviser,
it will promptly deliver the same over to the Custodian, in the name of the
Funds.
(b) Securities Transactions. Unless otherwise required by local
custom, all securities transactions for the Account will be consummated by
payment to or delivery by the Funds of cash or securities due to or from the
Account. The Adviser will make all reasonable efforts to notify the Custodian of
all orders to brokers for the Account by 9:00 am EST on the day following the
trade date and will affirm the trade within the close of business one (1)
business day after the trade date (T+1).
(c) Tri-Party Agreement. The Adviser is authorized to enter into
Tri-Party Repurchase Agreements and sign the standard PSA tri-party agreement
(the "Tri-Party Agreement") on behalf of the Client and the subcustodian
thereunder is authorized to act as a subcustodian for the Account's assets
involved in any tri-party repurchase agreement pursuant to such Tri-Party
Agreement.
6. RECORD KEEPING AND REPORTING
(a) Records. Adviser will maintain proper and complete records
relating to the furnishing of services under this Agreement, including records
with respect to the acquisition, holding and disposition of securities for
Client that are required of an investment adviser to a registered investment
company pursuant to the 1940 Act and the Investment Advisers Act of 1940, and
the rules thereunder, and in accordance with such reasonable instructions as
shall be provided to Adviser by Client from time to time. All records maintained
pursuant to this Agreement shall be subject to examination by Client and by
persons authorized by it during normal business hours upon reasonable notice.
Except as expressly authorized in this Agreement or as required by applicable
law, regulation or order of court or as directed by other party in writing,
Adviser and Client shall keep confidential the records and other information
obtained by reason of this Agreement. Upon termination of this Agreement,
Adviser shall promptly, upon demand, return to Client all records Client
reasonably believes are necessary in order to discharge its
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responsibilities to the Funds. Adviser shall be entitled to retain originals or
copies of records pursuant to the requirements of applicable laws or
regulations.
(b) Reconciliations. Adviser shall reconcile security and
cash positions, and market values on a monthly basis to the Custodian's records
and report discrepancies to the Client by ten (10) business days after the end
of the month.
(c) Loss Reimbursement. Adviser shall reimburse the Account for
any material error to the Fund's net asset value caused by Adviser's breach of
its standard of care set forth in Section 12 that is a direct cause of a delay
in the accurate daily pricing of the Fund(s), provided such loss was not the
result of action or inaction of other service providers to the Client or the
Fund in failing to observe the instructions of the Adviser.
(d) Reports. Adviser shall furnish Client and the Board of
Directors of the Vantagepoint Funds such periodic and special reports and
information as either of them may request, including such information as shall
be reasonably necessary to evaluate the terms of any advisory agreement between
Client and Adviser with respect to the assets of the Vantagepoint Equity Income
Fund.
(e) Other Reports on Request. Adviser shall provide to Client
promptly upon request any information available in the records maintained by
Adviser relating to the Account.
(f) Review of Materials. During the term of this Agreement, the
Client shall furnish to the Adviser at its principal office all prospectuses,
statements of additional information, proxy statements, reports to shareholders,
advertising and sales literature or other material prepared for distribution to
Fund shareholders or the public, which refer to the Adviser or its clients in
any way, prior to the use thereof, and the Client shall not use any such
materials if the Adviser reasonably objects in writing within ten (10) business
days (or such other time as may be mutually agreed) after receipt thereof. The
Client shall ensure that materials prepared by employees or agents of the Client
or its affiliates that refer to the Adviser or its clients in any way are
consistent with those materials previously approved by the Adviser as referenced
in the preceding sentence.
7. PURCHASE AND SALE OF SECURITIES
(a) Selection of Brokers. Except to the extent otherwise
instructed in writing by Client in acting on behalf of the Fund, (it being
understood that Client, acting on behalf of the Fund, may, in its absolute
discretion and consistent with the requirements of the 1940 Act and applicable
federal securities laws, direct portfolio transactions for which Adviser is
responsible to any broker that Client may see fit), Adviser shall place all
orders
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for the purchase and sale of securities on behalf of the Client with brokers or
dealers selected by Adviser, but not with a person affiliated with Adviser, as
the term "affiliated person" is defined in the Investment Company Act of 1940
(hereafter an "Affiliate"), unless the transaction is in compliance with Rules
17e-1 or 10f-3 under the 1940 Act, as applicable, and the Fund's policies and
procedures thereunder, copies of which shall be provided to Adviser.
