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(d)(20)
INVESTMENT SUB-ADVISORY AGREEMENT
This Investment Sub-Advisory Agreement is made as of the
__________ day of _______________, 1999 by and between VANTAGEPOINT INVESTMENT
ADVISERS, LLC, a Delaware limited liability company (hereafter "Client"), and
AVATAR INVESTORS ASSOCIATES CORP. at 000 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx
(hereafter "Adviser") and is effective as of March 1, 1999 (the "Effective
Date").
WHEREAS, the Vantagepoint Funds (the "Funds") is a Delaware
Business Trust registered as an open-end management investment company under
the Investment Company Act of 1940;
WHEREAS, Client is party to an Investment Adviser Agreement
with the Funds for management of the investment operations of the Funds
including the establishment and operation of investment portfolios for the
Funds and the entering into of contracts with sub-advisers to assist in
managing the investment of the Funds property;
WHEREAS, Client and Adviser wish to enter into an agreement
pursuant to which Adviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Adviser as
Investment Adviser of certain assets held by the Funds, the Client has
authorized the Adviser to manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Adviser shall perform
its services shall consist of those assets of the Funds which the Client
determines to assign to an account with the Adviser, together with all income
earned by those assets and all realized and unrealized capital appreciation
related to those assets (hereafter "Account"). From time to time, the Client
may, upon notice to the Adviser, make additions to the Account and may, upon
notice to the Adviser, make withdrawals from the Account.
2. APPOINTMENT STATUS, POWERS OF ADVISER
(a) Purchase and Sale. Client hereby appoints Adviser to
manage the Account on the terms and conditions set forth in this Agreement.
Subject to the restrictions set forth in this Agreement, and acting always in
conformity with the Investment Policies provided in Paragraph 4, Adviser shall
supervise and direct investment of the Account. Client hereby grants the
Adviser complete, unlimited and unrestricted discretion and authority to select
portfolio securities with respect to the
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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.
(c) Voting. Unless otherwise instructed by Client, Adviser
shall have discretion to take any action or render any advice with respect to
the voting of shares or the execution of proxies solicited from time to time by
or with respect to, the issuers of securities held in the Account. Adviser will
report annually to Client regarding such voting.
(d) Key Personnel. Adviser agrees that the following key
personnel have primary responsibility with respect to the investment management
of the Account. If the(se) individual(s) is unable to devote sufficient time to
maintain primary responsibility of the Account, the Adviser must give Client
written advance notice, or prompt notice within three (3) business days, of the
name of the person designated by the Adviser to replace or supplement the
individual(s). In addition, the Adviser will give Client prompt written notice
of the replacement of any employee of the Adviser who has direct supervisory
responsibility for the key personnel or who has responsibility for setting
investment policy.
Key Personnel: Xxxxxx X. Xxxxxxx, Xx.
Xxx Xxxxxxxx
Xxxxxxx X. Xxxxx
3. ACCEPTANCE OF APPOINTMENT
Adviser accepts the appointment as an investment adviser and
agrees to use its best efforts and professional judgment to make timely
investment transactions for the Client with respect to the investments of the
Account, and to provide the other services required of the Adviser under the
provisions of this Agreement.
4. INVESTMENT POLICIES
(a) Investment Objectives. The Adviser will adhere to the
investment objectives, guidelines, restrictions, and liquidity requirements of
the Funds as specified by the Client on SCHEDULE A hereto, and as restated or
modified from time to time by the Client in written notice to the Adviser.
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(b) Funds' Agreement and Declaration of Trust. The Adviser
will adhere to all specific provisions established in the Funds' Agreement and
Declaration of Trust and Registration Statement as filed with the Securities
and Exchange Commission on Form N-1A ("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 specific statement of Investment Adviser Guidelines,
SCHEDULE B, as restated or modified from time to time by the Client in written
notice to the Adviser. The Client retains the right, on written notice to the
Adviser, to modify any such objectives, guidelines, restrictions, and liquidity
requirements in any manner at any time.
(d) Conflict in Policies. If a conflict in policies or
guidelines referenced herein occurs, the Registration Statement shall govern
for purposes of this Agreement.
