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Mutual Fund Specialty

Zevenbergen Technology

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Ticker
RAGTX
CUSIP
92837Q801
POP
$ (as of )
Inception
02/05/2002
Total Assets by Class
$549,942,303.81 (as of 08/17/2022)
Total Assets by Fund
$1,516,845,030.08 (as of 08/17/2022)
Morningstar Category
Technology

Portfolio Overview

Investment Overview

The Fund seeks attractive long-term competitive returns by investing in a diversified portfolio of innovative technology companies that are capitalizing on the major themes powering tech sector growth.

Effective July 25, 2022, this Fund's name and subadviser have changed.

Management Team

Investment Partner

Zevenbergen Capital Investments LLC

Zevenbergen Capital Investments LLC is a growth equity boutique. The investment team applies rigorous fundamental research to build exclusively high-growth portfolios.


Learn more about Zevenbergen Capital Investments LLC

Investment Professionals

Nancy Zevenbergen

Nancy Zevenbergen, CFA

President, Co-Chief Investment Officer, Portfolio Manager

Industry start date: 1981
Start date as fund Portfolio Manager: 2022

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Brooke de Boutray

Brooke de Boutray, CFA

Co-Chief Investment Officer, Portfolio Manager

Industry start date: 1982
Start date as fund Portfolio Manager: 2022

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Joe Dennison

Joseph Dennison, CFA

Portfolio Manager

Industry start date: 2011
Start date as fund Portfolio Manager: 2022

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Anthony Zackery

Anthony Zackery, CFA

Portfolio Manager, Sustainable Investment Lead

Industry start date: 2011
Start date as fund Portfolio Manager: 2022

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Key Features

Capitalizing on Technological Growth Trends

The Fund aims to identify significant growth trends ahead of the crowd, building an intimate knowledge of technology companies with optimal exposure to key trends and investing in those that demonstrate market leading potential

Diversified Technology Portfolio

The Fund invests in 40-70 emerging and mature technology companies, focusing on revenue, cash flow, and earnings growth in companies with strong management and solid fundamentals

Leveraging an Information Advantage

The portfolio management team has deep experience uncovering emerging trends and managing investments in technology companies across lifecycles, applying perspective from decades of industry knowledge

Portfolio Characteristics

Characteristics4

(as of 06/30/2022)
Average Weighted Market Cap (billions) $626.50
Median Market Cap (billions) $38.99
Trailing P/E Ex-Negative Earnings 20.89
Price-to-Cash Flow 22.01
Price-to-Book Value 7.52
3-Year EPS Growth Rate 25.94

Top Holdings (% Fund)

(as of 06/30/2022)
Security
Alphabet Inc. Class C
9.59
 9.59%
Microsoft Corporation
8.34
 8.34%
Apple Inc.
6.67
 6.67%
Palo Alto Networks, Inc.
4.46
 4.46%
Amazon.com, Inc.
3.61
 3.61%
CrowdStrike Holdings, Inc. Class A
3.19
 3.19%
Mastercard Incorporated Class A
2.88
 2.88%
Broadcom Inc.
2.64
 2.64%
MongoDB, Inc. Class A
2.58
 2.58%
ON Semiconductor Corporation
2.47
 2.47%

Holdings are subject to change.

Sector Allocation (% Equity)

(as of 06/30/2022)
Software
32.91
 32.91%
Semiconductors & Semiconductor Equipment
19.46
 19.46%
IT Services
14.47
 14.47%
Interactive Media & Services
13.17
 13.17%
Technology Hardware Storage & Peripherals
9.85
 9.85%
Internet & Direct Marketing Retail
4.03
 4.03%
Automobiles
1.47
 1.47%
Communications Equipment
1.12
 1.12%
Electronic Equipment Instruments & Components
1.04
 1.04%
Hotels Restaurants & Leisure
0.89
 0.89%
Media
0.81
 0.81%
Road & Rail
0.63
 0.63%
Oil Gas & Consumable Fuels
0.16
 0.16%
Electrical Equipment
0.00
 0.00%

Performance & Risk

Growth of $10,000 Investment

From to
This chart assumes an initial investment of $10,000 made on for Class ddd shares including any applicable sales charges. Performance assumes reinvestment of dividends and capital gain distributions.

