VIRTUS INSIGHT TRUST (Form: 485BPOS, Received: 04/27/2012 17:16:41)

Please print or type name: ______________________________________

As filed with the Securities and Exchange Commission on April 27, 2012

File No. 033-64915

File No. 811-07447

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT

Under

the SECURITIES ACT OF 1933


		Pre-Effective Amendment No.
		Post-Effective Amendment No. 54		x

and/or

REGISTRATION STATEMENT

Under

the INVESTMENT COMPANY ACT OF 1940

Amendment No. 57

(Check appropriate box or boxes)

Virtus Insight Trust

(Exact Name of Registrant as Specified in Charter)

Area Code and Telephone Number: (800) 243-1574

101 Munson Street

Greenfield, Massachusetts 01301

(Address of Principal Executive Offices)

Kevin J. Carr, Esq.

Counsel

Virtus Investment Partners, Inc.

100 Pearl St.

Hartford, Connecticut 06103

(Name and Address of Agent for Service)

Copies of All Correspondence to:

David C. Mahaffey, Esq.

Sullivan & Worcester LLP

1666 K Street, N.W.

Washington, D.C. 20006

It is proposed that this filing will become effective (check appropriate box):

immediately upon filing pursuant to paragraph (b)

on May 1, 2012 pursuant to paragraph (b) of Rule 485

60 days after filing pursuant to paragraph (a)(1)

on or at such later date as the Commission shall order pursuant to paragraph (a)(2)

75 days after filing pursuant to paragraph (a)(2)

on pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

LOGO


PROSPECTUS

	TICKER SYMBOL BY CLASS
FUND	A	C	I
Virtus Balanced Allocation Fund	HIBZX	PBCIX	HIBLX

Virtus Core Equity Fund	HGRZX	PICCX	HGRIX

Virtus Emerging Markets Opportunities Fund	HEMZX	PICEX	HIEMX

Virtus High Yield Income Fund	HHYZX	PYHCX	HHYIX

Virtus Insight Government Money Market Fund	HIGXX		HGCXX

Virtus Insight Money Market Fund	HICXX		HACXX

Virtus Insight Tax-Exempt Money Market Fund	HITXX		HTCXX

Virtus Short/Intermediate Bond Fund	HIMZX	PCMZX	HIBIX

Virtus Tax-Exempt Bond Fund	HXBZX	PXCZX	HXBIX

Virtus Value Equity Fund	HIEZX	PIQCX	HEQIX




TRUST NAME:
VIRTUS INSIGHT TRUST				May 1, 2012

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. This prospectus contains important information that you should know before investing in Virtus Mutual Funds. Please read it carefully and retain it for future reference.

Not FDIC Insured

No Bank Guarantee May Lose Value

Virtus Mutual Funds



Table of Contents

FUND SUMMARIES

Virtus Balanced Allocation Fund			1

Virtus Core Equity Fund			5

Virtus Emerging Markets Opportunities Fund			9

Virtus High Yield Income Fund			13

Virtus Insight Government Money Market Fund			17

Virtus Insight Money Market Fund			20

Virtus Insight Tax-Exempt Money Market Fund			23

Virtus Short/Intermediate Bond Fund			26

Virtus Tax-Exempt Bond Fund			30

Virtus Value Equity Fund			34

MORE INFORMATION ABOUT FUND EXPENSES			38

MORE INFORMATION ABOUT INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES			39

Virtus Balanced Allocation Fund			40

Virtus Core Equity Fund			41

Virtus Emerging Markets Opportunities Fund			42

Virtus High Yield Income Fund			43

Virtus Insight Government Money Market Fund			44

Virtus Insight Money Market Fund			45

Virtus Insight Tax-Exempt Money Market Fund			46

Virtus Short/Intermediate Bond Fund			47

Virtus Tax-Exempt Bond Fund			48

Virtus Value Equity Fund			49

MORE INFORMATION ABOUT RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES			50

MANAGEMENT OF THE FUNDS			55

ADDITIONAL INVESTMENT TECHNIQUES			60

PRICING OF FUND SHARES			62

SALES CHARGES			64

YOUR ACCOUNT			69

HOW TO BUY SHARES			70

HOW TO SELL SHARES			71

THINGS YOU SHOULD KNOW WHEN SELLING SHARES			72

ACCOUNT POLICIES			73

INVESTOR SERVICES AND OTHER INFORMATION			76

TAX STATUS OF DISTRIBUTIONS			77

MASTER FUND/FEEDER FUND STRUCTURE			77

FINANCIAL HIGHLIGHTS			78

Virtus Balanced Allocation Fund

Investment Objective

The fund has an investment objective of providing current income and capital appreciation.

Fees and Expenses

The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Virtus Mutual Funds. More information about these and other discounts, as well as eligibility requirements for each share class, is available from your financial advisor and under “Sales Charges” on page 64 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 43 of the fund’s statement of additional information.

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

5.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.50%			0.50%			0.50%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.35%			0.35%			0.35%
Total Other Expenses			0.35%			0.35%			0.40%
Total Annual Fund Operating Expenses			1.10%			1.85%			0.90%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

Example

This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated. It shows your costs if you sold your shares at the end of the period or continued to hold them. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$681		$905		$1,146		$1,838
Class C	Sold		$288		$582		$1,001		$2,169
	Held		$188		$582		$1,001		$2,169
Class I	Sold or Held		$92		$287		$498		$1,108

Portfolio Turnover

The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund’s portfolio turnover rate was 70% of the average value of its portfolio.


Virtus Balanced Allocation Fund			1

Investments, Risks and Performance

Principal Investment Strategies

Diversified across stocks and bonds, the fund’s strategic allocation approach seeks to generate a combination of growth and current income. The fund’s equity allocation utilizes a proprietary quantitative process designed to identify stocks with improving fundamentals and competing valuations. The fixed income allocation is highly disciplined, combining fundamental and quantitative techniques in an effort to exploit opportunities in the bond market.

Under normal market conditions, equity securities will comprise between 40% and 65% of the fund’s assets, and fixed income securities will comprise at least 25% of the fund’s assets. The fund may invest in issuers of any capitalization. The fund normally invests in investment-grade securities and maintains a dollar-weighted average portfolio maturity of between five and ten years.

Principal Risks

The fund may not achieve its objectives, and it is not intended to be a complete investment program. The value of the fund’s investments that supports your share value may decrease. If between the time you purchase shares and the time you sell shares the value of the fund’s investments decreases, you will lose money. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected, and investments may fail to perform as the adviser expects. As a result, the value of your shares may decrease. The principal risks of investing in the fund are:

Allocation Risk. The risk that the fund’s exposure to equities and fixed income securities, or to different asset classes, may vary from the intended allocation or may not be optimum for market conditions at a given time.

Call Risk. The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the fund to reinvest in obligations with lower interest rates than the original obligations.

Credit Risk. The risk that the issuer of a security will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of the security to decline.

Equity Securities Risk. The risk that events negatively affecting issuers, industries or financial markets in which the fund invests, will impact the value of the stocks held by the fund and thus, the value of the fund’s shares over short or extended periods. Investments in smaller companies may be more volatile than investments in larger companies.

Foreign Investing Risk. The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts.

Interest Rate Risk. The risk that when interest rates rise, the values of the fund’s debt securities, especially those with longer maturities, will fall.

Market Volatility Risk. The risk that the value of the securities in which the fund invests may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be temporary or may last for extended periods.


2		Virtus Balanced Allocation Fund

Performance Information

The bar chart and table below provide some indication of the potential risks of investing in the fund. The fund’s past performance, before and after taxes, is not necessarily an indication of how the fund will perform in the future.

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of two broad-based securities market indexes and a composite benchmark that reflects the target allocation of the fund. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q3/2009: 10.31%		Worst Quarter: Q4/2008: -13.42%		Year-to-date (3/31/12): 8.44%

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year		5 Years		10 Years		Since Inception Class C (6/26/06)
Class I
Return Before Taxes		2.71%		2.06%		4.81%		—
Return After Taxes on Distributions		2.36%		1.23%		3.84%		—
Return After Taxes on Distributions and Sale of Fund Shares		1.97%		1.47%		3.78%		—
Class A
Return Before Taxes		-3.36%		0.60%		3.93%		—
Class C
Return Before Taxes		1.75%		1.05%		—		2.60%
Russell 1000 ^® Index (reflects no deduction for fees, expenses or taxes)		1.50%		-0.02%		3.34%		2.25%
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)		7.84%		6.50%		5.78%		6.95%
Balanced Benchmark (reflects no deduction for fees, expenses or taxes)		4.34%		3.01%		4.67%		4.54%

The Russell 1000 ^® Index is a market capitalization-weighted index of the 1000 largest companies in the Russell universe, which comprises the 3000 largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The Barclays Capital U.S. Aggregate Bond Index measures the U.S. investment-grade fixed rate bond market. The indexes are calculated on a total-return basis. The Balanced Benchmark consists of an allocation of 60% Russell 1000 ^® Index and 40% Barclays Capital U.S. Aggregate Bond Index.


Virtus Balanced Allocation Fund			3

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns are shown only for Class I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Peter J. Arts, Managing Director, Head of Fixed Income at Harris. Mr. Arts has served as Portfolio Manager of the fund since February 2012.

Thomas P. Lettenberger, CFA, Director and Senior Portfolio Manager at Harris. Mr. Lettenberger has served as a Portfolio Manager of the fund since 2009.

Daniela Mardarovici, CFA, Director and Senior Portfolio Manager at Harris. Ms. Mardarovici has served as a Portfolio Manager of the fund since February 2012.

Daniel L. Sido, Managing Director and Chief Investment Strategist at Harris. Mr. Sido has served as a Portfolio Manager of the fund since 2006.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.

Payments to Broker-Dealers and Other Financial Intermediaries

If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.


4		Virtus Balanced Allocation Fund

Virtus Core Equity Fund

Investment Objective

The fund has an investment objective of providing capital appreciation.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

5.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.70%			0.70%			0.70%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.33%			0.33%			0.33%
Total Other Expenses			0.33%			0.33%			0.38%
Total Annual Fund Operating Expenses			1.28%			2.03%			1.08%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$698		$958		$1,237		$2,031
Class C	Sold		$306		$637		$1,093		$2,358
	Held		$206		$637		$1,093		$2,358
Class I	Sold or Held		$110		$343		$595		$1,317

Portfolio Turnover


Virtus Core Equity Fund			5

Investments, Risks and Performance

Principal Investment Strategies

The fund is a large-cap core portfolio built utilizing a systematic process focusing on fundamentals, investor interest, and valuations. The subadviser employs a proprietary quantitative model to identify companies with higher growth rates while utilizing fundamental research to confirm the model’s indicators and capture qualitative data.

Principal Risks

The fund may not achieve its objective, and it is not intended to be a complete investment program. The value of the fund’s investments that supports your share value may decrease. If between the time you purchase shares and the time you sell shares the value of the fund’s investments decreases, you will lose money. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected, and investments may fail to perform as the adviser expects. As a result, the value of your shares may decrease. The principal risks of investing in the fund are:

Equity Securities Risk. The risk that events negatively affecting issuers, industries or financial markets in which the fund invests will impact the value of the stocks held by the fund and thus, the value of the fund’s shares over short or extended periods. Investments in smaller companies may be more volatile than investments in larger companies.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q2/2003: 13.85%		Worst Quarter: Q4/2008: -17.84%		Year-to-date (3/31/12): 12.64%


6		Virtus Core Equity Fund

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year		5 Years		10 Years		Since Inception Class C (6/26/06)
Class I
Return Before Taxes		3.19%		-0.36%		3.27%		—
Return After Taxes on Distributions		3.08%		-0.80%		2.46%		—
Return After Taxes on Distributions and Sale of Fund Shares		2.23%		-0.29%		2.67%		—
Class A
Return Before Taxes		-2.98%		-1.78%		2.42%		—
Class C
Return Before Taxes		2.12%		-1.36%		—		0.96%
S&P 500 ^® Index (reflects no deduction for fees, expenses or taxes)		2.11%		-0.25%		2.92%		2.26%

The S&P 500 ^® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Jason C. Hans, CFA, Director and Portfolio Manager at Harris. Mr. Hans has served as a Portfolio Manager of the fund since February 2012.

Ernesto Ramos, PhD, Managing Director and Head of Equities at Harris. Dr. Ramos has served as a Portfolio Manager of the fund since February 2012.

Daniel L. Sido, Managing Director and Chief Investment Strategist at Harris. Mr. Sido has served as a Portfolio Manager of the fund since 2005.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.


Virtus Core Equity Fund			7

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


8		Virtus Core Equity Fund

Virtus Emerging Markets Opportunities Fund

Investment Objective

The fund has an investment objective of providing capital appreciation.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

5.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.98%			0.98%			0.98%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.38%			0.38%			0.38%
Total Other Expenses			0.38%			0.38%			0.43%
Acquired Fund Fees and Expenses			0.01%			0.01%			0.01%
Total Annual Fund Operating Expenses ^(b)			1.62%			2.37%			1.42%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

(b)

The Total Annual Fund Operating Expenses do not correlate to the ratio of expense to average net assets appearing in the Financial Highlights tables, which tables reflect only the operating expenses of the fund and do not include acquired fund fees and expenses.

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$730		$1,057		$1,406		$2,386
Class C	Sold		$340		$739		$1,265		$2,706
	Held		$240		$739		$1,265		$2,706
Class I	Sold or Held		$145		$449		$776		$1,702

Portfolio Turnover


Virtus Emerging Markets Opportunities Fund			9

Investments, Risks and Performance

Principal Investment Strategies

This fund offers investors exposure to emerging economies through well-established companies. The securities selected for inclusion in the fund are those that in the opinion of the subadviser are well-managed businesses with consistent operating histories and financial performance that have favorable long-term economic prospects and, in most cases, generate free cash flow. Over full market cycles, the investment style is designed with the objective of capturing part of the up market cycles and may offer protection in down market cycles.

Under normal circumstances, the fund invests at least 80% of its assets in equity securities or equity-linked instruments of issuers located in emerging markets countries; such issuers may be of any capitalization. Emerging markets countries generally include every nation in the world except the U.S., Canada, Japan, Australia, New Zealand and most nations located in Western Europe. In determining “location” of an issuer, the subadviser primarily relies on the country where the issuer is incorporated. However, the country of risk is ultimately determined based on analysis of the following criteria: actual building address (domicile), primary exchange on which the security is traded and country in which the greatest percentage of company revenue is generated. This evaluation is conducted so as to determine that the issuer’s assets are exposed to the economic fortunes and risks of the designated country.

Principal Risks

Emerging Market Investing Risk. The risk that prices of emerging markets securities will be more volatile, or will be more greatly affected by negative conditions, than those of their counterparts in more established foreign markets.

Equity-Linked Instruments Risk. The risk that, in addition to market risk and other risks of the referenced equity security, the fund may experience a return that is different from that of the referenced equity security. Equity-linked instruments also subject the fund to counterparty risk, including the risk that the issuing entity may not be able to honor its financial commitment, which could result in a loss of all or part of the fund’s investment.

Equity Securities Risk. The risk that events negatively affecting issuers, industries or financial markets in which the fund invests will impact the value of the stocks held by the fund and thus, the value of the fund’s shares over short or extended periods. Investments in small and medium-sized companies may be more volatile than investments in larger companies.

Foreign Investing Risk. The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts.

Geographic Concentration Risk. The risk that events negatively affecting the fiscal stability of a particular country or region in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent the fund concentrates its assets in a particular country or region, the fund is more vulnerable to financial, economic or other political developments in that country or region as compared to a fund that does not concentrate holdings in a particular country or region.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. Updated performance information is available at virtus.com or by calling 800-243-1574.


10		Virtus Emerging Markets Opportunities Fund

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q2/2009: 26.74%		Worst Quarter: Q3/2008: -21.96%		Year-to-date (3/31/12): 12.41%

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year		5 Years		10 Years		Since Inception Class C (6/26/06)
Class I
Return Before Taxes		-2.92%		6.55%		15.32%		—
Return After Taxes on Distributions		-3.09%		4.33%		13.30%		—
Return After Taxes on Distributions and Sale of Fund Shares		-1.54%		5.15%		13.33%		—
Class A
Return Before Taxes		-8.70%		5.05%		14.36%		—
Class C
Return Before Taxes		-3.77%		5.51%		—		9.95%
S&P 500 ^® Index (reflects no deduction for fees, expenses or taxes)		2.11%		-0.25%		2.92%		2.26%
MSCI Emerging Markets Free Index (net) (reflects no deduction for fees, expenses or taxes)		-18.42%		2.40%		13.86%		7.42%

The S&P 500 ^® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The MSCI Emerging Markets Free Index (net) is a free float-adjusted market capitalization-weighted index that measures developed equity market performance in the global emerging markets. The indexes are calculated on a total return basis with net dividends reinvested.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Vontobel Asset Management, Inc. (“Vontobel”).

Portfolio Manager

Rajiv Jain, a Managing Director at Vontobel. Mr. Jain has served as Portfolio Manager of the fund since 2006.


Virtus Emerging Markets Opportunities Fund			11

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


12		Virtus Emerging Markets Opportunities Fund

Virtus High Yield Income Fund

Investment Objective

The fund has an investment objective of providing a high level of total return through a combination of income and capital appreciation.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

3.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.45%			0.45%			0.45%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.36%			0.36%			0.36%
Total Other Expenses			0.36%			0.36%			0.41%
Acquired Fund Fees and Expenses			0.01%			0.01%			0.01%
Total Annual Fund Operating Expenses ^(b)			1.07%			1.82%			0.87%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

(b)

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$480		$703		$943		$1,632
Class C	Sold		$285		$573		$985		$2,137
	Held		$185		$573		$985		$2,137
Class I	Sold or Held		$89		$278		$482		$1,073

Portfolio Turnover


Virtus High Yield Income Fund			13

Investments, Risks and Performance

Principal Investment Strategies

The fund will seek to achieve its investment objective by investing in a diversified pool of fixed income securities, primarily within the U.S. non-investment grade bond market. The fund aims to generate excess returns by balancing risk and reward through rigorous asset selection and continual monitoring of portfolio positions. The fund seeks to provide investors with current income, relatively low volatility and capital preservation over time.

Under normal circumstances, the fund invests at least 80% of its assets in a diversified portfolio of domestic and foreign high-yield, high-risk fixed income securities. The subadviser generally maintains the duration of the fund in line with that of its style benchmark, the BofA Merrill Lynch U.S. High Yield Master II Constrained Index.

Principal Risks

Foreign Investing Risk. The risk that the prices of foreign securities may be more volatile than those of their domestic counterparts.

High Yield-High Risk Fixed Income Securities (Junk Bonds) Risk. The risk that the issuers of high yield-high risk securities in the fund’s portfolio will default, that the prices of such securities will be volatile, and that the securities will not be liquid.

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Interest Rate Risk. The risk that when interest rates rise, the values of the fund’s debt securities, especially those with longer maturities, will fall.

Long-Term Maturities/Durations Risk. The risk of greater price fluctuations than would be associated with securities having shorter maturities or durations.

U.S. Government Securities Risk. The risk that the U.S. Government securities in the fund’s portfolio will be subject to price fluctuations, or that an agency or instrumentality will default on an obligation not backed by the full faith and credit of the United States.


14		Virtus High Yield Income Fund

Performance Information

The bar chart shows changes in the fund’s performance from year to year over the life of the fund. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. Updated performance information is available at virtus . com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q2/2009: 11.28%		Worst Quarter: Q4/2008: -13.71%		Year-to-date (3/31/12): 4.61%

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


				Since Inception
	1 Year	5 Years		Class A (5/14/04)		Class C (6/26/06)		Class I (9/20/02)
Class I
Return Before Taxes	5.47%		4.57%		—		—		6.90%
Return After Taxes on Distributions	3.05%		1.80%		—		—		4.13%
Return After Taxes on Distributions and Sale of Fund Shares	3.53%		2.21%		—		—		4.27%
Class A
Return Before Taxes	1.44%		3.59%		4.92%		—		—
Class C
Return Before Taxes	4.52%		3.55%		—		4.52%		—
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	7.84%		6.50%		5.83%		6.95%		5.34%
High Yield Income Linked Benchmark (reflects no deduction for fees, expenses or taxes)	4.37%		7.61%		8.44%		8.52%		10.16%

The Barclays Capital U.S. Aggregate Bond Index measures the U.S. investment-grade fixed-rate bond market. The High Yield Income Linked Benchmark consists of the BofA Merrill Lynch U.S. High Yield Master II Constrained Index, a capitalization-weighted index which measures the performance of below investment grade U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market. Total index allocation to an individual issuer is limited to 2%. Performance of the High Yield Income Linked Benchmark prior to 5/18/2010 is that of the Barclays Capital U.S. High Yield 2% Issuer Capped Bond Index. The indexes are calculated on a total return basis.


Virtus High Yield Income Fund			15

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is HIM Monegy, Inc. (“HIM Monegy”)

Portfolio Managers

Lori J. Marchildon, CFA, Portfolio Manager at HIM Monegy and a member of its Investment Policy Committee. Ms. Marchildon has served as a Portfolio Manager of the fund since May 2010.

Ovidiu Sandu, CFA, Assistant Portfolio Manager and Senior Quantitative Analyst at HIM Monegy and member of its Investment Policy Committee. Mr. Sandu has served as an Assistant Portfolio Manager of the fund since May 2010.

Sadhana Valia, CFA, Head of the High Yield Team and Lead Portfolio Manager for HIM Monegy’s high yield portfolios, and a member of its Investment Policy Committee. Ms. Valia has served as a Portfolio Manager of the fund since May 2010.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


16		Virtus High Yield Income Fund

Virtus Insight Government Money Market Fund

Investment Objective

The fund has an investment objective of providing as high a level of current income from government obligations as is consistent with preservation of capital and liquidity.

Fees and Expenses

The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund.


Shareholder Fees (fees paid directly from your investment)	Class A		Class I
Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)		None		None
Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)		None		None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class I
Management Fees			0.10%			0.10%
Distribution and Shareholder Servicing (12b-1) Fees			0.10%			None
Other Expenses:
Shareholder Servicing Fees		0.25%			0.05%
Remainder of Other Expenses		0.08%			0.08%
Total Other Expenses			0.33%			0.13%
Acquired Fund Fees and Expenses			0.01%			0.01%
Total Annual Fund Operating Expenses ^(a)			0.54%			0.24%

(a)

The Total Annual Fund Operating Expenses do not correlate to the ratio of expense to the average net assets appearing in the Financial Highlights tables, which tables reflect only the operating expenses of the fund and do not include acquired fund fees and expenses.

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$55		$173		$302		$677
Class I	Sold or Held		$25		$77		$135		$306

Investments, Risks and Performance

Principal Investment Strategies

With an emphasis on preservation of capital and liquidity, this fund seeks to generate high current income by investing in high-quality short-term money market instruments that, in the opinion of the fund’s subadviser, present minimal credit risks. The fund normally invests at least 80% of its assets in government money market securities.

Principal Risks

The fund may not achieve its objective, and it is not intended to be a complete investment program. The value of the fund’s investments that supports your share value may decrease. An investment in this fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The principal risks of investing in the fund are:

Counterparty Risk. The risk that a party upon whom the fund relies to consummate a transaction will default.


Virtus Insight Government Money Market Fund			17

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Principal Stability Risk. The risk that the fund may not be able to maintain a stable net asset value of $1.00.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

LOGO


Best Quarter: Q2/2007: 1.28%		Worst Quarter: Q1/2010: 0.00%		Year-to-date (3/31/12): 0.00%

Average Annual Total Returns (for the periods ended 12/31/11)


	1 Year		5 Years		10 Years
Class I		0.01%		1.52%		1.94%
Class A		0.01%		1.33%		1.69%

As of December 31, 2011, the fund’s 7-day yield for Class A Shares was 0.01% and for Class I Shares was 0.01%. For current yield information, call 1-800-243-1574.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Peter J. Arts, Managing Director and Head of Fixed Income at Harris. Mr. Arts has served as Portfolio Manager of the fund since 2004.

Boyd R. Eager, Director and Senior Portfolio Manager at Harris. Mr. Eager has served as Portfolio Manager of the fund since 2004.


18		Virtus Insight Government Money Market Fund

Purchase and Sale of Fund Shares


Purchase Minimums (Class A Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


Virtus Insight Government Money Market Fund			19

Virtus Insight Money Market Fund

Investment Objective

The fund has an investment objective of providing as high a level of current income as is consistent with its investment policies and with preservation of capital and liquidity.

Fees and Expenses

The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund.


Shareholder Fees (fees paid directly from your investment)	Class A		Class I
Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)		None		None
Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)		None		None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class I
Management Fees			0.10%			0.10%
Distribution and Shareholder Servicing (12b-1) Fees			0.10%			None
Other Expenses:
Shareholder Servicing Fees		0.25%			0.05%
Remainder of Other Expenses		0.09%			0.09%
Total Other Expenses			0.34%			0.14%
Acquired Fund Fees and Expenses			0.01%			0.01%
Total Annual Fund Operating Expenses ^(a)			0.55%			0.25%

(a)

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$56		$176		$307		$689
Class I	Sold or Held		$26		$80		$141		$318

Investments, Risks and Performance

Principal Investment Strategies

The fund invests only in high-quality short-term money market instruments that, in the opinion of the fund’s subadviser, present minimal credit risks. The fund invests in a broad range of short-term money market instruments, including U.S. Government securities, repurchase agreements, as well as bank and commercial obligations. Commercial paper purchases by the fund will consist of U.S. dollar-denominated direct obligations of domestic and foreign corporate issuers, including bank holding companies.

Principal Risks

The fund may not achieve its objective, and it is not intended to be a complete investment program. The value of the fund’s investments that supports your share value may decrease. An investment in this fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The principal risks of investing in the fund are:

Counterparty Risk. The risk that a party upon whom the fund relies to consummate a transaction will default.


20		Virtus Insight Money Market Fund

Foreign Investing Risk. The risk that the prices of the foreign securities may be more volatile that those of their domestic counterparts.

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Principal Stability Risk. The risk that the fund may not be able to maintain a stable net asset value of $1.00.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

LOGO


Best Quarter: Q3/2007: 1.34%		Worst Quarter: Q4/2011: 0.01%		Year-to-date (3/31/12): 0.01%

Average Annual Total Returns (for the periods ended 12/31/11)


	1 Year	5 Years		10 Years
Class I	0.06%		1.77%		2.12%
Class A	0.01%		1.52%		1.84%

As of December 31, 2011, the fund’s 7-day yield for Class A Shares was 0.01% and for Class I Shares was 0.01%. (These yields reflect non-recurring income received from a security class action settlement.) For current yield information, call 1-800-243-1574.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Peter J. Arts, Managing Director, Head of Fixed Income at Harris. Mr. Arts has served as Portfolio Manager of the fund since 2004.

Boyd R. Eager, Director, Senior Portfolio Manager at Harris. Mr. Eager has served as Portfolio Manager of the fund since 2004.

Purchase and Sale of Fund Shares


Purchase Minimums (Class A Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum


Virtus Insight Money Market Fund			21

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


22		Virtus Insight Money Market Fund

Virtus Insight Tax-Exempt Money Market Fund

Investment Objective

The fund has an investment objective of providing as high a level of current income that is exempt from federal income taxes as is consistent with its investment policies and with preservation of capital and liquidity.

Fees and Expenses

The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund.


Shareholder Fees (fees paid directly from your investment)	Class A		Class I
Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)		None		None
Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)		None		None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class I
Management Fees			0.12%			0.12%
Distribution and Shareholder Servicing (12b-1) Fees			0.10%			None
Other Expenses:
Shareholder Servicing Fees		0.25%			0.05%
Remainder of Other Expenses		0.10%			0.10%
Total Other Expenses			0.35%			0.15%
Acquired Fund Fees and Expenses			0.01%			0.01%
Total Annual Fund Operating Expenses ^(a)			0.58%			0.28%

(a)

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$59		$186		$324		$726
Class I	Sold or Held		$29		$90		$157		$356

Investments, Risks and Performance

Principal Investment Strategies

The fund normally invests primarily in U.S. dollar-denominated municipal securities. Under normal circumstances, the fund invests at least 80% of its assets in high-quality short-term money market instruments that generate income that is generally exempt from federal income tax and not subject to the alternative minimum tax.

