PRIVATE EQUITY

ALPS | Red Rocks Listed Private Equity Portfolio

What is Private Equity (PE)? Private Equity is an investment approach and business model:

Buy

Improve

PE firms use investor capital to buy controlling interests in companies. If the company is public, the company is taken private.

Sell

PE firms provide financing and expertise to improve the operations of the company and enable new growth.

After 5-7 years of improvements and enhancements, PE firms sell the company. Proceeds are distributed to investors and/or reinvested in new deals.

What is Listed Private Equity (LPE)? LPE companies employ the same business model (buy, improve, sell) as traditional private equity firms that raise capital from institutions and wealthy individuals. But unlike private deals, LPE companies attract capital from public market investors, providing investors with both convenient and liquid access through shares of a listed vehicle.

Investment Process Investment Universe

Core Research List

Red Rocks Capital Portfolio

•   Management track record •   Underlying investment valuation •   Historical returns analysis •   Macro investment themes •   Transparency •   Shareholder/management alignment

•   Monitoring and updates •   Consideration for portfolio additions •   Frequent meetings with

•   On-site due diligence – Meetings with

490+ Companies Total market cap of $500+ billion

~100 Companies

30-50 Holdings

investment teams at private equity portfolio companies

management, portfolio companies

•   In-depth portfolio analysis – Vintage age, valuation methodology, liquidity events

•   Fundamental analysis – industry

contacts, portfolio company contacts

•   Valuation mismatch – Net asset value vs market price

Key Portfolio Considerations •   Quality and backgrounds of management teams, tenure, growth management, and succession planning

•   Track record and consistency of returns •   Investment strategy and capabilities •   Areas of focus and specialization – i.e., industry, deal size, type

•   Other investors on shareholder register and size of position •   Consistency of investment strategy •   Treatment of shareholders vs. LPs •   Appropriate use of debt

of deal, market/geography

Examples of Private Equity-Backed Companies

Retail

Sprouts Lord & Taylor Nieman Marcus Hugo Boss

Entertainment Petco Toys “R” Us

Clear Channel Metro Goldwyn Mayer

Univision BMG

Why Invest in Private Equity?

A Cornerstone Investment for Institutional Investors Allocations to Private Equity - % of Total Asset Allocation 2007

2015

Allocation to Private Equity

35%

30%

30%

26%

25%

19%

20% 15%

12%

10%

10%

10%

7%

6%

5% 0%

Yale

Stanford

CalSTRS

CalPERS

Sources: Yale Corporation Annual Reports 2007, 2015; Stanford Management Company Annual Reports 2007, 2015; NACUBO Commonfund Study of Endowments 2014; CalSTRS Annual Reports 2007, 2015; CalPERS Annual Reports 2007, 2015.

With $4.2 trillion in global AUM*, private equity is a cornerstone investment for institutional investors *

Source: Preqin as of January 2016

Why Invest in Private Equity?

Global PE Assets are Growing at 2.8X vs. Public Equities 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Global Private Equity AUM

Global Public Equity Stock Market Capitalization 70

5

60 50

4 3.2

R1

Trillions USD

Trillions USD

%

R 4.7

CAG

40 30

G CA

3

%

2

20 1

10

Dec-15

Dec-14

Dec-13

Dec-12

Dec-11

Dec-10

Dec-09

Dec-08

Dec-07

Dec-06

Dec-15

Dec-14

Dec-13

Dec-12

Dec-11

Dec-10

Dec-09

Dec-08

Dec-07

Dec-06

Dec-05

Global Public Equity Stock Market Capitaliztion

Dec-05

0

0

Global Private Equity AUM

Sources: Bloomberg, Preqin, as of 12/31/2015 Excludes private real estate, private debt, publicly listed debt CAGR: Compound Annual Growth Rate (CAGR): annual growth rate of an investment over a specified period of time longer than one year.

Private Equity as % of total (combined public and private) has more than doubled, growing from 2.9% in 2005 to 6.1% in 2015 Restaurant/ Hospitality Burger King Dunkin’ Donuts Outback Steakhouse Dominos Pizza

Dave & Busters Hilton Hotels La Quinta Inns Vail Resorts

Examples provided are of sample holdings and are for educational purposes only.

