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EXHIBIT (d)(19)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made as of the
__________ day of _______________, 1999, by and between VANTAGEPOINT INVESTMENT
ADVISERS, LLC, a Delaware limited liability company (hereafter "Client"),
WELLINGTON MANAGEMENT COMPANY, LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
(hereafter "Subadviser"), and, as set forth in Section 23, THE VANTAGEPOINT
FUNDS, a Delaware business trust, and is effective as of July 30 ,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 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 Equity Income
Fund which 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 the
Account and may, upon notice to the Subadviser, make 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
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Investment Policies provided in Paragraph 4, Subadviser shall supervise and
direct investment of the Account. Client hereby grants the Subadviser 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 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 Fund Vantagepoint Equity Income 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: Xxxxxxx X. X'Xxxxx
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.
4. INVESTMENT POLICIES
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(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 Funds (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 Funds (including the
Account). In the event that any cash or securities of the Funds are delivered to
the Subadviser, 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
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the Funds 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.
(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
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evaluate the terms of any advisory agreement between Client and Subadviser with
respect to the assets of the Vantagepoint Equity Income 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 10f-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 Client 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 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
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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.
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 Equity Income 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.
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
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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 gross 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 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
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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.
(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 requirement.
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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
SUBADVISER:
Wellington Management Company, LLP
Attention: Regulatory Affairs Department
00 Xxxxx Xxxxxx
Xxxxxx, 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
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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.
22. YEAR 2000 STATEMENT
Subadviser certifies that it has taken the steps to address
the Year 2000 problem that are set forth in Subadviser'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.
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON July 30, 1999
and make it effective on the date set forth.
CLIENT SUBADVISER
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Vantagepoint Wellington Management Company, LLP
Investment Advisers, LLC
by: by:
/s/ XXXXXX XXXXXX /s/ XXXX X. XXXXX
------------------------- --------------------------------
(signature) (signature)
------------------------- --------------------------------
Xxxxxx Xxxxxx, President (name, title)
Date: Date:
FUNDS
The Vantagepoint Funds
by:
/s/ XXXXXX XXXXXX
-----------------------------
Xxxxxx Xxxxxx, President
Date:
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SCHEDULE A
THE VANTAGEPOINT FUNDS
EQUITY 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 Equity
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 Equity Income Fund seeks long-term, stable growth of capital by
investing primarily in dividend-paying, common stocks of
well-established companies. 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 Equity Income Fund are to be managed by two or more
subadvisers. The subadvisers are retained to manage separate accounts
under discretionary investment advisory contracts. Each subadviser is
selected for its individual investment management expertise, and each
operates independently of the others. Each subadviser must either be an
investment adviser registered with the Securities and Exchange
Commission (SEC) under the Investment Advisers Act of 1940, or be 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 are 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 selects subadvisers that represent a variety of portfolio
management approaches and investment disciplines. These investment
approaches are 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.
While the subadvisers employ different strategies, each has in common
the objective of providing total return from capital appreciation and
current income. The Fund will tend to be concentrated in
higher-yielding industries including, for example, utilities, energy,
financial, and cyclical companies. In addition it is likely, because of
the Fund's income and established company requirements, that larger
companies will dominate.
IV. PERFORMANCE BENCHMARKS
Performance benchmarks are established for the Fund. These benchmarks
are recommended by VIA and adopted by the Directors and will be
reviewed periodically and revised as appropriate. The current
performance benchmarks for the Fund are appended to this document as
Exhibit I.
V. DIRECTOR REVIEW
VIA reports periodically to the Directors on performance of the Fund
against the 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, registered money market mutual funds
within applicable limits, 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, but not to obtain
market leverage.
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. 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.
K. 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.
L. In the absence of prior consent of VIA, acquisition of more
than 5% of the outstanding of stock of any issuer
M. Commingled funds; this does not preclude investment in
registered mutual funds up to 5% per fund. Investments in
registered mutual funds overall are limited to 10% of the
Fund's market value at the time of purchase.
N. 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.
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III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
IV. SECURITIES LENDING
Nothing herein shall prevent loans of securities in the Equity 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 EQUITY INCOME FUND
MARCH 1, 1999
The following standards will be used to measure the performance of the Equity
Income Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is the S&P/BARRA VALUE
INDEX. This benchmark is used to measure the Fund's
performance net of subadviser fees.
2. The Lipper Equity Income Fund Index, maintained by Lipper
Analytical Services, serves as the performance benchmark for
participant returns, net of all fees and expenses. In
assessing performance against this benchmark, it is taken into
consideration that Lipper Analytical Services may change the
composition of the Index.
3. A peer group benchmark for the Fund consists of mutual funds
with characteristics similar to the Equity Income Fund. The
peer group is used to measure the Fund's performance relative
to other funds with a similar investment approach. The peer
group benchmark measures Fund performance net of all fees and
expenses except for the plan administration fee.
B. TIME HORIZON
The time horizons for performance measurement are one, three, and five
years.
