SCHEDULE 14C
(RULE 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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[X] Definitive information statement
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(Name of Registrant as Specified in Its Charter)
Vantagepoint Funds
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(3) Filing party: The Vantagepoint Funds
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(4) Date filed: October 16, 2002
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THE VANTAGEPOINT FUNDS
777 North Capitol Street NE
Washington D.C. 20002
1-800-669-7400
INFORMATION STATEMENT
This statement informs shareholders of the Vantagepoint Growth Fund (the "Growth
Fund"), the Vantagepoint Aggressive Opportunities Fund (the "Aggressive
Opportunities Fund") and the Vantagepoint International Fund (the "International
Fund") (each a "Fund" and together the "Funds") about recent changes in each
Fund's subadvisory arrangements. These changes were made by the Board of
Directors of The Vantagepoint Funds on the recommendation of each Fund's
investment adviser, Vantagepoint Investment Advisers, LLC ("VIA"), without
shareholder approval as is permitted by a May 8, 2000 order of the Securities
and Exchange Commission ("SEC"). WE ARE NOT ASKING FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
This information statement is being mailed to shareholders of each Fund on
October 16, 2002.
APPOINTMENT OF NEW SUBADVISERS FOR THE FUNDS
GROWTH FUND
Peregrine Capital Management, Inc. ("Peregrine") was appointed to serve as a new
subadviser to the Growth Fund, replacing TCW Investment Management Company
("TCW"). The Fund's subadvisory agreement with TCW was terminated.
In addition, the Growth Fund's subadvisory agreement with Atlanta Capital
Management Company, L.L.C. ("Atlanta") was terminated and the portion of the
Fund's passively managed S&P 500 Index portfolio subadvised by Barclay's Global
Fund Advisors ("Barclays") was reduced from approximately 20 percent to 5
percent. The portions of the Fund's portfolio previously managed by Atlanta
(approximately 10 percent) and Barclays were reallocated equally to two existing
subadvisers of the Fund, Brown Capital Management, Inc. ("Brown") and Tukman
Capital Management, Inc. ("Tukman"). Fidelity Management and Research Company
("FMR") continues as a subadviser with responsibility for managing approximately
25 percent of the Fund's assets.
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These changes were effective July 17, 2002. Currently, the subadvisers of the
Fund, the portion of the Fund's assets allocated to each of them and the
investment style (as described more fully in the Fund's prospectus) each employs
to seek to achieve the Fund's investment objective of long-term capital growth
are:
FMR 25% Aggressive Growth
Peregrine 25% Concentrated Growth
Brown 22.5% Mid/Large Cap Growth at a Reasonable Price
Tukman 22.5% Contrarian Growth
Barclays 5% S&P 500 Index
AGGRESSIVE OPPORTUNITIES FUND
Wellington Management Company, LLP ("Wellington Management t") and Southeastern
Asset Management, Inc. ("Southeastern") were appointed as new subadvisers for
the Aggressive Opportunities Fund, replacing TCW and MFS Institutional Advisors,
Inc. ("MFS"), respectively. The Fund's subadvisory agreements with TCW and MFS
were terminated. Roxbury Capital Management, LLC ("Roxbury") continues to serve
as a subadviser of the Fund.
These changes were effective July 17, 2002. Currently, the subadvisers of the
Fund, the approximate percentage of Fund assets allocated to them and the
investment style (as described more fully in the Fund's prospectus) each employs
to seek to achieve the Fund's investment objective of high long-term capital
appreciation are:
Roxbury 33 1/3% High Quality Growth
Southeastern 33 1/3% Special Situations Worldwide
Wellington Management 33 1/3% Global Smaller Companies
INTERNATIONAL FUND
Artisan Partners Limited Partnership ("Artisan Partners") was appointed as a new
subadviser of the International Fund. The Fund's subadvisory agreements with
Lazard Asset Management ("Lazard") and T. Rowe Price International, Inc. ("T.
Rowe International") were terminated. Capital Guardian Trust Company ("Capital
Guardian") continues to serve as a subadviser of the Fund. This reduced the
number of Fund subadvisers from three to two. Artisan Partners and Capital
Guardian each are responsible for managing approximately 50% of the Fund's
assets.