Performance

As of
As of

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.

Sales Charge and Expenses

Risk Statistics3

(as of )
Fund Index
R2
Beta
Alpha
Std Dev

Risk Considerations

Market Volatility: The value of the securities in the portfolio may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional, or global events such as war (e.g., Russia's invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the portfolio and its investments, including hampering the ability of the portfolio's manager(s) to invest the portfolio's assets as intended.
Issuer Risk: The portfolio will be affected by factors specific to the issuers of securities and other instruments in which the portfolio invests, including actual or perceived changes in the financial condition or business prospects of such issuers.
Equity Securities: The market price of equity securities may be adversely 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.
Focused Investments: To the extent the portfolio focuses its investments on a limited number of issuers, sectors, industries or geographic regions, it may be subject to increased risk and volatility.
Foreign Investing: Investing in foreign securities subjects the portfolio to additional risks such as increased volatility; currency fluctuations; less liquidity; less publicly available information about the foreign investment; and political, regulatory, economic, and market risk.
Prospectus: For additional information on risks, please see the fund's prospectus.

Commentary

2Q22

Effective July 25, 2022, this fund’s subadviser changed. The commentary that follows reflects the management of the fund as of June 30,2022.

Market Review

Global equities tumbled over the second quarter, with the MSCI World Index suffering one of its worst quarterly declines on record. Central banks switched to a more aggressive stance in raising rates as inflation continued to accelerate, and speculation grew that a period of negative growth would be needed to bring rampant prices under control. Lockdowns in key Chinese cities also weighed on sentiment as it led to the prospect of further supply chain disruptions. Additionally, hopes of a swift end to the war between Russia and Ukraine were dashed with the conflict looking like it will become a war of attrition. All sectors in the MSCI World Index fell, led by the information technology, consumer discretionary and communication services sectors. Defensive sectors, such as consumer staples and utilities, held up the best, as did energy stocks.

Information technology and related stocks underperformed the broader market during the period. ‘New technology’ stocks slumped as the prospect of higher interest rates lessened the appeal of companies that may not generate meaningful earnings until well into the future. At the industry level, semiconductors fell the most with reports of weakening consumer electronics demand and supply chain constraints. Software outperformed the sector and market despite mixed earnings results as investors sought safety in the relatively sturdy revenue growth and high margin characteristics of the group. Internet and ecommerce stocks continued to struggle as consumer confidence continued to deteriorate.

Performance

For the quarter, the Virtus Technology Fund (Institutional shares) returned ‑25.79%, underperforming the S&P North American Technology Sector Index’s return of ‑23.60%. During the period, stock selection and industry allocation detracted from relative returns.

Contributors

Our underweight position in NVIDIA was the top relative contributor during the period. Shares fell along with other semiconductor companies following reports of weakening consumer electronics demand and ongoing supply chain constraints. The company reported quarterly financial results that exceeded expectations driven by strong demand in the Data Center and Gaming segments. However, guidance was negatively impacted by demand headwinds from China’s Covid-related lockdowns. NVIDIA continues to demonstrate both diversification within the hyperscale segment and continued AI-driven value capture as accelerated computing proliferates beyond hyperscale customers. In our view, the company’s technological leadership and diversification across very attractive secular growth verticals such as gaming, datacenter, AI, Security, and edge computing should drive compelling growth over several years.

Our position in DXC Technology was also a top relative contributor. The IT services provider offers information technology, business process outsourcing, and professional services to commercial clients globally. DXC reported quarterly financial results that were better than feared with positive growth in its Global Business Services segment. Management reiterated revenue growth and free cash flow targets and will continue to implement the company’s share repurchase plan. DXC is benefiting from strength in the digital business and partnerships that are helping it expand in the cloud computing space.