Principal Risks

The fund may not achieve its objective, and it is not intended to be a complete investment program. The value of the fund’s investments that supports your share value may decrease. An investment in this fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. The principal risks of investing in the fund are:

Counterparty Risk. The risk that a party upon whom the fund relies to consummate a transaction will default.


Virtus Insight Tax-Exempt Money Market Fund			23

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Municipal Market Risk. The risk that events negatively impacting a particular municipal security, or the municipal bond market in general, will cause the fund’s investments to decrease in value.

Principal Stability Risk. The risk that the fund may not be able to maintain a stable net asset value of $1.00.

Tax-Exempt Securities Risk. The risk that tax-exempt securities may not provide a higher after-tax return than taxable securities.

Tax Liability Risk. The risk that noncompliant conduct by a municipal bond issuer, or certain adverse interpretations or actions by a government or tax authority, could cause interest from a security to become taxable, possibly retroactively, subjecting shareholders to increased tax liability.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

LOGO


Best Quarter: Q2/2006: 0.93%		Worst Quarter: Q2/2011: 0.00%		Year-to-date (3/31/12): 0.00%

Average Annual Total Returns (for the periods ended 12/31/11)


	1 Year	5 Years		10 Years
Class I	0.01%		1.23%		1.50%
Class A	0.01%		1.02%		1.23%

As of December 31, 2011, the fund’s 7-day yield for Class A Shares was 0.01% and for Class I Shares was 0.01%. For current yield information, call 1-800-243-1574.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Peter J. Arts, Managing Director and Head of Fixed Income at Harris. Mr. Arts has served as Portfolio Manager of the fund since 2004.

Boyd R. Eager, Director and Senior Portfolio Manager at Harris. Mr. Eager has served as Portfolio Manager of the fund since 2006.


24		Virtus Insight Tax-Exempt Money Market Fund

Purchase and Sale of Fund Shares


Purchase Minimums (Class A Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Distributions of net investment income attributed to the tax-exempt interest earned by the fund and designated as “exempt-interest dividends” will be exempt from the federal income tax. Such net investment income attributable to “private activity” bonds (other than private activity bonds issued in 2009 or 2010) may be a preference item for purposes of the federal alternative minimum tax. Income exempt from federal tax may be subject to state and local income tax. The fund may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax.

Payments to Broker-Dealers and Other Financial Intermediaries


Virtus Insight Tax-Exempt Money Market Fund			25

Virtus Short/Intermediate Bond Fund

Investment Objective

The fund has an investment objective of providing a high level of total return, including a competitive level of current income.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

2.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.55%			0.55%			0.55%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.33%			0.33%			0.33%
Total Other Expenses			0.33%			0.33%			0.38%
Total Annual Fund Operating Expenses			1.13%			1.88%			0.93%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$387		$624		$880		$1,612
Class C	Sold		$291		$591		$1,016		$2,201
	Held		$191		$591		$1,016		$2,201
Class I	Sold or Held		$95		$296		$515		$1,143

Portfolio Turnover


26		Virtus Short/Intermediate Bond Fund

Investments, Risks and Performance

Principal Investment Strategies

The fund focuses on investment-grade assets using a balanced approach consisting of yield curve management, sector allocation and security selection in an effort to provide excess return with lower risk over time. The fund invests at least 80% of its assets primarily in bonds with a short/intermediate-term average maturity, as these bonds tend to offer a buffer against rising interest rates.

Under normal market conditions, the fund invests at least 80% of its assets in bonds with a short/intermediate-term average maturity. The fund normally maintains a dollar-weighted average maturity (or average life with respect to mortgage-backed and asset-backed securities) of between two and five years.

Principal Risks

Foreign Investing Risk. The risk that the prices of the foreign securities may be more volatile that those of their domestic counterparts.

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Interest Rate Risk. The risk that when interest rates rise, the values of the fund’s debt securities, especially those with longer maturities, will fall.

Mortgage-Backed and Asset-Backed Securities Risk. The risk that the impairment of the value of collateral underlying a mortgage-backed or asset-backed security, such as due to non-payment of loans, will result in a reduction in the value of such security.


Virtus Short/Intermediate Bond Fund			27

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q2/2009: 5.42%		Worst Quarter: Q3/2008: -3.18%		Year-to-date (3/31/12): 1.75%

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year	5 Years		10 Years		Since Inception (6/26/06)
Class I
Return Before Taxes	3.25%		5.08%		4.44%		—
Return After Taxes on Distributions	2.21%		3.63%		2.92%		—
Return After Taxes on Distributions and Sale of Fund Shares	2.11%		3.49%		2.88%		—
Class A
Return Before Taxes	0.16%		4.24%		3.89%		—
Class C
Return Before Taxes	2.23%		4.04%		—		4.39%
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	7.84%		6.50%		5.78%		6.95%
Barclays Capital U.S. Intermediate Government/Credit Bond Index (reflects no deduction for fees, expenses or taxes)	5.80%		5.88%		5.20%		6.20%

The Barclays Capital U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The Barclays Capital U.S. Intermediate Government/Credit Bond Index measures U.S. investment grade government and corporate debt securities with an average maturity of four to five years. The indexes are calculated on a total return basis.


28		Virtus Short/Intermediate Bond Fund

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Daniela Mardarovici, CFA, Director and Senior Portfolio Manager at Harris. Ms. Mardarovici has served as a Portfolio Manager of the fund since 2011.

Andrew Reed, CFA, Vice President and Portfolio Manager at Harris. Mr. Reed has served as a Portfolio Manager of the fund since February 2012.

Jason D. Weiner, CFA, Managing Director and Portfolio Manager at Harris. Mr. Weiner has served as a Portfolio Manager of the fund since February 2012.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


Virtus Short/Intermediate Bond Fund			29

Virtus Tax-Exempt Bond Fund

Investment Objective

The fund has an investment objective of providing a high level of current income that is exempt from federal income tax.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

2.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.45%			0.45%			0.45%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.28%			0.28%			0.28%
Total Other Expenses			0.28%			0.28%			0.33%
Total Annual Fund Operating Expenses ^(b)			0.98%			1.73%			0.78%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

(b)

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$372		$579		$802		$1,443
Class C	Sold		$276		$545		$939		$2,041
	Held		$176		$545		$939		$2,041
Class I	Sold or Held		$80		$249		$433		$966

Portfolio Turnover


30		Virtus Tax-Exempt Bond Fund

Investments, Risks and Performance

Principal Investment Strategies

The fund seeks to generate high current income exempt from federal income tax by investing in a diversified portfolio of municipal bonds with varying maturities. The fund employs an interest rate strategy designed to help manage the downside risk of rate movements on its portfolio. This is backed by extensive analysis designed to help maintain a high quality portfolio. Under normal circumstances, the fund invests at least 80% of its assets in tax-exempt bonds, generally municipal bonds with varying maturities.

Principal Risks

Income Risk. The risk that income received from the fund will vary widely over the short- and long-term.

Interest Rate Risk. The risk that when interest rates rise, the values of the fund’s debt securities, especially those with longer maturities, will fall.

Municipal Bond Market Risk. The risk that events negatively impacting a particular municipal security, or the municipal bond market in general, will cause the fund’s investments to decrease in value.

Tax-Exempt Securities Risk. The risk that tax-exempt securities may not provide a higher rate of return than taxable securities.


Virtus Tax-Exempt Bond Fund			31

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q3/2009: 10.03%		Worst Quarter: Q3/2008: -5.64%		Year-to-date (3/31/12): 2.53%

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year		5 Years		10 Years		Since Inception Class C (6/26/06)
Class I
Return Before Taxes		11.36%		5.65%		5.62%		—
Return After Taxes on Distributions		11.35%		5.62%		5.51%		—
Return After Taxes on Distributions and Sale of Fund Shares		8.86%		5.43%		5.43%		—
Class A
Return Before Taxes		7.93%		4.78%		5.06%		—
Class C
Return Before Taxes		10.15%		4.58%		—		4.92%
Barclays Capital U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)		7.84%		6.50%		5.78%		6.95%
Barclays Capital Municipal Bond Index (reflects no deduction for fees, expenses or taxes)		10.70%		5.22%		5.38%		5.61%

The Barclays Capital U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The Barclays Capital Municipal Bond Index is a market capitalization-weighted index that measures the long-term tax-exempt bond market. The indexes are calculated on a total return basis.


32		Virtus Tax-Exempt Bond Fund

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

John D. Boritzke, CFA, Managing Director and Portfolio Manager at Harris. Mr. Boritzke has served as a Portfolio Manager of the fund since February 2012.

Duane A. McAllister, CFA, Managing Director and Portfolio Manager at Harris. Mr. McAllister has served as a Portfolio Manager of the fund since February 2012.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


Virtus Tax-Exempt Bond Fund			33

Virtus Value Equity Fund

Investment Objective

The fund has an investment objective of providing capital appreciation and current income.

Fees and Expenses

Shareholder Fees (fees paid directly from your investment)

Class A

Class C

Class I

Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)

5.75%

None

Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)

None

1.00%

^(a)

None


Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)	Class A			Class C			Class I
Management Fees			0.70%			0.70%			0.70%
Distribution and Shareholder Servicing (12b-1) Fees			0.25%			1.00%			None
Other Expenses:
Shareholder Servicing Fees		None			None			0.05%
Remainder of Other Expenses		0.28%			0.28%			0.28%
Total Other Expenses			0.28%			0.28%			0.33%
Total Annual Fund Operating Expenses			1.23%			1.98%			1.03%

(a)

The deferred sales charge is imposed on Class C Shares redeemed during the first year only.

Example


	Share Status	1 Year		3 Years		5 Years		10 Years
Class A	Sold or Held		$693		$943		$1,212		$1,978
Class C	Sold		$301		$621		$1,068		$2,306
	Held		$201		$621		$1,068		$2,306
Class I	Sold or Held		$105		$328		$569		$1,259

Portfolio Turnover


34		Virtus Value Equity Fund

Investments, Risks and Performance

Principal Investment Strategies

The fund invests in value-oriented large-cap companies utilizing a systematic process of focusing on fundamentals, investor interest and valuations. The subadviser employs a proprietary quantitative model designed to identify companies with higher growth rates while utilizing fundamental research to confirm the model’s indicators and capture qualitative data.

Under normal circumstances, the fund invests at least 80% of its assets in common stocks. These stocks are generally of companies with market capitalization in excess of $1 billion at time of purchase.

Principal Risks

Equity Securities Risk. The risk that events negatively affecting issuers, industries or financial markets in which the fund invests will impact the value of the stocks held by the fund and thus, the value of the fund’s shares over short or extended periods. Investments in small and medium-sized companies may be more volatile than investments in larger companies.

Value Stocks Risk. The risk that the fund will underperform when value investing is out of favor or that the fund’s investments will not appreciate in value as anticipated.

Performance Information

The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark that reflects the market sectors in which the fund invests. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class I Shares

Returns do not reflect sales charges applicable to other share classes and would be lower if they did.

LOGO


Best Quarter: Q3/2009: 13.62%		Worst Quarter: Q4/2008: -21.21%		Year-to-date (3/31/12): 11.02%


Virtus Value Equity Fund			35

Average Annual Total Returns (for the periods ended 12/31/11)

Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.


	1 Year		5 Years		10 Years		Since Inception (6/26/06)
Class I
Return Before Taxes		2.62%		-0.98%		4.10%		—
Return After Taxes on Distributions		2.43%		-1.66%		3.40%		—
Return After Taxes on Distributions and Sale of Fund Shares		1.95%		-0.82%		3.53%		—
Class A
Return Before Taxes		-3.55%		-2.39%		3.23%		—
Class C
Return Before Taxes		1.51%		-2.00%		—		0.12%
S&P 500 ^® Index (reflects no deduction for fees, expenses or taxes)		2.11%		-0.25%		2.92%		2.26%
Russell 1000 ^® Value Index (reflects no deduction for fees, expenses or taxes)		0.39%		-2.64%		3.89%		0.25%

The S&P 500 ^® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies. The Russell 1000 ^® Value Index is a market-capitalization-weighted index of value-oriented stocks of the 1,000 largest companies in the Russell Universe which comprises the 3,000 largest U.S companies. The indexes are calculated on a total return basis with dividends reinvested.

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc.

The fund’s subadviser is Harris Investment Management, Inc. (“Harris”)

Portfolio Managers

Jason C. Hans, CFA, Director and Portfolio Manager at Harris. Mr. Hans has served as a Portfolio Manager of the fund since February 2012.

Ernesto Ramos, PhD, Managing Director and Head of Equities at Harris. Dr. Ramos has served as a Portfolio Manager of the fund since February 2012.

Daniel L. Sido, Managing Director and Chief Investment Strategist at Harris. Mr. Sido has served as a Portfolio Manager of the fund since 2005.

Purchase and Sale of Fund Shares


Purchase Minimums (except Class I Shares)
Minimum Initial Purchase		$2,500
Individual Retirement Accounts (IRAs), systematic purchase or systematic exchange accounts		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum
Minimum Additional Purchase		$100
Defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans		No minimum


36		Virtus Value Equity Fund

For Class I Shares, the minimum initial purchase is $100,000; there is no minimum for additional purchases.

In general, you can buy or sell shares of the fund by mail or telephone on any business day. You also may buy and sell shares through a financial advisor.

Taxes

Payments to Broker-Dealers and Other Financial Intermediaries


Virtus Value Equity Fund			37

More Information About Fund Expenses

Virtus Investment Advisers, Inc. (“VIA”) has voluntarily agreed to limit the total operating expenses (excluding interest, taxes, extraordinary expenses and acquired fund fees and expenses, if any) of certain of the funds so that such expenses do not exceed, on an annualized basis, the amounts indicated in the following table.


	Class A Shares		Class C Shares		Class I Shares
Virtus Short/Intermediate Bond Fund		0.95%		1.70%		0.75%
Virtus Tax-Exempt Bond Fund		0.85%		1.60%		0.65%

VIA may discontinue these arrangements at any time. Under certain conditions, VIA may recapture operating expenses waived or reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement and/or waiver occurred.

With respect to all of the funds, the funds’ distributor has voluntarily agreed to waive the Class I Shares’ shareholder servicing fees. The distributor may discontinue this voluntary waiver at any time.

With respect to the Insight Government Money Market Fund, the Insight Money Market Fund and the Insight Tax-Exempt Money Market Fund, the distributor may from time to time waive the Distribution (12b-1) Fees and/or Shareholder Servicing Fees on Class A Shares. Also, with respect to these funds, VIA may from time to time waive all or a portion of its management fees. If waived, the Distribution (12b-1) Fees, Shareholder Servicing Fees and/or management fees may be reinstated at any time.

For those funds operating under an expense reimbursement arrangement and/or fee waiver for the prior fiscal year, total (net) fund operating expenses, including acquired fund fees and expenses, if any, after effect of any expense reimbursement and/or fee waivers were:


	Class A Shares		Class C Shares		Class I Shares
Virtus Balanced Allocation Fund		1.10%		1.85%		0.85%
Virtus Core Equity Fund		1.28%		2.02%		1.02%
Virtus Emerging Markets Opportunities Fund		1.62%		2.37%		1.37%
Virtus High Yield Income Fund		1.03%		1.79%		0.79%
Virtus Insight Government Money Market Fund		0.13%		N/A		0.12%
Virtus Insight Money Market Fund		0.24%		N/A		0.20%
Virtus Insight Tax-Exempt Money Market Fund		0.15%		N/A		0.16%
Virtus Short/Intermediate Bond Fund		0.95%		1.70%		0.70%
Virtus Tax-Exempt Bond Fund		0.81%		1.54%		0.57%
Virtus Value Equity Fund		1.23%		1.98%		0.98%


38		Virtus Mutual Funds

More Information About Investment Objectives and Principal Investment Strategies

The investment objectives and principal strategies of each fund are described in this section. Each of the funds has a non-fundamental investment objective. A non-fundamental investment objective may be changed by the Board of Trustees of that fund without shareholder approval. If a fund’s investment objective is changed, the prospectus will be supplemented to reflect the new investment objective. To the extent that there is a material change in a fund’s investment objective, shareholders will be provided with reasonable notice. There is no guarantee that a fund will achieve its objective.

Please see the statement of additional information (“SAI”) for additional information about the securities and investment strategies described in this prospectus and about additional securities and investment strategies that may be used by the funds.


Virtus Mutual Funds			39

Virtus Balanced Allocation Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing current income and capital appreciation.

Principal Investment Strategies:

The fund invests in a portfolio of equity and fixed income securities. Under normal market conditions, equity securities will comprise between 40% and 65% of the fund’s assets, and fixed income securities will comprise at least 25% of the fund’s assets.

The fund may invest in the equity securities of companies of any size. As of December 31, 2011, the market capitalizations of the equity issuers in which the fund was invested ranged from $100 million to $508 billion.

The fixed income portion of the fund will be invested primarily in bonds, which are debt instruments that normally pay a set amount of interest on a regular basis; repay the face amount, or principal, at a stated future date; and are issued by domestic and foreign corporations, federal and state governments, and their agencies. The fund normally invests in investment-grade securities and maintains a dollar-weighted average portfolio maturity (or average life with respect to mortgage-backed and asset-backed securities) of between five and ten years.

The fund’s subadviser reviews and adjusts the blend of the securities in an effort to enhance returns based on current market conditions, interest rate projections and other economic factors. The fund seeks to achieve an overall return comprising between 40% and 65% of the return of the Russell 1000 ^® Index and between 35% and 60% of the Barclays Capital U.S. Aggregate Bond Index.

Temporary Defensive Strategy : During periods of adverse market conditions, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by holding all or part of its assets in cash or short-term money market instruments including obligations of the U.S. Government, high-quality commercial paper, certificates of deposit, bankers acceptances, bank interest-bearing demand accounts, and repurchase agreements secured by U.S. Government securities. When this allocation happens, the fund may not achieve its objective.

Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.


40		Virtus Balanced Allocation Fund

Virtus Core Equity Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing capital appreciation.

Principal Investment Strategies:

Under normal circumstances, the fund invests at least 80% of its assets in common stocks. These stocks are generally of companies with market capitalizations in excess of $1 billion at time of purchase. As of December 31, 2011, the market capitalizations of the equity issuers in which the fund was invested ranged from $1 billion to $508 billion. The fund’s policy of investing at least 80% of its assets in common stocks may be changed only upon 60 days’ written notice to shareholders.

The fund’s subadviser selects securities that it considers to be undervalued and to represent growth opportunities. The subadviser considers many factors, but there is a focus on a company’s sales, earnings and valuation.

Temporary Defensive Strategy: During periods of adverse market conditions, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by holding all or part of its assets in cash or short-term money market instruments including obligations of the U.S. Government, high-quality commercial paper, certificates of deposit, bankers’ acceptances, bank interest-bearing demand accounts, and repurchase agreements secured by U.S. Government securities. When this allocation happens, the fund may not achieve its objective.


Virtus Core Equity Fund			41

Virtus Emerging Markets Opportunities Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing capital appreciation.

Principal Investment Strategies:

Under normal circumstances, at least 80% of the fund’s assets are invested in equity securities of issuers located in emerging markets countries. The World Bank and other international agencies define an emerging or developing country on the basis of such factors as trade initiatives, per capita income and level of industrialization. Emerging markets countries generally include every nation in the world except the U.S., Canada, Japan, Australia, New Zealand and most nations located in Western Europe. The fund’s policy of investing at least 80% of its assets in the securities of issuers located in emerging markets countries may be changed only upon 60 days’ written notice to shareholders.

Generally, the subadviser uses a bottom-up stock and business analysis approach. The subadviser makes its assessments by examining companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The fund may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser seeks to identify companies whose businesses are highly profitable, have consistent operating histories and financial performance and enjoy generally favorable long-term economic prospects.

A company may be sensibly priced when, in the opinion of the subadviser, the company is selling for a price that is below its intrinsic worth. A company may be sensibly priced due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company or other factors. Such factors may include buying opportunities at attractive prices compared to the subadviser’s calculation of future earnings power. The subadviser believes that buying these securities at a price that is below their intrinsic worth may generate greater returns for the fund than those obtained by paying a premium price for companies currently in favor in the market.

The subadviser seeks to achieve attractive absolute returns that exceed the “normalized risk-free” rate, defined as the rate of return available on long-term government securities or their equivalent in each country in which the fund invests. Utilization of an “absolute” rather than a “relative” valuation yardstick is designed not only to achieve a satisfactory return over the risk-free rate over a full market cycle, but at the same time to seek safety of principal. The subadviser considers the riskiness of an investment to be a function of the issuer’s business rather than the volatility of its stock price.

In determining which portfolio securities to sell, the subadviser focuses on the operating results of the portfolio companies, not price quotations, to measure the success of an investment. In making sell decisions, the subadviser considers, among other things, whether a security’s price target has been met, whether there has been an overvaluation of the issuer by the market, whether there has been a clear deterioration of future earnings power and whether, in the subadviser’s opinion, there has been a loss of a long-term competitive advantage.

Temporary Defensive Strategy: If the subadviser does not believe that market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, bankers’ acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.


42		Virtus Emerging Markets Opportunities Fund

Virtus High Yield Income Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing a high level of total return through a combination of income and capital appreciation.

Principal Investment Strategies:

Under normal circumstances, the fund invests at least 80% of its assets in a diversified portfolio of domestic and foreign high-yield, high-risk fixed income securities. The fund’s policy of investing 80% of its assets in high-yield fixed income securities may be changed only upon 60 days’ written notice to shareholders.

The subadviser uses an investment process that seeks to add value by balancing risk and reward through rigorous issuer and security selection, opportunistic trading, continual monitoring and active management.

The subadviser employs a bottom-up quantitative approach to security selection, complemented by fundamental analysis and a top-down sector overlay. Issuers believed by the subadviser to exhibit a relatively low default risk and provide bond yields/spreads that adequately compensate for the risk, are generally over weighted.

The subadviser puts an emphasis on quality issuers with attractive yields/spreads and mitigates credit risk by using quantitative screens designed to eliminate high-risk issuers and unattractive risk/return securities from consideration. To ensure selection of quality securities the manager uses quantitative analytics and conducts fundamental analysis focusing on the issuer’s competitive position, industry dynamics, cash flow, asset mix, liquidity position, debt coverage, degree of leverage and management.

Principally, securities are selected from a broad universe of domestic high-yield corporate bonds, although the fund may also invest in other types of high-yield securities.

The subadviser generally maintains the duration of the fund in line with that of its style benchmark, the BofA Merrill Lynch U.S. High Yield Master II Constrained Index. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security.

Temporary Defensive Strategy: During periods of adverse market conditions, the fund may temporarily invest a significant portion of its assets in investment grade fixed income securities and money market instruments. When this allocation happens, the fund may not achieve its objective.


Virtus High Yield Income Fund			43

Virtus Insight Government Money Market Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing as high a level of current income from government obligations as is consistent with preservation of capital and liquidity.

Principal Investment Strategies:

The fund invests only in high-quality, short-term money market instruments that, in the opinion of the fund’s subadviser, present minimal credit risks. Under normal circumstances, the fund invests at least 80% of its assets in government money market securities which are defined as:

U.S. Treasury securities whose interest and principal payments are backed by the full faith and credit of the U.S. Government and securities issued by U.S. Government agencies and instrumentalities whose interest and principal payments may be supported by the full faith and credit of the U.S. Treasury (such as Government National Mortgage Association participation certificates); or

Securities issued by the U.S. Government whose interest and principal payments are not backed by the full faith and credit of the U.S. Government and may be supported by the limited authority of the issuer to borrow from the U.S. Treasury (such as securities of the Federal Home Loan Bank); the discretionary authority of the U.S. Government to purchase certain obligations (such as securities of the Federal National Mortgage Association); or the credit of the issuer only; and repurchase agreements collateralized by U.S. Government securities.

The fund’s policy of investing at least 80% of its assets in government short-term money market instruments may be changed only upon 60 days’ written notice to shareholders.

The fund will purchase only securities (other than U.S. Government securities) that have been rated within the two highest rating categories by at least two nationally recognized statistical rating organizations (or, if not rated, are considered by the adviser to be of comparable quality) unless only one such agency has rated the security. No more than 3% of the fund’s assets will be invested in the second highest rating category. The fund’s current income generally will be lower than the income provided by funds that invest in securities with longer maturities or lower quality.


44		Virtus Insight Government Money Market Fund

Virtus Insight Money Market Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing as high a level of current income as is consistent with its investment policies and with preservation of capital and liquidity.

Principal Investment Strategies:

The fund invests only in high-quality, short-term money market instruments that, in the opinion of the fund’s subadviser, present minimal credit risks. The fund invests in a broad range of short-term money market instruments, including U.S. Government securities, repurchase agreements, and bank and commercial obligations. Commercial paper purchased by the fund will consist of U.S. dollar-denominated direct obligations of domestic and foreign corporate issuers, including bank holding companies.

The fund will purchase only U.S. dollar-denominated securities. In addition, the fund will purchase only securities (other than U.S. Government securities) that have been rated within the highest rating category by at least two nationally recognized statistical rating organizations (or, if not rated, are considered by the subadviser to be of comparable quality) unless only one such agency has rated the security. The fund’s current income generally will be lower than the income provided by funds that invest in securities with longer maturities or lower quality.


Virtus Insight Money Market Fund			45

Virtus Insight Tax-Exempt Money Market Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing as high a level of current income that is exempt from federal income taxes as is consistent with its investment policies and preservation of capital and liquidity.

Principal Investment Strategies:

Under normal circumstances, the fund invests at least 80% of its assets in high-quality, short-term money market instruments that generate income that is generally exempt from federal income tax and is not subject to the alternative minimum tax. This policy is fundamental and may only be changed by shareholder approval. The fund may also invest in securities that generate income that is not exempt from federal or state income tax.

Income exempt from federal or state income tax may be subject to state or local income tax. Any capital gains distributed by the fund may be taxable.

The fund will invest in primarily U.S. dollar-denominated municipal securities.

The fund will purchase only securities (other than U.S. Government securities) that have been rated within the highest rating category by at least two nationally recognized statistical rating organizations (or, if not rated, are considered by the subadviser to be of comparable quality) unless only one such agency has rated the security. The fund’s current income generally will be lower than the income provided by funds that invest in securities with longer maturities or lower quality.

Depending on market conditions, the fund may temporarily hold up to 20% of the current value of its assets in securities whose interest income is subject to taxation.


46		Virtus Insight Tax-Exempt Money Market Fund

Virtus Short/Intermediate Bond Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing a high level of total return, including a competitive level of current income.

Principal Investment Strategies:

Under normal circumstances, the fund invests at least 80% of its assets in bonds with a short/intermediate-term average maturity. “Bonds” are fixed income debt securities of various types of issuers, including corporate bonds, mortgage-backed and asset-backed securities, U.S. Government securities and other short-term instruments. The fund’s policy of investing at least 80% of its assets in short/intermediate bonds may be changed only upon 60 days’ written notice to shareholders.

The fund generally invests in investment-grade securities. Investment-grade securities are those with credit ratings, at the time of acquisition, within the four highest rating categories of a nationally recognized statistical rating organization, or if unrated, those that the subadviser determines, pursuant to procedures reviewed and approved by the Board of Trustees, are of comparable quality.

The fund may invest in bonds and debentures, U.S. Government securities, U.S. dollar-denominated debt obligations of foreign governments, mortgage-backed and asset-backed securities, municipal securities, zero-coupon securities, other floating/variable-rate obligations, and options and interest-rate futures contracts.

The fund normally maintains a dollar-weighted average maturity (or average life with respect to mortgage-backed and asset-backed securities) of between two and five years.

Temporary Defensive Strategy: During periods of adverse market conditions, the fund may temporarily invest a substantial portion of its assets in short-term U.S. Government Securities (such as Treasury bills), high-quality money market instruments and cash. When this happens, the fund may not achieve its objective.


