Small Caps Slipping?

Chart of the Week for August 6, 2004 - August 12, 2004

Small cap stocks fell dramatically in July with their worst decline since September 2002. The Russell 2000 Index of small stocks, shown in the chart above, fell 6.8%. Large cap stocks, as indicated by the S&P 500 Index above, had less of a decline in returns for July (-3.4%) making it only the 9th time in the past 24 months that large cap stocks outperformed small cap stocks. Small cap stocks have been leading much of the market recovery over the past year and a half, however it appears their momentum may be slipping. Some analysts and advisors continue to encourage investors to diversify to assist in maintaining their portfolio objectives.

* The illustration was created from information provided by Ibbotson Associates, a leading independent provider of economic, financial, and industry research designed to meet the diverse planning and information needs of businesses, governments, and professional investors and is not affiliated with the ICMA-RC). The S&P 500 is an Index of 500 Stocks, a widely recognized, unmanaged index of common stock prices. The Russell 2000 Index consists of 2000 US stocks in terms of market capitalization and is a measure of the stock price performance of small companies. 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. 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.