Long-term capital growth
Principal Investment Strategies
The Fund employs multiple investment strategies to seek long-term growth of capital, with lower volatility over time than that of stocks in general and a risk/return profile different from that of traditional asset classes, such as stocks and fixed income securities. In combination, the Fund’s investment strategies seek to provide investment exposure to U.S. and foreign convertible securities, stocks, fixed income securities, and real estate investment trusts (“REITS”) through direct investments or through the use of derivative instruments. The Fund currently uses the following investment strategies:
• Convertible Securities Strategy;
• Enhanced Equity Strategy;
• Low Duration-Plus Fixed Income Strategy; and
• Passive REIT Index Strategy.
Each of these investment strategies is described in more detail below.
• Convertible Securities Strategy—The Fund allocates a portion of its assets to a portfolio of convertible securities of U.S. or foreign companies (which may include issuers located in emerging market countries). Convertible securities, which include convertible bonds and convertible preferred stocks, possess investment characteristics of both stocks and bonds. The Fund’s subadvisers seek to invest in those convertible securities they believe represent an attractive risk/reward potential. The majority of these securities are rated below investment grade or are unrated. The Fund’s subadvisers also may invest in a combination of either convertible or non-convertible bonds, and common stocks or equity options, to seek to replicate the investment exposure of convertible securities or to seek to manage risk. The subadvisers implementing the Fund’s convertible securities strategy may also invest in other types of fixed income and equity securities, including “restricted” securities, such as Rule 144A securities.
• Enhanced Equity Strategy—Another portion of the Fund’s assets invests in a portfolio of Russell 2000® Index futures contracts and U.S. and foreign fixed income securities. This strategy’s subadviser utilizes Russell 2000 Index futures contracts or swap agreements to gain equity exposure, combined with purchasing U.S. and foreign fixed income securities seeking to generate returns in excess of the futures contracts’ or swap agreements’ implied financing costs. The Fund’s U.S. and foreign fixed income securities in this portion of the Fund’s portfolio (1) are held, in part, as collateral in conjunction with the Fund’s use of futures contracts; (2) may include government and agency securities, corporate bonds, mortgage-backed securities, asset-backed securities, and municipal securities; and (3) generally have a portfolio effective duration of no greater than three years. Effective duration is a measure of the expected change in value of a fixed income security for a given change in interest rates, and takes into account that expected cash flows will fluctuate as interest rates change. For example, the value of a fixed income security with an effective duration of two years would be expected to decline around 2% if interest rates rose by 1%. Conversely, the value of the same fixed income security would be expected to increase around 2% if interest rates fell by 1%. The fixed income securities in this portion of the Fund are generally investment grade securities.
• Low Duration-Plus Fixed Income Strategy—Another portion of the Fund’s portfolio invests in core short and intermediate maturity fixed income securities (including securities issued or guaranteed by the U.S. Government or foreign governments and their agencies or instrumentalities, and U.S. and foreign mortgage-backed and asset backed securities) that combined generally have a portfolio effective duration of no greater than three years.
The strategy’s core fixed income securities are generally investment grade securities (i.e., securities rated within the four highest grades by Standard & Poor’s, Moody’s Investors Service, Inc. (“Moody’s”), or Fitch Ratings (“Fitch”) or unrated securities that the subadviser determines are of comparable quality) that the subadviser to this portion of the Fund believes provide return opportunities because they are priced below fair market value relative to securities of similar credit quality and interest rate sensitivity. Plus, the strategy also incorporates investments in non-core sectors and securities which may include but are not limited to below investment grade and unrated securities, foreign securities, including securities of issuers located in emerging market countries, inflation-adjusted securities, floating rate loans, and currencies that the subadviser believes offer attractive investment opportunities. The subadviser may use futures and swaps as part of this fixed income strategy and may seek to reduce risk of loss due to currency fluctuations by hedging its non-U.S. dollar exposure, using a variety of techniques, including forward currency contracts.
• Passive REIT Index Strategy—Another portion of the Fund’s assets invests in a portfolio of REIT and REIT-like securities included in the Dow Jones U.S. Select REIT Index™, following an indexed or passively managed approach to investing. The subadviser to this portion of the Fund seeks to approximate the investment characteristics and performance of the Dow Jones U.S. Select REIT Index by investing in REITs and REIT-like securities included in that index. The Dow Jones U.S. Select REIT Index is an unmanaged index that intends to measure the performance of publicly traded REITs and REIT-like securities. The index is a subset of the Dow Jones U.S. Select Real Estate Securities Index, which represents equity REITs and real estate operating companies traded in the U.S.
Additional Information About the Fund’s Principal Investment Strategies
A significant portion of the Fund’s assets may be invested in “below investment grade” securities (commonly known as “high yield securities” or “junk bonds”). Below investment grade securities are those rated below the four highest categories by Standard & Poor’s (below BBB), Moody’s (below Baa), or Fitch (below BBB), or are unrated securities that the Fund’s subadvisers determine are of comparable quality. The Fund’s below investment grade securities or instruments (which include fixed income securities, convertible securities, preferred stock, and floating rate loans) generally will not exceed, in the aggregate, 55% of the Fund’s net assets, with additional limits as specified below.