(b) Best Execution. In placing such orders, the Adviser will give
primary consideration to obtaining the most favorable price and efficient
execution reasonably available under the circumstances. In evaluating the terms
available for executing particular transactions for Client and in selecting
brokers and dealers to execute such transactions, the Adviser may consider, in
addition to commission cost and execution capabilities, the financial stability
and reputation of brokers and dealers and the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended) provided by brokers and dealers. Adviser is authorized to pay
a broker or dealer who provides such brokerage and research services a
commission for executing a transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer in discharging responsibilities with respect
to the Account or to other client accounts as to which it exercises investment
discretion.
(c) Bunching Orders. Client agrees that Adviser may aggregate sales
and purchase orders of Account with similar orders being made simultaneously for
other accounts managed by Adviser, if in Adviser's reasonable judgment such
aggregation shall result in an overall economic benefit or more efficient
execution to the Account taking into consideration the advantageous selling or
purchase price, brokerage commission and other expenses. Client acknowledges
that the determination of such economic benefit to the Fund by Adviser
represents Adviser's evaluation that the Account is benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions or a combination of these and other factors. In such event,
allocation of the securities so purchased or sold, as well as expenses incurred
in the transaction, will be made by the Adviser in a manner the Adviser
considers to be most equitable and consistent with its fiduciary obligations to
the Fund and to its other clients.
8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Adviser for its services
under this Agreement shall be calculated and paid by the Client from the assets
of the Account in accordance with SCHEDULE C hereto.
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(b) For purposes of this section 8 and Schedule C, all payments due to
Adviser shall be solely made from the assets of the Vantagepoint Growth Fund.
(c) Pro Rata Fee. If the Adviser should serve for less than the whole
of any calendar quarter, its compensation shall be determined as provided above
on the basis of the ending market value of the Account in the month in which
the termination occurs and shall be payable on a pro rata basis for the period
of the calendar quarter for which it has served as Adviser hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Adviser shall devote its best efforts and such time as it deems
necessary to provide prompt and expert service to the Client. The services of
Adviser to be provided to Client hereunder are not to be deemed exclusive and
Adviser shall be free to provide similar services for its own account and the
accounts of other persons and to receive compensation for such services. Client
acknowledges that Adviser and its members, Affiliates and employees, and
Adviser's other clients may at any time, have, acquire, increase, decrease, or
dispose of positions in the same investments which are at the same time being
held, acquired for or disposed of under this Agreement for the Fund. Adviser
shall have no obligation to acquire or dispose of a position in any investment
pursuant to this Agreement simply because Adviser, its directors, members,
Affiliates or employees invest in such a position for its or their own accounts
or for the account of another client.
10. 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
such policies shall be delivered to the Client upon request, and any material
violation of such policies by personnel of the Adviser who are "access persons"
with respect to the Account shall be reported to the Client.
11. INSURANCE
At all times during the term of this Agreement, Adviser shall maintain,
at its own cost and expense, professional liability insurance for errors,
omissions, and negligent acts, in an amount and with such terms as are standard
in the financial services industry
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for an investment adviser managing the amount of aggregate assets managed by
Adviser for Client and for the Adviser's other clients.
12. LIABILITY
In the absence of any gross negligence, malfeasance, or willful violation
of this Agreement, Adviser shall not be liable to Client for honest mistakes of
judgment or for action or inaction taken in good faith for a purpose that the
Adviser reasonably believes to be in the best interests of the Client or the
Fund. However, neither this provision nor any other provision of this Agreement
shall constitute a waiver or limitation of any rights which Client may have
under federal or state securities laws.
13. TERM
This Agreement shall be in effect for an initial term of two years
beginning on the Effective Date. This Agreement may be renewed thereafter for
successive one-year periods if such renewal is approved annually by the majority
of the Fund's Board of Directors, provided that in such event, continuance shall
also be approved by a vote of those members of the Funds' Board of Directors who
are not "interested persons" as that term is defined in the Investment Company
Act of 1940.
14. TERMINATION
This Agreement may be terminated by either party hereto, without the
payment of any penalty, immediately upon notice to the other in the event of a
material breach of any provision thereof by the party so notified if such breach
shall not have been cured within a twenty (20) day period after notice of such
breach, or otherwise by Adviser upon sixty (60) days' written notice to the
Client or by Client upon 30 days' written notice to Adviser, except that this
Agreement shall automatically terminate in the event of its assignment, as
provided in Paragraph 19, at the discretion of the Client in the event of
Adviser's change in control as provided in Paragraph 19, upon the termination of
the Funds, or upon termination of Client's advisory agreement with the Funds.
