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(d)(16)
INVESTMENT SUBADVISORY AGREEMENT
This Investment Subadvisory Agreement is made 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 March 28, 2000 (the "Effective Date").
WHEREAS, the Vantagepoint Funds (the "Funds") is a Delaware Business
Trust registered as an open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, Client is party to an Investment Adviser Agreement with the
Funds for management of the investment operations of the Funds including the
establishment and operation of investment portfolios for the Funds and the
entering into of contracts with sub-advisers to assist in managing the
investment of the Funds property;
WHEREAS, Client and Subadviser wish to enter into a sub-advisory
agreement pursuant to which Subadviser will provide such assistance to Client.
AGREEMENTS:
In consideration of the performance by the Subadviser as Investment
Subadviser of certain assets held by the Funds, the Client has authorized the
Subadviser to manage the securities and other assets as follows:
1. ACCOUNT
The account with respect to which the Subadviser shall perform its
services shall consist of those assets of the Vantagepoint Growth & 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 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 Growth & 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
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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: Xxxx Xxxx
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
(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.
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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 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 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 evaluate the terms of any advisory agreement between
Client and Subadviser with respect to the assets of the Vantagepoint Growth &
Income Fund.
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(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
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.
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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 Growth &
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 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
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This Agreement shall be in effect for an initial term of two years
beginning on the Effective Date. This Agreement may be renewed thereafter for
successive one-year periods if such renewal is approved annually by the majority
of the Fund's Board of Directors, provided that in such event, continuance shall
also be approved by a vote of those members of the Funds' Board of Directors who
are not "interested persons" as that term is defined in the Investment Company
Act of 1940.
14. TERMINATION
This Agreement may be terminated by either party hereto, without the
payment of any penalty, immediately upon notice to the other in the event of a
material breach of any provision thereof by the party so notified if such breach
shall not have been cured within a twenty (20) day period after notice of such
breach, or otherwise by Subadviser upon sixty (60) days' written notice to the
Client or by Client upon 30 days' written notice to Subadviser, except that this
Agreement shall automatically terminate in the event of its assignment, as
provided in Paragraph 19, at the discretion of the Client in the event of
Subadviser's change in control as provided in Paragraph 19, upon the termination
of the Funds, or upon termination of Client's advisory agreement with the Funds.
Any termination in accordance with the terms of this Agreement shall not cause
the payment of any penalty. Any such termination shall not affect the status,
obligations or liabilities of any party hereto to the other.
15. REPRESENTATIONS
(a) Subadviser hereby confirms to Client that Subadviser is
registered as an investment adviser under the Investment Advisers Act of 1940,
that it has full power and authority to enter into and perform fully the terms
of this Agreement and that the execution of this Agreement on behalf of
Subadviser has been duly authorized and, upon execution and delivery, this
Agreement will be binding upon Subadviser in accordance with its terms.
(b) Client hereby confirms to Subadviser that it is registered as an
investment adviser under the Investment Advisers Act of 1940, that it has full
power and authority to enter into this Agreement and that the execution of this
Agreement on behalf of Client has been fully authorized and, upon execution and
delivery, this Agreement will be binding upon Client in accordance with its
terms.
(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.
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
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Washington, D.C. 20002-4240
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
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
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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
March 28, 2000 and make it effective on the date set forth.
CLIENT SUBADVISER
Vantagepoint Wellington Management Company, LLP
Investment Advisers, LLC
by: by:
/s/ XXXXXX XXXXXX /s/ XXXX X. XXXXX
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(signature) (signature)
President Sr. Vice President
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Xxxxxx Xxxxxx, President (name, title)
Date: Date: March 29, 2000
FUNDS
The Vantagepoint Funds
by:
/s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx, President
Date: March 28, 2000
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SCHEDULE A
THE VANTAGEPOINT FUNDS
GROWTH & INCOME FUND
STATEMENT OF INVESTMENT POLICIES
These Investment Policies and Guidelines have been adopted by the Vantagepoint
Funds (the "Funds") to govern the management and administration of the Growth &
Income Fund by Vantagepoint Investment Advisers, LLC ("VIA"). They may be
reviewed and revised at the discretion of the Directors of the Vantagepoint
Funds (the "Directors"). VIA is responsible for the monitoring and appointment
of subadvisers to handle the day-to-day investment of assets assigned to them.
I. GENERAL DESCRIPTION AND GOALS
The Growth & Income Fund seeks long-term capital growth by investing
primarily (at least 65 percent) in common stocks that offer the
potential for high total return through a combination of capital
appreciation and current income. The Fund may also invest in other
equity-type securities (e.g., convertible securities and preferred
stocks) and in bonds.
