Portfolio Rebalancing

Chart of the Week for March 16-22, 2007

When markets move up and down, the returns from different asset classes can cause a portfolio to move away from its initial allocation. As allocations shift, failing to rebalance can change the risk profile of the portfolio, as certain asset classes tend to be riskier than others. Retirement savers should be aware of this and keep their asset allocations close to target.

To illustrate this concept, imagine a sample portfolio divided evenly between five different asset classes shown in the graph above. Over a three-year period ending 12/31/2006, the first pie chart shows an allocation that was kept with periodic rebalancing - the percentage of funds in each asset class remains balanced to 20% in each asset category. The second chart shows how the allocation could have changed over the same three-year period if the portfolio was never rebalanced.

It is apparent from this example that the risk profile of a portfolio can change if it is never rebalanced. Retirement investors should remember to periodically check their asset allocations to make sure they are still close to their targets, and rebalance if necessary.

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. 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.