The Fund limits its aggregate investments in (i) fixed income securities that are rated below investment grade, excluding convertible bonds; and (ii) floating rate loans so that, taken together, they generally will not be more than 15% of the Fund’s net assets.
The Fund limits its investments in convertible securities, which include convertible bonds and convertible preferred stocks, such that they generally will remain below 45% of the Fund’s net assets.
Under normal circumstances, the Fund invests at least 40% of its net assets in fixed income securities in addition to its investments in convertible bonds.
In addition to Russell 2000 Index futures contracts, the Fund’s subadvisers also may use other derivative instruments, including futures and options, swap agreements, swaptions, and forward currency contracts, to achieve desired investment exposure, enhance portfolio efficiency, or manage risk. Trading in derivative instruments is used as an alternative to, or in conjunction with, buying, selling and holding stocks and fixed income securities.
The Fund’s investments in credit default swaps, if any, will be less than 5% of the Fund’s net assets.
The Fund is available for investment only by the Vantagepoint Model Portfolio Funds and Vantagepoint Milestone Funds.
Principal Investment Risks
There is no guarantee that the Fund will achieve its investment objective.
You may lose money by investing in the Fund.
The Fund’s principal investment risks include Convertible Securities Risk, Interest Rate Risk, Credit Risk, High Yield Securities Risk, Small-Cap Securities Risk, Derivative Instruments Risk, Foreign Securities Risk, U.S. Government Agency Securities Risk, Asset-Backed Securities Risk, Mortgage-Backed Securities Risk, REITs Risk, Indexing Risk, Foreign Currency Risk, Municipal Securities Risk, Floating Rate Loans Risk, Call Risk, Stock Market Risk, Portfolio Turnover Risk, Multi-Manager Risk.
Please see the Risk Glossary for additional information about the Fund’s risks.
Performance & Expenses
|Fund/Benchmark Name||Qtr||YTD||1-Yr||3-Yr||5-Yr||10-Yr||Since Inception|
|VP Diversifying Strategies T||5.19%||7.90%||8.96%||4.02%||4.13%||N/A||2.63%|
|S&P 500 Indexa,b||3.85%||7.84%||15.43%||11.16%||16.37%||7.24%||N/A|
Fund past performance, as shown, is no guarantee of how the Fund will perform in the future. The performance shown has been annualized for periods greater than one year. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. For current performance, visit www.icmarc.org.
Fund performance is shown comparing it to a "benchmark" which may be a (i) broad-based securities market index (ii) a group of mutual funds with similar investment objectives, or (iii) a short term government backed debt obligation such as a U.S. Treasury Bill. An index is not available for direct investment, is unmanaged, and does not reflect the costs of portfolio management or trading. A fund's portfolio may differ from the securities held in an index.
a. The S&P 500 Index consists of 500 companies representing larger capitalization stocks traded in the U.S.
b. Certain information including, but not limited to, benchmark performance or other performance and/or fee information, is provided by Morningstar, Inc., © 2016 All rights reserved. This information: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed and (3) is not warranted to be accurate, complete or timely. Neither Morningstar and/or its content providers are responsible for any damages or losses arising from any use of information. Morningstar is a registered trademark of Morningstar, Inc.
c. The custom benchmark is comprised of the S&P 500 Index and Bloomberg Barclays U.S. Intermediate Aggregate Bond Index. Prior to May 1, 2014, the weightings were 50% S&P 500 Index and 50% Bloomberg Barclays U.S. Intermediate Aggregate Bond Index. Beginning May 1, 2014, the weightings were 60% S&P 500 Index and 40% Bloomberg Barclays U.S. Intermediate Aggregate Bond Index. The S&P 500 Index consists of 500 companies representing larger capitalization stocks traded in the U.S. The Bloomberg Barclays U.S. Intermediate Aggregate Bond Index consists of investment-grade U.S. fixed income securities with maturities of 1 to 10 years.
|Record Date||Ex/Payable Date||Income/Capital Gains Paid Per Share|
|Sep 23, 2016||Sep 23, 2016||$0.679010000|
|Jul 29, 2016||Jul 29, 2016||$0.027007000|
|Dec 18, 2015||Dec 18, 2015||$0.264308000|
|Dec 19, 2014||Dec 19, 2014||$0.689129000|
|Dec 20, 2013||Dec 20, 2013||$0.318116000|
|Dec 31, 2012||Dec 31, 2012||$0.002435000|
|Dec 17, 2012||Dec 17, 2012||$0.200595000|
|Dec 16, 2011||Dec 16, 2011||$0.159169000|
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, fee waivers, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. For funds with loads, the Morningstar rating on a load-waived basis is provided, when available. Load-waived ratings do not include any front- or back-end sales loads and are intended for investors that have access to such purchase terms. Funds with loads are waived for plans administered by ICMA-RC. Past performance is no guarantee of future results.
The source for this information is Morningstar, Inc. Copyright © 2016 Morningstar, Inc.® All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar, Inc. is a global investment research firm that is not affiliated with ICMA-RC. ICMA-RC does not independently verify Morningstar data.
Morningstar places funds in certain categories based on the fund's historical portfolio holdings. Placement of a fund in a particular Morningstar category does not mean that the fund will remain in that category or that it will invest primarily in securities consistent with its Morningstar category. A fund's investment strategy and portfolio holdings are governed by its prospectus, guidelines or other governing documents, not its Morningstar category.