Industrials

Gates Rubber/ Tompkins Spirit Aerosystems Blaupunkt

Jen-Weld Allison Transmissions Carestream Health

Why Invest in Private Equity? A Shrinking Pool of Public Companies

Number of Listed Companies on US Exchanges 8,000 7,322 7,000

Number of Companies

6,000 5,000 4,000 3,700

3,000 2,000 1,000 0 1975

1980

1985

1990

1995

2000

2005

2010

2015

The “Wilshire 5000” Index currently consists of about 3,700 companies - 2002 was last time the “Wilshire 5000” had 5,000 constituents Sources: Droidge, Karolyi, Stulz (1975-2012), Wilshire Associates

LPE Provides Differentiated Source of Returns Portfolio Holdings Overlap with S&P 500 and MSCI ACWI

Overlap with S&P 500

•   Holdings: 1 •   4.4% of portfolio weight

PORTFOLIO STRATEGY

Overlap with MSCI ACWI

•   Holdings: 10 •   31.6% of portfolio weight

As of 9/30/2016, 45 holdings S&P 500 Index: Index based on the market capitalizations of 500 large companies listed on the NYSE or NASDAQ. MSCI ACWI: Index designed to captures large, mid and small cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries; 2,481 companies as of 9/30/2016 Wilshire 5000 Total Market Index: named for the nearly 5,000 stocks it contained at launch, measures performance of all U.S. equity securities with readily available price data.

Listed Private Equity Enables Active Portfolio Management Portfolio Construction Considerations Management Tenure and Skill

•   In-depth understanding and assessment of management teams, backgrounds, capabilities; multiple on-site visits before taking initial position

•   Ongoing on-site due diligence; only invest with firms that allow access top executives who are •  

Shareholder Alignment

•   Listed PE vehicles must be structured so that shareholders are not at a disadvantage relative to limited partners or company management

•   Executive compensation must be reasonable and tied to performance of the public vehicle or •  

Risk Management

actively involved in the investment process Historical track record and consistency of returns

underlying investments Who are other shareholders and limited partners invested in the portfolio?

•   Take positions only after we are comfortable with their valuation methodology, financial •  

reporting, and third party review Review/contact other shareholders and limited partners that may be invested alongside us

Portfolio Adjustment Considerations Investment Maturity

•   Due to the transparent nature of our holdings, we can overweight PE managers with mature

Underlying Asset Values vs. Public Stock Price

•   Can overweight companies with mismatch of asset value to stock intrinsic value, capture the

holdings that are likely to be exited soon or underweight where cash is to high and may be a drag on IRR (internal rate of return) implying a more efficient use of capital

excess return as that discount narrows

The ALPS | Red Rocks Listed Private Equity Portfolio Investment Objective: To seek the maximize total return, which consists of appreciation on its investments and a variable income stream. Description: The ALPS | Red Rocks Listed Private Equity Portfolio provides investors with exposure to private businesses by investing in publicly-traded private equity companies that trade on global exchanges. These listed private equity companies have direct ownership, control and influence over the privately held businesses in their portfolios. The Portfolio assembles approximately 30-60 holdings and is diversified by stage of investment, geography, industry, and capital structure. Investors enjoy daily liquidity and valuation, and the primary mission of the Portfolio is to maximize total return.

Top 10 Holdings^ AURELIUS Equity Opportunities SE & Co. KGaA

4.30%

Macquarie Infrastructure Corp.

2.60%

3i Group PLC

3.20%

Onex Corp.

2.60%

Brookfield Asset Management, Inc., Class A

3.10%

Blackstone Group LP

2.60%

SVG Capital PLC

3.10%

Top Ten Holdings

Wendel SA

2.80%

Total Number of Holdings

Eurazeo SA

2.80%

^ As of 9/30/16. Future holdings are subject to change.

Ares Capital Corp.

2.70%

29.80% 30-60

Important Disclosures & Definitions An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1.866.432.2926 or visit www.alpsfunds.com. Read the prospectus carefully before investing. Listed Private Equity Companies are subject to various risks depending on their underlying investments, which could include, but are not limited to, additional liquidity risk, industry risk, non-U.S. security risk, currency risk, credit risk, managed portfolio risk and derivatives risk (derivatives risk is the risk that the value of the Listed Private Equity Companies derivative investments will fall because of pricing difficulties or lack of correlation with the underlying investment. There are inherent risks in investing in private equity companies, which encompass financial institutions or vehicles whose principal business is to invest in and lend capital to privately held companies. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make a fully informed investment decision. Listed Private Equity Companies may have relatively concentrated investment portfolios, consisting of a relatively small number of holdings. A consequence of this limited number of investments is that the aggregate returns realized may be adversely impacted by the poor performance of a small number of investments, or even a single investment, particularly if a company experiences the need to write down the value of an investment. The information presented is for illustrative and educational purposes only. You should not assume that an investment in the securities mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance does not guarantee future results. Not FDIC Insured • No Bank Guarantee • May Lose Value S&P 500 Index: Index based on the market capitalizations of 500 large companies listed on the NYSE or NASDAQ. MSCI ACWI: Index designed to captures large, mid and small cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries; 2,481 companies as of 9/30/2016 An investor cannot invest directly in an index. ALPS | Red Rocks Listed Private Equity Portfolio is a series of ALPS Variable Investment Trust. ALPS Portfolio Solutions Distributor, Inc., distributor for the ALPS | Red Rocks Listed Private Equity Portfolio. ARR000160 1/31/17

Learn More 866.432.2926 www.alpsfunds.com