5. CUSTODY, DELIVERY, RECEIPT OF SECURITIES
(a) Custody Responsibilities. The Client shall designate one
or more custodians to hold the Account. The Custodian, as designated by the
Client will be responsible for the custody, receipt and delivery of securities
and other assets of the Funds (including the Account), and the Adviser shall
have no authority, responsibility or obligation with respect to the custody,
receipt or delivery of securities or other assets of the Funds (including the
Account). 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. 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 notify the Custodian
of all orders to brokers for the Account by 9:00 am EST on the day following
the trade date and will affirm the trade within one (1) business day after the
trade date (T+1).
(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
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(a) Records. Adviser will maintain proper and complete
records relating to the furnishing of services under this Agreement, including
records with respect to the acquisition, holding and disposition of securities
for Client. All records maintained pursuant to this Agreement shall be subject
to examination by Client and by persons authorized by it at all times upon
reasonable notice. Except as expressly authorized in this Agreement or as
required by applicable law, regulation or order of court or as directed by
other party in writing, Adviser and Client shall keep confidential the records
and other information obtained by reason of this Agreement (including, with
respect to Client, the investment information and transactions executed by
Adviser). Upon termination of this Agreement, Adviser shall promptly, upon
demand, return to Client all records Client reasonably believes are necessary
in order to discharge its responsibilities to the Funds. Adviser shall be
entitled to retain originals or copies of records pursuant to the requirements
of applicable laws or regulations.
(b) Quarterly Valuation Reports. Adviser shall use best
efforts to provide to the Client within TEN (10) business days after the end of
each calendar quarter a statement of the fair market value of the Account as of
the close of such quarter together with an itemized list of the assets in the
Account.
(c) Valuation Methodology. For purposes of this Agreement,
fair market value shall mean, as of a particular date, the value of the
Account, plus income accrued thereon less the liabilities related to the assets
in the Account. Adviser shall reconcile security and cash positions , and
market values, and report discrepancies to the Client.
(d) Loss Reimbursement. Adviser shall reimburse the Account
for any loss caused by Adviser's actions that cause delay in the accurate daily
pricing of the Fund(s), it being understood that Adviser shall not be
responsible for such daily pricing.
(e) Monthly Reports. Adviser shall provide the Client an
itemized report as to the securities in the account, the fair market value
thereof and the accrued income thereon within FOUR (4) business days after the
end of each Calendar Month. The Adviser shall also use best efforts to provide,
in writing, preliminary performance numbers and a brief explanation of these
results within FIVE (5) business days after the end of each Calendar Month. The
requested format will be as mutually agreed by Adviser and Client. For purposes
of this Agreement, fair market value shall mean, as of a particular date, the
value of the Account plus income accrued thereon less the liabilities related
to the assets in the Account.
(f) Reports on Request. Adviser shall provide to Client
promptly upon request any information available in the records maintained by
Adviser relating to the Account.
7. PURCHASE AND SALE OF SECURITIES
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(a) Selection of Brokers. Except to the extent otherwise
instructed by Client, (it being understood that Client may, in its absolute
discretion, direct portfolio transactions for which Adviser is responsible to
any broker that Client may see fit), Adviser shall place all orders for the
purchase and sale of securities on behalf of the Client with brokers or dealers
selected by Adviser, but not with a person affiliated with Adviser, as the term
"affiliated person" is defined in the Investment Company Act of 1940 (hereafter
an "Affiliate").
(b) Best Execution. In placing such orders, the
Adviser will give primary consideration to obtaining the most favorable price
and efficient execution. In evaluating the terms available for executing
particular transactions for Client and in selecting brokers and dealers to
execute such transactions, the Adviser may consider, in addition to commission
cost and execution capabilities, the financial stability and reputation of
brokers and dealers and the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended)
provided by brokers and dealers. Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a transaction which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if Adviser
determines that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer in
discharging responsibilities with respect to the Account.
(c) Bunching Orders. Client agrees that Adviser may aggregate
sales and purchase orders of Account with similar orders being made
simultaneously for other accounts managed by Adviser, if in Adviser's
reasonable judgment such aggregation shall result in an overall economic
benefit to the Account taking into consideration the advantageous selling or
purchase price, brokerage commission and other expenses. Client acknowledges
that the determination of such economic benefit to Client by Adviser represents
Adviser's evaluation that client is benefited by relatively better purchase or
sales prices, lower commission expenses and beneficial timing of transactions
or a combination of these and other factors.
