Value Beats Growth in International Equity Funds Over Five Years

Chart of the Week for October 21-October 27, 2005

International equity markets have had strong performance recently as evidenced by the latest quarterly return of 10.4% for the MSCI EAFE Index. Longer-term, results are muted but still positive as shown by the five-year performance numbers above. Taking a deeper look at the returns shows that the performance of international equity funds is not consistent across styles. Value-oriented funds have beaten growth-oriented funds in the past five-year period, following the similar trend in US markets. Value stocks are those that trade at a discount to their fair value. Growth companies are the opposite; their stock sells at high P/E ratios because of high earnings growth with expectations for continued growth.

Just as growth and value styles fall in and out of favor within US markets, international style cycles also occur. This demonstrates the importance of diversification across styles when investing in both US and international equities.

* The following indices represent market sectors: U.S. large cap stocks - S&P 500; international stocks - MSCI EAFE; emerging markets stocks - MSCI Emerging Markets. 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. .