Virtus Short/Intermediate Bond Fund			47

Virtus Tax-Exempt Bond Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing a high level of current income that is exempt from federal income tax.

Principal Investment Strategies:

Under normal circumstances, the fund invests at least 80% of its assets in tax-exempt bonds, generally municipal securities with varying maturities. These securities generate income that is exempt from federal income tax and not subject to the federal alternative minimum tax. This policy is fundamental and may only be changed by shareholder approval. The fund may also invest in securities that generate income that is not exempt from federal or state income tax and is subject to the federal alternative minimum tax.

Income exempt from federal or state income tax may be subject to state or local income tax. Any capital gains distributed by the fund may be taxable.

The fund will normally purchase only securities that are investment grade.

The subadviser employs:

interest rate risk management techniques designed to temper the potential negative impact of interest rate increases on the fund’s share price; and

credit analysis designed to determine whether the municipalities issuing the bonds are likely to repay their debt.

The fund also may invest in U.S. Government securities and securities with various forms of credit enhancement (such as bank letters of credit). The fund may buy and sell options and interest rate futures contracts to hedge against declines in the value of portfolio securities.

In pursuit of higher income, the subadviser normally favors longer-term bonds that typically mature in ten years or more. In exchange for this higher potential income, investors may experience higher share-price volatility than would occur through investments with shorter maturities.

Temporary Defensive Strategy: During periods of adverse market conditions, the fund may temporarily invest a substantial portion of its assets in investment-grade fixed income securities and money market instruments. When this allocation happens, the fund may not achieve its objective.


48		Virtus Tax-Exempt Bond Fund

Virtus Value Equity Fund

Non-Fundamental Investment Objective:

The fund has an investment objective of providing capital appreciation and current income.

Principal Investment Strategies:

The subadviser selects stocks that are representative of the companies found within the Russell 1000 ^® Value Index in an effort to:

provide greater returns, over the long-term, than the securities comprising the Russell 1000 ^® Value Index; and

maintain a risk level approximating that of the Russell 1000 ^® Value Index.

The Russell 1000 ^® Value Index measures the performance of those Russell 1000 ^® companies with lower price-to-book ratios and lower forecasted growth values.


Virtus Value Equity Fund			49

More Information About Risks Related to Principal Investment Strategies

Each of the funds may not achieve its objective, and each is not intended to be a complete investment program.

Generally, the value of a fund’s investments that supports your share value may decrease. If between the time you purchase shares and the time you sell shares the value of such fund’s investments decreases, you will lose money.

Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected and investments may fail to perform as the adviser or subadviser expects. As a result, the value of your shares may decrease.

Specific risks of investing in the funds are identified in the below table and described in detail following the table.

Risks

Virtus

Balanced
Allocation

Fund

Virtus
Core
Equity

Fund

Virtus
Emerging
Markets
Oppor-
tunities

Fund

Virtus
High
Yield
Income

Fund

Virtus
Insight
Govern-
ment
Money
Market

Fund

Virtus
Insight
Money
Market

Fund

Virtus
Insight
Tax-
Exempt
Money
Market

Fund

Virtus
Short/
Inter-
mediate
Bond

Fund

Virtus
Tax-
Exempt
Bond

Fund

Virtus
Value
Equity

Fund

Allocation

Counterparty

Debt Securities

Call

Credit

Income

Interest Rate

Long-Term

Maturities/

Durations

Equity Securities

Growth Stocks

Large Market

Capitalization

Companies

Small and Medium

Market Capitalization

Companies

Value Stocks

Equity-Linked Instruments

Foreign Investing

Currency Rate

Emerging Market

Investing

Geographic

Concentration

High Yield-High Risk Securities (Junk Bonds)

Market Volatility

Mortgage-Backed and Asset-Backed

Securities

Municipal Bond Market

Principal Stability

Tax-Exempt Securities

Tax Liability

U.S. Government Securities

In order to determine which risks are principal risks for a fund, please refer to the table above.

Allocation Risk

A fund’s investment performance depends, in part, upon how its assets are allocated and reallocated by its adviser. If the fund’s exposure to equities and fixed income securities, or to different asset classes, deviates from the adviser’s intended allocation, or if the fund’s allocation is not optimal for market conditions at a given time, the fund’s performance may suffer.


50		Virtus Mutual Funds

Counterparty Risk

When the fund engages in investment techniques where it relies on another party to consummate the transaction, the fund is subject to the risk of default by the other party.

Debt Securities Risks

Debt securities are subject to various risks, the most prominent of which are credit risk and interest rate risk. These risks can affect a security’s price volatility to varying degrees, depending upon the nature of the instrument. Risks associated with investing in debt securities include the following:

Call Risk. There is a risk that issuers will prepay fixed rate obligations when interest rates fall. A fund holding callable securities therefore may be forced to reinvest in obligations with lower interest rates than the original obligations and otherwise may not benefit fully from the increase in value that other fixed income securities experience when rates decline.

Credit Risk. There is a risk that the issuer of a security will fail to pay interest or principal in a timely manner, or that negative perceptions of the issuer’s ability to make such payments will cause the price of the security to decline. Debt securities rated below investment-grade are especially susceptible to this risk.

Income Risk. The income shareholders receive from the fund is based primarily on the dividends and interest the fund earns from its investments, which can vary widely over the short- and long-term. If prevailing market interest rates drop, distribution rates of the fund’s preferred stock holdings and any bond holdings could drop as well. The fund’s income also would likely be affected adversely when prevailing short-term interest rates increase.

Interest Rate Risk. The values of debt securities usually rise and fall in response to changes in interest rates. Declining interest rates generally increase the value of existing debt instruments, and rising interest rates generally decrease the value of existing debt instruments. Changes in a debt instrument’s value usually will not affect the amount of interest income paid to the fund, but will affect the value of the fund’s shares. Interest rate risk is generally greater for investments with longer maturities.

Certain securities pay interest at variable or floating rates. Variable rate securities reset at specified intervals, while floating rate securities reset whenever there is a change in a specified index rate. In most cases, these reset provisions reduce the effect of changes in market interest rates on the value of the security. However, some securities do not track the underlying index directly, but reset based on formulas that can produce an effect similar to leveraging; others may also provide for interest payments that vary inversely with market rates. The market prices of these securities may fluctuate significantly when interest rates change.

Some investments give the issuer the option to call or redeem an investment before its maturity date. If an issuer calls or redeems an investment during a time of declining interest rates, the fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore it might not benefit from any increase in value as a result of declining interest rates.

Long-Term Maturities/Durations Risk. Fixed income securities with longer maturities or durations may be subject to greater price fluctuations due to interest rate, tax law, and general market changes than securities with shorter maturities or durations.

Equity Securities Risks

Generally, prices of equity securities are more volatile than those of fixed income securities. The prices of equity securities will rise and fall in response to a number of different factors. In particular, equity securities will respond to events that affect entire financial markets or industries (such as changes in inflation or consumer demand) and to events that affect particular issuers (such as news about the success or failure of a new product). Equity securities also are subject to “stock market risk,” meaning that stock prices in general may decline over short or extended periods of time. When the value of the stocks held by the fund goes down, the value of the fund’s shares will be affected.

Growth Stocks. There is a possibility that the fund’s focus on growth investing will cause the fund to underperform when growth investing is out of favor, or the fund’s investments will not appreciate as anticipated. Growth investing may increase the volatility of the fund’s share price.


Virtus Mutual Funds			51

Large Market Capitalization Companies. The value of investments in larger companies may not rise as much as smaller companies, or larger companies may be unable to respond quickly to competitive challenges, such as changes in technology and consumer tastes.

Small and Medium Market Capitalization Companies. Small and medium-sized companies often have narrower markets, fewer products or services to offer, and more limited managerial and financial resources than larger, more established companies. As a result, the performance of small and medium-sized companies may be more volatile, and they may face a greater risk of business failure, which could increase the volatility and risk of loss to the fund.

Value Stocks. There is a possibility that the fund’s focus on value investing will cause the fund to underperform when value investing is out of favor, or that investments in companies whose securities are believed to be undervalued do not appreciate in value as anticipated. Value investing may increase the volatility of the fund’s share price.

Equity-Linked Instruments.

Equity-linked instruments are instruments of various types issued by financial institutions or special purpose entities located in foreign countries to provide the synthetic economic performance of a referenced equity security, including benefits from dividends and other corporate actions, but without certain rights of direct investment in the referenced securities, such as voting rights. In addition to the market and other risks of the referenced equity security, equity-linked instruments involve counterparty risk, which includes the risk that the issuing entity may not be able to honor its financial commitment. Equity-linked instruments have no guaranteed return of principal and may experience a return different from the referenced equity security . Typically, a fund will invest in equity-linked instruments in order to obtain exposure to certain countries in which it does not have local accounts.

Foreign Investing Risks

Investing in securities of non-U.S. companies involves special risks and considerations not typically associated with investing in U.S. companies, and the values of non-U.S. securities may be more volatile than those of U.S. securities. The values of non-U.S. securities are subject to economic and political developments in countries and regions where the issuers operate or are domiciled, or where the securities are traded, such as changes in economic or monetary policies, and to changes in currency exchange rates. Values may also be affected by restrictions on receiving the investment proceeds from a non-U.S. country.

In general, less information is publicly available about non-U.S. companies than about U.S. companies. Non-U.S. companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. Certain foreign issuers classified as passive foreign investment companies may be subject to additional taxation risk.

Currency Rate Risk. Because the foreign securities in which the fund invests generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the fund’s net asset value, the value of dividends and interest earned, and gains and losses realized on the sale of securities. Because the value of the fund’s shares is calculated in U.S. dollars, it is possible for the fund to lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the fund’s holdings goes up. Generally, a strong U.S. dollar relative to such other currencies will adversely affect the value of the fund’s holdings in foreign securities.

Emerging Market Investing Risk. The risks of foreign investments are generally greater in countries whose markets are still developing than they are in more developed markets. Emerging market countries typically have economic and political systems that are less fully developed, and can be expected to be less stable than those of more developed countries. For example, the economies of such countries can be subject to rapid and unpredictable rates of inflation or deflation. Since these markets are often small, they may be more likely to suffer sharp and frequent price changes or long-term price depression because of adverse publicity, investor perceptions or the actions of a few large investors. They may also have policies that restrict investment by foreigners, or that prevent foreign investors from withdrawing their money at will. Certain emerging markets may also face other significant internal or external risks, including the risk of war and civil unrest. For all of these reasons, investments in emerging markets may be considered speculative.


52		Virtus Mutual Funds

Geographic Concentration Risk

The value of the investments of a fund that focuses its investments in a particular geographic location will be highly sensitive to financial, economic, political and other developments affecting the fiscal stability of that location, and conditions that negatively impact that location will have a greater impact on the fund as compared with a fund that does not have its holdings similarly concentrated. Events negatively affecting such location are therefore likely to cause the value of the fund’s shares to decrease, perhaps significantly.

High Yield-High Risk Fixed Income Securities (Junk Bonds) Risk

Securities rated “BB” or below by S&P or “Ba” or below by Moody’s are known as “high yield” securities and are commonly referred to as “junk bonds.” Such securities entail greater price volatility and credit and interest rate risk than investment grade securities. Analysis of the creditworthiness of high yield-high risk issuers is more complex than for higher-rated securities, making it more difficult for the subadviser to accurately predict risk. There is a greater risk with high yield-high risk fixed income securities that an issuer will not be able to make principal and interest payments when due. If the fund pursues missed payments, there is a risk that fund expenses could increase. In addition, lower-rated securities may not trade as often and may be less liquid than higher-rated securities, especially during periods of economic uncertainty or change. As a result of all of these factors, these bonds are generally considered to be speculative.

Market Volatility Risk

The value of the securities in which a fund invests may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be temporary or may last for extended periods.

Instability in the financial markets has led to volatile financial markets that expose a fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments that it holds. In response to financial markets that experienced extreme volatility, and in some cases a lack of liquidity, the U.S. Government has taken a number of unprecedented actions, including acquiring distressed assets from financial institutions and acquiring ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear. Additional legislation or government regulation may also change the way in which funds themselves are regulated, which could limit or preclude a fund’s ability to achieve its investment objective.

Mortgage-Backed and Asset-Backed Securities Risk

Mortgage-backed securities represent interests in pools of residential mortgage loans purchased from individual lenders by a federal agency or originated and issued by private lenders. Asset-backed securities represent interests in pools of underlying assets such as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. These two types of securities share many of the same risks.

The impairment of the value of collateral or other assets underlying a mortgage-backed or asset-backed security, such as that resulting from non-payment of loans, may result in a reduction in the value of such security and losses to a fund.

Early payoffs in the loans underlying such securities may result in the fund receiving less income than originally anticipated. The variability in prepayments will tend to limit price gains when interest rates drop and exaggerate price declines when interest rates rise. In the event of high prepayments, the fund may be required to invest proceeds at lower interest rates, causing the fund to earn less than if the prepayments had not occurred. Conversely, rising interest rates may cause prepayments to occur at a slower than expected rate, which may effectively change a security that was considered short- or intermediate-term into a long-term security. Long-term securities tend to fluctuate in value more widely in response to changes in interest rates than shorter-term securities.

Municipal Bond Market Risk

The amount of public information available about municipal bonds is generally less than that for corporate equities or bonds, and the investment performance of the fund may be more dependent on the analytical abilities of the investment adviser than would be the case for a fund that does not invest in municipal bonds. The secondary market for municipal


Virtus Mutual Funds			53

bonds also tends to be less well-developed and less liquid than many other securities markets, which may adversely affect the fund’s ability to sell its bonds at attractive prices. In addition, municipal obligations can experience downturns in trading activity, and the supply of municipal obligations may exceed the demand in the market. During such periods, the spread can widen between the price at which an obligation can be purchased and the price at which it can be sold. Less liquid obligations can become more difficult to value and be subject to erratic price movements. Economic and other events (whether real or perceived) can reduce the demand for certain investments or for investments generally, which may reduce market prices and cause the value of the fund’s shares to fall. The frequency and magnitude of such changes cannot be predicted. The fund may invest in municipal obligations that do not appear to be related but in fact depend on the financial rating or support of a single government unit, in which case events that affect one of the obligations will also affect the others and will impact the fund’s portfolio to a greater degree than if the fund’s investments were not so related. The increased presence of non-traditional participants in the municipal markets may lead to greater volatility in the markets.

Principal Stability Risk

The fund may not be able to maintain a stable net asset value of $1.00.

Tax-Exempt Securities Risk

Tax-exempt securities may not provide a higher after-tax return than taxable securities.

Tax Liability Risk

Distributions by the fund could become taxable to shareholders as ordinary income due to noncompliant conduct by a municipal bond issuer, unfavorable changes in federal or state tax laws, or adverse interpretations of tax laws by applicable tax authorities. Such adverse interpretations or actions could cause interest from a security to become taxable, possibly retroactively, subjecting shareholders to increased tax liability. In addition, such adverse interpretations or actions could cause the value of a security, and therefore the value of a fund’s shares, to decline.

U.S. Government Securities Risk

Obligations issued or guaranteed by the U.S. Government, its agencies, authorities and instrumentalities and backed by the full faith and credit of the United States only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will increase, and in fact the market values of such obligations may fluctuate. In addition, not all U.S. Government securities are backed by the full faith and credit of the United States; some are the obligation solely of the entity through which they are issued. There is no guarantee that the U.S. Government would provide financial support to its agencies and instrumentalities if not required to do so by law.


54		Virtus Mutual Funds

Management of the Funds

The Adviser

Virtus Investment Advisers, Inc. (“VIA”) is the investment adviser to the funds and is located at 100 Pearl Street, Hartford, CT 06103. VIA acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. As of December 31, 2011, VIA had approximately $20.8 billion in assets under management. VIA has acted as an investment adviser for over 70 years and is an indirect wholly-owned subsidiary of Virtus Investment Partners, Inc., a publicly traded multi-manager asset management business.

Subject to the direction of the fund’s Board of Trustees, VIA is responsible for managing the funds’ investment programs and for the general operations of the funds, including oversight of the funds’ subadvisers, and for, recommending their hiring, termination and replacement. With respect to all the funds other than the High Yield Income Fund and Emerging Markets Opportunities Fund, Virtus has appointed and oversees the activities of Harris Investment Management, Inc. (“Harris”) as the investment subadviser. In the case of High Yield Income Fund, VIA has appointed and oversees the activities of HIM Monegy, Inc. (“HIM Monegy”) as the investment subadviser. In the case of Emerging Markets Opportunities Fund, VIA has appointed and oversees the activities of Vontobel Asset Management, Inc. (“Vontobel”) as the investment subadviser. Prior to May 18, 2006, Harris was each fund’s investment adviser.

VIA has appointed and oversees the activities of each of the subadvisers for the funds as follows. Each subadviser manages the investments of that fund to conform with its investment policies as described in this prospectus.


Virtus Balanced Allocation Fund		Harris
Virtus Core Equity Fund		Harris
Virtus Emerging Markets Opportunities Fund		Vontobel
Virtus High Yield Income Fund		HIM Monegy
Virtus Insight Government Money Market Fund		Harris
Virtus Insight Money Market Fund		Harris
Virtus Insight Tax-Exempt Money Market Fund		Harris
Virtus Short/Intermediate Bond Fund		Harris
Virtus Tax-Exempt Bond Fund		Harris
Virtus Value Equity Fund		Harris

Management Fees

Each fund pays VIA an investment management fee that is accrued daily against the value of the fund’s net assets at the following annual rates:


High Yield Income Fund		0.45%
Tax-Exempt Bond Fund		0.45%


	First $1 billion	$1+ billion
Emerging Markets Opportunities Fund	1.00%	0.95%


	First $1 billion	$1+ billion through $2 billion	$2+billion
Short/Intermediate Bond Fund	0.55%	0.50%	0.45%


Virtus Mutual Funds			55


	First $2 billion	$2+ billion
Balanced Allocation Fund	0.50%	0.45%
Core Equity Fund	0.70%	0.65%
Value Equity Fund	0.70%	0.65%

The Insight Government Money Market Fund, Insight Money Market Fund and Insight Tax-Exempt Money Market Fund each pay VIA 0.14% on the fund’s first $100 million of net assets, plus 0.10% on the fund’s remaining assets.

In its last fiscal year, the funds paid fees to the adviser at the following percentage of average net assets:


Virtus Balanced Allocation Fund		0.50%
Virtus Core Equity Fund		0.70%
Virtus Emerging Markets Opportunities Fund		0.98%
Virtus High Yield Income Fund		0.45%
Virtus Insight Government Money Market Fund		0.10%
Virtus Insight Money Market Fund		0.10%
Virtus Insight Tax-Exempt Money Market Fund		0.12%
Virtus Short/Intermediate Bond Fund		0.55%
Virtus Tax-Exempt Bond Fund		0.45%
Virtus Value Equity Fund		0.70%

The Subadvisers

Harris is located at 115 South LaSalle Street, 11 ^th Floor, P.O. Box 755, Chicago, IL 60603. Harris has been an investment adviser since 1989. Harris is a wholly-owned subsidiary of BMO Bankcorp, Inc., which is wholly owned by BMO Financial Corp. BMO Financial Corp. is wholly owned by Bank of Montreal, a publicly-traded Canadian banking institution. As of December 31, 2011, Harris had approximately $12.8 billion in assets under management.

HIM Monegy is located at 302 Bay Street, 12th Floor, Toronto, ON, Canada M5X 1A1. HIM Monegy acts as adviser to institutional investors in the United States, Canada and Australia and has been an investment adviser since 1999. HIM Monegy is owned by Harris Investment Management, Inc. Harris Investment Management, Inc. is a wholly-owned subsidiary of Harris Bankcorp, Inc., which is wholly owned by Harris Financial Corp. Harris Financial Corp. is wholly owned by Bank of Montreal, a publicly-traded Canadian banking institution. As of December 31, 2011, HIM Monegy had approximately $1.93 billion in assets under management.

Vontobel is located at 1540 Broadway, 38 ^th Floor, New York, NY 10036. Vontobel is a wholly-owned and controlled subsidiary of Vontobel Holding AG, a Swiss bank holding company, having its registered offices in Zurich, Switzerland. In addition to U.S. registered investment companies, Vontobel also acts as subadviser to six series of a Luxembourg investment fund that accepts investments from non-U.S. investors only and that was organized by an affiliate of Vontobel. Vontobel has provided investment advisory services to mutual fund clients since 1990. As of December 31, 2011, Vontobel had approximately $20 billion in assets under management.


56		Virtus Mutual Funds

VIA pays Harris a subadvisory fee payable on the funds’ average daily net assets at the following annual rates:


Virtus Balanced Allocation Fund		0.28%
Virtus Core Equity Fund		0.38%
Virtus Short/Intermediate Bond Fund		0.305%
Virtus Tax-Exempt Bond Fund		0.255%
Virtus Value Equity Fund		0.38%

With respect to the Insight Government Money Market Fund, Insight Money Market Fund and Insight Tax-Exempt Money Market Fund, VIA pays Harris a subadvisory fee at the annual rate of 0.07% on each fund’s first $100 million of net assets, plus 0.05% on the fund’s remaining net assets.

For each fund, the subadvisory fee payable to Harris will be reduced by 50% of any reimbursement or waivers by VIA and increased by 50% of any such reimbursements or waivers subsequently recaptured.

VIA pays HIM Monegy a subadvisory fee for the fund listed below at the following annual rate:


Virtus High Yield Income Fund		50% of Net Advisory Fee

VIA pays Vontobel a subadvisory fee for the fund listed below at the following annual rate:


Virtus Emerging Markets Opportunities Fund		50% of Net Advisory Fee

A discussion regarding basis of the Board of Trustees approving the advisory and subadvisory agreements is available in the funds’ annual report covering the period January 1, 2011 through December 31, 2011.

Portfolio Management

The following individuals are responsible for the day-to-day management of the funds’ portfolios.

Harris


Virtus Balanced Allocation Fund		Peter J. Arts (since February 2012) Thomas P. Lettenberger, CFA (since 2009) Daniela Mardarovici, CFA (since February 2012) Daniel L. Sido, CFA (since 2006)
Virtus Core Equity Fund		Jason C. Hans, CFA (since February 2012) Ernesto Ramos, PhD (since February 2012) Daniel L. Sido, CFA (since 2005)
Virtus Insight Government Money Market Fund		Peter J. Arts Boyd R. Eager (both since 2004)
Virtus Insight Money Market Fund		Peter J. Arts Boyd R. Eager (both since 2004)
Virtus Tax-Exempt Money Market Fund		Peter J. Arts (since 2004) Boyd R. Eager (since 2006)
Virtus Short/Intermediate Bond Fund		Daniela Mardarovici, CFA (since 2011) Andrew Reed, CFA (since February 2012) Jason D. Weiner, CFA (since February 2012)


Virtus Mutual Funds			57

Virtus Tax-Exempt Bond Fund

John D. Boritzke, CFA (since February 2012)

Duane A. McAllister, CFA (since February 2012)

Virtus Value Equity Fund

Jason C. Hans, CFA (since February 2012)

Ernesto Ramos, PhD (since February 2012)

Daniel L. Sido, CFA (since 2005)

Peter J. Arts. Mr. Arts joined Harris in 1993 and serves as Managing Director and Head of Fixed Income, responsible for the team charged with management of the short-, intermediate- and long-duration fixed income strategies. He has over 21 years of investment management experience.

John D. Boritzke, CFA. Mr. Boritzke joined Harris in 2011 and serves as Managing Director and Portfolio Manager. Mr. Boritzke is also a Senior Vice President and Head of Tax Exempt Fixed Income of M&I Investment Management Corp. (IMC), an affiliate of Harris, and has been with IMC since 1983. He has over 29 years of investment management experience.

Boyd R. Eager. Mr. Eager joined Harris in 1996 and serves as Director and Senior Portfolio Manager. He is a member of the liquidity products team which has principal responsibility for the firm’s long duration and cash management strategies. He has over 15 years of investment management experience.

Jason C. Hans, CFA. Mr. Hans joined Harris in 2008 and serves as Director and Portfolio Manager, responsible for equity portfolio management and research with a primary focus on large-cap strategies. Prior to 2008, Mr. Hans was a Managing Director and Head of Research for Quantitative Services Group, an independent quantitative research and model construction firm (2003 to 2008). He has over 14 years of experience in the investment management industry.

Thomas P. Lettenberger, CFA. Mr. Lettenberger joined Harris in 2005 and serves as Director and Senior Portfolio Manager, specializing in small-cap products. He has over 18 years of investment management experience.

Daniela Mardarovici, CFA. Ms. Mardarovici joined Harris in 2005 and serves as Director and Portfolio Manager. She specializes in mortgage-backed securities with a focus on taxable institutional mandates. She has over 11 years of investment management experience.

Duane A. McAllister, CFA. Mr. McAllister joined Harris in February 2012 and serves as Managing Director and Portfolio Manager, specializing in tax-exempt investing. Mr. McAllister is also a Senior Vice President and a Portfolio Manager of IMC and has been with IMC since 2007. Prior to 2007, he served in investment management positions with Wells Fargo Funds Management LLC (2002 to 2007). He has over 22 years of investment management experience.

Ernesto Ramos, PhD. Dr. Ramos joined Harris in 2005 and serves as Managing Director and Head of Equities. Dr. Ramos is a member of Harris’s Investment Committee and leads the team responsible for portfolio management and research for all equity strategies. He has over 25 years of experience in the investment management industry.

Andrew Reed, CFA. Mr. Reed joined Harris in February 2012 and serves as Vice President and Portfolio Manager. He is a member of the credit products team which has principal responsibility for the management of the investment grade corporate bond sector. Mr. Reed is also a Vice President and a Portfolio Manager of IMC and joined IMC in 2001. He has over 11 years of experience in the investment management industry.

Daniel L. Sido, CFA. Mr. Sido joined Harris in 1994 and serves as Managing Director and Chief Investment Strategist. Prior to joining Harris, Mr. Sido served as portfolio manager for a trust company, managing equity and fixed income portfolios. He has over 28 years of investment management experience.

Jason D. Weiner, CFA. Mr. Weiner joined Harris in 2011 and serves as Managing Director and Portfolio Manager. He is a member of the team charged with management of the short-, intermediate- and long-duration fixed income strategies. Mr. Weiner is also a Vice President and Portfolio Manager of IMC and joined IMC in 1993. He has over 18 years of investment management experience.


58		Virtus Mutual Funds

HIM Monegy

Virtus High Yield Income Fund

Lori J. Marchildon, CFA (since May 2010)

Ovidiu Sandu, CFA (since May 2010)

Sadhana Valia, CFA (since May 2010)

Lori J. Marchildon, CFA . Ms. Marchildon is a Portfolio Manager and a member of the HIM Monegy’s Investment Policy Committee. Ms. Marchildon has portfolio management responsibilities with credit coverage accountability for the consumer products and capital goods sectors. Prior to joining HIM Monegy in 2001, Ms. Marchildon spent five years with BMO Financial Group’s Risk Management Group where she led the design and implementation of a risk framework to address credit risk for trading, underwriting and investment portfolios. Ms. Marchildon’s prior experience also includes working as an economist with the federal Canadian Department of Finance. She has 16 years experience in the financial industry.

Ovidiu Sandu, CFA. Mr. Sandu is an Assistant Portfolio Manager and a Senior Quantitative Analyst and member of the Investment Policy Committee. Mr. Sandu has credit responsibility for the healthcare, aerospace and industrial services sectors and has focused on high yield since joining HIM Monegy in 2000. His prior experience includes emerging market equity research, mergers and acquisitions and privatizations with a European bank. Mr. Sandu has 15 years experience in the financial industry

Sadhana Valia, CFA. Ms. Valia is head of the High Yield Team, Lead Portfolio Manager for HIM Monegy’s high yield portfolios, and a member of the Investment Policy Committee. Ms. Valia serves as President of HIM Monegy and is a member of its Board of Directors, as well as a member of Harris Investment Management, Inc.’s management team. She has focused on high yield since joining HIM Monegy in 1998. She previously held senior positions in BMO Financial Group’s Corporate & Investment Banking Group, including the origination, structuring and syndication of project, mergers and acquisition, leveraged buyout and corporate loan financings. Ms. Valia’s prior experience includes three years as an executive in BMO’s Credit Department with responsibility for large corporate, institutional and government accounts. She has 27 years experience managing credit risk assets.