These changes were effective October 1, 2002. Currently, the subadvisers of the
Fund, the approximate percentage of Fund assets allocated to them and the
investment style (as described more fully in the Fund's prospectus) each employs
to seek to achieve the Fund's investment objective of long-term capital growth
and diversification by country are:
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Artisan Partners 50% International Growth Opportunities
Capital Guardian 50% International Blend of Value and
Growth
VIA'S RECOMMENDATION AND THE BOARD OF DIRECTORS' DECISION
VIA recommended changing the subadvisory arrangements for each Fund, as
described above, based on its conclusion, in each case, that the changes would
improve the potential for each Fund to realize the expected benefits of having
multiple portfolio managers managing assets within a single fund in different
but complementary investment styles. VIA's multi-management strategy seeks to
improve consistency of return over time by eliminating reliance on the results
of a single subadviser. The new subadvisers were recommended because each had
demonstrated expertise in the consistent execution of a specific investment
strategy that is expected to complement the strategies of other Fund
subadvisers. The recommended subadviser weights are expected to provide an
appropriate level of diversification and optimize return relative to risk.
Before approving VIA's recommendations, the Board of Directors of The
Vantagepoint Funds, at meetings held on July 16, 2002 and September 30, 2002,
considered detailed recommendations, supporting analyses and data presented by
VIA.
Among other things, the Board of Directors received from VIA and considered
information relating to VIA's recommendation to terminate the existing
subadvisers and about the proposed new subadvisers' business, personnel,
operations, brokerage and trading policies and practices, code of ethics and
other compliance procedures and investment services, including data on the
performance of comparable accounts and funds and the portfolio composition of
comparable accounts and funds under each proposed new subadviser's management
and the portions of each Fund managed by its existing subadvisers both those
that continue as subadvisers of the Fund and those that were terminated. The
Board of Directors also received information from VIA on the results of VIA's
ongoing subadviser oversight and monitoring process and its prospective
subadviser search process that included on-site interviews of each new
subadviser's key personnel by a team of VIA representatives. VIA provided the
Board of Directors with information relating to the expected effect of the
subadvisory changes on the Funds, including information on cross-holdings among
the securities held in each Fund's portfolio and similar accounts managed by the
Funds' proposed new subadvisers. In addition, the Board of Directors received
and considered information relating to advisory fees and expense ratios of a
selected group of comparable funds and the impact of the recommended changes on
each Fund in terms of the advisory fees that would be paid to each proposed new
subadviser in relation to each Fund's current subadvisory fees and in terms of
that Fund's total expense ratio and the potential transaction and investment
opportunity costs to each Fund of transitioning from an existing subadviser to a
new subadviser. In reaching its decision to appoint each new subadviser and to
discontinue the services of each terminated subadviser, the Board of Directors
considered the nature and quality of the services expected to be provided to the
Fund, the distinct investment process of each subadviser, the history,
reputation and qualifications of each subadviser's personnel and certain
information relating to its financial condition, and other relevant factors.
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THE SUBADVISORY AGREEMENTS
The subadvisory agreements between the new subadvisers, the Funds and VIA have
terms substantially similar to the agreements with the former subadvisers and
other subadvisers to The Vantagepoint Funds, except for the rates of the fees
payable by each Fund to the new subadvisers. Each new subadviser will make
investment decisions for the portion of Fund assets allocated to it, and will
continuously review, supervise and administer the Fund's investment program with
respect to those assets. Each subadviser is independent of VIA and discharges
its responsibilities subject to the supervision of VIA and the Board of
Directors, and in a manner consistent with the Fund's investment objectives,
policies and limitations. Each new subadvisory agreement has an initial term of
two years, until July 16, 2004 for the Growth Fund and Aggressive Opportunities
Fund and September 30, 2004 for the International Fund. Thereafter, continuance
of each agreement will require annual approval of the Funds' Board of Directors,
including a majority of the independent directors.
The fees, based on the value of Fund assets under the subadviser's management,
charged by each new subadviser are:
GROWTH FUND:
Peregrine Capital Management, Inc.
First $25 million 0.60%
Next $25 million 0.48%
Over $50 million 0.40%
AGGRESSIVE OPPORTUNITIES FUND:
Wellington Management Company, LLP
First $100 million 0.75%
Over $100 million 0.65%
Southeastern Asset Management, Inc.
First $100 million 0.875%
Over $100 million 0.750%
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INTERNATIONAL FUND:
Artisan Partners Limited Partnership 0.70%
SUBADVISORY FEE INCREASES
For the Growth Fund, the appointment of Peregrine as a new subadviser and the
reallocation of assets among existing subadvisers, described above, increased
the fees payable by the Fund to its subadvisers by 0.06%, from 0.38% to 0.44% of
the Fund's average daily net assets, and is expected to result in an approximate
increase in the Fund's total expenses from 0.88% to 0.94%.