II. STRUCTURE
The assets of the Growth & Income Fund shall be managed by two or
more subadvisers. The subadvisers may be retained to manage separate
accounts under discretionary investment advisory contracts. Each
subadviser will be selected for its individual investment management
expertise and each will operate independently of the others. Each
subadviser must either be registered with the Securities and
Exchange Commission (SEC) under the Investment Advisers Act of 1940
or a Bank, Insurance Company or Trust Company exempt as such from
registration.
Each subadviser shall exercise complete management discretion over
assets of the Fund allocated to its account in a manner consistent
with these Investment Policies and Guidelines and with such further
investment limitations and conditions as may be established by VIA
and approved by the Directors. Subadvisers will be obligated to
manage Fund assets as if they were subject to the fiduciary duty of
care that applies under the Employee Retirement Income Security Act
of 1974 (ERISA) governing pension and profit sharing assets.
III. INVESTMENT STRATEGY
VIA shall select subadvisers that represent a variety of portfolio
management approaches and investment disciplines. These investment
approaches will be combined in a complementary manner to effectively
achieve the investment objective of the Fund. The Fund as a whole
will be more diversified than each individual subadviser's
portfolio.
Investment strategies employed by the subadvisers included in the
Growth & Income Fund may involve:
- a focus on past patterns as well as future prospects for
growth in corporate earnings per share.
- an emphasis on securities that pay current dividends and
offer potential earnings growth
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- debt and equity securities which may not currently pay
dividends, but offer prospects for capital appreciation or
future income.
- production of long-term capital growth by investing in
securities that the subadviser believes to be undervalued at
the time of purchase where the production of income is a
secondary objective,
- the ability to emphasize a growth or income-oriented strategy
opportunistically.
IV. PERFORMANCE BENCHMARKS
Performance benchmarks will be established for the Fund. These
benchmarks will be recommended by VIA and adopted by the Directors
and will be reviewed and revised as appropriate from time to time.
The current performance benchmarks for the Fund are appended to this
document as Exhibit I.
V. DIRECTOR REVIEW
VIA will report periodically to the Directors on performance of the
Fund against benchmarks and on subadviser results and will evaluate
for the Directors the overall performance of the Fund relative to
its objectives. The Directors will consider such reports and other
relevant factors in appraising the investment objectives and
performance of the Fund.
INVESTMENT GUIDELINES
I. ELIGIBLE INVESTMENTS
A. EQUITY SECURITIES: Common stock, preferred stock, common stock
equivalents (units of beneficial interest), American Depository
Receipts, convertible preferred stocks, warrants, and other
rights.
B. CASH/CASH EQUIVALENTS: Fixed income obligations with maturity
less than one year, or short-term accounts or securities managed
by a custodian institution.
C. FIXED INCOME: Fixed income and convertible fixed income
securities with maturities greater than one year.
D. FINANCIAL FUTURES: Equity index futures.
E ELIGIBLE PRACTICES: There are no restrictions on subadvisers as
to the following:
- Portfolio turnover.
- Realized gains and losses.
F. ELIGIBLE INVESTMENT LIMITS
MINIMUM NORMAL RANGE MAXIMUM
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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%
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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. Margin purchases and other forms of borrowing; granting of
pledges or other security interests in assets of the Fund; use of
futures to obtain market leverage.
F. Securities issued by the subadvisers of the Fund or their
affiliates.
G. General partner interests.
H. Direct investments in oil, gas, or other mineral exploration or
development programs.
I. Direct investments in real estate or interests in real estate;
this does not preclude investment in purchases of securities of
real estate investment trusts and other companies holding real
estate or interests in real estate.
J. Commingled funds; this does not preclude investment in mutual
funds up to 10% of the Fund's market value at the time of
purchase.
K. Acquisition of securities that would cause exposure to non-equity
holdings to exceed 35% of the Fund's market value at the time of
purchase.
L. Acquisition of securities that would cause exposure to a single
industry to exceed 25% of the Fund's market value at the time of
purchase.
M. In the absence of prior consent of VIA, acquisition of securities
of an issuer that would cause more than 5% of the Fund to be
invested in such securities.
N. In the absence of prior consent of VIA, acquisition of more than
5% of the outstanding shares of any class of equity securities.
III. SECURITIES AND PRACTICES NOT OTHERWISE MENTIONED
Any securities or practices not enumerated in Section I or Section
II of these Investment Guidelines may be acquired or employed, as
the case may be, but only if explicitly approved in advance by VIA.
IV. SECURITIES LENDING
Nothing herein shall prevent loans of securities in the Growth &
Income Fund pursuant to an established securities lending program
conducted by the Fund's custodian.