Vontobel


Virtus Emerging Markets Opportunities Fund		Rajiv Jain (since 2006)

Rajiv Jain. Mr. Jain is a Managing Director (since 2002) of Vontobel. He joined Vontobel in 1994 as an equity analyst and associate manager of its international equity portfolios. He has been a portfolio manager of Vontobel’s global equity products since 2002.

Please refer to the SAI for additional information about the funds’ portfolio managers, including the structure of and method of computing compensation, other accounts they manage and their ownership of shares of the funds.


Virtus Mutual Funds			59

Additional Investment Techniques

In addition to the Principal Investment Strategies and Risks Related to Principal Investment Strategies, each of the funds listed in the chart below may engage in additional investment techniques that present additional risks to a fund as indicated in the chart below. Those additional investment techniques in which a fund is expected to engage as of the date of this prospectus are indicated in the chart below, although other techniques may be utilized from time to time. Each risk is described after the chart. Many of the additional investment techniques that a fund may use, as well as other investment techniques that are relied upon to a lesser degree, are more fully described in the SAI.

Risks

Virtus

Balanced
Allocation

Fund

Virtus
Core
Equity

Fund

Virtus
Emerging
Markets
Opportunities

Fund

Virtus
High
Yield
Income

Fund

Virtus
Insight
Money
Market

Fund

Virtus
Short/
Intermediate
Bond

Fund

Virtus
Tax-
Exempt
Bond

Fund

Virtus
Value
Equity

Fund

Borrowing

Counterparty

Debt Securities

Call

Credit

Interest Rate

Foreign Investing

Currency Rate

Municipal Bond Market

Securities Lending

In order to determine which investment techniques apply to a fund, please refer to the table above.

Borrowing Risk

When a fund borrows money, it is required to maintain continuous asset coverage (total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed. If the asset coverage declines, for example as a result of market fluctuations, the fund may be required to sell some of its portfolio holdings quickly to reduce the debt and restore the required asset coverage, even though it may be disadvantageous from an investment standpoint to do so. Borrowing may exaggerate the effect on the fund’s net asset value of any increase or decrease in the market value of the portfolio. Money borrowed will be subject to interest costs that may or may not be offset by appreciation of the securities purchased. The fund also may be subject to other conditions or fees that would increase the cost of borrowing over the stated interest rate. The various costs of borrowing may therefore ultimately exceed the income from investments made with such leverage.

Counterparty Risk

When the fund engages in investment techniques where it relies on another party to consummate the transaction, the fund is subject to the risk of default by the other party.

Debt Securities Risks


60		Virtus Mutual Funds

Foreign Investing Risks

Municipal Bond Market Risk


Virtus Mutual Funds			61

affect the fund’s ability to sell its bonds at attractive prices. In addition, municipal obligations can experience downturns in trading activity, and the supply of municipal obligations may exceed the demand in the market. During such periods, the spread can widen between the price at which an obligation can be purchased and the price at which it can be sold. Less liquid obligations can become more difficult to value and be subject to erratic price movements. Economic and other events (whether real or perceived) can reduce the demand for certain investments or for investments generally, which may reduce market prices and cause the value of the fund’s shares to fall. The frequency and magnitude of such changes cannot be predicted. The fund may invest in municipal obligations that do not appear to be related but in fact depend on the financial rating or support of a single government unit, in which case events that affect one of the obligations will also affect the others and will impact the fund’s portfolio to a greater degree than if the fund’s investments were not so related. The increased presence of non-traditional participants in the municipal markets may lead to greater volatility in the markets.

Securities Lending

Each of the funds (except the Virtus Insight Money Market Funds) may loan portfolio securities with a value up to one-third of its assets to increase its investment returns. If the borrower is unwilling or unable to return the borrowed securities when due, the fund can suffer losses. In addition, there is a risk of delay in receiving additional collateral or in the recovery of the securities, and a risk of loss of rights in the collateral, in the event that the borrower fails financially. There is also a risk that the value of the investment of the collateral could decline, causing a loss to the fund.

The funds may buy other types of securities or employ other portfolio management techniques. Please refer to the SAI for more detailed information about these and other investment techniques of the funds.

Pricing of Fund Shares

How is the Share Price determined?

Each fund calculates a share price for each class of its shares. The share price for each class is based on the net assets of the fund and the number of outstanding shares of that class. In general, each fund calculates a share price for each class by:

adding the values of all securities and other assets of the fund;

subtracting liabilities; and

dividing the result by the total number of outstanding shares of that class.

Assets: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or if no closing price is available, at the last bid price. Shares of other investment companies are valued at such companies’ net asset values (“NAVs”). Debt securities (other than short-term investments) are valued on the basis of broker quotations or valuations provided by a pricing service, which in determining value utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. As required, some securities and assets are valued at fair value as determined in good faith by, or under the direction of, the Board of Trustees. Other assets, such as accrued interest, accrued dividends and cash are also included in determining a fund’s NAV.

Liabilities: Accrued liabilities for class-specific expenses (if any), distribution fees, service fees and other liabilities are deducted from the assets of each class. Accrued expenses and liabilities that are not class-specific (such as management fees) are allocated to each class in proportion to each class’s net assets except where an alternative allocation can be more appropriately made.

Net Asset Value (NAV): The liabilities allocated to a class are deducted from the proportionate interest of such class in the assets of the applicable fund. The resulting amount for each class is then divided by the number of shares outstanding of that class to produce each class’s NAV per share.


62		Virtus Mutual Funds

For Virtus non-money market funds, the NAV per share of each class of each fund is determined as of the close of trading (normally 4:00 PM Eastern time) on days when the New York Stock Exchange (“NYSE”) is open for trading. A Virtus non-money market fund will not calculate its NAV per share class on days when the NYSE is closed for trading. For the money market funds, the NAV of each class of each fund generally is determined as of the times indicated in the table below on each business day, except on those days the Securities Industry and Financial Markets Association (formerly, the Bond Market Association) (“SIFMA”) recommends that the U.S. bond market remains closed. The money market funds may price their shares at an earlier time if an early close is recommended by SIFMA. Information regarding whether they are expected to do so on any such day will be available to investors who call Mutual Fund Services toll-free at (800) 243-1574. A money market fund will not calculate its NAV per share class on days SIFMA has recommended that the U.S. bond market remains closed.

Normal Pricing Times for Virtus Insight Money Market Funds


Insight Government Money Market Fund		4:30 PM eastern time
Insight Money Market Fund		4:30 PM eastern time
Insight Tax-Exempt Money Market Fund		12:00 Noon eastern time

How are securities fair valued?

If market quotations are not readily available or available prices are not reliable, the funds determine a “fair value” for an investment according to policies and procedures approved by the Board of Trustees. The types of assets for which such pricing might be required include (i) securities whose trading has been suspended; (ii) securities where the trading market is unusually thin or trades have been infrequent; (iii) debt securities that have recently gone into default and for which there is no current market quotation; (iv) a security whose market price is not available from an independent pricing source and for which otherwise reliable quotes are not available; (v) securities of an issuer that has entered into a restructuring; (vi) a security whose price as provided by any pricing source does not, in the opinion of the adviser/subadviser, reflect the security’s market value; (vii) foreign securities subject to trading collars for which no or limited trading takes place; and (viii) securities where the market quotations are not readily available as a result of “significant” events. This list is not inclusive of all situations that may require a security to be fair valued, nor is it intended to be conclusive in determining whether a specific event requires fair valuation.

The value of any portfolio security held by a fund for which market quotations are not readily available shall be determined in good faith and in a manner that assesses the security’s “fair value” on the valuation date ( i.e. , the amount that the fund might reasonably expect to receive for the security upon its current sale), based on a consideration of all available facts and all available information, including, but not limited to, the following: (i) the fundamental analytical data relating to the investment; (ii) an evaluation of the forces which influence the market in which these securities are purchased and sold ( e.g. , the existence of merger proposals or tender offers that might affect the value of the security); (iii) price quotes from dealers and/or pricing services; (iv) an analysis of the company’s financial statements; (v) trading volumes on markets, exchanges or among dealers; (vi) recent news about the security or issuer; (vii) changes in interest rates; (viii) information obtained from the issuer, analysts, other financial institutions and/or the appropriate stock exchange (for exchange traded securities); (ix) whether two or more dealers with whom the adviser/subadviser regularly effects trades are willing to purchase or sell the security at comparable prices; (x) other news events or relevant matters; and (xi) government (domestic or foreign) actions or pronouncements.

Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the fund calculates its NAV (generally, the close of regular trading on the NYSE) that may impact the value of securities traded in these foreign markets. In such cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis.

The value of a security, as determined using the funds’ fair valuation procedures, may not reflect such security’s market value.


Virtus Mutual Funds			63

At what price are shares purchased?

For non-money market funds, all investments received by the funds’ authorized agents in good order prior to the close of regular trading on the NYSE (normally 4:00 PM eastern time) will be executed based on that day’s NAV. For money market funds, investments received in good order will be executed based on the next-determined NAV. Shares credited to your account from the reinvestment of fund distributions will be in full and fractional shares that are purchased at the closing NAV on the next business day on which the respective fund’s NAV is calculated following the dividend record date.

Sales Charges

What are the classes and how do they differ?

Each fund offers from two to three classes of shares. Each class has different sales and distribution charges. (See “Fees and Expenses” in each fund’s “Fund Summary,” previously in this prospectus.) For certain classes of shares, the funds have adopted distribution and service plans allowed under Rule 12b-1 of the Investment Company Act of 1940, as amended, that authorize the funds to pay distribution and service fees for the sale of their shares and for services provided to shareholders. The money market funds have adopted shareholder servicing plans in addition to the distribution and service plans allowed under Rule 12b-1.

What arrangement is best for you?

The different classes of shares permit you to choose the method of purchasing shares that is most beneficial to you. In choosing a class of shares, consider the amount of your investment, the length of time you expect to hold the shares, whether you decide to receive distributions in cash or to reinvest them in additional shares, and any other personal circumstances. Depending upon these considerations, the accumulated distribution and service fees and contingent deferred sales charges of one class of shares may be more or less than the initial sales charge and accumulated distribution and service fees of another class of shares bought at the same time. Because distribution and service fees are paid out of a fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.

Your financial representative should recommend only those arrangements that are suitable for you based on known information. In certain instances, you may be entitled to a reduction or waiver of sales charges. For instance, you may be entitled to a sales charge discount on Class A Shares if you purchase more than certain breakpoint amounts. You should inform or inquire of your financial representative whether or not you may be entitled to a sales charge discount attributable to your total holdings in a fund or affiliated funds. To determine eligibility for a sales charge discount, you may aggregate all of your accounts (including joint accounts, retirement accounts such as IRAs, non-IRAs, etc.) and those of your spouse and minor children. The financial representative may request you to provide an account statement or other holdings information to determine your eligibility for a breakpoint and to make certain all involved parties have the necessary data. Additional information about the classes of shares offered, sales charges, breakpoints and discounts follows in this section and also may be found in the SAI in the section entitled “How to Buy Shares.” This information is available free of charge, and in a clear and prominent format, at the Individual Investors section of the Virtus Mutual Funds’ Web site at virtus.com . Please be sure that you fully understand these choices before investing. If you or your financial representative require additional assistance, you may also contact Mutual Fund Services by calling toll-free (800) 243-1574.

Class A Shares. If you purchase Class A Shares of the equity funds, you will pay a sales charge at the time of purchase equal to 5.75% of the offering price (6.10% of the amount invested). If you purchase Class A Shares of the fixed income funds, you will pay a sales charge at the time of purchase equal to 4.75% of the offering price (4.99% of the amount invested). If you purchase Class A Shares of the money market funds, you will not pay a sales charge at the time of purchase. The sales charge may be reduced or waived under certain conditions. (See “Initial Sales Charge Alternative—Class A Shares” below.) Generally, Class A Shares are not subject to any charges by the funds when redeemed; however, a contingent deferred sales charge (“CDSC”) may be imposed on certain redemptions within 18 months on exchanges from a Virtus non-money market fund into a Virtus money market fund and purchases on which a finder’s fee has been paid. For all Virtus fixed income funds, the CDSC is 0.50%; for all other Virtus Mutual Funds,


64		Virtus Mutual Funds

the CDSC is 1.00%. The 18-month period begins on the last day of the month preceding the month in which the purchase was made. Class A Shares have lower distribution and service fees (0.25%) and pay higher dividends than Class C Shares.

Class C Shares (not offered by Intermediate Government Bond Fund and Money Market Funds). If you purchase Class C Shares, you will not pay a sales charge at the time of purchase. If you sell your Class C Shares within the first year after they are purchased, you will pay a deferred sales charge of 1%. (See “Deferred Sales Charge Alternative—Class C Shares” below.) Class C Shares do not convert to any other class of shares of the funds, so the higher distribution and service fees paid by Class C Shares continue for the life of the account.

Class I Shares. Class I shares are offered primarily to clients of financial intermediaries that (i) charge such clients an ongoing fee for advisory, investment, consulting or similar services, or (ii) have entered into an agreement with the distributor to offer Class I shares through a no-load network or platform. Such clients may include pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations. Class I shares are also offered to private and institutional clients of, or referred by, the adviser, the subadviser and their affiliates. If you are eligible to purchase and do purchase Class I Shares, you will pay no sales charge at any time. There are no distribution and service fees applicable to Class I Shares. For additional information about purchasing Class I Shares, please contact Mutual Fund Services by calling (800) 243-1574.

Initial Sales Charge Alternative—Class A Shares

The public offering price of Class A Shares of Virtus non-money market funds is the NAV plus a sales charge that varies depending on the size of your purchase. (See “Class A Shares—Reduced Initial Sales Charges” in the SAI.) Shares purchased based on the automatic reinvestment of income dividends or capital gain distributions are not subject to any sales charges. The sales charge is divided between your investment dealer and the funds’ underwriter, VP Distributors, LLC (“VP Distributors” or “Distributor”).

Sales Charge you may pay to purchase Class A Shares

Virtus Balanced Allocation Fund, Virtus Core Equity Fund, Virtus Emerging Markets Fund, Virtus Value Equity Fund


	Sales Charge as a percentage of
Amount of Transaction at Offering Price	Offering Price			Net Amount Invested
Under $50,000		5.75	%		6.10	%
$50,000 but under $ 100,000		4.75			4.99
$100,000 but under $ 250,000		3.75			3.90
$250,000 but under $ 500,000		2.75			2.83
$500,000 but under $ 1,000,000		2.00			2.04
$1,000,000 or more		None			None

Virtus High Yield Income Fund and Virtus Intermediate Government Bond Fund


	Sales Charge as a Percentage of
Amount of Transaction at Offering Price	Offering Price			Amount Invested
Under $50,000		3.75	%		3.90	%
$50,000 but under $ 100,000		3.50			3.63
$100,000 but under $ 250,000		3.25			3.36
$250,000 but under $ 500,000		2.25			2.30
$500,000 but under $ 1,000,000		1.75			1.78
$1,000,000 or more		None			None


Virtus Mutual Funds			65

Virtus Intermediate Tax-Exempt Bond Fund, Virtus Short/Intermediate Bond Fund, and Virtus Tax-Exempt Bond Fund


	Sales Charge as a Percentage of
Amount of Transaction at Offering Price	Offering Price			Amount Invested
Under $50,000		2.75	%		2.83	%
$50,000 but under $ 100,000		2.25			2.30
$100,000 but under $ 250,000		1.75			1.78
$250,000 but under $ 500,000		1.25			1.27
$500,000 but under $ 1,000,000		1.00			1.01
$1,000,000 or more		None			None

Class A Sales Charge Reductions and Waivers

Investors may reduce or eliminate sales charges applicable to purchases of Class A Shares through utilization of Combination Purchase Privilege, Letter of Intent, Right of Accumulation, Purchase by Associations or the Account Reinstatement Privilege. These programs are summarized below and are described in greater detail in the SAI. Investors buying Class A Shares on which a finder’s fee has been paid may incur a CDSC if they redeem their shares within 18 months of purchase. For all Virtus fixed income funds, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%.

Combination Purchase Privilege. Your purchase of any class of shares of these funds or any other Virtus Mutual Fund (other than any Virtus money market fund), if made at the same time by the same person, will be added together with any existing Virtus Mutual Fund account values to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as (a) any individual, his or her spouse and minor children purchasing shares for his or her own account (including an IRA account) including his or her own trust; (b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist); (c) multiple employer trusts or certain Section 403(b) plans for the same employer; (d) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third party administrator; or (e) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.

Letter of Intent. If you sign a Letter of Intent, your purchase of any class of shares of these funds or any other Virtus Mutual Fund (other than any Virtus money market fund), if made by the same person within a 13-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding arrangement between you and the Distributor. Shares worth 5% of the amount of each purchase will be held in escrow (while remaining registered in your name) to secure payment of the higher sales charges applicable to the shares actually purchased in the event the full intended amount is not purchased.

Right of Accumulation. The value of your account(s) in any class of shares of these funds or any other Virtus Mutual Fund (other than any Virtus money market fund) if made over time by the same person, may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to the Distributor at the time of purchase to exercise this right.

Purchase by Associations. Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; and (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.


66		Virtus Mutual Funds

Account Reinstatement Privilege. Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A or Class C Shares on which you have previously paid a sales charge, you may purchase Class A Shares of any Virtus Mutual Fund at NAV, with no sales charge, by reinvesting all or part of your proceeds, but not more.

Sales at Net Asset Value. In addition to the programs summarized above, the funds may sell their Class A Shares at NAV without an initial sales charge to certain types of accounts or account holders, including, but not limited to: trustees of the Virtus Mutual Funds; directors, officers, employees and sales representatives of the adviser, subadviser or Distributor or a corporate affiliate of the adviser, subadviser or Distributor; private clients of an adviser or subadviser to any of the Virtus Mutual Funds; registered representatives and employees of dealers with which the Distributor has sales agreements; and certain qualified employee benefit plans, endowment funds or foundations. Please see the SAI for more information about qualifying for purchases of Class A Shares at NAV.

Deferred Sales Charge Alternative—Class C Shares

Class C Shares are purchased without an initial sales charge; however, shares sold within a specified time period are subject to a declining CDSC at the rates listed below. The sales charge will be multiplied by the then-current market value or the initial cost of the shares being redeemed, whichever is less. No sales charge will be imposed on increases in NAV or on shares purchased through the reinvestment of income dividends or capital gain distributions. To minimize the sales charge, shares not subject to any charge will be redeemed first, followed by shares held the longest time. To calculate the number of shares owned and time period held, all Class C Shares are considered purchased on the trade date.



All Funds Offering Class C Shares

Year	1			2+
CDSC		1	%		0	%

Compensation to Dealers

Dealers with whom the Distributor has entered into sales agreements receive a discount or commission on Class A Shares as described below.

Virtus Balanced Allocation Fund, Virtus Core Equity Fund, Virtus Emerging Markets Opportunities Fund, Virtus Value Equity Fund


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a Percentage of Amount Invested			Dealer Discount as a Percentage of Offering Price
Under $50,000		5.75	%		6.10	%		5.00	%
$50,000 but under $ 100,000		4.75			4.99			4.25
$100,000 but under $ 250,000		3.75			3.90			3.25
$250,000 but under $ 500,000		2.75			2.83			2.25
$500,000 but under $ 1,000,000		2.00			2.04			1.75
$1,000,000 or more		None			None			None


Virtus Mutual Funds			67

Virtus High Yield Income Fund and Virtus Intermediate Government Bond Fund


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a Percentage of Amount Invested			Dealer Discount as a Percentage of Offering Price
Under $50,000		3.75	%		3.90	%		3.25	%
$50,000 but under $ 100,000		3.50			3.63			3.00
$100,000 but under $ 250,000		3.25			3.36			3.75
$250,000 but under $ 500,000		2.25			2.30			2.00
$500,000 but under $ 1,000,000		1.75			1.78			1.50
$1,000,000 or more		None			None			None

Virtus Intermediate Tax-Exempt Bond Fund, Virtus Short/Intermediate Bond Fund, and Virtus Tax-Exempt Bond Fund


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a Percentage of Amount Invested			Dealer Discount as a Percentage of Offering Price
Under $50,000		2.75	%		2.83	%		2.25	%
$50,000 but under $ 100,000		2.25			2.30			2.00
$100,000 but under $ 250,000		1.75			1.78			1.50
$250,000 but under $ 500,000		1.25			1.27			1.00
$500,000 but under $ 1,000,000		1.00			1.01			1.01
$1,000,000 or more		None			None			None

With respect to Class C Shares, the Distributor intends to pay investment dealers a sales commission of 1% of the sale price of Class C Shares. (This sales commission will not be paid to dealers for sales of Class C Shares purchased by 401(k) participants of the Merrill Lynch Daily K Plan due to a waiver of the CDSC for these plan participants’ purchases.) Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.

Dealers and other entities that enter into special arrangements with the Distributor may receive compensation for the sale and promotion of shares of these funds and/or for providing other shareholder services. Such fees are in addition to the sales commissions referenced above and may be based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of fund shares; access to sales personnel and information dissemination services; provision of recordkeeping and administrative services to qualified employee benefit plans; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the funds through distribution fees, service fees or transfer agent fees or, in some cases, the Distributor may pay certain fees from its own profits and resources.

From its own profits and resources, the Distributor may, from time to time, make payments to qualified wholesalers, registered financial institutions and third party marketers for marketing support services and/or retention of assets. Among others, the Distributor has agreed to make such payments for marketing support services to AXA Advisors, LLC. Additionally, for Virtus fixed income funds, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 0.50% of eligible Class A Share purchases from $1,000,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. For all other Virtus Mutual Funds, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 1.00% of eligible Class A Share purchases from $1,000,000 to $3,000,000, 0.50% on amounts of $3,000,001 to $10,000,000, and 0.25% on amounts greater than $10,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a finder’s fee only if such plan has at least 100 eligible employees. A CDSC may be imposed on certain redemptions of such investments within 18 months of purchase. For all Virtus fixed income funds, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. For purposes of determining the applicability of the CDSC, the 18-month period begins on the last day of the month preceding the month in which the purchase was made. The Distributor will also pay broker-dealers a service fee of 0.25% beginning in the thirteenth month following purchase of Class A Shares on which a finder’s fee has been paid. VP Distributors reserves the right to discontinue or alter such fee payment plans at any time.


68		Virtus Mutual Funds

From its own resources or pursuant to the distribution and shareholder servicing plans, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time to time, reallow the entire portion of the sales charge on Class A Shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.

The Distributor has agreed to pay fees to certain distributors for preferred marketing opportunities. These arrangements may be viewed as creating a conflict of interest between these distributors and investors. Investors should make due inquiry of their selling agents to ensure that they are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.

Your Account

Opening an Account

Your financial advisor can assist you with your initial purchase as well as all phases of your investment program. If you are opening an account by yourself, please follow the instructions outlined below. These procedures do not apply to purchases of Class I Shares. For information about purchasing Class I Shares, please contact Mutual Fund Services by calling (800) 243-1574.

The funds have established the following preferred methods of payment for fund shares:

Checks drawn on an account in the name of the investor and made payable to Virtus Mutual Funds;

Checks drawn on an account in the name of the investor’s company or employer and made payable to Virtus Mutual Funds; or

Wire transfers or Automated Clearing House (ACH) transfers from an account in the name of the investor, or the investor’s company or employer.

Payment in other forms may be accepted at the discretion of the funds; however, the funds generally do not accept such other forms of payment as cash equivalents (such as traveler’s checks, cashier’s checks, money orders or bank drafts), starter checks, credit card convenience checks, or certain third party checks. Please specify the name(s) of the fund or funds in which you would like to invest on the check or transfer instructions.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. Accordingly, when you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may check the information you provide against publicly available databases, information obtained from consumer reporting agencies, other financial institutions or other sources. If, after reasonable effort, we cannot verify your identity, we reserve the right to close the account and redeem the shares at the NAV next calculated after the decision is made by us to close the account.

Step 1.

Your first choice will be the initial amount you intend to invest.

Minimum initial investments:

$25 for individual retirement accounts (IRAs), accounts that use the systematic exchange privilege or accounts that use the Systematic Purchase program. (See below for more information on the Systematic Purchase program.)


Virtus Mutual Funds			69

There is no initial dollar requirement for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans. There is also no minimum for reinvesting dividends and capital gains into another account.

$500 for all other accounts.

Minimum additional investments:

$25 for any account.

There is no minimum additional investment requirement for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans. There is also no minimum additional investment requirement for reinvesting dividends and capital gains into an existing account.

The funds reserve the right to refuse a purchase order for any reason.

Step 2.

Your second choice will be what class of shares to buy. Each share class has different sales and distribution charges. Because all future investments in your account will be made in the share class you choose when you open your account, you should make your decision carefully. Your financial advisor can help you pick the share class that makes the most sense for your situation.

Step 3.

Your next choice will be how you want to receive any dividends and capital gain distributions. Your options are:

Receive both dividends and capital gain distributions in additional shares;

Receive dividends in additional shares and capital gain distributions in cash;

Receive dividends in cash and capital gain distributions in additional shares; or

Receive both dividends and capital gain distributions in cash.

No interest will be paid on uncashed distribution checks.

How to Buy Shares


		To Open An Account (Class A and Class C Shares only)
Through a financial advisor		Contact your advisor. Some advisors may charge a fee and may set different minimum investments or limitations on buying shares.
Through the mail		Complete a New Account Application and send it with a check payable to the fund. Mail them to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074.
Through express delivery		Complete a New Account Application and send it with a check payable to the fund. Send them to: Virtus Mutual Funds, 4400 Computer Drive, Westborough, MA 01581-1722.
By Federal Funds wire		Call us at (800) 243-1574 (press 1, then 0).
By Systematic Purchase		Complete the appropriate section on the application and send it with your initial investment payable to the fund. Mail them to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074.
By telephone exchange		Call us at (800) 243-1574 (press 1, then 0).


70		Virtus Mutual Funds

The price at which a purchase is effected is based on the applicable NAV determined after receipt of a purchase order in good order by the funds’ Transfer Agent. A purchase order is generally “in good order” if an acceptable form of payment accompanies the purchase order and the order includes the appropriate application(s) and/or form(s) and any supporting legal documentation required by the Transfer Agent, each in legible form. For the Virtus money market funds, orders in proper form placed prior to 12:00 Noon (Insight Tax Exempt Money Market Fund) or 4:30 PM (Insight Government Money Market Fund and Insight Money Market Fund) and payments for which are received in or converted into Federal Funds by the funds’ custodian by 6:00 PM generally will become effective at the price determined on that day at 12:00 Noon or 4:30 PM, respectively (all provided that the fund and the fund’s custodian are open for business on that day and the fund has not calculated its NAV earlier due to an earlier close recommendation by SIFMA). In either case, shares purchased will receive the dividend on that day. Orders for Class A shares of the Virtus Insight Money Market Funds placed after 12:00 Noon (Insight Tax Exempt Money Market Fund) or 4:30 PM (Insight Government Money Market Fund and Insight Money Market Fund) will become effective at the applicable price next determined after receipt of the order, which generally will be on the next business day. Orders for Class I shares of the Virtus Insight Money Market Funds placed after 12:00 Noon (Insight Tax Exempt Money Market Fund) or 4:30 PM (Insight Government Money Market Fund and Insight Money Market Fund) will not be accepted and executed; notice of the purchase order being rejected will be given to the institution placing the order, and any payments received will be returned promptly to the sending institution. For all funds, specified times are eastern time.

Each fund reserves the right to refuse any order that may disrupt the efficient management of that fund.