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8. INVESTMENT FEES
(a) Fee Schedule. The compensation of the Adviser for its
services under this Agreement shall be calculated and paid by the Client from
the assets of the Account in accordance with SCHEDULE C hereto. The Adviser
shall send a written invoice to the Client within 30 days of the quarter end and
shall be duly compensated from the assets of the Account.
(b) Fee Computation. The Adviser's fee shall be
calculated as set forth in SCHEDULE C.
(c) Fee Amendment. Fee rates may be changed from time to time
by agreement between the Client and the Adviser; provided, however, that no
increase in such rates shall be made during the first calendar year of this
Agreement.
(d) Pro Rata Fee. If the Adviser should serve for less than
the whole of any calendar quarter, its compensation shall be determined as
provided above on the basis of the ending market value of the Account in the
month in which the termination occurs and shall be payable on a pro rata basis
for the period of the calendar quarter for which it has served as Adviser
hereunder.
9. BEST EFFORTS; NON-EXCLUSIVITY OF SERVICES
The Adviser shall devote its best efforts and such time as it
deems necessary to provide prompt and expert service to the Client. The
services of Adviser to be provided to Client hereunder are not to be deemed
exclusive and Adviser shall be free to provide similar services for its own
account and the accounts of other persons and to receive compensation for such
services. Client acknowledges that Adviser and its members, Affiliates and
employees, and Adviser's other clients may at any time, have, acquire,
increase, decrease, or dispose of positions in the same investments which are
at the same time being held, acquired for or disposed of under this Agreement
for the Client. Adviser shall have no obligation to acquire or dispose of a
position in any investment pursuant to this Agreement simply because Adviser,
its directors, members, Affiliates or employees invest in such a position for
its or their own accounts or for the account of another client.
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, and any violation of
such policies by personnel of the Adviser shall be reported to the Client.
11. INSURANCE
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At all times during the term of this Agreement, Adviser shall
maintain, at its own cost and expense, professional liability insurance for
errors, omissions, and negligent acts, in an amount and with such terms as are
standard in the financial services industry for an investment adviser managing
the amount of aggregate assets managed by Adviser for Client and for the
Adviser's other clients.
12. LIABILITY
Adviser shall not be liable to Client for honest mistakes of
judgment or for action or inaction taken in good faith for a purpose that the
Adviser reasonably believes to be in the best interests of the Client. Adviser
shall be liable to Client for any liability, damages or expenses of Client
arising out of the negligence, malfeasance or violation of applicable law by
Adviser or any of its officers, employees or Affiliates in providing management
under this Agreement. However, neither this provision nor any other provision
of this Agreement shall constitute a waiver or limitation of any rights which
Client may have under federal or state securities laws.
13. TERM
This Agreement shall be in effect for an initial term of two
years beginning on the Effective Date. This Agreement may be renewed thereafter
for successive one-year periods if such renewal is approved annually by the
majority of those members of the Funds' Board of Directors who are not
"interested persons" as that term is defined in the Investment Company Act of
1940.
14. TERMINATION
This Agreement may be terminated by either party hereto,
without the payment of any penalty, immediately upon notice to the other in the
event of a breach of any provision thereof by the party so notified, or
otherwise by Adviser upon sixty (60) days' written notice to the Client or by
Client upon 30 days' written notice to Adviser, except that this Agreement
shall automatically terminate in the event of its assignment, as provided in
Paragraph 19, at the discretion of the Client in the event of Adviser's
ownership change as provided in Paragraph 19, or upon the termination of the
Funds. Any termination in accordance with the terms of this Agreement shall not
cause the payment of any penalty. Any such termination shall not affect the
status, obligations or liabilities of any party hereto to the other.
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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 has full power
and authority to enter into this Agreement and that the execution of this
Agreement on behalf of Client has been fully authorized and, upon execution and
delivery, this Agreement will be binding upon Client in accordance with its
terms.
16. RECIPROCAL INDEMNIFICATION
Client and Adviser each agree to indemnify and hold harmless
the other and each of its officers, directors and employees against any and all
losses, claims, damages, liabilities, or litigation (including reasonable
attorney fees and other expenses) to which the indemnified party becomes
subject, insofar as such matters arise out of, or are based upon, any material
breach of this Agreement by the indemnifying party.