Any termination in accordance with the terms of this Agreement shall not cause
the payment of any penalty. Any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other.
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15. REPRESENTATIONS
(a) Adviser hereby confirms to Client that Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into and perform fully the terms of this Agreement
and that the execution of this Agreement on behalf of Adviser has been duly
authorized and, upon execution and delivery, this Agreement will be binding upon
Adviser in accordance with its terms.
(b) Client hereby confirms to Adviser that it is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into this Agreement and that the execution of this
Agreement on behalf of Client has been fully authorized and, upon execution and
delivery, this Agreement will be binding upon Client in accordance with its
terms.
(c) Adviser hereby acknowledges that the Vantagepoint Funds is
registered as an open-end investment company under the 1940 Act and is subject
to taxation as a regulated investment company under Subchapter M and the
regulations promulgated thereunder of the Internal Revenue Code. Adviser hereby
represents that it is familiar with the requirements of such laws and the rules
and regulations thereunder as they apply to the Vantagepoint Funds and has
systems and procedures in place reasonably designed to permit Adviser, Client,
and the Vantagepoint Funds to comply with such requirement.
16. NOTICES
Notices or other notifications given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent if
delivered to the party at its address listed below in person or by telex or
telecopy receipt of which is confirmed or by mail or by registered mail, return
receipt requested. The addresses of the parties are:
CLIENT:
Vantagepoint Investment Advisers, LLC
Attention: Legal Department
c/o ICMA Retirement Corporation
000 Xxxxx Xxxxxxx Xxxxxx, XX, Xxx. 000
Xxxxxxxxxx, X.X. 00000-0000
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ADVISER:
Xxxxx Capital, Inc.
Attention: Xxxxxxx Xxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 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.
18. WAIVER OR MODIFICATION
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged. No failure to
exercise and no delay in exercising, on the part of any party hereto, of any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof.
Only the Chief Executive Officer, has authority on behalf of Client to modify or
waive any of the provisions of the Agreement. It is understood that certain
material amendments may require approval of the Funds shareholders.
19. ASSIGNMENT AND CHANGE IN CONTROL
This Agreement shall automatically terminate in the event of its
assignment. Adviser agrees to provide immediate written notice in the event of a
change in control. Such a change in control will entitle, but not require, the
Client to terminate the Agreement immediately or upon notice.
20. COUNTERPARTS
This Agreement may be executed in counterparts each of which shall be
deemed to be an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.
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21. CHOICE OF LAW
This Agreement shall be governed by, and the rights of the parties
arising hereunder construed in accordance with, the laws of the State of
Delaware without reference to principles of conflict of laws and the 1940 Act.
To the extent that the applicable laws of the State of Delaware conflict with
the applicable provisions of the 1940 Act, the latter shall control.
22. YEAR 2000 STATEMENT
Adviser certifies that it has taken the steps to address the Year 2000
problem that are set forth in Adviser's SEC Form ADV-Y2K, a copy of which has
been filed with the SEC and provided to Client. Any subsequent SEC filings
regarding this issue shall be provided to Client.
23. VANTAGEPOINT FUNDS AS PARTY TO AGREEMENT
For purposes of Sections 8 (Fees), 12 (Liability), 13 (Term), 14
(Termination), 15 (Representations), 16 (Notices), 18 (Waiver or Modification),
19 (Assignment and Change in Control), and 22 (Year 2000 Statement) of the
Agreement, as well as for purposes of Schedule C of the Agreement, the
Vantagepoint Funds is hereby made a party to the Agreement and shall be entitled
to all notices, protections and rights set forth in those Sections and in
Schedule C to which Client is entitled.
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IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON September 30,
1999 and make it effective on the date set forth.
CLIENT ADVISER
Vantagepoint Xxxxx Capital, Inc.
Investment Advisers, LLC
by: by:
/s/ XXXXXX XXXXXX /s/ XXXXX X. XXXXX
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Xxxxxx Xxxxxx, President Xxxxx X. Xxxxx, President
Date: September 30, 1999 Date: September 30, 1999
FUNDS
The Vantagepoint Funds
by:
/s/ XXXXXX XXXXXX
--------------------------
Xxxxxx Xxxxxx, President
Date: September 30, 1999
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SCHEDULE A
THE VANTAGEPOINT FUNDS
GROWTH 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
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 Fund seeks long-term growth of capital by investing primarily
in common stocks with above average growth potential. Dividend income is
incidental to the overall growth objective.