How to Sell Shares

You have the right to have the funds buy back shares at the NAV next determined after receipt of a redemption request in good order by the funds’ Transfer Agent or an authorized agent. In the case of a Class C Share redemption, you will be subject to the applicable contingent deferred sales charge, if any, for such shares. Subject to certain restrictions, shares may be redeemed by telephone or in writing. In addition, shares may be sold through securities dealers, brokers or agents who may charge customary commissions or fees for their services. The funds do not charge any redemption fees. Payment for shares redeemed is generally made within seven days; however, redemption proceeds will not be disbursed until each check used for purchases of shares has been cleared for payment by your bank, which may take up to 15 days after receipt of the check.

For the Virtus money market funds, written redemption requests will be priced at the NAV next calculated after the written request is received in proper form. If the redemption proceeds are wired to you on the same day your order is priced, you will not receive the dividend declared on that day. If a check for your redemption proceeds is mailed to you on the next business day after your request is priced, you will be entitled to dividends through the day on which the fund priced your request.

Also for the Virtus money market funds, provided in each case that the fund and the funds’ custodian are open for business on that day, telephone redemption requests received by 12:00 Noon for any Virtus Insight Money Market Fund generally will be processed so that redemption proceeds are sent by 1:30 PM; telephone redemption requests received by 3:30 PM for either the Insight Government Money Market Fund or the Insight Money Market Fund generally will be processed so that redemption proceeds are sent by 4:45 PM; and telephone redemption requests received by 4:30 PM for either the Insight Government Money Market Fund or the Insight Money Market Fund generally will be processed so that redemption proceeds are sent by 5:45 PM (all provided that the fund has not calculated its NAV earlier due to an earlier close recommendation by SIFMA). In all such instances, the shares being redeemed will not receive the dividend declared on that day. Telephone redemption requests for Class A shares of a Money Market Fund made after 12:00 Noon (Insight Tax Exempt Money Market Fund) or 4:30 PM (Insight Government Money Market Fund and Insight Money Market Fund), or made before such applicable time on a day when the fund or the funds’ custodian is closed or made before such applicable time but after the time the fund has calculated its NAV on a day the fund has calculated its NAV earlier due to an earlier recommendation by SIFMA, generally will be processed so that payment is made the next business day on which the funds’ custodian is open for business. Telephone redemption requests for Class I shares of a Virtus money market fund placed after the applicable fund calculates its NAV will not be accepted and executed; appropriate notice will be given to the institution placing the request. For all funds, specified times are eastern time. For information about selling Class I Shares, please contact the funds’ Transfer Agent at (800) 243-1574.


Virtus Mutual Funds			71


		To Sell Shares (Class A and Class C Shares only)
Through a financial advisor		Contact your advisor. Some advisors may charge a fee and may set different minimums on redemptions of accounts.
Through the mail		Send a letter of instruction to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. Be sure to include the registered owner’s name, fund and account number and number of shares or dollar value you wish to sell.
Through express delivery		Send a letter of instruction to: Virtus Mutual Funds, 4400 Computer Drive, Westborough, MA 01581-1722. Be sure to include the registered owner’s name, fund and account number and number of shares or dollar value you wish to sell.
By telephone		For sales up to $50,000, requests can be made by calling (800) 243-1574.
By telephone exchange		Call us at (800) 243-1574 (press 1, then 0).
By check (fixed income funds only)		If you selected the checkwriting feature you may write checks for amounts of $250 or more. Checks may not be used to close accounts.

Things You Should Know When Selling Shares

You may realize a taxable gain or loss (for federal income tax purposes) if you redeem shares of the funds. Except for the Virtus money market funds, each fund reserves the right to pay large redemptions “in kind” ( i.e. , in securities owned by the fund) rather than in cash. Large redemptions are those that exceed $250,000 or 1% of the fund’s net assets, whichever is less, over any 90-day period. Additional documentation will be required for redemptions by organizations, fiduciaries, or retirement plans, or if a redemption is requested by anyone but the shareholder(s) of record. Transfers between broker-dealer “street” accounts are governed by the accepting broker-dealer. Questions regarding this type of transfer should be directed to your financial advisor.

Redemption requests will not be honored until all required documents, in proper form, have been received. To avoid delay in redemption or transfer, shareholders having questions about specific requirements should contact the funds’ Transfer Agent at (800) 243-1574. As stated in the applicable account applications, accounts associated with certain types of retirement plans and individual retirement accounts may incur fees payable to the Transfer Agent in the event of redeeming an account in full. Shareholders with questions about this should contact the funds’ Transfer Agent at (800) 243-1574.

Redemptions by Mail

If you are selling shares held individually, jointly, or as custodian under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act:

Send a clear letter of instruction if both of these apply:

The proceeds do not exceed $50,000.

The proceeds are payable to the registered owner at the address on record.

Send a clear letter of instruction with a signature guarantee when any of these apply:

You are selling more than $50,000 worth of shares.

The name or address on the account has changed within the last 30 days.

You want the proceeds to go to a different name or address than on the account.

If you are selling shares held in a corporate or fiduciary account, please contact the funds’ Transfer Agent at (800) 243-1574.


72		Virtus Mutual Funds

If required, the signature guarantee must be a STAMP 2000 Medallion guarantee and be made by an eligible guarantor institution as defined by the funds’ Transfer Agent in accordance with its signature guarantee procedures. Guarantees using previous technology medallions will not be accepted. As of the date of this Prospectus, the Transfer Agent’s signature guarantee procedures generally permit guarantees by banks, broker-dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations.

Selling Shares by Telephone

The Transfer Agent will use reasonable procedures to confirm that telephone instructions are genuine. Address and bank account information are verified, redemption instructions are taped, and all redemptions are confirmed in writing.

The individual investor bears the risk from instructions given by an unauthorized third-party that the Transfer Agent reasonably believed to be genuine.

The Transfer Agent may modify or terminate the telephone redemption privilege at any time with 60 days’ notice to shareholders, except for instances of disruptive trading or market timing; in such cases, the telephone redemption privilege may be suspended immediately, followed by written notice. (See “Disruptive Trading and Market Timing” in this prospectus.)

During times of drastic economic or market changes, telephone redemptions may be difficult to make or temporarily suspended.

Account Policies

Account Reinstatement Privilege

Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A Shares on which you have previously paid a sales charge, you may purchase Class A Shares of any Virtus Mutual Fund at NAV, with no sales charge, by reinvesting all or part of your proceeds, but not more. Send your written request to Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. You can call us at (800) 243-1574 for more information.

Please remember, a redemption and reinvestment are considered to be a sale and purchase for tax-reporting purposes.

Annual Fee on Small Accounts

To help offset the costs associated with maintaining small accounts, Virtus Mutual Funds reserve the right to assess an annual $25 small account fee on fund accounts with a balance below $2,500. The small account fee may be waived in certain circumstances, such as for accounts that have elected electronic delivery of statements/regulatory documents and accounts owned by shareholders having multiple accounts with a combined value of over $25,000. The small account fee does not apply to accounts held through a financial intermediary.

The small account fee will be collected through the automatic sale of shares in your account. We will send you written notice before we charge the $25 fee so that you may increase your account balance above the minimum, sign up for electronic delivery, consolidate your accounts or liquidate your account. You may take these actions at any time by contacting your investment professional or the Transfer Agent.

Redemption of Small Accounts

Due to the high cost of maintaining small accounts, if your redemption activity causes your account balance to fall below $200, you may receive a notice requesting you to bring the balance up to $200 within 60 days. If you do not, the shares in the account will be sold at NAV, and a check will be mailed to the address of record.

Distributions of Small Amounts

Distributions in amounts less than $10 will automatically be reinvested in additional shares of the applicable fund.


Virtus Mutual Funds			73

Uncashed Checks

If any correspondence sent by a fund is returned by the postal or other delivery service as “undeliverable,” your dividends or any other distribution may be automatically reinvested in the respective fund.

If your distribution check is not cashed within six months, the distribution may be reinvested in the fund at the current NAV. You will not receive any interest on uncashed distribution or redemption checks. This provision may not apply to certain retirement or qualified accounts.

Inactive Accounts

As required by the laws of certain states, if no activity occurs in an account within the time period specified by your state law, the assets in your account may be transferred to the state.

Exchange Privileges

You should read the prospectus of the Virtus Mutual Fund(s) into which you want to make an exchange before deciding to make an exchange. You can obtain a prospectus from your financial advisor or by calling us at (800) 243-4361, or accessing our Web site at virtus.com .

You may exchange shares of one fund for the same class of shares of another Virtus Mutual Fund ( e.g. , Class A Shares for Class A Shares). Class C Shares are also exchangeable for Class T Shares of those Virtus Mutual Funds offering them. Exchange privileges may not be available for all Virtus Mutual Funds and may be rejected or suspended.

On exchanges into Class A of a Virtus money market fund from Class A of a Virtus non-money market fund made within 18 months of a finder’s fee being paid on such Virtus non-money market fund shares, a CDSC may be assessed on exchange proceeds. For all Virtus fixed income funds, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC may be waived upon return of the finder’s fee by the dealer.

Exchanges may be made by telephone ((800) 243-1574) or by mail (Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074)).

The amount of the exchange must be equal to or greater than the minimum initial investment required, unless the minimum has been waived (as described in the SAI).

The exchange of shares is treated as a sale and a purchase for federal income tax purposes.

In certain circumstances, a fund or the distributor may enter into an agreement with a financial intermediary to permit exchanges from one class of a fund into another class of the same fund, subject to certain conditions. Such exchanges will only be permitted if, among other things, the financial intermediary agrees to follow procedures established by the fund or distributor, which generally will require that the exchanges be carried out (i) within accounts maintained and controlled by the intermediary, (ii) on behalf of all or a particular segment of beneficial owners holding shares of the affected fund within those accounts, and (iii) all at once or within a given time period, or as agreed upon in writing by the fund or the distributor and the financial intermediary. A shareholder’s ability to make this type of exchange may be limited by operational or other limitations of his or her financial intermediary or the fund.

Disruptive Trading and Market Timing

These funds are not suitable for market timers and market timers are discouraged from becoming investors. Your ability to make exchanges among Virtus Mutual Funds is subject to modification if we determine, in our sole opinion, that your exercise of the exchange privilege may disadvantage or potentially harm the rights or interests of other shareholders.

Frequent purchases, redemptions and exchanges, programmed exchanges, exchanges into and then out of a fund in a short period of time, and exchanges of large amounts at one time may be indicative of market timing and otherwise disruptive trading (“Disruptive Trading”) which can have risks and harmful effects for other shareholders. These risks and harmful effects include:


74		Virtus Mutual Funds

dilution of the interests of long-term investors, if market timers or others exchange into a fund at prices that are below the true value or exchange out of a fund at prices that are higher than the true value;

an adverse effect on portfolio management, as determined by portfolio management in its sole discretion, such as causing the fund to maintain a higher level of cash than would otherwise be the case, or causing the fund to liquidate investments prematurely; and

reducing returns to long-term shareholders through increased brokerage and administrative expenses.

Additionally, the nature of the portfolio holdings of the Virtus Emerging Markets Opportunities Fund may expose those funds to investors who engage in the type of market timing trading that seeks to take advantage of possible delays between the change in the value of a mutual fund’s portfolio holdings and the reflection of the change in the NAV of the fund’s shares, sometimes referred to as “time-zone arbitrage.” Arbitrage market timers seek to exploit possible delays between the change in the value of a mutual fund’s portfolio holdings and the NAV of the fund’s shares in funds that hold significant investments in foreign securities because certain foreign markets close several hours ahead of the U.S. markets. If an arbitrageur is successful, the value of the fund’s shares may be diluted if redeeming shareholders receive proceeds (and buying shareholders receive shares) based upon NAVs which do not reflect appropriate fair value prices.

In order to attempt to protect our shareholders from the potential harmful effects of Disruptive Trading, the funds’ Board of Trustees has adopted market timing policies and procedures designed to discourage Disruptive Trading. The Board has adopted these policies and procedures as a preventive measure to protect all shareholders from the potential effects of Disruptive Trading, while also abiding by any rights that shareholders may have to make exchanges and provide reasonable and convenient methods of making exchanges that do not have the potential to harm other shareholders.

Excessive trading activity is measured by the number of roundtrip transactions in an account. A roundtrip transaction is one where a shareholder buys and then sells, or sells and then buys, shares of any fund within 30 days. Shareholders of the funds are limited to one roundtrip transaction within any rolling 30-day period. Roundtrip transactions are counted at the shareholder level. In considering a shareholder’s trading activity, the funds may consider, among other factors, the shareholder’s trading history both directly and, if known, through financial intermediaries, in the funds, in other funds within the Virtus Mutual Fund complex, in non-Virtus mutual funds or in accounts under common control or ownership. We do not include exchanges made pursuant to the dollar cost averaging or other similar programs when applying our market timing policies. Systematic withdrawal and/or contribution programs, mandatory retirement distributions, and transactions initiated by a plan sponsor also will not count towards the roundtrip limits. The funds may permit exchanges that they believe, in the exercise of their judgment, are not disruptive. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.

Shareholders holding shares for at least 30 days following investment will ordinarily be in compliance with the funds’ policies regarding market timing. The funds may, however, take action if activity is deemed disruptive even if shares are held longer than 30 days, such as a request for a transaction of an unusually large size. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.

Under our market timing policies, we may modify your exchange privileges for some or all of the funds by not accepting an exchange request from you or from any person, asset allocation service, and/or market timing services made on your behalf. We may also limit the amount that may be exchanged into or out of any fund at any one time or could revoke your right to make Internet, telephone or facsimile exchanges. We may reinstate Internet, telephone and facsimile exchange privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading.

The funds currently do not charge exchange or redemption fees, or any other administrative charges on fund exchanges. The funds reserve the right to impose such fees and/or charges in the future.

Orders for the purchase of fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any exchange request into any fund if the purchase of shares in the corresponding fund is not accepted for any reason.


Virtus Mutual Funds			75

The funds do not have any arrangements with any person, organization or entity to permit frequent purchases and redemptions of fund shares.

We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. The funds reserve the right to reject any purchase or exchange transaction at any time. If we reject a purchase or exchange for any reason, we will notify you of our decision in writing.

The funds cannot guarantee that their policies and procedures regarding market timing will be effective in detecting and deterring all Disruptive Trading.

Retirement Plans

Shares of the funds may be used as investments under the following retirement plans: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing, money purchase plans, and certain 403(b) plans. For more information, call (800) 243-4361.

Investor Services and Other Information

Systematic Purchase is a systematic investment plan that allows you to have a specified amount automatically deducted from your checking or savings account and then deposited into your mutual fund account. Just complete the Systematic Purchase Section on the application and include a voided check.

Systematic Exchange allows you to automatically move money from one Virtus Mutual Fund to another on a monthly, quarterly, semiannual or annual basis. Shares of one Virtus Mutual Fund will be exchanged for shares of the same class of another Virtus Mutual Fund at the interval you select. To sign up, just complete the Systematic Exchange Section on the application. Exchange privileges may not be available for all Virtus Mutual Funds, and may be rejected or suspended.

Telephone Exchange lets you exchange shares of one Virtus Mutual Fund for the same class of shares in another Virtus Mutual Fund, using our customer service telephone service. (See the “Telephone Exchange” section on the application.) Exchange privileges may not be available for all Virtus Mutual Funds, and may be rejected or suspended.

Systematic Withdrawal allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual, or annual basis. Sufficient shares from your account will be redeemed at the closing NAV on the applicable payment date, with proceeds to be mailed to you or sent through ACH to your bank (at your selection). For payments to be mailed, shares will be redeemed on the 15 ^th of the month so that the payment is made about the 20 ^th of the month. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15 ^th of the month. The minimum withdrawal is $25, and minimum account balance requirements continue to apply. Shareholders in the program must own Virtus Mutual Fund shares worth at least $5,000.

Disclosure of Fund Holdings. A description of the funds’ policies and procedures with respect to the disclosure of the funds’ portfolio securities is available in the SAI.


76		Virtus Mutual Funds

Tax Status of Distributions

The funds plan to make distributions from net investment income at intervals stated in the table below and to distribute net realized capital gains, if any, at least annually.


Fund		Dividend Paid
Balanced Allocation Fund		Quarterly
Core Equity Fund		Semiannually
Emerging Markets Opportunities Fund		Semiannually
High Yield Income Fund		Monthly ⁽¹⁾
Insight Government Money Market Fund		Monthly ⁽¹⁾
Insight Money Market Fund		Monthly ⁽¹⁾
Insight Tax-Exempt Money Market Fund		Monthly ⁽¹⁾
Short/Intermediate Bond Fund		Monthly ⁽¹⁾
Tax-Exempt Bond Fund		Monthly ⁽¹⁾
Value Equity Fund		Quarterly

(1) Although a dividend is paid monthly, it is accrued daily.

Distributions of short-term capital gains (gains on securities held for a year or less) and net investment income are taxable to shareholders as ordinary income. Under the Jobs and Growth Tax Reconciliation Act of 2003, certain distributions of long-term capital gains and certain dividends are taxable at a lower rate than ordinary income for a limited number of years. This lower rate terminates for tax years after 2010. Long-term capital gains, if any, distributed to shareholders and which are designated by a fund as capital gain distributions, are taxable to shareholders as long-term capital gain distributions regardless of the length of time you have owned your shares.

Unless you elect to receive distributions in cash, dividends and capital gain distributions are paid in additional shares. All distributions, cash or additional shares, are subject to federal income tax and may be subject to state, local and other taxes.

Master Fund/Feeder Fund Structure

The Board of Trustees has the authority to convert any fund to a “feeder” fund in a Master Fund/Feeder Fund Structure in which the fund, instead of investing in portfolio securities directly, would seek to achieve its investment objective by investing all of its investable assets in a separate “master” fund having the same investment objectives and substantially similar investment restrictions. Other funds with similar objectives and restrictions could also invest in the same Master Fund. The purpose of such an arrangement is to achieve greater operational efficiencies and reduce costs.


Virtus Mutual Funds			77

Financial Highlights

These tables are intended to help you understand the funds’ financial performance for the past five years or since inception. Some of the information reflects financial information for a single fund share. The total returns in the tables represent the rate that a investor would have earned or lost on an investment in the fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the funds’ independent registered public accounting firm. PricewaterhouseCoopers LLP’s report, together with the funds’ financial statements, is included in the funds’ most recent Annual Report, which is available upon request.


	Net Asset Value, Beginning of Period		Net Investment Income (Loss) ⁽²⁾			Net Realized and Unrealized Gain/(Loss)			Total from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Gains			Total Distributions
Balanced Allocation Fund
Class I
1/1/11 to 12/31/11	$	13.58		0.21			0.15			0.36			(0.21	)		—			(0.21	)
1/1/10 to 12/31/10		12.10		0.23			1.48			1.71			(0.23	)		—			(0.23	)
1/1/09 to 12/31/09		10.46		0.24			1.64			1.88			(0.24	)		—			(0.24	)
1/1/08 to 12/31/08		14.30		0.29			(3.84	)		(3.55	)		(0.29	)		—			(0.29	)
1/1/07 to 12/31/07		15.00		0.34			0.63			0.97			(0.35	)		(1.32	)		(1.67	)
Class A
1/1/11 to 12/31/11	$	13.53		0.18			0.16			0.34			(0.18	)		—			(0.18	)
1/1/10 to 12/31/10		12.07		0.19			1.47			1.66			(0.20	)		—			(0.20	)
1/1/09 to 12/31/09		10.42		0.21			1.66			1.87			(0.22	)		—			(0.22	)
1/1/08 to 12/31/08		14.26		0.26			(3.84	)		(3.58	)		(0.26	)		—			(0.26	)
1/1/07 to 12/31/07		14.96		0.30			0.63			0.93			(0.31	)		(1.32	)		(1.63	)
Class C
1/1/11 to 12/31/11	$	13.53		0.08			0.16			0.24			(0.08	)		—			(0.08	)
1/1/10 to 12/31/10		12.07		0.10			1.47			1.57			(0.11	)		—			(0.11	)
1/1/09 to 12/31/09		10.42		0.13			1.66			1.79			(0.14	)		—			(0.14	)
1/1/08 to 12/31/08		14.26		0.16			(3.84	)		(3.68	)		(0.16	)		—			(0.16	)
1/1/07 to 12/31/07		14.96		0.18			0.63			0.81			(0.19	)		(1.32	)		(1.51	)
Core Equity Fund
Class I
1/1/11 to 12/31/11	$	18.00		0.14			0.44			0.58			(0.14	)		—			(0.14	)
1/1/10 to 12/31/10		16.33		0.07			1.68			1.75			(0.08	)		—			(0.08	)
1/1/09 to 12/31/09		13.64		0.08			2.69			2.77			(0.08	)		—			(0.08	)
1/1/08 to 12/31/08		20.84		0.13			(7.01	)		(6.88	)		(0.12	)		(0.20	)		(0.32	)
1/1/07 to 12/31/07		21.85		0.21			1.32			1.53			(0.22	)		(2.32	)		(2.54	)
Class A
1/1/11 to 12/31/11	$	17.72		0.09			0.42			0.51			(0.09	)		—			(0.09	)
1/1/10 to 12/31/10		16.07		0.03			1.66			1.69			(0.04	)		—			(0.04	)
1/1/09 to 12/31/09		13.42		0.05			2.65			2.70			(0.05	)		—			(0.05	)
1/1/08 to 12/31/08		20.51		0.08			(6.89	)		(6.81	)		(0.08	)		(0.20	)		(0.28	)
1/1/07 to 12/31/07		21.53		0.15			1.31			1.46			(0.16	)		(2.32	)		(2.48	)
Class C
1/1/11 to 12/31/11	$	17.45		(0.04	)		0.42			0.38			—			—			—
1/1/10 to 12/31/10		15.91		(0.09	)		1.63			1.54			—			—			—
1/1/09 to 12/31/09		13.36		(0.06	)		2.61			2.55			—			—			—
1/1/08 to 12/31/08		20.44		(0.04	)		(6.84	)		(6.88	)		—			(0.20	)		(0.20	)
1/1/07 to 12/31/07		21.49		(0.02	)		1.31			1.29			(0.02	)		(2.32	)		(2.34	)

The footnote legend is at the end of the financial highlights.


78		Virtus Mutual Funds


Net Asset Value, End of Period		Total Return ⁽¹⁾			Net Assets, End of Period (in thousands)		Ratio of Net Operating Expenses to Average Net Assets			Ratio of Gross Operating Expenses to Average Net Assets			Ratio of Net Investment Income to Average Net Assets			Portfolio Turnover Rate


$	13.73		2.71	%	$	63,750		0.85	%		0.90	%		1.55	%		70	%
	13.58		14.28			59,643		0.84			0.89			1.80			73
	12.10		18.28			52,601		0.82			0.87			2.20			58
	10.46		(25.10	)		46,545		0.83			0.88			2.28			55
	14.30		6.48			71,603		0.77			0.82			2.18			71

$	13.69		2.53	%	$	7,717		1.10	%		1.10	%		1.30	%		70	%
	13.53		13.88			9,064		1.09			1.09			1.55			73
	12.07		18.16			7,864		1.07			1.07			1.95			58
	10.42		(25.35	)		7,050		1.08			1.08			2.02			55
	14.26		6.16			11,646		1.02			1.02			1.93			71

$	13.69		1.75	%	$	900		1.85	%		1.85	%		0.55	%		70	%
	13.53		13.04			706		1.84			1.84			0.79			73
	12.07		17.31			454		1.82			1.82			1.22			58
	10.42		(25.93	)		498		1.83			1.83			1.33			55
	14.26		5.45			321		1.78			1.78			1.19			71


$	18.44		3.19	%	$	61,217		1.02	%		1.07	%		0.78	%		72	%
	18.00		10.76			73,321		1.02			1.07			0.44			122
	16.33		20.41			81,239		0.97			1.02			0.58			83
	13.64		(33.36	)		76,658		0.95			1.00			0.73			68
	20.84		7.06			124,328		0.91			0.96			0.91			58

$	18.14		2.94	%	$	13,060		1.28	%		1.28	%		0.51	%		72	%
	17.72		10.48			10,277		1.27			1.27			0.20			122
	16.07		20.16			9,121		1.22			1.22			0.32			83
	13.42		(33.54	)		5,943		1.20			1.20			0.47			68
	20.51		6.81			10,265		1.16			1.16			0.66			58

$	17.83		2.12	%	$	353		2.02	%		2.02	%		(0.22	)%		72	%
	17.45		9.68			431		2.02			2.02			(0.57	)		122
	15.91		19.27			486		1.97			1.97			(0.41	)		83
	13.36		(34.04	)		617		1.95			1.95			(0.23	)		68
	20.44		6.00			251		1.92			1.92			(0.10	)		58


Virtus Mutual Funds			79

Financial Highlights (continued)


	Net Asset Value, Beginning of Period		Net Investment Income (Loss) ⁽²⁾			Net Realized and Unrealized Gain/(Loss)			Total from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Gains			Total Distributions
Emerging Markets Opportunities Fund
Class I
1/1/11 to 12/31/11	$	9.10		0.12			(0.38	)		(0.26	)		(0.07	)		(0.07	)		(0.14	)
1/1/10 to 12/31/10		7.17		0.10			1.91			2.01			(0.08	)		—	⁽³⁾		(0.08	)
1/1/09 to 12/31/09		4.90		0.10			2.26			2.36			(0.09	)		—			(0.09	)
1/1/08 to 12/31/08		10.08		0.06			(4.43	)		(4.37	)		(0.11	)		(0.70	)		(0.81	)
1/1/07 to 12/31/07		12.34		0.15			3.62			3.77			(0.09	)		(5.94	)		(6.03	)
Class A
1/1/11 to 12/31/11	$	8.83		0.09			(0.37	)		(0.28	)		(0.04	)		(0.07	)		(0.11	)
1/1/10 to 12/31/10		6.96		0.07			1.86			1.93			(0.06	)		—	⁽³⁾		(0.06	)
1/1/09 to 12/31/09		4.76		0.08			2.20			2.28			(0.08	)		—			(0.08	)
1/1/08 to 12/31/08		9.80		0.05			(4.30	)		(4.25	)		(0.09	)		(0.70	)		(0.79	)
1/1/07 to 12/31/07		12.14		0.09			3.57			3.66			(0.06	)		(5.94	)		(6.00	)
Class C
1/1/11 to 12/31/11	$	8.72		0.03			(0.37	)		(0.34	)		—	⁽³⁾		(0.07	)		(0.07	)
1/1/10 to 12/31/10		6.90		—	⁽³⁾		1.85			1.85			(0.03	)		—	⁽³⁾		(0.03	)
1/1/09 to 12/31/09		4.72		0.02			2.19			2.21			(0.03	)		—			(0.03	)
1/1/08 to 12/31/08		9.69		—	⁽³⁾		(4.23	)		(4.23	)		(0.04	)		(0.70	)		(0.74	)
1/1/07 to 12/31/07		12.14		—	⁽³⁾		3.55			3.55			(0.06	)		(5.94	)		(6.00	)
High Yield Income Fund
Class I
1/1/11 to 12/31/11	$	10.74		0.73			(0.16	)		0.57			(0.71	)		—			(0.71	)
1/1/10 to 12/31/10		10.19		0.76			0.53			1.29			(0.74	)		—			(0.74	)
1/1/09 to 12/31/09		8.45		0.84			1.74			2.58			(0.84	)		—			(0.84	)
1/1/08 to 12/31/08		11.87		0.88			(3.42	)		(2.54	)		(0.88	)		—			(0.88	)
1/1/07 to 12/31/07		12.45		0.89			(0.58	)		0.31			(0.89	)		—			(0.89	)
Class A
1/1/11 to 12/31/11	$	10.75		0.71			(0.15	)		0.56			(0.68	)		—			(0.68	)
1/1/10 to 12/31/10		10.20		0.73			0.53			1.26			(0.71	)		—			(0.71	)
1/1/09 to 12/31/09		8.45		0.81			1.75			2.56			(0.81	)		—			(0.81	)
1/1/08 to 12/31/08		11.87		0.85			(3.42	)		(2.57	)		(0.85	)		—			(0.85	)
1/1/07 to 12/31/07		12.45		0.86			(0.58	)		0.28			(0.86	)		—			(0.86	)
Class C
1/1/11 to 12/31/11	$	10.74		0.63			(0.16	)		0.47			(0.60	)		—			(0.60	)
1/1/10 to 12/31/10		10.19		0.65			0.53			1.18			(0.63	)		—			(0.63	)
1/1/09 to 12/31/09		8.45		0.74			1.74			2.48			(0.74	)		—			(0.74	)
1/1/08 to 12/31/08		11.87		0.78			(3.42	)		(2.64	)		(0.78	)		—			(0.78	)
1/1/07 to 12/31/07		12.45		0.77			(0.58	)		0.19			(0.77	)		—			(0.77	)

The footnote legend is at the end of the financial highlights.