17. NOTICES
Notices or other notifications given or sent under or
pursuant to this Agreement shall be in writing and be deemed to have been given
or sent if delivered to the party at its address listed below in person or by
telex or telecopy receipt of which is confirmed or by mail or by registered
mail, return receipt requested. The addresses of the parties are:
CLIENT:
Vantagepoint Investment Advisers, LLC
Attention: Legal Department
c/o ICMA Retirement Corporation
000 Xxxxx Xxxxxxx Xxxxxx, XX, Xxx. 000
Xxxxxxxxxx, X.X. 00000-0000
ADVISER:
AVATAR Associates
Attention: Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Each party may change its address by giving notice as herein
required.
18. 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.
19. 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.
20. ASSIGNMENT AND OWNERSHIP CHANGE
This Agreement shall automatically terminate in the event of
its assignment. Adviser agrees to provide immediate written notice in the event
of an ownership change. Such an ownership change will entitle, but not require,
the Client to terminate the Agreement immediately or upon notice.
21. COUNTERPARTS
This Agreement may be executed in counterparts each of which
shall be deemed to be an original and all of which, taken together, shall be
deemed to constitute one and the same instrument.
22. CHOICE OF LAW
This Agreement shall be governed by, and the rights of the
parties arising hereunder construed in accordance with, the laws of the State
of Delaware without reference to principles of conflict of laws.
23. YEAR 2000 WARRANTY
Adviser warrants that it has taken all reasonable actions to
ensure that all software or other information technology product used by
Adviser or by Adviser's vendors, subcontractors, or agents, that is to be used
in the performance of Adviser's obligations under this Agreement, is designed
to be used prior to, during, and after the calendar year 2000 A.D., including
without limitation making reasonable inquiries of its
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vendors and suppliers in order to ensure that said software or other
information technology product will operate during such time period without
error relating to date data, specifically including any error relating to, or
the product of, date data which represents or references different centuries or
more than one century.
IN WITNESS WHEREOF, THE PARTIES HERETO EXECUTE THIS AGREEMENT ON
March 1, 1999, and make it effective on the date set forth.
CLIENT ADVISER
Vantagepoint AVATAR Investors Associates Corp.
Investment Advisers, LLC.
by: by:
/s/ XXXXXX XXXXXX
--------------------------- --------------------------------
(signature) (signature)
President
--------------------------- --------------------------------
(name, title) (name, title)
Date: Date:
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ADDENDUM DATED March 1, 1999 TO THE
INVESTMENT ADVISORY AGREEMENT DATED _____________
This addendum modifies and forms a part of the Investment Advisory Agreement
(the "Agreement") dated March 1 1999, between Vantagepoint Investment
Advisers, LLC, a Delaware corporation ("Client"), and Avatar Investor
Associates Corp. ("Adviser"), relating to the Vantagepoint Funds ("VF").
All terms used in this Addendum have the same meaning given to them in the
Agreement unless specifically noted otherwise.
1. The assets of the Account to be managed by the Adviser under the Agreement
and this Addendum are assets of the Asset Allocation Fund (the "Fund") a
portfolio of VF. For purposes of Section 8 (Fees) and Schedule C, all payments
due to Adviser shall be solely made from the assets of the Fund.
2. All references in the Agreement and this Addendum to the Investment Policies
to be followed by Adviser in managing the assets of the Fund are hereby deemed
to include the Investment Policies set forth in the Agreement and any Schedules
to the Agreement, as well as the Fund's current prospectus and statement of
additional information as on file with the Securities and Exchange Commission.
3. The activities of the Client and the Adviser in managing the assets of the
Fund pursuant to the Agreement and this Addendum shall in all instances be
conducted subject to the supervision and direction of the Board of Directors of
VF.
4. For purposes of Sections 8 (Fees), 12 (Liability), 13 (Term), 14
(Termination), 15 (Representation), 17 (Notices), 19 (Waiver or Modification),
20 (Assignment and Ownership Change), and 23 (Year 2000 Warranty) of the
Agreement, as well as for purposes of Schedule C of the Agreement, VF is hereby
made a party to the Agreement and shall be entitled to all notices, protections
and rights set forth in those Sections and in Schedule C to which Client is
entitled.
5. For purposes of the Agreement and this Addendum, Client and Adviser hereby
agree to maintain all books and records relating to VF that are required to be
maintained in accordance with good practice, applicable federal and state
securities laws, including the Investment Company Act of 1940 and or the
Investment Advisers Act of 1940, and such reasonable instructions as shall be
provided to Adviser by Client from time to time.
