Currency Turnaround Benefits U.S. Investors in Japan

Chart of the Week for August 20-26, 1999

For most of the first seven months of 1999, dollar-based returns on Japanese securities (measured by the Nikkei Average) lagged returns measured in yen. This was because the yen was becoming weaker relative to the dollar. As a foreign currency weakens against the dollar, it takes more units of that currency to convert back into dollars and as a result, returns to U.S. investors are dampened.

The weakening of the yen relative to the dollar began to reverse in July. By Friday, August 20, the yen was 2% stronger relative to the dollar than at the beginning of 1999 and about 10% stronger than at its low point relative to the dollar in May. This trend benefits U.S. investors in Japanese securities—the cumulative year-to-date return on the Nikkei Average in dollar terms pulled ahead of the return in yen during the week of August 16.

Japan is the largest country allocation of both the Vantagepoint International and Vantagepoint Overseas Equity Index Funds. As of June 30, the allocation to Japan was 22.4% of the International Fund and 23.2% of the Overseas Equity Index Fund. Both of these funds have produced positive quarter-to-date returns, in contrast to all major domestic equity indexes, which are in negative territoryfor the third quarter to date.

* This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. 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. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.