80		Virtus Mutual Funds


Net Asset Value, End of Period		Total Return ⁽¹⁾			Net Assets, End of Period (in thousands)		Ratio of Net Operating Expenses to Average Net Assets			Ratio of Gross Operating Expenses to Average Net Assets			Ratio of Net Investment Income to Average Net Assets			Portfolio Turnover Rate


$	8.70		(2.92	)%	$	2,082,147		1.36	%		1.41	%		1.34	%		29	%
	9.10		28.15			801,366		1.41			1.46			1.25			33
	7.17		48.52			232,325		1.47			1.52			1.64			50
	4.90		(45.90	)		63,699		1.54			1.59			0.77			126
	10.08		37.39			199,197		1.34			1.39			1.22			92

$	8.44		(3.13	)%	$	474,368		1.61	%		1.61	%		1.09	%		29	%
	8.83		27.82			224,015		1.66			1.66			0.87			33
	6.96		48.12			42,658		1.72			1.72			1.34			50
	4.76		(46.04	)		11,281		1.79			1.79			0.65			126
	9.80		37.16			11,616		1.60			1.60			0.77			92

$	8.31		(3.77	)%	$	70,198		2.36	%		2.36	%		0.36	%		29	%
	8.72		26.88			36,971		2.41			2.41			0.03			33
	6.90		47.29			4,206		2.49			2.49			0.30			50
	4.72		(46.50	)		307		2.54			2.54			(0.05	)		126
	9.69		35.89			373		2.35			2.35			0.01			92


$	10.60		5.47	%	$	51,829		0.78	%		0.83	%		6.84	%		29	%
	10.74		13.24			48,212		0.91			0.96			7.30			62
	10.19		31.67			43,061		0.79			0.84			8.91			117
	8.45		(22.44	)		31,932		0.83			0.88			8.33			121
	11.87		2.52			47,958		0.74			0.79			7.22			117

$	10.63		5.39	%	$	2,214		1.02	%		1.02	%		6.58	%		29	%
	10.75		12.84			2,303		1.16			1.16			6.92			62
	10.20		31.60			840		1.06			1.06			8.90			117
	8.45		(22.63	)		3,550		1.08			1.08			8.09			121
	11.87		2.34			5,390		0.99			0.99			7.01			117

$	10.61		4.52	%	$	710		1.78	%		1.78	%		5.85	%		29	%
	10.74		12.01			661		1.91			1.91			6.27			62
	10.19		30.49			382		1.79			1.79			7.75			117
	8.45		(23.21	)		117		1.84			1.84			7.37			121
	11.87		1.50			140		1.74			1.74			6.26			117


Virtus Mutual Funds			81

Financial Highlights (continued)


	Net Asset Value, Beginning of Period		Net Investment Income (Loss) ⁽²⁾			Net Realized and Unrealized Gain/(Loss)			Total from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Gains			Total Distributions
Insight Government Money Market Fund
Class I
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/09 to 12/31/09		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/08 to 12/31/08		1.00		0.02			—	⁽³⁾		0.02			(0.02	)		—			(0.02	)
1/1/07 to 12/31/07		1.00		0.05			—	⁽³⁾		0.05			(0.05	)		—	⁽³⁾		(0.05	)
Class A
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/09 to 12/31/09		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/08 to 12/31/08		1.00		0.02			—	⁽³⁾		0.02			(0.02	)		—			(0.02	)
1/1/07 to 12/31/07		1.00		0.05			—			0.05			(0.05	)		—	⁽³⁾		(0.05	)
Insight Money Market Fund
Class I
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—			—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—			—	⁽³⁾
1/1/09 to 12/31/09		1.00		0.01			—	⁽³⁾		0.01			(0.01	)		—	⁽³⁾		(0.01	)
1/1/08 to 12/31/08		1.00		0.03			—	⁽³⁾⁽⁵⁾		0.03			(0.03	)		—			(0.03	)
1/1/07 to 12/31/07		1.00		0.05			—			0.05			(0.05	)		—			(0.05	)
Class A
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—			—	⁽³⁾
1/1/09 to 12/31/09		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/08 to 12/31/08		1.00		0.02			—	⁽³⁾⁽⁵⁾		0.02			(0.02	)		—			(0.02	)
1/1/07 to 12/31/07		1.00		0.05			—			0.05			(0.05	)		—			(0.05	)
Insight Tax-Exempt Money Market Fund
Class I
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—			—	⁽³⁾
1/1/09 to 12/31/09		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/08 to 12/31/08		1.00		0.02			—	⁽³⁾		0.02			(0.02	)		—	⁽³⁾		(0.02	)
1/1/07 to 12/31/07		1.00		0.04			—			0.04			(0.04	)		—			(0.04	)
Class A
1/1/11 to 12/31/11	$	1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/10 to 12/31/10		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—			—	⁽³⁾
1/1/09 to 12/31/09		1.00		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾		—	⁽³⁾
1/1/08 to 12/31/08		1.00		0.02			—	⁽³⁾		0.02			(0.02	)		—	⁽³⁾		(0.02	)
1/1/07 to 12/31/07		1.00		0.03			—			0.03			(0.03	)		—			(0.03	)

The footnote legend is at the end of the financial highlights.


82		Virtus Mutual Funds


Net Asset Value, End of Period		Total Return ⁽¹⁾			Net Assets, End of Period (in thousands)		Ratio of Net Operating Expenses to Average Net Assets			Ratio of Gross Operating Expenses to Average Net Assets			Ratio of Net Investment Income to Average Net Assets			Portfolio Turnover Rate


$	1.00		0.01	%	$	1,339,716		0.11	%		0.22	%		0.01	%		N/A
	1.00		0.06			122,384		0.23			0.28			0.05			N/A
	1.00		0.30			131,990		0.24			0.29			0.31			N/A
	1.00		2.25			428,314		0.21			0.26			2.12			N/A
	1.00		5.07			279,393		0.19			0.24			4.94			N/A

$	1.00		0.01	%	$	72,490		0.12	%		0.53	%		0.01	%		N/A
	1.00		0.02			156,216		0.26			0.58			0.01			N/A
	1.00		0.09			168,054		0.46			0.59			0.09			N/A
	1.00		1.89			229,729		0.56			0.56			1.84			N/A
	1.00		4.71			207,943		0.54			0.54			4.59			N/A


$	1.00		0.06	%	$	376,475		0.19	%		0.24	%		0.08	%		N/A
	1.00		0.15	⁽⁴⁾		1,536,180		0.19			0.24			0.14			N/A
	1.00		0.62	⁽⁴⁾		2,054,581		0.23			0.28			0.52			N/A
	1.00		2.82	⁽⁵⁾		1,619,040		0.19			0.24			2.86			N/A
	1.00		5.28			2,805,101		0.18			0.24			5.16			N/A

$	1.00		0.01	%	$	326,702		0.23	%		0.54	%		0.01	%		N/A
	1.00		0.01	⁽⁴⁾		383,931		0.33			0.54			0.01			N/A
	1.00		0.31	⁽⁴⁾		532,034		0.55			0.59			0.26			N/A
	1.00		2.47	⁽⁵⁾		706,353		0.54			0.55			2.52			N/A
	1.00		4.91			1,169,249		0.53			0.54			4.80			N/A


$	1.00		0.01	%	$	86,601		0.15	%		0.26	%		0.02	%		N/A
	1.00		0.09			604,209		0.19			0.24			0.09			N/A
	1.00		0.36			844,557		0.22			0.27			0.37			N/A
	1.00		2.22			1,190,802		0.20			0.25			2.16			N/A
	1.00		3.52			1,067,153		0.19			0.24			3.46			N/A

$	1.00		0.01	%	$	92,796		0.14	%		0.57	%		0.01	%		N/A
	1.00		0.01			112,608		0.27			0.54			0.01			N/A
	1.00		0.09			199,472		0.50			0.57			0.09			N/A
	1.00		1.86			224,685		0.55			0.55			1.82			N/A
	1.00		3.16			219,625		0.53			0.53			3.11			N/A


Virtus Mutual Funds			83

Financial Highlights (continued)


	Net Asset Value, Beginning of Period		Net Investment Income (Loss) ⁽²⁾		Net Realized and Unrealized Gain/(Loss)			Total from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Gains			Total Distributions
Short/Intermediate Bond Fund
Class I
1/1/11 to 12/31/11	$	10.51		0.31		0.03			0.34			(0.31	)		—			(0.31	)
1/1/10 to 12/31/10		10.21		0.40		0.30			0.70			(0.40	)		—			(0.40	)
1/1/09 to 12/31/09		9.41		0.44		0.80			1.24			(0.44	)		—			(0.44	)
1/1/08 to 12/31/08		10.05		0.43		(0.64	)		(0.21	)		(0.43	)		—			(0.43	)
1/1/07 to 12/31/07		10.03		0.43		0.02			0.45			(0.43	)		—			(0.43	)
Class A
1/1/11 to 12/31/11	$	10.51		0.28		0.03			0.31			(0.28	)		—			(0.28	)
1/1/10 to 12/31/10		10.20		0.37		0.31			0.68			(0.37	)		—			(0.37	)
1/1/09 to 12/31/09		9.41		0.41		0.79			1.20			(0.41	)		—			(0.41	)
1/1/08 to 12/31/08		10.05		0.41		(0.64	)		(0.23	)		(0.41	)		—			(0.41	)
1/1/07 to 12/31/07		10.03		0.41		0.02			0.43			(0.41	)		—			(0.41	)
Class C
1/1/11 to 12/31/11	$	10.51		0.20		0.03			0.23			(0.20	)		—			(0.20	)
1/1/10 to 12/31/10		10.21		0.29		0.30			0.59			(0.29	)		—			(0.29	)
1/1/09 to 12/31/09		9.41		0.34		0.80			1.14			(0.34	)		—			(0.34	)
1/1/08 to 12/31/08		10.05		0.33		(0.64	)		(0.31	)		(0.33	)		—			(0.33	)
1/1/07 to 12/31/07		10.03		0.34		0.01			0.35			(0.33	)		—			(0.33	)
Tax-Exempt Bond Fund
Class I
1/1/11 to 12/31/11	$	10.38		0.41		0.74			1.15			(0.43	)		—			(0.43	)
1/1/10 to 12/31/10		10.55		0.43		(0.17	)		0.26			(0.43	)		—			(0.43	)
1/1/09 to 12/31/09		9.32		0.45		1.23			1.68			(0.45	)		—			(0.45	)
1/1/08 to 12/31/08		10.36		0.45		(1.03	)		(0.58	)		(0.45	)		(0.01	)		(0.46	)
1/1/07 to 12/31/07		10.49		0.44		(0.09	)		0.35			(0.44	)		(0.04	)		(0.48	)
Class A
1/1/11 to 12/31/11	$	10.38		0.39		0.74			1.13			(0.41	)		—			(0.41	)
1/1/10 to 12/31/10		10.55		0.40		(0.17	)		0.23			(0.40	)		—			(0.40	)
1/1/09 to 12/31/09		9.32		0.43		1.23			1.66			(0.43	)		—			(0.43	)
1/1/08 to 12/31/08		10.36		0.42		(1.02	)		(0.60	)		(0.43	)		(0.01	)		(0.44	)
1/1/07 to 12/31/07		10.50		0.41		(0.09	)		0.32			(0.41	)		(0.05	)		(0.46	)
Class C
1/1/11 to 12/31/11	$	10.38		0.31		0.74			1.05			(0.33	)		—			(0.33	)
1/1/10 to 12/31/10		10.56		0.32		(0.18	)		0.14			(0.32	)		—			(0.32	)
1/1/09 to 12/31/09		9.33		0.35		1.23			1.58			(0.35	)		—			(0.35	)
1/1/08 to 12/31/08		10.36		0.35		(1.02	)		(0.67	)		(0.35	)		(0.01	)		(0.36	)
1/1/07 to 12/31/07		10.50		0.34		(0.10	)		0.24			(0.33	)		(0.05	)		(0.38	)

The footnote legend is at the end of the financial highlights.


84		Virtus Mutual Funds


Net Asset Value, End of Period		Total Return ⁽¹⁾			Net Assets, End of Period (in thousands)		Ratio of Net Operating Expenses to Average Net Assets			Ratio of Gross Operating Expenses to Average Net Assets			Ratio of Net Investment Income to Average Net Assets			Portfolio Turnover Rate


$	10.54		3.25	%	$	65,206		0.70	%		0.93	%		2.91	%		47	%
	10.51		6.93			60,777		0.70			0.91			3.81			49
	10.21		13.39			80,733		0.70			0.83			4.46			21
	9.41		(2.16	)		116,639		0.70			0.80			4.36			46
	10.05		4.59			214,669		0.70			0.77			4.30			35

$	10.54		2.99	%	$	15,145		0.95	%		1.13	%		2.62	%		47	%
	10.51		6.77			10,273		0.95			1.12			3.52			49
	10.20		13.00			8,176		0.95			1.03			4.08			21
	9.41		(2.41	)		3,996		0.95			1.00			4.13			46
	10.05		4.33			4,526		0.95			0.97			4.05			35

$	10.54		2.23	%	$	13,761		1.70	%		1.88	%		1.86	%		47	%
	10.51		5.88			8,138		1.70			1.87			2.76			49
	10.21		12.26			5,121		1.70			1.78			3.29			21
	9.41		(3.13	)		1,350		1.70			1.76			3.44			46
	10.05		3.56			321		1.70			1.72			3.34			35


$	11.10		11.36	%	$	94,228		0.57	%		0.77	%		3.78	%		59	%
	10.38		2.39			47,202		0.60			0.82			3.99			36
	10.55		18.26			25,394		0.60			0.78			4.46			91
	9.32		(5.62	)		41,662		0.60			0.75			4.49			111
	10.36		3.45			69,482		0.60			0.72			4.21			71

$	11.10		10.98	%	$	107,873		0.81	%		0.98	%		3.62	%		59	%
	10.38		2.23			77,853		0.85			1.01			3.74			36
	10.55		17.96			59,226		0.85			0.98			4.19			91
	9.32		(5.85	)		49,160		0.85			0.95			4.25			111
	10.36		3.09			60,147		0.85			0.93			3.96			71

$	11.10		10.15	%	$	28,641		1.54	%		1.70	%		2.91	%		59	%
	10.38		1.37			17,809		1.60			1.77			2.96			36
	10.56		17.18			6,175		1.60			1.72			3.33			91
	9.33		(6.57	)		1,469		1.60			1.70			3.56			111
	10.36		2.33			749		1.60			1.68			3.26			71


Virtus Mutual Funds			85

Financial Highlights (continued)


	Net Asset Value, Beginning of Period		Net Investment Income (Loss) ⁽²⁾			Net Realized and Unrealized Gain/(Loss)			Total from Investment Operations			Dividends from Net Investment Income			Distributions from Net Realized Gains			Total Distributions
Value Equity Fund
Class I
1/1/11 to 12/31/11	$	10.96		0.12			0.16			0.28			(0.13	)		—			(0.13	)
1/1/10 to 12/31/10		9.73		0.09			1.24			1.33			(0.10	)		—			(0.10	)
1/1/09 to 12/31/09		8.49		0.11			1.25			1.36			(0.12	)		—			(0.12	)
1/1/08 to 12/31/08		13.94		0.16			(5.05	)		(4.89	)		(0.15	)		(0.41	)		(0.56	)
1/1/07 to 12/31/07		14.66		0.18			1.27			1.45			(0.18	)		(1.99	)		(2.17	)
Class A
1/1/11 to 12/31/11	$	11.06		0.10			0.16			0.26			(0.11	)		—			(0.11	)
1/1/10 to 12/31/10		9.82		0.06			1.25			1.31			(0.07	)		—			(0.07	)
1/1/09 to 12/31/09		8.57		0.09			1.26			1.35			(0.10	)		—			(0.10	)
1/1/08 to 12/31/08		14.06		0.13			(5.09	)		(4.96	)		(0.12	)		(0.41	)		(0.53	)
1/1/07 to 12/31/07		14.77		0.14			1.28			1.42			(0.14	)		(1.99	)		(2.13	)
Class C
1/1/11 to 12/31/11	$	11.02		0.02			0.15			0.17			(0.03	)		—			(0.03	)
1/1/10 to 12/31/10		9.79		(0.01	)		1.25			1.24			(0.01	)		—			(0.01	)
1/1/09 to 12/31/09		8.56		0.03			1.24			1.27			(0.04	)		—			(0.04	)
1/1/08 to 12/31/08		14.04		0.04			(5.08	)		(5.04	)		(0.03	)		(0.41	)		(0.44	)
1/1/07 to 12/31/07		14.76		0.02			1.27			1.29			(0.02	)		(1.99	)		(2.01	)

Footnote Legend:

⁽¹⁾	Sales charges, where applicable, are not reflected in total return calculation.

⁽²⁾	Computed using average shares outstanding.

⁽³⁾	Amount is less than $0.005.

⁽⁴⁾

The Insight Money Market Fund received $3,642 for 2009 and $316 for 2010 (in thousands) in distributions from the Tyco International Ltd. Securities Litigation Settlement proceeds. If these proceeds had not been received, the total return would have been lower by 0.11% and 0.07% for Class I and Class A, respectively for 2009 and 0.02% for Class I for 2010.

⁽⁵⁾	Includes the effect of a payment by affiliate. Without this effect, the total return would have been 2.27% for Class I shares and 1.91% for Class A shares. The impact to the net investment income (loss) per share was less than $0.005.


86		Virtus Mutual Funds


Net Asset Value, End of Period		Total Return ⁽¹⁾			Net Assets, End of Period (in thousands)		Ratio of Net Operating Expenses to Average Net Assets			Ratio of Gross Operating Expenses to Average Net Assets			Ratio of Net Investment Income to Average Net Assets			Portfolio Turnover Rate


$	11.11		2.62	%	$	120,862		0.98	%		1.03	%		1.07	%		65	%
	10.96		13.71			130,651		0.97			1.02			0.88			74
	9.73		16.24			150,822		0.92			0.97			1.33			64
	8.49		(36.26	)		150,922		0.90			0.95			1.37			56
	13.94		10.10			272,426		0.87			0.92			1.13			55

$	11.21		2.34	%	$	8,123		1.23	%		1.23	%		0.92	%		65	%
	11.06		13.41			9,739		1.22			1.22			0.62			74
	9.82		15.92			13,106		1.17			1.17			1.10			64
	8.57		(36.39	)		15,946		1.15			1.15			1.14			56
	14.06		9.82			22,330		1.12			1.12			0.88			55

$	11.16		1.51	%	$	218		1.98	%		1.98	%		0.14	%		65	%
	11.02		12.68			254		1.97			1.97			(0.13	)		74
	9.79		14.96			216		1.92			1.92			0.39			64
	8.56		(36.87	)		406		1.90			1.90			0.36			56
	14.04		8.92			691		1.87			1.87			0.12			55


Virtus Mutual Funds			87

P.O. Box 9874

Providence, RI 02940-8074

ADDITIONAL INFORMATION

You can find more information about the funds in the following documents:

Annual and Semiannual Reports

Annual and semiannual reports contain more information about the funds’ investments. The annual report discusses the market conditions and investment strategies that significantly affected the funds’ performance during the last fiscal year.

Statement of Additional Information (SAI)

The SAI contains more detailed information about the funds. It is incorporated by reference and is legally part of the prospectus.

To obtain free copies of these documents, you can download copies from the Individual Investors section of our Web site, virtus.com , or you can request copies by calling us toll-free at 1-800-243-1574.

Information about the funds (including the SAI) can be reviewed and copied at the Securities and Exchange Commission’s (SEC) Public Reference Room in Washington, DC. For information about the operation of the Public Reference Room, call 1-202-551-8090. This information is also available on the SEC’s Internet site at sec.gov . You may also obtain copies upon payment of a duplicating fee by writing the Public Reference Section of the SEC, Washington, DC 20549-6009 or by electronic request at publicinfo@sec.gov.

Mutual Fund Services: 1-800-243-1574


Investment Company Act File No. 811-7447		5-12
8003

VIRTUS INSIGHT TRUST


	TICKER SYMBOL BY CLASS
FUND	A	C	I
Virtus Balanced Allocation Fund	HIBZX	PBCIX	HIBLX
Virtus Core Equity Fund	HGRZX	PICCX	HGRIX
Virtus Emerging Markets Opportunities Fund	HEMZX	PICEX	HIEMX
Virtus High Yield Income Fund	HHYZX	PYHCX	HHYIX
Virtus Insight Government Money Market Fund	HIGXX		HGCXX
Virtus Insight Money Market Fund	HICXX		HACXX
Virtus Insight Tax-Exempt Money Market Fund	HITXX		HTCXX
Virtus Short/Intermediate Bond Fund	HIMZX	PCMZX	HIBIX
Virtus Tax-Exempt Bond Fund	HXBZX	PXCZX	HXBIX
Virtus Value Equity Fund	HIEZX	PIQCX	HEQIX

101 Munson Street

Greenfield, MA 01301

Statement of Additional Information

May 1, 2012

This Statement of Additional Information (“SAI”) is not a prospectus, but expands upon and supplements the information contained in the current Prospectuses for the Virtus Insight Trust (“the Trust”), dated May 1, 2012 and should be read in conjunction with them. The SAI incorporates by reference certain information that appears in the Trust’s annual and semiannual reports, which are delivered to all investors. You may obtain a free copy of the Trust’s Prospectuses, annual or semiannual reports by visiting the Virtus Mutual Funds’ Web site at virtus.com, by calling VP Distributors, LLC (“VP Distributors” or “Distributor”) at (800) 243-4361 or by writing to VP Distributors at 100 Pearl Street, Hartford, CT 06103.

Mutual Fund Services: (800) 243-1574

Adviser Consulting Group: (800) 243-4361

Telephone Orders: (800) 367-5877

Web site: virtus.com

8003B (5/12)

TABLE OF CONTENTS


		PAGE


The Trust			3
Investment Restrictions			3
Master Fund/Feeder Fund Structure			4
Investment Techniques and Risks			5
Ratings			29
Performance Information			30
Portfolio Turnover			31
Portfolio Transactions and Brokerage			31
Disclosure of Fund Holdings			33
Services of the Adviser and Subadvisers			35
Portfolio Managers			39
Net Asset Value			42
How to Buy Shares			43
Alternative Purchase Arrangements			43
Investor Account Services and Policies			46
How to Redeem Shares			48
Dividends, Distributions and Taxes			49
Tax Sheltered Retirement Plans			54
The Distributor			54
Service and Distribution Plans			57
Management of the Trust			59
Additional Information			69
Appendix			72
Glossary			73

THE TRUST

The Trust is an open-end management investment company organized as a Massachusetts business trust on December 6, 1995. Currently, the Trust is named Virtus Insight Trust. Prior to May 18, 2006, it was named “Harris Insight Funds Trust.” From May 18, 2006 to October 20, 2008, the Trust was named “Phoenix Insight Funds Trust.”

The Trust’s Prospectuses describe the investment objectives of the Funds and the strategies that the Funds will employ in seeking to achieve their investment objectives. The “Equity Funds” are: Virtus Balanced Allocation Fund (“Balanced Allocation Fund”), Virtus Core Equity Fund (“Core Equity Fund”), Virtus Emerging Markets Opportunities Fund (“Emerging Markets Opportunities Fund”), and Virtus Value Equity Fund (“Value Equity Fund”). The “Fixed Income Funds” are Virtus High Yield Income Fund (“High Yield Income Fund”), Virtus Short/Intermediate Bond Fund (“Short/Intermediate Bond Fund”), and Virtus Tax-Exempt Bond Fund (“Tax-Exempt Bond Fund”). The “Money Market Funds” are Virtus Insight Government Money Market Fund (“Insight Government Money Market Fund”), Virtus Insight Money Market Fund (“Insight Money Market Fund”), and Virtus Insight Tax-Exempt Money Market Fund (“Insight Tax-Exempt Money Market Fund”). Prior to October 1, 2008, each of the non-money market funds was named “Phoenix Insight” and each of the money market funds was named “Phoenix” in place of “Virtus” in its name. Each of the Equity Funds, Fixed Income Funds and Money Market Funds, is a “Fund” and together they are the “Funds.” Each Fund’s investment objective is a non-fundamental policy of that Fund and may be changed by the Board of Trustees without the approval of the Fund’s shareholders. The following discussion supplements the disclosure in the Prospectuses.

INVESTMENT RESTRICTIONS

The following investment restrictions have been adopted by the Funds. Except as otherwise stated, these investment restrictions are “fundamental” policies. A “fundamental” policy is defined in the Investment Company Act of 1940, as amended (the “1940 Act”), to mean that the restriction cannot be changed without the vote of a “majority of the outstanding voting securities” of the Fund. A “majority of the outstanding voting securities” is defined in the 1940 Act as the lesser of (a) 67% or more of the voting securities present at a meeting if the holders of more than 50% of the outstanding voting securities are present or represented by proxy, or (b) more than 50% of the outstanding voting securities.

(1) No diversified Fund may, with respect to 75% of its assets, invest more than 5% of its assets (valued at the time of investment) in securities of any one issuer, except for securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities or repurchase agreements for such securities, and except that all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies. This is not a fundamental policy of the Funds.

(2) No Fund may, with respect to 75% of its assets, acquire securities of any one issuer that at the time of investment represent more than 10% of the voting securities of the issuer, except that all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies. This is not a fundamental policy of the Funds.

(3) No Fund may invest more than 25% of its assets (valued at the time of investment) in securities of companies in any one industry, except that (a) this restriction does not apply to investments in (i) securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities, (ii) municipal obligations (for purposes of this restriction, private activity bonds shall not be deemed municipal obligations if the payment of principal and interest on such bonds is the ultimate responsibility of non-governmental users), and (iii) in the case of the Money Market Funds, bank obligations that are otherwise permitted as investments, and (b) all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies.

(4) No Fund may borrow money except to the extent permitted by applicable law, regulation or order.

(5) No Fund may issue any senior security except to the extent permitted by applicable law, regulation or order.

(6) No Fund may underwrite the distribution of securities of other issuers; however, (a) the Fund may acquire “restricted” securities that, in the event of a resale, might be required to be registered under the 1933 Act on the ground that the Fund could be regarded as an underwriter as defined by that act with respect to such resale and (b) all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies.

(7) No Fund may make loans, but this restriction shall not prevent the Fund from (a) investing in debt obligations, (b) investing in money market instruments or repurchase agreements, (c) participating in an interfund lending program among Funds having a common investment adviser or distributor to the extent permitted by applicable law or (d) lending its portfolio securities. The Fund will not lend securities having a value in excess of 33 ¹ /3% of its assets, including collateral received for loaned securities (valued at the time of any loan).

(8) No Fund may purchase or sell real estate or interests in real estate, although it may invest in securities secured by interests in real estate and securities of enterprises that invest in real estate or interests in real estate, and may acquire and dispose of real estate or interests in real estate acquired through the exercise of rights as a holder of debt obligations secured by real estate or interests therein.

(9) No Fund may purchase or sell commodities or commodity contracts, except that it may enter into (a) futures, options, and options on futures, (b) forward contracts, and (c) other financial transactions not requiring the delivery of physical commodities.

(10) No Fund may invest in the securities of other investment companies except to the extent permitted by applicable law, regulation or order or rule of the Securities and Exchange Commission (the “SEC”).

