A Case for Diversification

Chart of the Week for December 5-11, 2003

The S&P 500 Index measures the movement of 500 of America’s leading companies. The smallest 100 stocks of the group have strongly outperformed the largest 100 stocks in 2003. As can be seen in the chart, the current year-to-date performance of the smallest 100 stocks has outperformed the 20-year annualized returns for all other stocks within the index. Many investors believe that the larger the market capitalization of a company, the less risky the investment, but in some markets the opposite may be true allowing the investor to benefit from diversification. According to the chart, even stocks that seem similar on the surface can perform quite differently.

* This illustration was compiled by information provided by Bloomberg L.P., which is an information services, news and media company serving customers around the world. Bloomberg L.P. is not affiliated with the ICMA-RC. This information is being provided for educational purposes only and is not intended to be construed as or relied upon as investment advice. This information is not intended to be construed as a solicitation for particular product or security. Performance reflected above represents past performance. The S&P 500 is an Index of 500 Stocks, a widely recognized, unmanaged index of common stock prices. A fund’s portfolio may differ significantly from the securities held in the indices. Indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual open-ended investment company portfolio. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Past performance is not indicative of future returns. Individuals are advised to consider any new investment strategies carefully prior to implementing. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide, which contains additional information on management fees, other fund expenses, and investment risks and objectives carefully prior to investing any money. 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.