For the Aggressive Opportunities Fund, the appointment of Southeastern and
Wellington Management increased the fees payable by the Fund to its subadvisers
by 0.09%, from 0.64% to 0.73% of the Fund's average daily net assets, and is
expected to result in an approximate increase in the Fund's total expenses from
1.12% to 1.21%.
For the International Fund, the appointment of Artisan Partners and the
allocation of assets between Artisan Partners and Capital Guardian increased the
fees payable by the Fund to its subadvisers by 0.06%, from 0.53% to 0.59% of the
Fund's average daily net assets, and is expected to result in an approximate
increase in the Fund's total expenses from 1.16% to 1.22%.
THE NEW SUBADVISERS
GROWTH FUND
Peregrine, 800 LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402 serves
as a subadviser to the Growth Fund. Peregrine seeks to achieve the Growth Fund's
objective of total return, primarily from capital appreciation, by seeking to
invest in high-quality companies at attractive valuations that have the
potential for superior long-term earnings growth.
Peregrine is a Minnesota corporation founded in 1984 that is 100% owned by Wells
Fargo Bank Minnesota, N.A., which, in turn, is 99.18% owned by Wells Fargo &
Company. Mr. John S. Dale, CFA, and Gary E. Nussbaum, CFA, serve as portfolio
managers to the portion of the Growth Fund's assets allocated to Peregrine. Mr.
Dale has been with Peregrine since 1987 and Mr. Nussbaum since 1990.
Peregrine also provides investment advice to the following registered investment
companies with similar investment objectives to the Growth Fund, and is paid
advisory fees at the rates indicated below:
Fund Total Assets 9/30/02 Advisory Fees
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Wells Fargo Funds Trust - $2.01 billion See Below
Large Company Growth Fund
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Wells Fargo Variable Trust - $.06 billion See Below
Large Company Growth Fund
SEI Institutional Managed Trust - See Below See Below
Large Cap Growth Fund
SEI Institutional Investments Trust - See Below See Below
Large Cap Growth Fund
SEI Insurance Products Trust - See Below See Below
SEI VP Large Cap Growth Fund
Wells Fargo Funds Trust - Large Company Growth Fund advisory fees are at the
rate of: .75% on the first $25 million of assets under management, .60% on the
next $25 million, .50% on the next $225 million, and .30% on the balance. Wells
Fargo Variable Funds Trust - Large Company Growth Fund advisory fees are at the
rate of .75% on the first $25 million of assets under management, .60% on the
next $25 million, .40% on the next $225 million, and .30% on the balance. These
fee rates are contractual and the net fee would reflect a waiver fee discount of
25% resulting in a rate for each fund of .5625% on the first $25 million, .4500%
on the next $25 million, .3750 on the next $225 million and .2250% on the
balance.
Peregrine subadvises approximately $861 million in the aggregate for the three
SEI funds listed above. The rate of Peregrine's fees for providing advisory
services to these SEI funds is currently .20% of assets under management.
Peregrine has represented to the Fund that its fee rate with respect to the SEI
Funds was negotiated based on the overall and substantially greater amount of
SEI-related assets subadvised by Peregrine, including assets of SEI funds or
accounts that do not have investment objectives similar to those of the Growth
Fund.
AGGRESSIVE OPPORTUNITIES FUND
SOUTHEASTERN
Southeastern, 6410 Poplar Avenue, Memphis, Tennessee 38119, seeks to achieve the
Fund's investment objective of capital appreciation by investing in financially
strong, well-managed companies regardless of sector or country that can be
purchased at prices significantly below their current values. O. Mason Hawkins,
CFA, and G. Staley Cates, CFA, head the investment team that manages the Fund's
portfolio. Mr. Hawkins began his investment career in 1972 and joined
Southeastern as co-founder in 1975. Mr. Cates began his investment career in
1986 when he joined Southeastern. Andrew McDermott, another member of the
investment team for the Fund, joined Southeastern in 1998. Mr. McDermott was
with JP Morgan from 1994 to 1998.
Southeastern also serves as subadviser to the Vantagepoint Equity Income Fund.
Southeastern does not currently serve as investment adviser to other registered
investment companies with investment objectives similar to those of the
Aggressive Opportunities Fund. Southeastern is a privately held Tennessee
corporation that is wholly owned by its employees.
