Treasury Inflation Protected Securities

Chart of the Week for May 4 - May 10, 2007

Treasury Inflation Protected Securities (TIPS) are a type of US Treasury note or bond that are designed to help protect the bondholder from the effects of inflation. Like other US Treasury securities, they carry little default risk, because they are backed by the US Government. TIPS pay a return that has two components: a fixed interest rate like traditional bonds, and the inflation rate. The bond's principal (the amount paid to the bondholder at the maturity date) is automatically adjusted to compensate for inflation, and as a result interest payments rise with inflation and fall with deflation. The inflation rate used is the Consumer Price Index (CPI), a monthly measurement of the price for a fixed basket of goods and services bought regularly by US consumers.

In the graph above, we can see that in four of the last five years, TIPS Funds, as measured by the Lehman Brothers U.S. TIPS Index, have outperformed the overall U.S. investment grade bond market, as measured by the Lehman Brothers Aggregate Bond Index. The Aggregate Index includes components for government and corporate securities, mortgage securities, and asset-backed securities, but does not include TIPS.

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.