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6. Adviser shall furnish Client and the Board of Directors of VF such periodic
and special reports and information as either of them may request, including
such information as shall be reasonably necessary to evaluate the terms of any
advisory agreement between Client and Adviser with respect to assets of VF.
7. For purposes of the Agreement and this Addendum, the value of the assets of
the Fund managed by Adviser shall be calculated in accordance with the
procedures for determining net asset value per share ("NAV") set forth in the
Fund's prospectus and statement of additional information.
8. Section 6 is hereby amended as follows:
a. 6(a) is amended beginning on line 8 and ending on line 9 by deleting
the parentheses and all language with in the parentheses;
b. 6(b) is deleted in its entirety;
c. 6(c) is redesignated 6(b) Reconciliations, the first sentence is
deleted;
d. 6(d) is changed to 6(c); and
e. 6(e) is deleted and 6(f) is changed to 6(d).
9. Section 8, Investment Fees, is amended by deleting 8(b) and 8(c) in their
entirety and by redesignating 8(d) as 8(b).
10.Section 15, Representations, is amended by the insertion of 15(c) below:
"(c) Adviser hereby acknowledges that VF is registered as an open end
investment company under the Investment Company Act of 1940 and is
subject to taxation as a regulated investment company under the
Internal Revenue Code; Adviser hereby represents that it is familiar
with the requirements of such laws and the rules and regulations
thereunder as they apply to VF and has systems and procedures in place
reasonably designed to permit Adviser, Client, and VF to comply with
such requirement."
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SCHEDULE A
THE VANTAGEPOINT FUNDS
ASSET ALLOCATION 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 Asset
Allocation 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 Asset Allocation Fund seeks to maximize total return relative to
risk by varying the portfolio's exposure to common stocks, bonds and
money market instruments.
II. STRUCTURE
The assets of the Asset Allocation 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 will integrate the activities of the Fund's subadvisers to create a
framework in which overall Fund exposure to stocks, bonds, and cash
will be varied in response to changes in criteria including:
- Long-term expected returns
- Historical valuation levels
- Monetary, economic, and other indicators that can be quantified
and measured over long periods of time.
Subadvisers seek to add value by taking advantage of the changes in
relative value and risk among asset classes. Allocation among asset
classes may change dramatically over time. Allocation among asset
classes are often implemented by using futures contracts. Portfolio
management of assets representing each asset class may be active or
passive.
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. 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: Money market instruments.
C. FIXED INCOME: U.S. Treasury notes and bonds.
D. FINANCIAL FUTURES: S&P 500 Index futures contracts and U.S.
Treasury note and bond futures contracts.
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
------
Equity securities 0% 45-80% 100%
Cash and cash equivalents 0% 5-40% 100%
Fixed income 0% 15-30% 50%
II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales; however, the use of S&P 500 Index futures contracts
and U.S. Treasury note and bond futures contracts to offset
existing exposures is permitted.
B. Options.
C. Commodities except for financial futures. Financial futures may
be used to vary asset class exposure but may not be used to obtain
market leverage or for any other purpose.
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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 Fund,
G. Securities issued by the subadvisers of the Fund or their
affiliates (except as provided in Section 2(a) of the Investment
Advisory Agreement).
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. Commingled funds; this does not preclude investment in mutual
funds up to 10% of the Fund's market value at the time of purchase.
L. 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.
M. 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.
N. 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.
O. In the absence of prior consent of VIA, acquisition of more than
5% of the outstanding shares of any class of equity securities.
III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
IV. SECURITIES LENDING
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Nothing herein shall prevent loans of securities in the Asset
Allocation 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 ASSET ALLOCATION FUND
MARCH 1, 1999
The following standards will be used to measure the performance of the Asset
Allocation Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is a composite index
consisting of a 65% allocation to the STANDARD & POOR'S 500
INDEX, a 25% allocation to the XXXXXX LONG-TERM TREASURY INDEX
and a 10% allocation to the 91-DAY TREASURY XXXX. This
benchmark will be used to measure the Fund's performance net
of subadviser fees.
2. A peer group benchmark for the Asset Allocation Fund will
consist of mutual funds with characteristics similar to those
of the Asset Allocation 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 Flexible Portfolio 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.
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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 Asset Allocation Fund is to exceed the returns of all
relevant benchmarks; however, shortfalls over various time periods
should be expected in some cases. Under-performance against a single
benchmark over an extended period may be acceptable, particularly if
other benchmarks have been exceeded.