Detractors

Our position in database software company, MongoDB, was a top detractor during the period as shares came under pressure amid the high growth tech selloff. The company reported strong quarterly results that exceeded consensus expectations. The Atlas product continued to see strong traction in the market with growth remaining above 80% y/y. Management raised their revenue guidance for the year while also incorporating some potential for softening in the demand outlook, which we view as prudent. We remain constructive on the shares based on our view of a robust demand environment for cloud-based applications and MongoDB’s uniqueness as a database-centric and platform agnostic provider.

Our position in cloud security company Zscaler was also a top detractor amid the growth software selloff. The company reported quarterly financial results that exceeded expectations driven by billings growth of 54% y/y. Despite the volatile market environment, we believe the company remains well-positioned to produce very attractive long-term growth. Zscaler is a first mover in cloud security that has essentially created a new market in the cyber security world with an innovative product umbrella and strategic focus, which should disrupt the competitive landscape for years to come.

Outlook

In our view, the technology sector continues to benefit from strong tailwinds which should continue to drive attractive long-term appreciation. There is no question in our minds that the COVID-19 crisis will spur the use of technology and change how we live and work in the future. Additionally, many businesses are struggling to find workers to meet customer demand and need technology solutions to improve productivity of limited staffs. As companies need to reduce costs and improve productivity, we expect to see accelerating demand for innovative and more productive solutions such as cloud, software-as-a-service, artificial intelligence, cyber security, etc. We are in a period of rapid change, where the importance of technology is key to the prosperity of most industries. This environment is likely to provide attractive growth opportunities in many technology stocks over the next several years.

We continue to believe the technology sector can provide some of the best absolute and relative return opportunities in the equity markets – especially for bottom-up stock pickers.

The commentary is the opinion of the subadviser. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.

Related Literature

Marketing Materials

Virtus Zevenbergen Technology Fund Fact Sheet - A
Virtus Zevenbergen Technology Fund Fact Sheet - INST

Financial Materials

Virtus Investment Trust Statutory Prospectus
Virtus Zevenbergen Technology Fund Summary Prospectus
Virtus Investment Trust SAI
Virtus Investment Trust Annual Report
Virtus Investment Trust Semiannual Report

Holdings

Technology Holdings Monthly
Virtus Zevenbergen Technology Fund Top Holdings
Virtus AllianzGI Technology Fund Holdings Fiscal Q1
Virtus AllianzGI Technology Fund Holdings Fiscal Q3

Investors should carefully consider the investment objectives, risks, charges and expenses of any Virtus Mutual Fund before investing. The prospectus and summary prospectus contains this and other information about the fund. Please contact your financial representative, call 1-800-243-4361 to obtain a current prospectus and/or summary prospectus. You should read the prospectus and/or summary prospectus 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.

Average annual total return is the annual compound return for the indicated period. It reflects the change in share price and the reinvestment of all dividends and capital gains. NAV returns do not include the effect of any applicable sales charges. POP and w/CDSC returns include the effect of maximum applicable sales charges.

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

1 Yields/Distributions: 30-day SEC Yield is a standardized yield calculated according to a formula set by the SEC, and is subject to change. 30-day SEC Yield (unsubsidized) is the 30-day SEC Yield without the effect of applicable expense waivers. Distribution Rate is calculated by (a) annualizing the latest income distribution for fixed income funds or funds less than 1 year old, or (b) summing all income distributions over the preceding 12 months for all other funds, and dividing by the NAV on the last business date of the period, unless otherwise indicated. The Distribution Rate may be comprised of ordinary income, net realized capital gains and returns of capital.

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: Avg. Weighted Market Cap (bn): The total dollar market value of all of a company’s outstanding shares. Trailing P/E Ex-Negative Earnings: Per-share stock price divided by the latest 12-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.

4 Characteristics: For Fixed Income Funds: Effective Duration represents the interest rate sensitivity of a fixed income fund. For example, if a fund's effective duration is five years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price.

Morningstar Disclosures:
The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads.

© Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.