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WELLINGTON MANAGEMENT
Wellington Management, 75 State Street, Boston, Massachusetts 02109, seeks to
achieve the Aggressive Opportunities Fund's investment objective of capital
appreciation by seeking long-term returns through investments in smaller U.S.
and non-U.S. companies that may offer superior growth opportunities in global
equity markets. Edward L. Makin and Jamie A. Rome, CFA, serve as portfolio
managers to the Aggressive Opportunities Fund. Mr. Makin has been with
Wellington Management since 1994 and has more than 15 years of investment
experience. Mr. Rome has been with Wellington Management since 1994 and has more
than 15 years of investment experience.
Wellington Management also serves as a subadviser to the Vantagepoint Growth &
Income and the Vantagepoint Income Preservation Funds. Wellington Management
does not currently serve as investment adviser to other registered investment
companies with investment objectives similar to those of the Aggressive
Opportunities Fund. Wellington Management is a privately held Massachusetts
limited liability partnership.
INTERNATIONAL FUND
ARTISAN PARTNERS
Artisan Partners Limited Partnership, 1000 N. Water Street, Suite 1770,
Milwaukee, Wisconsin, seeks to achieve the Fund's investment objective of
long-term capital growth and diversification by country, by using fundamental
analysis to identify stocks of individual non-U.S. companies that Artisan
Partners believes have sustainable growth, dominant industry positions,
excellent management, attractive valuations and offer long-or short-term growth
opportunities. Mark Yockey, a managing director of Artisan Partners, serves as
portfolio manager for the Fund. He joined Artisan Partners in 1995 and has
worked in the investment management industry since 1981.
Artisan Partners is a Delaware limited partnership managed by its sole general
partner, Artisan Investment Corporation. Its managing member is Artisan
Investment Corporation. Andrew Ziegler and Carlene Ziegler are the directors of
Artisan Investment Corporation and together own 100% of Artisan Investment
Corporation's outstanding voting securities.
Artisan also provides investment advice to the following registered investment
companies with similar investment objectives to the International Fund, and is
paid advisory fees at the rates shown by each such fund. The assets shown are
those assets under management by Artisan Partners.
Fund Total Assets Advisory Fees
---- ------------- --------------
The Artisan International Fund $6.7 billion .93%*
The Masters' Select International Fund $74.8 million .50%**
Hirtle Callaghan Trust International
Equity Portfolio $203.3 million ***
Schwab International MarketMasters Fund $44.4 million .75% on first $100
million; .70% on assets in
excess of $100 million
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* Includes portfolio management and administrative services.
** Non-diversified portfolio typically consisting of no more than ten
securities.
*** Artisan Partners' advisory fee is based on the performance of the
portion of the Trust portfolio it manages against a benchmark. Under
this fee arrangement, Artisan receives a quarterly fee of 0.10% of the
portfolio's average daily net assets, plus or minus a performance factor
that is calculated based on the difference between the portfolio's
performance over the immediately preceding 12 months and the performance
of a benchmark index. Artisan's annual fee may not exceed 0.80 % of the
average daily net assets of the portfolio or 0.20 % per quarter, but its
annual fee may fall to zero in certain circumstances.
THE ADVISER AND THE MASTER INVESTMENT ADVISORY AGREEMENT
VIA, 777 North Capitol Street, NE, Washington, D.C. 20002, is a wholly owned
subsidiary of, and controlled by the ICMA Retirement Corporation ("RC"), a
retirement plan administrator and investment adviser whose principal investment
advisory client is VantageTrust Company ("VantageTrust"). RC was established as
a not-for-profit organization in 1972 to assist state and local governments and
their agencies and instrumentalities in the establishment and maintenance of
deferred compensation and qualified retirement plans for the employees of such
public sector entities. These plans are established and maintained in accordance
with Sections 457 and 401, respectively, of the Internal Revenue Code of 1986,
as amended. RC has been registered as an investment adviser with the SEC since
1983.
VIA is a Delaware limited liability company, and is registered as an investment
adviser with the SEC.
The following officers of VIA are also officers of The Vantagepoint Funds:
Girard Miller - President, Paul Breault - Treasurer and Paul Gallagher -
Secretary.
VIA provides investment advisory services to each of The Vantagepoint Funds,
including the Growth Fund, the Aggressive Opportunities Fund and the
International Fund under a Master Investment Advisory Agreement (the "Advisory
Agreement"). VIA's advisory services include Fund design, establishment of Fund
investment objectives and strategies, selection and management of subadvisers,
and performance monitoring, and supervising and directing each Fund's
investments. Additionally, VIA furnishes periodic reports to the Funds' Board of
Directors regarding the investment strategy and performance of each Fund.