One Year:
Performance relative to any benchmark established for the Fund can 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 factors that are not related to the market, action may be
appropriate.
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Three and Five Years:
Performance of the Fund should track market and universe benchmarks
more closely as the evaluation period lengthens. The ideal performance
objective for the Equity Income Fund is to exceed the returns of all
relevant benchmarks; however, shortfalls over various time periods are
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 Equity Income 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 Lower
Capitalization Somewhat Lower
Dividend Yield Higher
Hist. 5 year EPS Growth Lower
Price to Earnings Ratio Lower
Standard Deviation Lower
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SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
EQUITY INCOME FUND
INVESTMENT GUIDELINES
FOR
WELLINGTON MANAGEMENT COMPANY, LLP
JULY 28, 1999
These Investment Guidelines refer to the portion of the Vantagepoint Equity
Income Fund managed by WELLINGTON MANAGEMENT COMPANY, LLP. Investment Guidelines
for the Fund are an integral part of these guidelines.
The WELLINGTON MANAGEMENT - EQUITY INCOME PRODUCT reflects the portfolio
management approach of employing proprietary fundamental research to identify
large capitalization companies that are selling at attractive valuations
relative to their upside potential. Key components of the strategy include a
focus on value and catalysts for change, a belief that dividends matter, and an
aversion to reaching for yield. The portfolios are managed through a team
approach and are concentrated in 50-60 securities. The portfolio is normally
fully invested with no more than 25% of the portfolio invested in any one
industry.
The Advisor must comply with the Fund Investment Guidelines (see Schedule A)
except where noted in the sections that follow: I. ELIGIBLE INVESTMENTS and II.
PROHIBITED PRACTICES AND SECURITIES.
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.*
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT
GUIDELINES, SECTION I.B.]
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C. FIXED INCOME: Fixed income and convertible fixed income
securities with maturities greater than one year.
D. FINANCIAL FUTURES: Futures are not permitted.
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT
GUIDELINES, SECTION I.D.]
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% 0-5% 10%
(ADRs only)*
Cash and cash equivalents* 0% 0%-10% 20%
Fixed income securities* 0% 0%-10% 20%
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT
GUIDELINES, SECTION I.F.]
II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales.
B. Options.
C. Commodities.
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
portfolio; use of futures to obtain market leverage.
F. Securities offered by the Adviser or its affiliates.
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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. Acquisition of securities that would cause exposure to a
single industry to exceed 25% of the portfolio at the time of
purchase.
K. 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.
L. In the absence of prior consent of VIA, acquisition of more
than 5% of the outstanding stock of any issuer.
M. Commingled and registered mutual funds.
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT
GUIDELINES, SECTION II.M.]
N. Foreign securities unless listed and traded in the U.S.*
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT
GUIDELINES, SECTION II.]
Exceptions to the above listed eligible investments and prohibited
securities or practices may be permitted with prior consent from VIA.
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III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
IV. PERFORMANCE BENCHMARK AND MONITORING CRITERIA
[Note: The standards outlined in this section are subject to review
by VIA as and when appropriate.]
A. PERFORMANCE BENCHMARKS
Two benchmarks are used to track the Adviser's relative
performance:
1. The LIPPER EQUITY INCOME INDEX is used to evaluate
performance relative to the average of similar mutual
funds.
2. The S&P/BARRA VALUE INDEX is used to measure
performance relative to a market benchmark of "value"
stocks.
The Adviser is tracked over one-, three- and five-year periods
with the expectation that the Adviser will outperform the
benchmark (net of Adviser fees).
B. PEER GROUP
VIA will also compare investment performance to a peer group
of other managers with similar investment approaches.
VIA tracks the Adviser's net performance over one-, three- and
five-year periods with the expectation that the Adviser will outperform the
median return of the peer group for all periods.
The current peer group is THE WILSHIRE LARGE-CAP VALUE
universe.
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SCHEDULE C
VANTAGEPOINT INVESTMENT ADVISERS, LLC
VANTAGEPOINT EQUITY INCOME FUND
FEE SCHEDULE
FOR
WELLINGTON MANAGEMENT COMPANY, LLP
The Adviser'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 0.40 percent
Next $ 50 million 0.30 percent
Over $ 100 million 0.25 percent
EXAMPLE OF FEE CALCULATION (HYPOTHETICAL AMOUNTS)
January 1, 1999 $190,000,000 End-of-Day Net Assets
January 2, 1999 $190,678,462 End-of-Day Net Assets
January 3, 1999 $190,796,123 End-of-Day Net Assets
. . .
March 29, 1999 $194,512,214 End-of-Day Net Assets
March 30, 1999 $194,720,978 End-of-Day Net Assets
March 31, 1999 $194,901,556 End-of-Day Net Assets
Quarterly Daily Average $192,601,555
First $ 50 million 0.40 percent $200,000
Next $ 50 million 0.30 percent $150,000
Over $100 million 0.25 percent $231,504
Annual Fee $581,504
One-Fourth Annual Fee $145,376
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