C. INVESTMENT CHARACTERISTICS
The investment characteristics of the Asset Allocation Fund will depend
upon subadviser asset allocation, which is intended to maximize
risk-adjusted returns.
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SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
ASSET ALLOCATION FUND
INVESTMENT GUIDELINES
FOR
AVATAR ASSOCIATES
MARCH 1, 1999
Avatar Associates seeks to maximize risk-adjusted total return by shifting
assets between stocks and cash. Its strategy is based on a disciplined
quantitative framework incorporating economic, monetary, and market momentum
factors. At any given time, all or none of the assets may be allocated to either
stocks or cash, though shifts more typically occur in varied increments and may
occur frequently.
I. ELIGIBLE INVESTMENTS
A. EQUITY SECURITIES: Units of a portfolio designated by VIA that
fully replicates the S&P 500 Index.
B. CASH/CASH EQUIVALENTS: U.S. Treasury obligations with maturity
less than one year; money market portfolio designated by VIA; short
term accounts or securities managed by the custodian institution.
C. FINANCIAL FUTURES: Standard & Poor's 500 Index futures.
D. ELIGIBLE INVESTMENT LIMITS:
MINIMUM NORMAL MAXIMUM
------- ------ -------
RANGE
-----
Equity securities 0% 50-90% 100%
Cash and cash equivalents 0% 10-50% 100%
Fixed income 0% 0% 0%
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II. PROHIBITED PRACTICES AND SECURITIES
A. Short sales; however, the use of S&P 500 Index futures contracts to
offset existing exposures is permitted.
B. Options.
C. Commodities except financial futures. Financial futures will be
used to vary asset class exposure but may not be used to obtain
market leverage or for any other purpose.
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 to be invested in such securities.
L. Acquisition of more than 5% of the outstanding shares of any class
of equity securities.
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.
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III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section II
of these Investment Guidelines may be acquired or employed, as the case
may be, but only if explicitly approved in advance by VIA.
IV. PERFORMANCE BENCHMARK AND MONITORING CRITERIA
The standards outlined in this section are subject to review by VIA as
and when appropriate.
A. PERFORMANCE BENCHMARKS
The market benchmark for measuring investment performance over
a market cycle for the Adviser is a blended stock/cash
benchmark represented by a 60% allocation to the STANDARD &
POOR'S 500 INDEX and a 40% allocation to the 91-DAY T-XXXX
RATE. This benchmark will measure the Adviser's performance
net of Adviser fees.
B. PEER GROUPS
VIA will develop an appropriate peer group against which to
compare investment performance. The peer group will consist of
other managers with a similar investment approach. The
managers within the peer group will be reviewed periodically
for consistency of style and may be changed as and when deemed
appropriate by VIA. Such changes will be communicated to the
Adviser.
1. The peer group will consist primarily of mutual funds;
however, separate account managers may be included.
2. VIA will track relative net-of-fee performance quarterly
and evaluate performance on a trailing one-, three-, and
five-year basis.
3. VIA will compare the Adviser's net performance with the
one-year mean return of the peer group.
The current peer group consists of the following two managers:
Stagecoach Asset Allocation A
Xxxxx Managed Assets C
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SCHEDULE C
VANTAGEPOINT INVESTMENT ADVISERS, LLC
FEE SCHEDULE
FOR
AVATAR ASSOCIATES
The Advisor's quarterly fee shall be calculated based on the average daily
market value of the assets under management as provided by the Custodian, based
on the following annual rate.
$250 million 0.25 percent
Next $250 million 0.20 percent
Over $500 million 0.18 percent
EXAMPLE OF FEE CALCULATION (HYPOTHETICAL AMOUNTS)
January 1, 1999 $190,000,000 End-of-Day Market Value
January 2, 1999 $190,678,462 End-of-Day Market Value
January 3, 1999 $190,796,123 End-of-Day Market Value
. . .
March 29, 1999 $194,512,214 End-of-Day Market Value
March 30, 1999 $194,720,978 End-of-Day Market Value
March 31, 1999 $194,901,556 End-of-Day Market Value
Quarterly Daily Average $192,601,555
$100 million 0.50 percent $500,000
Next $100 million 0.45 percent $416,707
Over $200 million 0.40 percent --------
Annual Fee $916,707
One-Fourth Annual Fee $229,177
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