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allocations. By investing in this way, each VP Model Portfolio Fund is exposed to the <br />risks as well as the potential rewards of its underlying funds and the portfolio <br />holdings and strategies of those funds. <br />Asset Allocation: The targeted allocation of each VP Model Portfolio Fund among <br />the underlying funds and the asset classes they represent is established by VIA. <br />Rebalancing: If one component of a particular VP Model Portfolio Fund <br />outperforms another component over any given time period, the VP Model <br />Portfolio Fund will become "out of balance." For example, if the equity <br />component of a VP Model Portfolio Fund outperforms' the fixed income portion, <br />the amount of the equity portion may increase beyond its intended allocation. A <br />significant change in the allocation can affect both the level of risk and the <br />potential for gain or loss. VIA, as investment adviser, monitors the performance <br />and underlying fund allocations of each VP Model Portfolio Fund on a regular <br />basis. When a fund becomes out of balance, VIA will transfer assets between <br />underlying funds in order to rebalance a VP Model Portfolio Fund. <br />C. VT II Cash Management Fund <br />The VT II Cash Management Fund invests substantially all of its assets in a single <br />underlying third -party fund. The underlying fund generally invests in a diversified <br />portfolio of high quality, short -term debt securities. <br />VII. INVESTMENT RISKS <br />Key risks of investing in the Funds and any underlying funds are summarized below. This is not <br />an exhaustive list. Please refer to each individual Fund Fact Sheet or Investment Options Sheet <br />which identifies the key risks applicable to that Fund. <br />Asset Allocation Risk —Asset allocation risk is the risk that the selection of the underlying funds <br />and the allocation of Fund assets among them will cause a Fund to lose money or to <br />underperform other funds with similar investment objectives. In addition, there is the risk that <br />the asset classes favored by the allocations will not perform as expected. Any changes made in <br />the underlying funds, such as changes in investment objectives or strategies, may affect the <br />Fund's performance. Similarly, if the Fund's asset allocations become "out of balance," this <br />could affect both the Fund's level of risk and the Fund's potential for gain or loss. <br />Asset - Racked Securities Risk — Defaults on the assets underlying asset - backed securities may <br />adversely affect the value of these securities. These securities are subject to risks associated <br />with the nature of the underlying assets and are also subject to interest rate risk, credit risk, <br />prepayment risk, and extension risk. Certain asset- backed securities may be more volatile and <br />less liquid than other traditional types of fixed income securities. <br />VantageTrust11Funds <br />Disclosure Memorandum <br />2016.0113 - 8 - <br />