II. STRUCTURE
The assets of the Growth 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 Growth
Fund may may focus on past patterns as well as future prospects for
growth in corporate earnings per share. For example, earnings growth may
result from changes in a company's management, an industry trend, a
cyclical recovery, unit growth, new products, and product expansion.
Investments may include:
- equity securities of large established growth companies,
medium size firms, and smaller emerging growth companies,
- securities issued by companies that are "distressed" or
"out of favor",
- securities issued by foreign companies, and
- futures contracts.
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 (including
shares of closed-end funds), 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 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 RANGE MAXIMUM
------- ------------ -------
U.S. equity securities 65% 80-100% 100%
Non-U.S. equity securities 0% 0-10% 20%
Cash and cash equivalents 0% 0-10% 35%
Fixed income securities 0% 0-5% 10%
II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales
B. Options
C. Commodities (excluding financial futures).
D. Securities for which there is no established trading market.
E. Securities issued by the subadvisers of the Fund or their
affiliates.
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F. General partner interests.
G. Direct investments in oil, gas, or other mineral exploration or
development programs.
H. 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.
I. Commingled funds; this does not preclude investment in mutual
funds up to 10% of the Fund's market value at the time of
purchase.
J. 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.
K. 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.
L. 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.
M. 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
Nothing herein shall prevent loans of securities in the Fund pursuant to
an established securities lending program conducted by the Fund's
custodian.
VIA FUND GUIDELINES-OCTOBER 1, 1999
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EXHIBIT I
TO THE
STATEMENT OF INVESTMENT POLICIES AND GUIDELINES OF
THE GROWTH FUND
OCTOBER 1, 1999
The following standards will be used to measure the performance of the Growth
Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is the WILSHIRE 5000
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 Growth 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
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.
XXX XXXX XXXXXXXXXX-XXXXXXX 0, 0000
00
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 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 Growth 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 WILSHIRE 5000 INDEX
Beta Higher
Capitalization Lower
Dividend Yield Lower
Hist. 5 year EPS Growth Higher
Price to Earnings Ratio Higher
Standard Deviation Higher
VIA FUND GUIDELINES-OCTOBER 1, 1999
19
SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
GROWTH FUND
INVESTMENT GUIDELINES
FOR
XXXXX CAPITAL MANAGEMENT, INC.
OCTOBER 1, 1999
Xxxxx Capital Management, Inc. follows a "Growth At A Reasonable Price" approach
to security selection, focusing on mid- to large-capitalization securities.
Screening criteria and fundamental analysis lead to portfolio holdings that
exhibit P/E ratios (based on forward twelve month EPS) below prospective (3-5
year) EPS growth rates. The portfolio is well diversified in 40 to 60 holdings
and is normally fully invested in equities 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
------- ------------ -------
U.S. Equity securities 80% 90%-100% 100%
Non-U.S. Equity securities 0% 0%-5% 10%
Cash and cash equivalents 0% 0%-10% 15%
Fixed income securities 0% 0%-5% 10%
XXX Xxxxxxx Xxxxxxxxxx - Xxxxxxx 0, 0000
00
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.
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.
VIA Adviser Guidelines - October 1, 1999
21
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 S&P 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.
VIA Adviser Guidelines - October 1, 1999
22
SCHEDULE C
VANTAGEPOINT INVESTMENT ADVISERS, LLC
FEE SCHEDULE
FOR
XXXXX CAPITAL MANAGEMENT, INC.
The Advisor's quarterly fee shall be calculated based on the average daily net
assets of the assets under management as provided by the Custodian, based on the
following annual rate.
First $50 million 0.50 percent
Next $50 million 0.40 percent
Next $100 million 0.30 percent
Next $300 million 0.25 percent
Over $500 million 0.20 percent
EXAMPLE OF QUARTERLY FEE CALCULATION (HYPOTHETICAL AMOUNTS)
January 1, 1999 $250,000,000 End-of-Day Net Assets
January 2, 1999 $250,678,462 End-of-Day Net Assets
January 3, 1999 $250,796,123 End-of-Day Net Assets
...
March 29, 1999 $260,512,214 End-of-Day Net Assets
March 30, 1999 $261,720,978 End-of-Day Net Assets
March 31, 1999 $262,901,556 End-of-Day Net Assets
Quarterly Daily Average $257,601,560
$50 million 0.50 percent $250,000
Next $50 million 0.40 percent $200,000
Next $100 million 0.30 percent $300,000
Next $300 million 0.25 percent $144,004
Over $500 million 0.20 percent --------
Annual Fee $894,004
One-Fourth Annual Fee $223,501
VIA Fee Schedule - August 1, 1999