(11) No Fund may purchase securities on margin (except for use of short-term credits as are necessary for the clearance of transactions) or participate in a joint or on a joint or several basis in any trading account in securities. This is not a fundamental policy of the Funds.

(12) No Fund may invest more than 15% (5% in the case of a Money Market Fund) of its net assets (valued at the time of investment) in illiquid securities, including repurchase agreements maturing in more than seven days. This is not a fundamental policy of the Funds.

(13) No Fund may make short sales of securities unless (a) the Fund owns at least an equal amount of such securities, or owns securities that are convertible or exchangeable, without payment of further consideration, into at least an equal amount of such securities or (b) the securities sold are “when issued” or “when distributed” securities that the Fund expects to receive in a recapitalization, reorganization or other exchange for securities that it contemporaneously owns or has the right to obtain and provided that transactions in options, futures and options on futures are not treated as short sales. This is not a fundamental policy of the Funds.

(14) As a matter of fundamental policy, none of the foregoing investment policies or restrictions of a Fund shall prohibit a Fund from investing all or substantially all of its assets in the shares of another registered open-end investment company having the same investment objective and substantially similar policies and restrictions.

Except as noted below, if any percentage restriction described above for a Fund is adhered to at the time of investment, a subsequent increase or decrease in the percentage resulting from a change in the value of the Fund’s assets will not constitute a violation of the restriction. With respect to investment restriction (4), in the event that asset coverage for all borrowings shall at any time fall below 300 per centum, the Fund shall, within three days thereafter (not including Sundays and holidays) or such longer period as the SEC may prescribe by rules and regulations, reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300 per centum. With respect to investment restriction (3)(a)(ii), “municipal obligations” are, in fact, tax-exempt municipal obligations and with respect to investment restriction (3)(a)(iii), “bank obligations” are, in fact, bank obligations of domestic banks.

For purposes of these investment restrictions, as well as for purposes of diversification under the 1940 Act, the identification of the issuer of a municipal obligation depends on the terms and conditions of the obligation. If the assets and revenues of an agency, authority, instrumentality or other political subdivision are separate from those of the government creating the subdivision and the obligation is backed only by the assets and revenues of the subdivision, such subdivision would be regarded as the sole issuer. Similarly, in the case of a “private activity bond,” if the bond is backed only by the assets and revenues of the non-governmental user, the non-governmental user would be deemed to be the sole issuer. If in either case the creating government or another entity guarantees an obligation, the guarantee would be considered a separate security and be treated as an issue of such government or entity.

MASTER FUND/FEEDER FUND STRUCTURE

The shareholders of each Fund have authorized the Fund to become a “feeder fund” by investing substantially all of its investable assets in another open-end management investment company having the same investment objective and substantially similar policies and restrictions (a “Master Fund/Feeder Fund Structure”). Prior to the conversion of any Fund to a feeder fund, however, the Board of Trustees would be required to approve the conversion and shareholders would be notified.

Although the Trust’s Board of Trustees has not determined that any of the Funds should convert to a Master Fund/Feeder Fund Structure at this time, the Board of Trustees believes it could be in the best interests of some or all of the Funds at some future date and could vote at some time in the future to convert a Fund into a “Feeder Fund” under which all of the assets of the Fund would be invested in a Master Fund. The Feeder Fund would transfer its assets to a Master Fund in exchange for shares of beneficial interest in the Master Fund having the same net asset value (“NAV”) as the value of the assets transferred. (The ownership interests of the Fund’s shareholders would not be altered by this change.)

INVESTMENT TECHNIQUES AND RISKS

The following pages contain more detailed information about types of instruments in which each Fund may invest, strategies the Adviser and/or Subadvisers may employ in pursuit of each Fund’s investment objective, and a summary of related risks. The Funds may not buy all of these instruments or use all of these techniques.

Throughout this section, the term Adviser may be used to refer to a Subadviser, if any, and the term “the Fund” may be used to refer to any Fund.

Bank Obligations

Each Fund may invest in bank obligations, including negotiable certificates of deposit, bankers’ acceptances and time deposits of U.S. banks (including savings banks and savings associations), foreign branches of U.S. banks, foreign banks and their non-U.S. branches (Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and wholly-owned banking-related subsidiaries of foreign banks. The Money Market Fund limits its investments in domestic bank obligations to obligations of U.S. banks (including foreign branches and thrift institutions) that have more than $1 billion in total assets at the time of investment and are members of the Federal Reserve System, are examined by Comptroller of the Currency or whose deposits are insured by the Federal Deposit Insurance Corporation (“U.S. banks”). The Money Market Fund limits its investments in foreign bank obligations to U.S. dollar-denominated obligations of foreign banks (including U.S. branches): (a) which banks at the time of investment (i) have more than $10 billion, or the equivalent in other currencies, in total assets and (ii) are among the 100 largest banks in the world, as determined on the basis of assets, and have branches or agencies in the U.S.; and (b) which obligations, in the opinion of the Adviser, are of an investment quality comparable to obligations of U.S. banks that may be purchased by such Money Market Fund. The Money Market Fund may invest more than 25% of the current value of its total assets in obligations including of: (a) U.S. banks; (b) U.S. branches of foreign banks that are subject to the same regulation as U.S. banks by the U.S. Government or its agencies or instrumentalities; or (c) foreign branches of U.S. banks if the U.S. banks would be unconditionally liable in the event the foreign branch failed to pay on such obligations for any reason.

Certificates of deposit represent an institution’s obligation to repay funds deposited with it that earn a specified interest rate over a given period. Bankers’ acceptances are negotiable obligations of a bank to pay a draft which has been drawn by a customer and are usually backed by goods in international trade. Time deposits are non-negotiable deposits with a banking institution that earn a specified interest rate over a given period. Certificates of deposit and fixed time deposits, which are payable at the stated maturity date and bear a fixed rate of interest, generally may be withdrawn on demand but may be subject to early withdrawal penalties which could reduce the Fund’s yield. Deposits subject to early withdrawal penalties or that mature in more than seven days are treated as illiquid securities if there is no readily available market for the securities. The Fund’s investments in the obligations of foreign banks and their branches, agencies or subsidiaries may be obligations of the parent, of the issuing branch, agency or subsidiary, or both.

Borrowing

Each Fund may borrow up to 10% of the current value of its net assets for temporary purposes only in order to meet redemptions, which borrowing may be secured by the pledge of up to 10% of the current value of the Fund’s net assets. Investments may not be purchased while any aggregate borrowings in excess of 5% exist.

Commodity Interests

Certain of the investment techniques permitted for the Funds may be considered commodity interests for purposes of the Commodity Exchange Act (“CEA”) and regulations approved by the Commodity Futures Trading Commission (“CFTC”). However, each Fund intends to limit the use of these techniques as required to qualify for exemption from being considered a “commodity pool” or otherwise as a vehicle for trading in commodity interests under such regulations. As a result, each Fund has filed a notice of exclusion under CFTC Regulation 4.5. Furthermore, each Fund is operated by a person who has claimed an exemption from the definition of a “commodity pool operator” and, therefore, who is not subject to registration or regulation as a commodity pool operator under the CEA.

Common and Preferred Stock

The Equity Funds and the High Yield Income Fund may invest in common and preferred stock. Common stockholders are the owners of the company issuing the stock and, accordingly, usually have the right to vote on various corporate governance matters such as mergers. They are not creditors of the company, but rather, in the event of liquidation of the company, would be entitled to their pro rata shares of the company’s assets after creditors (including fixed income security holders) and, if applicable, preferred stockholders are paid. Preferred stock is a class of stock having a preference over common stock as to dividends or upon liquidation. A preferred stockholder is a shareholder in the company and not a creditor of the company as is a holder of the company’s fixed income securities. Dividends paid to common and preferred stockholders are distributions of the earnings or other surplus of the company and not interest payments, which are expenses

of the company. Equity securities owned by the Fund may be traded in the over-the-counter market or on a securities exchange and may not be traded every day or in the volume typical of securities traded on a major U.S. national securities exchange. As a result, disposition by the Fund of a portfolio security to meet redemptions by shareholders or otherwise may require the Fund to sell the security at less than the reported value of the security, to sell during periods when disposition is not desirable, or to make many small sales over a lengthy period of time. The market value of all securities, including equity securities, is based upon the market’s perception of value and not necessarily the book value of an issuer or other objective measure of a company’s worth.

Stock values may fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, common stocks have provided greater long-term returns and have entailed greater short- term risks than other types of securities. Smaller or newer issuers may be more likely to realize more substantial growth or suffer more significant losses. Investments in these companies can be both more volatile and more speculative.

Convertible Securities

The Equity Funds and the Fixed Income Funds may invest in convertible preferred stock and bonds, which are fixed income securities that are convertible into common stock at a specified price or conversion ratio. Because they have the characteristics of both fixed income securities and common stock, convertible securities sometimes are called “hybrid” securities. Convertible bonds, debentures and notes are debt obligations offering a stated interest rate; convertible preferred stocks are senior securities offering a stated dividend rate. Convertible securities will at times be priced in the market like other fixed income securities; that is, their prices will tend to rise when interest rates decline and will tend to fall when interest rates rise. However, because a convertible security provides an option to the holder to exchange the security for either a specified number of the issuer’s common shares at a stated price per share or the cash value of such common shares, the security market price will tend to fluctuate in relationship to the price of the common shares into which it is convertible. Thus, convertible securities ordinarily will provide opportunities for producing both current income and longer-term capital appreciation. Because convertible securities are usually viewed by the issuer as future common stock, they are generally subordinated to other senior securities and therefore are rated one category lower than the issuer’s non-convertible debt obligations or preferred stock.

See additional information on ratings and debt obligations below under “Debt Securities” and in Appendix A of this SAI.

Debt Securities

Each Fund may invest in debt, or fixed income, securities. Debt, or fixed income, securities (which include corporate bonds, commercial paper, debentures, notes, government securities, municipal obligations, state- or state agency-issued obligations, obligations of foreign issuers, asset-or mortgage-backed securities, and other obligations) are used by issuers to borrow money and thus are debt obligations of the issuer. Holders of debt securities are creditors of the issuer, normally ranking ahead of holders of both common and preferred stock as to dividends or upon liquidation. The issuer usually pays a fixed, variable, or floating rate of interest and must repay the amount borrowed at the security’s maturity. Some debt securities, such as zero-coupon securities (discussed below), do not pay interest but are sold at a deep discount from their face value.

Yields on debt securities depend on a variety of factors, including the general conditions of the money, bond, and note markets, the size of a particular offering, the maturity date of the obligation, and the rating of the issue. Debt securities with longer maturities tend to produce higher yields and are generally subject to greater price fluctuations in response to changes in market conditions than obligations with shorter maturities. An increase in interest rates generally will reduce the market value of portfolio debt securities, while a decline in interest rates generally will increase the value of the same securities. The achievement of a Fund’s investment objective depends in part on the continuing ability of the issuers of the debt securities in which the Fund invests to meet their obligations for the payment of principal and interest when due. Obligations of issuers of debt securities are subject to the provisions of bankruptcy, insolvency, sovereign immunity, and other laws that affect the rights and remedies of creditors. There is also the possibility that, as a result of litigation or other conditions, the ability of an issuer to pay, when due, the principal of and interest on its debt securities may be materially affected.

The rating or quality of a debt security refers to the issuer’s creditworthiness, i.e. , its ability to pay principal and interest when due. Higher ratings indicate better credit quality, as rated by independent rating organizations such as Moody’s Investors Service (“Moody’s”), Standard & Poor’s (“S&P”), or Fitch, which publish their ratings on a regular basis. Appendix A provides a description of the various ratings provided for bonds (including convertible bonds), municipal bonds, and commercial paper.

Duration . Duration is a time measure of a bond’s interest-rate sensitivity, based on the weighted average of the time periods over which a bond’s cash flows accrue to the bondholder. Time periods are weighted by multiplying by the present value of its cash flow divided by the bond’s price. (A bond’s cash flows consist of coupon payments and repayment of capital.) A bond’s duration will almost always be shorter than its maturity, with the exception of zero-coupon bonds, for which maturity and duration are equal.

High Yield Debt Securities. Securities rated “BB”, “B”, or “CCC” by S&P (“Ba” or lower by Moody’s) are regarded as having predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal, with “B” indicating a lesser degree of speculation than “CCC”. Such securities are frequently referred to as “high yield” securities or “junk bonds”. While such debt may have some quality and protective characteristics, these are outweighed by large uncertainties or major exposures to adverse conditions. Securities rated “CCC” (“Caa” by Moody’s) have a currently identifiable vulnerability to default and are dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, they are not likely to have the capacity to pay interest and repay principal.

While the market values of low-rated and comparable unrated securities tend to react less to fluctuations in interest rate levels than the market values of higher-rated securities, the market values of certain low-rated and comparable unrated securities also tend to be more sensitive to individual corporate developments and changes in economic conditions than higher-rated securities. In addition, low-rated securities and comparable unrated securities generally present a higher degree of credit risk, and yields on such securities will fluctuate over time. Issuers of low-rated and comparable unrated securities are often highly leveraged and may not have more traditional methods of financing available to them so that their ability to service their debt obligations during an economic downturn or during sustained periods of rising interest rates may be impaired. The risk of loss due to default by such issuers is significantly greater because low-rated and comparable unrated securities generally are unsecured and frequently are subordinated to the prior payment of senior indebtedness. The Fund may incur additional expenses to the extent that it is required to seek recovery upon a default in the payment of principal or interest on its portfolio holdings. The existence of limited markets for low-rated and comparable unrated securities may diminish the Fund’s ability to obtain accurate market quotations for purposes of valuing such securities and calculating its NAV.

Fixed income securities, including low-rated securities and comparable unrated securities, frequently have call or buy-back features that permit their issuers to call or repurchase the securities from their holders, such as a Fund. If an issuer exercises these rights during periods of declining interest rates, the Fund may have to replace the security with a lower yielding security, thus resulting in a decreased return to the Fund.

To the extent that there is no established retail secondary market for low-rated and comparable unrated securities, there may be little trading of such securities in which case the responsibility of the Trust’s Board of Trustees to value such securities becomes more difficult and judgment plays a greater role in valuation because there is less reliable, objective data available. In addition, the Fund’s ability to dispose of the bonds may become more difficult. Furthermore, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of high yield bonds, especially in a thinly traded market.

Tender Option Bonds . Tender option bonds are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security’s liquidity.

Strip Bonds . Strip bonds are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity.

Depositary Receipts

The Emerging Markets Opportunities Fund and the High Yield Income Fund may purchase sponsored and unsponsored American Depositary Receipts (“ADRs”), European Depositary Receipts (“EDRs”), Global Depositary Receipts (“GDRs”) and similar securities (“Depositary Receipts”). Each of the Equity Funds not previously named also may invest in ADRs and EDRs. Depositary Receipts are typically issued by a financial institution (“depository”) and evidence ownership interests in a security or a pool of securities (“underlying securities”) that have been deposited with the depository. For ADRs, the depository is typically a U.S. financial institution and the underlying securities are issued by a foreign issuer. For other Depositary Receipts, the depository may be a foreign or a U.S. entity, and the underlying securities may have a foreign or a U.S. issuer. Depositary Receipts will not necessarily be denominated in the same currency as their underlying securities. Depositary Receipts may be issued pursuant to sponsored or unsponsored programs. In sponsored programs, an issuer has made arrangements to have its securities traded in the form of Depositary Receipts. In unsponsored programs, the issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally similar, in some cases it may be easier to obtain financial information from an issuer that has participated in the creation of a sponsored program. Accordingly, there may be less information available regarding issuers of securities underlying unsponsored programs and there may not be a correlation between such information and the market value of the Depositary Receipts. For purposes of the Fund’s investment policies, investments in Depositary Receipts will be deemed to be investments in the underlying securities. Thus, a Depositary Receipt representing ownership of common stock will be treated as common stock.

Dollar Rolls

The Fund may enter into a mortgage dollar roll in which the Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund is compensated by the interest earned on the cash proceeds of the initial sale and by the lower repurchase price at the future date.

Emerging Market Securities

The Emerging Markets Opportunities Fund may invest in countries or regions with relatively low gross national product per capita compared to the world’s major economies, and in countries or regions with the potential for rapid economic growth (emerging markets). Emerging markets will include any country: (i) having an “emerging stock market” as defined by the International Finance Corporation; (ii) with low-to-middle-income economies according to the International Bank for Reconstruction and Development (the “World Bank”); (iii) listed in World Bank publications as developing; or (iv) determined by the Subadviser to be an emerging market as defined above.

The risks of investing in foreign securities may be intensified in the case of investments in emerging markets. Securities of many issuers in emerging markets may be less liquid and more volatile than securities of comparable domestic issuers. Emerging markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of the Fund is uninvested and no return is earned thereon. The inability of the Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Fund due to subsequent declines in value of portfolio securities or, if the Fund has entered into a contract to sell the security, in possible liability to the purchaser. Securities prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively unstable governments, present the risk of nationalization of businesses, restrictions on foreign ownership, or prohibitions of repatriation of assets, and may have less protection of property rights than more developed countries. The economies of countries with emerging markets may be predominantly based on only a few industries, may be highly vulnerable to changes in local or global trade conditions, and may suffer from extreme and volatile debt burdens or inflation rates. Local securities markets may trade a small number of securities and may be unable to respond effectively to increases in trading volume, potentially making prompt liquidation of substantial holdings difficult or impossible at times. Securities of issuers located in countries with emerging markets may have limited marketability and may be subject to more abrupt or erratic price movements.

Certain emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if a deterioration occurs in an emerging market’s balance of payments or for other reasons, a country could impose temporary restrictions on foreign capital remittances. The Fund could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investments.

Investments in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of the Fund.

Additional Risk Factors . As a result of its investments in foreign securities, the Fund may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. In that event, the Fund may convert such currencies into dollars at the then current exchange rate. Under certain circumstances, however, such as where the Subadviser believes that the applicable rate is unfavorable at the time the currencies are received or the Subadviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time.

In addition, the Fund may be required to receive delivery of the foreign currency underlying forward foreign currency contracts it has entered into. This could occur, for example, if an option written by the Fund is exercised or the Fund is unable to close out a forward contract. The Fund may hold foreign currency in anticipation of purchasing foreign securities. The Fund may also elect to take delivery of the currencies’ underlying options or forward contracts if, in the judgment of the Subadviser, it is in the best interest of the Fund to do so. In such instances as well, the Fund may convert the foreign currencies to dollars at the then current exchange rates, or may hold such currencies for an indefinite period of time.

While the holding of currencies will permit the Fund to take advantage of favorable movements in the applicable exchange rate, it also exposes the Fund to risk of loss if such rates move in a direction adverse to the Fund’s position. Such losses could

reduce any profits or increase any losses sustained by the Fund from the sale or redemption of securities, and could reduce the dollar value of interest or dividend payments received. In addition, the holding of currencies could adversely affect the Fund’s profit or loss on currency options or forward contracts, as well as its hedging strategies.

Eurodollar Instruments

The Emerging Markets Opportunities Fund may make investments in Eurodollar instruments. Eurodollar instruments are U.S. dollar-denominated futures contracts or options thereon which are linked to the London Interbank Offering Rate (“LIBOR”), although foreign currency-denominated instruments are available from time to time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. The Fund might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to which many interest rate swaps and fixed income instruments are linked.

Floating and Variable Rate Obligations

Each Fund may purchase securities having a floating or variable rate of interest. These securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to an interest rate index or market interest rate. These adjustments tend to decrease the sensitivity of the security’s market value to changes in interest rates. The Subadviser will monitor, on an ongoing basis, the ability of an issuer of a floating or variable rate demand instrument to pay principal and interest on demand. The Fund’s right to obtain payment at par on a demand instrument could be affected by events occurring between the date the Fund elects to demand payment and the date payment is due that may affect the ability of the issuer of the instrument to make payment when due, except when such demand instrument permits same day settlement. To facilitate settlement, these same day demand instruments may be held in book entry form at a bank other than the Funds’ custodian subject to a sub-custodian agreement between the bank and the Funds’ custodian.

The floating and variable rate obligations that the Funds may purchase include certificates of participation in such obligations purchased from banks. A certificate of participation gives the Fund an undivided interest in the underlying obligations in the proportion that the Fund’s interest bears to the total principal amount of the obligation. Certain certificates of participation may carry a demand feature that would permit the holder to tender them back to the issuer prior to maturity. The Money Market Funds may invest in certificates of participation even if the underlying obligations carry stated maturities in excess of thirteen months, upon compliance with certain conditions contained in a rule of the SEC. The income received on certificates of participation in tax-exempt municipal obligations constitutes interest from tax-exempt obligations.

Each Fund will limit its purchases of floating and variable rate obligations to those of the same quality as it otherwise is allowed to purchase. Similar to fixed rate debt instruments, variable and floating rate instruments are subject to changes in value based on changes in prevailing market interest rates or changes in the issuer’s creditworthiness.

Certain variable rate securities pay interest at a rate that varies inversely to prevailing short-term interest rates (sometimes referred to as inverse floaters). For example, upon reset the interest rate payable on a security may go down when the underlying index has risen. During periods when short-term interest rates are relatively low as compared to long-term interest rates, the Fund may attempt to enhance its yield by purchasing inverse floaters. Certain inverse floaters may have an interest rate reset mechanism that multiplies the effects of changes in the underlying index. While this form of leverage may increase the security’s yield, it may also increase the volatility of the security’s market value.

A floating or variable rate instrument may be subject to the Fund’s percentage limitation on illiquid securities if there is no reliable trading market for the instrument or if the Fund may not demand payment of the principal amount within seven days.

Foreign Currency and Foreign Currency Forward Contracts, Futures, and Options

When investing in foreign securities, the Fund usually effects currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange market. The Fund incurs expenses in converting assets from one currency to another.

Forward Contracts . Each of the Equity Funds and the Fixed Income Funds, except for the Tax-Exempt Bond Fund, may enter into foreign currency forward contracts for the purchase or sale of a fixed quantity of a foreign currency at a future date (“forward contracts”). Forward contracts may be entered into by the Fund for hedging purposes, either to “lock-in” the U.S. dollar purchase price of the securities denominated in a foreign currency or the U.S. dollar value of interest and dividends to be paid on such securities, or to hedge against the possibility that the currency of a foreign country in which the Fund has investments may suffer a decline against the U.S. dollar, as well as for non-hedging purposes. The Fund may also enter into a forward contract on one currency in order to hedge against risk of loss arising from fluctuations in the value of a second currency (“cross hedging”), if in the judgment of the Subadviser, a reasonable degree of correlation can be expected between movements in the values of the two currencies. By entering into such transactions, however, the Fund may be required to forego the benefits of advantageous changes in exchange rates.

Forward contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, such contracts operate in a manner distinct from exchange-traded instruments, and their use involves certain risks beyond those associated with transactions in futures contracts or options traded on an exchange, including counterparty credit risk.

The Emerging Markets Opportunities Fund may also enter into transactions in forward contracts for other than hedging purposes; such transactions may present greater profit potential, but they also involve increased risk. For example, if the Subadviser believes that the value of a particular foreign currency will increase or decrease relative to the value of the U.S. dollar, the Fund may purchase or sell such currency, respectively, through a forward contract. If the expected changes in the value of the currency occur, the Fund will realize a profit that will increase its gross income. Where exchange rates do not move in the direction or to the extent anticipated, however, the Funds may sustain losses that will reduce its gross income. Such transactions, therefore, could be considered speculative.

The Funds have established procedures consistent with statements by the SEC regarding the use of forward contracts by registered investment companies, which require the use of segregated assets or “cover” in connection with the purchase and sale of such contracts. In those instances in which the Funds satisfy this requirement through segregation of assets, they will segregate appropriate liquid securities, which will be marked to market on a daily basis, in an amount equal to the value of their commitments under forward contracts.

Only a limited market, if any, currently exists for hedging transactions relating to currencies in many emerging market countries, or to securities of issuers domiciled or principally engaged in business in emerging market countries, in which the Emerging Markets Opportunities Fund may invest. This may limit the Fund’s ability to effectively hedge its investments in those emerging markets.

Foreign Currency Futures . Generally, foreign currency futures provide for the delivery of a specified amount of a given currency, on the settlement date, for a pre-negotiated price denominated in U.S. dollars or other currency. Foreign currency futures contracts would be entered into for the same reason and under the same circumstances as forward contracts. The Subadviser will assess such factors as cost spreads, liquidity and transaction costs in determining whether to utilize futures contracts or forward contracts in its foreign currency transactions and hedging strategy. These contracts may be traded on an exchange or over-the-counter.

Purchasers and sellers of foreign currency futures contracts are subject to the same risks that apply to the buying and selling of futures generally. In addition, there are risks associated with foreign currency futures contracts and their use as a hedging device similar to those associated with options on foreign currencies described below. The Fund must accept or make delivery of the underlying foreign currency, through banking arrangements, in accordance with any U.S. or foreign restrictions or regulations regarding the maintenance of foreign banking arrangements by U.S. residents and may be required to pay any fees, taxes or charges associated with such delivery which are assessed in the issuing country.

Foreign Currency Options . The Emerging Markets Opportunities Fund may purchase and write options on foreign currencies for purposes similar to those involved with investing in forward contracts. For example, in order to protect against declines in the dollar value of portfolio securities which are denominated in a foreign currency, the Fund may purchase put options on an amount of such foreign currency equivalent to the current value of the portfolio securities involved. As a result, the Fund would be able to sell the foreign currency for a fixed amount of U.S. dollars, thereby securing the dollar value of the portfolio securities (less the amount of the premiums paid for the options). Conversely, the Fund may purchase call options on foreign currencies in which securities it anticipates purchasing are denominated to secure a set U.S. dollar price for such securities and protect against a decline in the value of the U.S. dollar against such foreign currency. The Fund may also purchase call and put options to close out written option positions.

The Fund may also write covered call options on foreign currency to protect against potential declines in its portfolio securities that are denominated in foreign currencies. If the U.S. dollar value of the portfolio securities falls as a result of a decline in the exchange rate between the foreign currency in which it is denominated and the U.S. dollar, then a loss to the Fund occasioned by such value decline would be reduced by receipt of the premium on the option sold. At the same time, however, the Fund gives up the benefit of any rise in value of the relevant portfolio securities above the exercise price of the option and, in fact, only receives a benefit from the writing of the option to the extent that the value of the portfolio securities falls below the price of the premium received. The Fund may also write options to close out long call option positions. A covered put option on a foreign currency would be written by the Fund for the same reason it would purchase a call option, namely, to hedge against an increase in the U.S. dollar value of a foreign security which the Fund anticipates purchasing. Here, the receipt of the premium would offset, to the extent of the size of the premium, any increased cost to the Fund resulting from an increase in the U.S. dollar value of the foreign security. However, the Fund could not benefit from any decline in the cost of the foreign security that is greater than the price of the premium received. The Fund may also write options to close out long put option positions. The Fund’s ability to establish and close out positions on foreign currency options is subject to the maintenance of a liquid secondary market. These instruments may be traded on an exchange or over the counter.

The value of a foreign currency option depends upon the value of the underlying currency relative to the U.S. dollar. As a result, the price of the option position may vary with changes in the value of either or both currencies and have no relationship to the investment merits of a foreign security, including foreign securities held in a “hedged” investment portfolio. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the use of foreign currency options, investors may be disadvantaged by having to deal in an odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.

As in the case of other kinds of options, the use of foreign currency options constitutes only a partial hedge, and the Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an option on a foreign currency may not necessarily constitute an effective hedge against fluctuations in exchange rates and, in the event of rate movements adverse to the Fund’s position, the Fund may forfeit the entire amount of the premium plus related transaction costs.

Options on foreign currencies written or purchased by the Fund may be traded on U.S. or foreign exchanges or over the counter. There is no systematic reporting of last sale information for foreign currencies traded over the counter or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information available is generally representative of very large transactions in the interbank market and thus may not reflect relatively smaller transactions (i.e., less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that the U.S. options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that are not reflected in the options market.