Pursuant to the Advisory Agreement, The Vantagepoint Funds compensate VIA for
these services by paying VIA an annual advisory fee assessed against average
daily net assets under management in each Fund as follows: All Funds, except the
Index Funds, (including the Model Portfolio Funds) - 0.10% and the Index Funds -
0.05%.
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The Vantagepoint Funds' distributor is ICMA-RC Services, LLC, a wholly owned
subsidiary of RC.
Investors Bank and Trust Company, 200 Clarendon Street, Boston, Massachusetts
serves as the administrator and custodian for The Vantagepoint Funds.
FEES PAID
The following fees were paid to each Fund's former subadvisers from January 1,
2002 through the effective date of their termination:
GROWTH FUND
Atlanta Capital Management, L.L.C. $ 817,823.00
TCW Investment Management Company $1,994,247.82
AGGRESSIVE OPPORTUNITIES FUND
TCW Investment Management Company $1,166,721.82
MFS Institutional Advisors, Inc. $1,209,574.48
INTERNATIONAL FUND
Lazard Asset Management $ 371,306.06
T. Rowe Price International, Inc. $ 433,806.30
RECORD OF BENEFICIAL OWNERSHIP
The principal shareholder in The Vantagepoint Funds is VantageTrust.
VantageTrust was established for the purpose of holding and investing the assets
of public sector retirement and deferred compensation plans. VantageTrust owns a
majority of the outstanding shares of each Fund and is considered a "control"
person for purposes of the Investment Company Act of 1940. As of July 16, 2002
and September 30, 2002 the directors and officers of The Vantagepoint Funds
owned less than 1% of the outstanding shares of the Funds.
FINANCIAL INFORMATION
The Vantagepoint Funds' most recent annual and semi-annual reports to
shareholders are available upon request, without charge, by calling
1-800-669-7400.
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EXHIBT A
EXECUTIVE OFFICERS, DIRECTORS AND/OR PARTNERS OF SUBADVISERS
The principal executive officers of Peregrine are:
Robert B. Mersky Chairman and President
Ronald G. Hoffman Senior Vice President, COO, CCO and CFA
Paul von Kuster Senior Vice President
William Giese Senior Vice President
Patricia Burns Senior Vice President
Jeannine McCormick Senior Vice President
John Dale Senior Vice President
Gary Nussbaum Senior Vice President
Barbara McFadden Senior Vice President
Paul Wurm Senior Vice President
Tasso Coin Senior Vice President
Julie Gerend Senior Vice President
Daniel Hagen Senior Vice President
Jay Strohmaier Senior Vice President
James Ross Senior Vice President
Douglas Pugh Senior Vice President
John Maschoff Senior Vice President
William Grierson Vice President
The principal executive officers of Southeastern are:
Mason Hawkins Chairman - CEO and Director
George Staley Cates President and Director
Frank Stanley Vice President and Director
Randy Holt Vice President and Secretary
Charles Reaves Vice President and General Counsel
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Joseph Ott Vice President, Treasurer and COO
The partners of Wellington Management are:
Kenneth Abrams Nicholas Adams Rand Alexander
Deborah Allinson James Averill William Booth
Paul Braverman Robert Bruno Maryann Carroll
Pamela Dippel Robert Evans Lisa Finkel
Charles Freeman Laurie Gabriel John Gooch
Nicholas Greville Paul Hamel Lucius Hill, III
Paul Kaplan John Keough George Lodge, Jr.
Nancy Lukitsh Mark Lynch Christine Manfredi
Earl McEvoy Duncan McFarland Paul Mecray, III
Matthew Mergargel James Mordy Diane Nordin
Stephen O'Brien Saul Pannell Thomas Pappas
Jonathan Payson Phillip Perelmuter Robert Rands
Eugene Record, Jr. James Rullo John Ryan
Joseph Schwartz Theodore Shasta Binkley Shorts
Trond Skramstad Stephen Soderberg Eric Stromsquist
Brendan Swords Harriett Taggart Perry Traquina
Gene Tremblay Mary Ann Tynan Clare Villari
Ernst Von Metzsch James Walters Kim Williams
Karl Bandtel Edward Owens Steven Angeli
John Averill Mark Flaherty Andrew Offit
James Shakin Scott Simpson Jean Hynes
Michael Boudens Kevin Blake Mark Beckwith
William Clark Scott Elliott David Fassnacht
Lorraine Keady Mark Mandel Nilesh Undavia
Itsuki Yamashita James Bevilacqua
The executive officers of Artisan Investment Corporation are:
Andrew A. Ziegler Lawrence A. Totsky
Carlene M. Ziegler Janet D. Olsen
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