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Investment Opportunity

This portfolio pursues long-term capital appreciation in the small-cap sector while seeking to provide the risk characteristics of the less volatile large-cap S&P 500 Index. The portfolio invests in a select group of small-cap value companies believed to be undervalued relative to their future growth potential. The investment strategy emphasizes companies with a competitive advantage, strong management and low financial risk that are able to grow over market cycles, despite their discounted valuations.

Fund Risks

The market price of equity securities may be affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small or medium-sized companies may enhance that risk.

Because the fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a less concentrated fund.

Key Stats (as of 4/23/2014)

Inception: 11/20/2000
CUSIP: 92829L802
Net Assets by Fund: $119,051,993
Net Assets by Class: $119,051,993

Management Team

Julie Kutasov
Julie Kutasov Kayne Anderson Rudnick Investment Management

Industry start date: 2001

Start date with Series: 2010

Craig Stone
Craig Stone Kayne Anderson Rudnick Investment Management

Industry start date: 1990

Start date with Series: 2010

Kayne Anderson Rudnick Investment Management

Kayne Anderson Rudnick believes that superior risk-adjusted returns can be achieved through investment in high-quality companies with global dominance, excellent management, financial strength, and consistent growth purchased at reasonable prices.

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 612 funds, 2 stars out of 554 funds and 2 stars out of 335 funds within the Small Blend category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Average Annual Total Returns

Monthly Performance (%) (as of 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -4.23 -4.23 21.56 11.62 20.72 6.86 9.29
Quarterly Performance (%) (as of 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -4.23 -4.23 21.56 11.62 20.72 6.86 9.29
Index 1.78 1.78 22.65 12.74 23.33 8.07 NA

3 Mon., YTD and 1 Year performance is not annualized.

Index: Russell 2000® Value Index
The Russell 2000® Value Index is a market capitalization-weighted index of value-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

Sales Charge and Expense

Fund class operating expenses are 1.20% and gross operating expenses are 1.34%.

Operating expenses reflect a contractual expense reimbursement in effect through 04/30/2015.

Risk Statistics3 (as of 3/31/2014)

  Fund Index
R2 0.85 1.00
Beta 0.88 1.00
Alpha 0.48 0.00
Std Dev 15.32 16.04
Index: Russell 2000® Value Index

Daily Price (as of 4/23/2014)

NAV Change ($)
16.76 -0.06

Top Holdings (% Fund)
(as of 3/31/2014)

CARBO Ceramics Inc. 5.02
Landstar System, Inc. 4.86
Corporate Executive Board Company 4.75
WD-40 Company 4.64
Graco Inc. 4.33
RLI Corp. 4.11
Interval Leisure Group, Inc. 4.09
Cass Information Systems, Inc. 4.08
Syntel, incorporated 4.02
Jack Henry & Associates, Inc. 3.97

Top Sectors (% Equity)
(as of 3/31/2014)

Financial Services 28.59
Producer Durables 19.37
Consumer Discretionary 11.50
Consumer Staples 8.85
Materials & Processing 8.58

Characteristics4
(as of 3/31/2014)

Avg Weighted Market Cap (bn) $2.47
Median Market Cap (bn) $2.36
Trailing P/E 23.32x
Price-to-Cash Flow 17.57
Price-to-Book Value 4.09
3-Year EPS Growth Rate 6.57

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 612 funds, 2 stars out of 554 funds and 2 stars out of 335 funds within the Small Blend category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

The investments for the Series are managed by the same portfolio manager(s) who manage one or more other funds that have similar names, investment objectives and investment styles as the Series. You should be aware that the Series is likely to differ from the other mutual funds in size, cash flow pattern and tax matters. Accordingly, the holdings and performance of the Series can be expected to vary from those of the other mutual funds.

Shares of the separate Series of Virtus Variable Insurance Trust are sold only through the currently effective prospectuses and are not available to the general public. Shares of the VIT Series may be purchased only by life insurance companies to be used with their separate accounts which fund variable annuity and variable life insurance policies or qualified retirement plans and are also available as an underlying investment fund for certain qualified retirement plans. The performance information for the Series does not reflect fees and expenses of the insurance companies. If such fees and expenses were deducted, performance would be lower.

Please carefully consider the investment objectives, risks, charges, and expenses of the Series before investing. For this and other information about any Virtus Variable Insurance Trust Series, call 1-800-367-5877 or visit Virtus.com for a prospectus and/or summary prospectus. Read it carefully before you invest or send money.


Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.

Returns for periods of less than one year are cumulative total returns.

1 Yields/Distributions: Distribution Yield (at NAV) is calculated by annualizing the latest month's distribution and dividing by the NAV on the last business day of the period. SEC Yield represents the net investment income earned by a fund over a 30-day period (7-day period for Money Market Funds), expressed as an annual percentage rate based on the fund's public offering share price at the end of the 30-day period (7-day period for Money Market Funds).

2 Distribution History: Distributions are represented on a cash basis and may be reclassified at year end for tax purposes. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. STCG: Short Term Capital Gain, LTCG: Long Term Capital Gain


3 Risk Statistics: R2 is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. Beta is a quantitative measure of the volatility of a given portfolio to the overall market. Alpha is a risk adjusted measure of an investment's excess return relative to a benchmark. A positive Alpha indicates that the investment produced a return greater than expected for the risk (as measured by Beta) taken. Standard Deviation measures variability of returns around the average return for an investment fund. Higher standard deviation suggests greater risk. Risk Statistics are calculated using 36 monthly returns.

4 Characteristics: For Equity Funds:Trailing P/E: Per-share stock price divided by the latest12-months Earnings per Share; Price/Cash Flow: Per-share stock price divided by the per-share operating cash flow; Price/Book: Per-share stock price divided by the latest 12-month per-share Book Value; 3-Year EPS Growth Rate: Average of earnings per share growth for latest 3-year period. The 3-Year EPS Growth Rate is not a forecast of the fund's performance.

Not insured by FDIC/NCUSIF or any federal government agency. No bank guarantee. Not a deposit. May lose value.

Distributed by VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment Partners, Inc.