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EXHIBIT I
TO THE
STATEMENT OF INVESTMENT POLICIES AND GUIDELINES OF
THE GROWTH & INCOME FUND
MARCH 1, 1999
The following standards will be used to measure the performance of the Growth &
Income Fund:
A. BENCHMARKS
1. The performance benchmark for the Fund is the S&P 500 INDEX
("S&P 500 Index"). The benchmark will be used to measure the
Fund's performance net of subadviser fees.
2. A peer group benchmark for the Fund will consist of mutual
funds with characteristics similar to the Fund. The peer group
will be used to measure the Fund's performance relative to
other funds with a similar investment approach. The peer group
benchmark will measure Fund performance net of all fees and
expenses except for the plan administration fee.
3. The Lipper Growth & Income Fund Index, selected by Lipper
Analytical Services, will serve as the performance benchmark
for participant returns, net of all fees and expenses. In
assessing performance against this benchmark, it will be taken
into consideration that Lipper Analytical Services may change
the composition of the Index.
B. TIME HORIZON
The time horizon for performance measurement will be one, three, and
five years.
One Year:
Performance relative to any benchmark established for the Fund will vary
widely over one-year periods; such variance over short time periods is
expected and acceptable. However, if such variance is determined to be
caused by systemic issues, action may be appropriate.
Three and Five Years:
Performance of the Fund should track market and universe benchmarks more
closely as the evaluation period lengthens. The ideal performance
objective for the Growth & Income Fund is to exceed the returns of all
relevant benchmarks; however, shortfalls over various time periods
should be expected in some cases. Underperformance against a single
benchmark over an extended period may be acceptable, particularly if
other benchmarks have been exceeded.
C. INVESTMENT CHARACTERISTICS
The Fund may have investment characteristics which differ from the
general market, as measured by the Standard & Poor's 500 Index. For the
total Fund, these would include, but are not limited to:
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CHARACTERISTIC RELATIVE TO S&P 500 INDEX
Beta Similar
Capitalization Somewhat Lower
Dividend Yield Similar
Hist. 5 year EPS Growth Similar
Price to Earnings Ratio Similar
Standard Deviation Similar
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SCHEDULE B
VANTAGEPOINT INVESTMENT ADVISERS, LLC
GROWTH & INCOME FUND
INVESTMENT GUIDELINES
FOR
WELLINGTON MANAGEMENT COMPANY, LLP
DECEMBER 1, 1999
These Investment Guidelines refer to the portion of the Vantagepoint Growth &
Income Fund managed by WELLINGTON MANAGEMENT COMPANY, LLP. Investment Guidelines
for the Fund are an integral part of these guidelines.
The WELLINGTON MANAGEMENT - VALUE/YIELD PRODUCT reflects the portfolio
management approach of seeking financially sound companies that are temporarily
out of favor and targeting those that offer above-average potential total
returns and sell at below-average price-to-earnings multiples. Investment
decisions are based primarily on detailed, in-house fundamental research and
security valuations (as measured by a security's relative return/appreciation
potential). The portfolio is managed through a team approach and is invested in
a diversified basket of 70-90 securities, with the exposure to a single stock
limited to 7 percent at market. Portfolio weights may vary from S&P 500 weights
subject to a maximum industry exposure of 25 percent.
The Adviser 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.*
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.
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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%**
(Defined as the security of a company headquartered outside the U.S.)
Cash and cash equivalents* 0% 0%-10% 20%
U.S. Fixed income securities* 0% 0%-10% 20%
[*NOTE: THESE INSTRUCTIONS DIFFER FROM SCHEDULE A, INVESTMENT GUIDELINES,
SECTION I.F.]
[** NON-U.S. SECURITIES THAT ARE NEITHER LISTED NOR TRADED IN THE U.S. CANNOT
EXCEED 5%]
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.
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 realestate.
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.J.]
N. Foreign securities unless listed and traded in the U.S.*
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[*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.
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 GROWTH & 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.
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SCHEDULE C
VANTAGEPOINT INVESTMENT ADVISERS, LLC
VANTAGEPOINT GROWTH & 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, 2000 $70,000,000 End-of-Day Net Assets
January 2, 2000 $70,630,000 End-of-Day Net Assets
January 3, 2000 $70,644,126 End-of-Day Net Assets
March 29, 2000 $71,541,900 End-of-Day Net Assets
March 30, 2000 $71,577,671 End-of-Day Net Assets
March 31, 2000 $71,606,302 End-of-Day Net Assets
Quarterly Daily Average $71,000,000
First $ 50 million 0.40 percent $50,000
Next $ 50 million 0.30 percent $15,750
Over $100 million 0.25 percent $0
Annual Fee $263,000
One-Fourth Annual Fee $65,750
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