Smaller Has Been Better

Chart of the Week for August 15-21, 2003

The dramatic rise in equity stock prices since the beginning of the second quarter has not affected all stocks equally. Riskier smaller company stocks, those with market capitalizations of $2 billion and under, have exceeded the returns of their larger counterparts. This fact has some investors believing that the bear market is over. During the early stages of a bull-market, the stocks of smaller companies routinely outperform the stocks of larger companies. One possible explanation for this is that improved investor optimism leads to an increased willingness to assume more risk, with the hope of earning a greater return. Only time will tell if this rally is a false start or the beginning of a trend.

* This illustration was compiled by information provided by Ibbotson Associates, an organization, which is not affiliated with the ICMA-RC). This information is provided for educational purposes only and is not intended to be construed as or relied upon as investment advice. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person. Individuals should seek financial advice regarding the appropriateness of any new investment strategy. You cannot directly invest in these indices. The indices performance illustrated here do not reflect the expenses associated with the active management of a portfolio of open-ended investment company shares. Performance is historical and past performance is not indicative of future performance. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.