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holder of such assets may not be able to sell the assets at the time desired for an acceptable <br />price or might not be able to sell the assets at all. Illiquid assets may also be difficult to value. <br />Mid -Cap Securities Risk— Investments in mid - capitalization companies involve greater risk than <br />is customarily associated with investments in larger, more established companies. Equity <br />securities of mid - capitalization companies generally trade in lower volume and are generally <br />subject to greater and less predictable price changes than the securities of larger companies. <br />Mortgage - Racked Securities Risk — Defaults on the mortgages underlying mortgage- backed <br />securities may adversely affect the value of these securities. These securities are also subject to <br />interest rate risk, credit risk, prepayment risk, and extension risk. Certain mortgage - backed <br />securities may be more volatile and less liquid than other traditional types of fixed income <br />securities. <br />Multi- Manager Risk —While VIA monitors each subadviser and the overall management of the <br />The Vantagepoint Funds that are the underlying mutual funds to certain VantageTrust II Funds, <br />each subadviser makes investment decisions independently from VIA and the other <br />subadvisers. It is possible that the security selection process of one subadviser will not <br />complement that of the other subadvisers. As a result, the fund's exposure to a given security, <br />industry, sector or market capitalization could be smaller or larger than if the fund were <br />managed by a single subadviser, which could affect the fund's performance. <br />Municipal Securities Risk —The value of, payment of interest and repayment of principal with <br />respect to, and the ability of the fund to sell, a municipal security may be affected by <br />constitutional amendments, legislative enactments, executive orders, administrative <br />regulations and voter initiatives as well as the economics of the regions where the issuer is <br />located. Certain municipal securities may be difficult to value or sell at a fair price. <br />Preferred Stock Risk— Preferred stockholders may have more limited voting rights than <br />common stockholders. Holders of a company's debt securities are generally paid before holders <br />of the company's preferred stock. The value and volatility of preferred stock may be dependent <br />on factors that affect both fixed income securities and equity securities. <br />Prepayment and Extension Risk— Mortgage- backed and asset - backed securities are exposed to <br />prepayment risk and extension risk. Prepayment risk may occur when borrowers pay their <br />mortgages or loans more quickly than required under the terms of the mortgage or loan. Most <br />borrowers are likely to prepay their mortgage or loan at a time when it may be least <br />advantageous to a holder of these securities (e.g., during periods of falling interest rates), which <br />may force the holder to reinvest the proceeds of prepayments in lower- yielding instruments <br />and result in a decline in the holder's income. Extension risk may occur when rising interest <br />rates result in decreased prepayments, which could extend the average life of the security, <br />cause its value to decline more than traditional fixed - income securities and increase its <br />volatility. <br />VantageTrust 11 Funds <br />Disclosure Memorandum <br />2016.01.13 -12- <br />