International Markets Year in Review

Chart of the Week for January 13-19, 2006

International markets recorded strong returns in 2005, significantly outperforming domestic markets. Both emerging markets such as Argentina, Brazil and Mexico and developed markets including Hong Kong, Japan and Singapore posted higher results. Assets in international equity funds, fueled by strong performance of international stocks relative to U.S. equities, surged past $1 trillion in 2005. This is the fourth straight year that international markets have outperformed U.S. markets, despite a strengthening US dollar in 2005. Investors exposed to overseas markets and funds benefit from a weak dollar because once the international assets are converted back into weaker dollars, the assets' dollar value rises.

Japan's stock market, after several years of poor returns, outperformed most developed markets, returning over 25% in 2005. Investor optimism in Japan is up, as investors see an end to deflation, real estate prices are rising and Japanese companies are reporting solid corporate profits. Market returns in Latin American were also robust. The MSCI EM Latin America Index was up over 50% in US Dollars in 2005 and prices for many companies remain attractive. Upcoming elections in several Latin American countries, however, could affect returns in 2006.

There are risks inherent with investing in international securities including currency exposure, social and political risks. Although performance of international funds and international markets has been very good, it is imperative that investors do not chase returns. Diversifying one's assets by adding exposure to international markets is wise; however, it should be only one component of an overall portfolio.

This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. 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.

Investment information can change rapidly and the changes can be significant particularly in volatile markets. For this reason “as of”’ dates are provided for specific data where applicable. The information should not be considered current after the dates provided.

Please read both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should carefully consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. The Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.

The performance data quoted represents past performance. Past performance is no guarantee of 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 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.