Foreign Currency Warrants. The Emerging Markets Opportunities Fund may invest in foreign currency warrants. Foreign currency warrants, such as Currency Exchange Warrants (“CEWs”), are warrants that entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) that is calculated pursuant to a predetermined formula and based on the exchange rate between a specified foreign currency and the U.S. dollar as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time. Foreign currency warrants have been issued in connection with U.S. dollar-denominated debt offerings by major corporate issuers in an attempt to reduce the foreign currency exchange risk that, from the point of view of prospective purchasers of the securities, is inherent in the international fixed income marketplace. Foreign currency warrants may be used to reduce the foreign exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen or Euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction ( e.g. , unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed). Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. Upon exercise of warrants, there may be a delay between the time the holder gives instructions to exercise and the time the exchange rate relating to exercise is determined, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining “time value” of the warrants ( i.e. , the difference between the current market value and the exercise value of the warrants), and, if the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants. Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the Options Clearing Corporation (“OCC”). Unlike foreign currency options issued by OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants is generally considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving significantly larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign exchange risk, including risks arising from complex political or economic factors.

Principal Exchange Rate Linked Securities . The Emerging Markets Opportunities Fund may invest in principal exchange rate linked securities. Principal exchange rate linked securities (or “PERLS”) are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the U.S. dollar and a particular foreign currency at or about that time. The return on “standard” principal exchange rate linked securities is enhanced if the foreign currency to which the security is linked appreciates against the U.S. dollar, and is adversely affected by increases in the foreign exchange value of the U.S. dollar; “reverse” PERLS are like the “standard” securities, except that their return is enhanced by

increases in the value of the U.S. dollar and adversely impacted by increases in the value of foreign currency. Interest payments on the securities are generally made in U.S. dollars at rates that reflect the degree of foreign currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some of the foreign exchange risk, or relatively lower interest rates if the issuer has assumed some of the foreign exchange risk, based on the expectations of the current market). PERLS may in limited cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity.

Performance Indexed Paper . The Emerging Markets Opportunities Fund may invest in performance indexed paper. Performance indexed paper (or “PIP”) is U.S. dollar-denominated commercial paper the yield of which is linked to certain foreign exchange rate movements. The yield to the investor on performance indexed paper is established at maturity as a function of spot exchange rates between the U.S. dollar and a designated currency, as of or about a specified time (generally, the index maturity two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on U.S. dollar-denominated commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.

Foreign Investment Companies

Some of the countries in which the Emerging Markets Opportunities Fund may invest, may not permit, or may place economic restrictions on, direct investment by outside investors. Investments in such countries may be permitted only through foreign government-approved or -authorized investment vehicles, which may include other investment companies. These funds may also invest in other investment companies that invest in foreign securities. Investing through such vehicles may involve frequent or layered fees or expenses and may also be subject to limitation under the 1940 Act. Under the 1940 Act, the Fund may invest up to 10% of its assets in shares of investment companies and up to 5% of its assets in any one investment company as long as the Fund does not own more than 3% of the voting stock of any one investment company. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment company’s expenses, including advisory fees. Those expenses would be in addition to the advisory and other expenses that the Fund bears directly in connection with its own operations.

Foreign Securities

Investing in foreign securities generally represents a greater degree of risk than investing in domestic securities, due to possible exchange controls or exchange rate fluctuations, limits on repatriation of capital, less publicly available information as a result of accounting, auditing, and financial reporting standards different from those used in the U.S., more volatile markets, less securities regulation, less favorable tax provisions, political or economic instability, war or expropriation. As a result of its investments in foreign securities, the Fund may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated.

Each of the Emerging Markets Opportunities Fund and the High Yield Income Fund, may invest a portion of its assets in certain sovereign debt obligations known as “Brady Bonds.” Brady Bonds are issued under the framework of the Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their outstanding external indebtedness. The Brady Plan contemplates, among other things, the debtor nation’s adoption of certain economic reforms and the exchange of commercial bank debt for newly issued bonds. In restructuring its external debt under the Brady Plan framework, a debtor nation negotiates with its existing bank lenders as well as the World Bank or the International Monetary Fund (the “IMF”). The World Bank or IMF supports the restructuring by providing funds pursuant to loan agreements or other arrangements that enable the debtor nation to collateralize the new Brady Bonds or to replenish reserves used to reduce outstanding bank debt. Under these loan agreements or other arrangements with the World Bank or IMF, debtor nations have been required to agree to implement certain domestic monetary and fiscal reforms. The Brady Plan sets forth only general guiding principles for economic reform and debt reduction, emphasizing that solutions must be negotiated on a case-by-case basis between debtor nations and their creditors.

Agreements implemented under the Brady Plan are designed to achieve debt and debt-service reduction through specific options negotiated by a debtor nation with its creditors. As a result, each country offers different financial packages. Options have included the exchange of outstanding commercial bank debt for bonds issued at 100% of face value of such debt, bonds issued at a discount of face value of such debt, and bonds bearing an interest rate that increases over time and the advancement of the new money for bonds. The principal of certain Brady Bonds has been collateralized by U.S. Treasury zero coupon bonds with a maturity equal to the final maturity of the Brady Bonds. Collateral purchases are financed by the IMF, World Bank and the debtor nations’ reserves. Interest payments may also be collateralized in part in various ways.

Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any

uncollateralized repayment of principal at maturity (these uncollateralized amounts constitute the “residual risk”). In light of the residual risk of Brady Bonds and, among other factors, the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds can be viewed as speculative.

Each of the Equity Funds, other than the Balanced Allocation Fund, may invest up to 10% of its total assets in dollar-denominated foreign equity and debt securities. The Balanced Allocation Fund, the High Yield Income Fund and the Short/Intermediate Bond Fund (each with respect to 20% of its total assets) may invest in non-convertible and convertible debt of foreign banks, foreign corporations and foreign governments which obligations are denominated in and pay interest in U.S. dollars. The Insight Money Market Fund may invest in non-convertible debt of foreign banks, foreign corporations and foreign governments which obligations are denominated in and pay interest in U.S. dollars.

Funding Agreements

Funding agreements are insurance contracts between an investor and the issuing insurance company. For the issuer, they represent senior obligations under an insurance product. For the investor, and from a regulatory perspective, these agreements are treated as securities. These agreements, like other insurance products, are backed by claims on the general assets of the issuing entity and rank on the same priority level as other policy holder claims. Funding agreements typically are issued with a one-year final maturity and a variable interest rate, which may adjust weekly, monthly, or quarterly. Some agreements carry a seven-day put feature. A funding agreement without this feature is considered illiquid. These agreements are regulated by the state insurance board of the state where they are executed.

Government Securities

Government securities consist of obligations issued or guaranteed by the U.S. Government, its agencies, instrumentalities or sponsored enterprises (“Government Securities”). Obligations of the U.S. Government agencies and instrumentalities are debt securities issued by U.S. Government-sponsored enterprises and federal agencies. Some of these obligations are supported by: (a) the full faith and credit of the U.S. Treasury (such as Government National Mortgage Association participation certificates); (b) the limited authority of the issuer to borrow from the U.S. Treasury (such as securities of the Federal Home Loan Bank); (c) the discretionary authority of the U.S. Government to purchase certain obligations (such as securities of the Federal National Mortgage Association); or (d) the credit of the issuer only. In the case of obligations not backed by the full faith and credit of the United States, the investor must look principally to the agency issuing or guaranteeing the obligation for ultimate repayment. In cases where U.S. Government support of agencies or instrumentalities is discretionary, no assurance can be given that the U.S. Government will provide financial support, since it is not legally obligated to do so.

Guaranteed Investment Contracts

Each of the Short/Intermediate Bond Fund and the Insight Money Market Fund may invest in guaranteed investment contracts (“GICs”) issued by U.S. and Canadian insurance companies. A GIC requires the investor to make cash contributions to a deposit fund of an insurance company’s general account. The insurance company then makes payments to the investor based on negotiated, floating or fixed interest rates. A GIC is a general obligation of the issuing insurance company and not a separate account. The purchase price paid for a GIC becomes part of the general assets of the insurance company, and the contract is paid from the insurance company’s general assets. Generally, a GIC is not assignable or transferable without the permission of the issuing insurance company, and an active secondary market in GICs does not currently exist.

Hedging Transactions

The High Yield Income Fund may enter into various hedging transactions, such as interest rate swaps, and the purchase and sale of interest rate collars, caps and floors. Hedging is a means of transferring risk that an investor does not desire to assume in an uncertain interest or exchange rate environment. The Subadviser believes it is possible to reduce the effect of interest rate fluctuations on the value of the Fund’s portfolio, or sectors thereof, through the use of such strategies.

Interest rate swaps involve the exchange with another party of commitments to pay or receive interest, e.g., an exchange of floating rate payments for fixed rate payments. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor. An interest rate collar combines the elements of purchasing a cap and selling a floor. The collar protects against an interest rate rise above the maximum amount but gives up the benefit of an interest rate decline below the minimum amount. The net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis and any asset, including equity securities and non-investment grade debt so long as the asset is liquid, unencumbered and marked to market daily having an aggregate value at least equal to the accrued

excess will be specifically designated on the accounting records of the Fund. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction. (See “Swap Agreements,” below, for more information about these instruments.)

Illiquid Securities and Restricted Securities

Each Fund may invest up to 15% (5% with respect to the Money Market Funds) of its net assets in securities that are considered illiquid. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act of 1933 (the “1933 Act”) (“restricted securities”), securities that are otherwise not readily marketable, such as over-the-counter options, and repurchase agreements not entitling the holder to payment of principal in seven days. Subject to the oversight of the Trust’s Board of Trustees, the Subadviser determines and monitors the liquidity of portfolio securities.

Repurchase agreements, reverse repurchase agreements and time deposits that do not provide for payment to the Fund within seven days after notice or which have a term greater than seven days are deemed illiquid securities for this purpose unless such securities are variable amount master demand notes with maturities of nine months or less or unless the Subadviser has determined that an adequate trading market exists for such securities or that market quotations are readily available.

The Funds may purchase Rule 144A securities sold to institutional investors without registration under the 1933 Act and commercial paper issued in reliance upon the exemption in Section 4(2) of the 1933 Act, for which an institutional market has developed. Institutional investors depend on an efficient institutional market in which the unregistered security can be readily resold or on the issuer’s ability to honor a demand for repayment of the unregistered security. A security’s contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity of the security. These securities may be determined to be liquid in accordance with guidelines established by the Trust’s Board of Trustees. Those guidelines take into account trading activity in the securities and the availability of reliable pricing information, among other factors. The Board of Trustees monitors implementation of those guidelines on a periodic basis.

Index Futures Contracts and Options on Index Futures Contracts

Each Equity Fund and Fixed Income Fund may attempt to reduce the risk of investment in equity and other securities by hedging a portion of each portfolio through the use of futures contracts on indices and options on such indices traded on a securities or futures exchange. Each of these Funds may hedge a portion of its portfolio by selling index futures contracts to limit exposure to decline. During a market advance or when the Subadviser anticipates an advance, the Fund may hedge a portion of its portfolio by purchasing index futures or options on indices. This affords a hedge against the Fund’s not participating in a market advance at a time when it is not fully invested and serves as a temporary substitute for the purchase of individual securities that may later be purchased in a more advantageous manner. The Fund will sell options on indices only to close out existing hedge positions.

A securities index assigns relative weightings to the securities in the index, and the index generally fluctuates with changes in the market values of those securities. A securities index futures contract is an agreement in which one party agrees to deliver to the other an amount of cash equal to a specific dollar amount times the difference between the value of a specific securities index at the close of the last trading day of the contract and the price at which the agreement is made. Unlike the purchase or sale of an underlying security, no consideration is paid or received by the Fund upon the purchase or sale of a securities index futures contract. When the contract is executed, each party deposits with a broker a percentage of the contract amount, which may be as low as 5% or less, called the “initial margin.” During the term of the contract, the amount of this deposit is adjusted, based on the current value of the futures contract, by payments of variation margin to or from the broker.

Municipal bond index futures contracts, which are based on an index of 40 tax-exempt, municipal bonds with an original issue size of at least $50 million and a rating of A or higher by S&P or A or higher by Moody’s, began trading in mid-1985. No physical delivery of the underlying municipal bonds in the index is made. The Fixed Income Funds may utilize any such contracts and associated put and call options for which there is an active trading market.

The Fund will use index futures contracts only as a hedge against changes resulting from market conditions in the values of securities held in the Fund’s portfolio or which it intends to purchase and where the transactions are economically appropriate to the reduction of risks inherent in the ongoing management of the Fund. The Fund will sell index futures only if the amount resulting from the multiplication of the then-current level of the indices upon which its futures contracts which would be outstanding do not exceed one-third of the value of the Fund’s net assets. Also, the Fund may not purchase or sell index futures if, immediately thereafter, the sum of the premiums paid for unexpired options on futures contracts and margin deposits on the Fund’s outstanding futures contracts would exceed 5% of the market value of the Fund’s total assets. When the Fund purchases index futures contracts, it will segregate on the accounting records of the fund, appropriate liquid securities equal to the market value of the futures contracts.

There are risks that are associated with the use of futures contracts for hedging purposes. The price of a futures contract will vary from day to day and should parallel (but not necessarily equal) the changes in price of the underlying securities that are included in the index. The difference between these two price movements is called “basis.” There are occasions when basis becomes distorted. For instance, the increase in value of the hedging instruments may not completely offset the decline in value of the securities in the portfolio. Conversely, the loss in the hedged position may be greater than the capital appreciation that the Fund experiences in its securities positions. Distortions in basis are more likely to occur when the securities hedged are not part of the index covered by the futures contract. Further, if market values do not fluctuate, the Fund will sustain a loss at least equal to the commissions on the financial futures transactions.

All investors in the futures market are subject to initial margin and variation margin requirements. Changes in the initial and variation margin requirements may influence an investor’s decision to close out the position. The normal relationship between the securities and futures markets may become distorted if changing margin requirements do not reflect changes in value of the securities. The margin requirements in the futures market are substantially lower than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary basis distortion. The margin requirements may be changed by the exchanges, including for open positions that may have already been established by the Fund.

In the futures market, it may not always be possible to execute a buy or sell order at the desired price, or to close out an open position due to market conditions, limits on open positions, and/or daily price fluctuation limits. Each market may establish a limit on the amount by which the daily market price of a futures contract may fluctuate. Once the market price of a futures contract reaches its daily price fluctuation limit, positions in the contract can be neither taken nor liquidated unless traders are willing to effect trades at or within the limit. The holder of a futures contract (including the Fund) may therefore be locked into its position by an adverse price movement for several days or more, which may be to its detriment. If the Fund could not close its open position during this period, it would continue to be required to make daily cash payments of variation margin. The risk of loss to the Fund is theoretically unlimited when it writes (sells) a futures contract because it is obligated to settle for the value of the contract unless it is closed out, regardless of fluctuations in the price of the underlying index. When the Fund purchases a put option or call option, however, unless the option is exercised, the maximum risk of loss to the Fund is the price of the put option or call option purchased.

Options on securities indices are similar to options on securities except that, rather than the right to take or make delivery of securities at a specified price, an option on a securities index gives the holder the right to receive, upon exercise of the option, an amount of cash if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. This amount of cash is equal to the difference between the closing price of the index and the exercise price of the option expressed in dollars times a specified multiple (the “multiplier”). The writer of the option is obligated, in return for the premium received, to make delivery of this amount. Unlike options on securities, all settlements are in cash, and gain or loss depends on price movements in the securities market generally (or in a particular industry or segment of the market) rather than price movements in individual securities.

The Fund’s successful use of index futures contracts and options on indices depends upon the Subadviser’s ability to predict the direction of the market and is subject to various additional risks. The correlation between movements in the price of the index future and the price of the securities being hedged is imperfect and the risk from imperfect correlation increases as the composition of the Fund’s portfolio diverges from the composition of the relevant index. In addition, if the Fund purchases futures to hedge against market advances before it can invest in a security in an advantageous manner and the market declines, the Fund might create a loss on the futures contract. Particularly in the case of options on stock indices, the Fund’s ability to establish and maintain positions will depend on market liquidity. In addition, the ability of the Fund to close out an option depends on a liquid secondary market. The risk of loss to the Fund is theoretically unlimited when it writes (sells) a futures contract because the Fund is obligated to settle for the value of the contract unless it is closed out, regardless of fluctuations in the underlying index. There is no assurance that liquid secondary markets will exist for any particular option at any particular time.

Although no Fund has a present intention to invest 5% or more of its assets in index futures and options on indices, the Fund has the authority to invest up to 25% of its net assets in such securities.

See additional risk disclosure below under “Interest Rate Futures Contracts and Related Options.”

Interest Rate Futures Contracts and Related Options

Each Equity Fund and Fixed Income Fund may invest in interest rate futures contracts and options on such contracts that are traded on a domestic exchange or board of trade. Such investments may be made by the Fund solely for the purpose of hedging against changes in the value of its portfolio securities due to anticipated changes in interest rates and market conditions, and not for purposes of speculation. A public market exists for interest rate futures contracts covering a number of debt securities, including long-term U.S. Treasury Bonds, ten-year U.S. Treasury Notes, agency securities, three-month

U.S. Treasury Bills, Eurodollars, Eurobonds, and three-month domestic bank certificates of deposit. Other financial futures contracts may be developed and traded. The purpose of the acquisition or sale of an interest rate futures contract by the Fund, as the holder of municipal or other debt securities, is to protect the Fund from fluctuations in interest rates on securities without actually buying or selling such securities.

Unlike the purchase or sale of a security, no consideration is paid or received by the Fund upon the purchase or sale of a futures contract. Initially, the Fund will be required to deposit initial margin with the broker, as determined by the broker. The initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to the Fund upon termination of the futures contract, assuming that all contractual obligations have been satisfied. Subsequent payments, known as variation margin, to and from the broker, will be made on a daily basis as the price of the index fluctuates, making the long and short positions in the futures contract more or less valuable, a process known as marking-to-market. At any time prior to the expiration of the contract, the Fund may elect to close the position by taking an opposite position, which will operate to terminate the Fund’s existing position in the futures contract.

The Fund may not purchase or sell futures contracts or purchase options on futures contracts if, immediately thereafter, more than one-third of its net assets would be hedged, or the sum of the amount of margin deposits on the Fund’s existing futures contracts and premiums paid for options would exceed 5% of the value of the Fund’s total assets. When the Fund enters into futures contracts to purchase an index or debt security or purchase call options, an amount of cash or appropriate liquid securities equal to the notional market value of the underlying contract will be segregated on the accounting records of the fund to cover the positions, thereby insuring that the use of the contract is unleveraged.

Although the Fund will enter into futures contracts only if an active market exists for such contracts, there can be no assurance that an active market will exist for the contract at any particular time. Most domestic futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. The daily limit establishes the maximum amount the price of a futures contract may vary either up or down from the previous day’s settlement price at the end of a trading session. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit. The daily limit governs only price movement during a particular trading day and therefore does not limit potential losses because the limit may prevent the liquidation of unfavorable positions. It is possible that futures contract prices could move to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of futures positions and subjecting some futures traders to substantial losses. In such event, it will not be possible to close a futures position and, in the event of adverse price movements, the Fund would be required to make daily cash payments of variation margin. In such circumstances, an increase in the value of the portion of the portfolio being hedged, if any, may partially or completely offset losses on the futures contract. As described above, however, there is no guarantee the price of municipal bonds or of other debt securities will, in fact, correlate with the price movements in the futures contract and thus provide an offset to losses on a futures contract.

If the Fund has hedged against the possibility of an increase in interest rates that would adversely affect the value of municipal bonds or other debt securities held in its portfolio, and rates decrease instead, the Fund will lose part or all of the benefit of the increased value of the securities it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if the Fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements. Such sales of securities may, but will not necessarily, be at increased prices which reflect the decline in interest rates. The Fund may have to sell securities at a time when it may be disadvantageous to do so.

In addition, the ability of the Fund to trade in futures contracts and options on futures contracts may be materially limited by the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), applicable to a regulated investment company. See “Tax Information” below.

The Fund may purchase put and call options on interest rate futures contracts which are traded on a domestic exchange or board of trade as a hedge against changes in interest rates, and may enter into closing transactions with respect to such options to terminate existing positions. There is no guarantee such closing transactions can be effected.

Options on futures contracts, as contrasted with the direct investment in such contracts, give the purchaser the right, in return for the premium paid, to assume a position in futures contracts at a specified exercise price at any time prior to the expiration date of the options. Upon exercise of an option, the delivery of the futures position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer’s futures margin account, which represents the amount by which the market price of the futures contract exceeds, in the case of a call, or is less than, in the case of a put, the exercise price of the option on the futures contract. The potential loss related to the purchase of an option on interest rate futures contracts is limited to the premium paid for the option (plus transaction costs). Because the value of the option is fixed at the point of sale, there are no daily cash payments to reflect changes in the value of the underlying contract; however, the value of the option does change daily and that change would be reflected in the NAV of the Fund.

There are several risks in connection with the use of interest rate futures contracts and options on such futures contracts as hedging devices. Successful use of these derivative securities by the Fund is subject to the Subadviser’s ability to predict correctly the direction of movements in interest rates. Such predictions involve skills and techniques which may be different from those involved in the management of a long-term bond portfolio. There can be no assurance that there will be a correlation between price movements in interest rate futures, or related options, on the one hand, and price movements in the debt securities which are the subject of the hedge, on the other hand. Positions in futures contracts and options on futures contracts may be closed out only on an exchange or board of trade that provides an active market; therefore, there can be no assurance that a liquid market will exist for the contract or the option at any particular time. Consequently, the Fund may realize a loss on a futures contract that is not offset by an increase in the price of the debt securities being hedged or may not be able to close a futures position in the event of adverse price movements. Any income earned from transactions in futures contracts and options on futures contracts will be taxable.

Investment Company Securities and Investment Funds

In connection with the management of its daily cash positions, each Fund may invest in securities issued by investment companies that invest in short-term debt securities (which may include municipal obligations that are exempt from Federal income taxes) and that seek to maintain a $1.00 NAV per share.

Each non-Money Market Fund also may invest in securities issued by investment companies that invest in securities in which the Fund could invest directly, within the limits prescribed by the 1940 Act. These generally limit each such Fund so that, except as provided above in the section “Master Fund/Feeder Fund Structure”, (i) not more than 5% of its total assets will be invested in the securities of any one investment company; (ii) not more than 10% of its total assets will be invested in the aggregate in securities of investment companies as a group; and (iii) not more than 3% of the outstanding voting stock of any one investment company will be owned by the Fund. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment company’s expenses, including advisory fees. Those expenses would be in addition to the advisory and other expenses that the Fund bears directly in connection with its own operations. See additional information concerning permitted investments in non-U.S. investment companies above under “Foreign Investment Companies”.

Letters of Credit

Debt obligations, including municipal obligations, certificates of participation, commercial paper and other short-term obligations, may be backed by an irrevocable letter of credit of a bank that assumes the obligation for payment of principal and interest in the event of default by the issuer. Only banks that, in the opinion of the Subadviser, are of investment quality comparable to other permitted investments of the Fund may be used for Letter of Credit-backed investments.

Loan Participations and Assignments

The Emerging Markets Opportunities Fund may also invest in fixed-rate or floating-rate loans arranged through private negotiations between an issuer of emerging market debt instruments and one or more financial institutions (“lenders”). Generally, investments in loans would be in the form of loan participations and assignments of loan portfolios from third parties.

When investing in a loan participation, the Fund will typically have the right to receive payments from the lender to the extent that the lender receives payments from the borrower. In addition, the Fund will be able to enforce its rights through the lender, and not directly against the borrower. As a result, in a loan participation the Fund assumes credit risk with respect to both the borrower and the lender.

When the Fund purchases loan assignments from lenders, it will acquire direct rights against the borrower, but these rights and the Fund’s obligations may differ from, and be more limited than, those held by the assigning lender. Loan participations and assignments may be illiquid.

Mortgage-Related and Other Asset-Backed Securities

All Equity Funds, the High Yield Income Fund, and the Short/Intermediate Bond Fund may invest in mortgage-backed securities, including collateralized mortgage obligations (“CMOs”) and Government Stripped Mortgage-Backed Securities.

Each Fund may purchase asset-backed securities, which represent direct or indirect participation in, or are secured by and payable from, assets other than mortgage-backed assets such as installment loan contracts, leases of various types of real and personal property, motor vehicle installment sales contracts and receivables from revolving credit (credit card) agreements. In accordance with guidelines established by the Trust’s Board of Trustees, asset-backed securities may be considered illiquid securities and, therefore, may be subject to the Fund’s 15% (5% with respect to the Money Market Funds) limitation on such investments. Asset-backed securities, including adjustable rate asset-backed securities, have yield characteristics similar to those of mortgage-backed securities and, accordingly, are subject to many of the same risks, including prepayment risk.

Mortgage Pass-through Securities. These are interests in pools of mortgage loans, assembled and issued by various governmental, government-related, and private organizations. Unlike other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates, these securities provide a monthly payment consisting of both interest and principal payments. In effect, these payments are a “pass-through” of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs. “Modified pass-through” securities (such as securities issued by the Government National Mortgage Association (“GNMA”)) entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.

The principal governmental guarantor of mortgage-related securities is GNMA. GNMA is a wholly-owned United States Government corporation within the Department of Housing and Urban Development. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of Federal Housing Administration insured or Veterans Administration guaranteed mortgages.

Government-related guarantors whose obligations are not backed by the full faith and credit of the United States Government include the Federal National Mortgage Association (“FNMA”) and the Federal Home Loan Mortgage Corporation (“FHLMC”). FNMA purchases conventional (i.e., not insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. FHLMC issues Participation Certificates (“PCs”) that represent interests in conventional mortgages from FHLMC’s national portfolio. FNMA and FHLMC guarantee the timely payment of interest and ultimate collection of principal on securities they issue, but the securities they issue are neither issued nor guaranteed by the United States Treasury.

Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may, in addition, be the originators and/or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments for such securities. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets the Fund’s investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. Funds may buy mortgage-related securities without insurance or guarantees if, through an examination of the loan experience and practices of the originator/servicers and poolers, the Subadviser determines that the securities meet the Funds’ quality standards. Securities issued by certain private organizations may not be readily marketable.

Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Funds’ industry concentration restrictions, set forth below under “Investment Restrictions,” by virtue of the exclusion from the test available to all U.S. Government securities. The Funds will take the position that privately-issued, mortgage-related securities do not represent interests in any particular “industry” or group of industries. The assets underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages. It is possible that the availability and the marketability (that is, liquidity) of the securities discussed in this section could be adversely affected by actions of the U.S. government to tighten the availability of its credit.

On September 7, 2008, the Federal Housing Finance Agency (“FHFA”), an agency of the U.S. government, placed FNMA and FHLMC into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate FNMA and FHLMC until they are stabilized. The conservatorship has no specified termination date. There can be no assurance as to when or how the conservatorship will be terminated or

whether FNMA or FHLMC will continue to exist following the conservatorship or what their respective business structures will be during or following the conservatorship. FHFA, as conservator, has the power to repudiate any contract entered into by FNMA or FHLMC prior to its appointment if it determines that performance of the contract is burdensome and repudiation of the contract promotes the orderly administration of FNMA’s or FHLMC’s affairs. Furthermore, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. If FHFA were to transfer any such guarantee obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guarantee obligation and would be exposed to the credit risk of that party.

Collateralized Mortgage Obligations (“CMOs”). A CMO is similar to a bond in that interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans or by portfolios of mortgage pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA, and their income streams.

CMOs are typically structured in multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes typically receive principal only after the first class has been retired. An investor may be partially guarded against a sooner than desired return of principal because of the sequential payments.

FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates and are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Unlike FHLMC PCs, payments of principal and interest on the CMOs are made semiannually rather than monthly. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule. Sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payments of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking-fund payments. Because of the “pass-through” nature of all principal payments received on the collateral pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC’s minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.

CMO Residuals. CMO residuals are derivative mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans. As described above, the cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the issuer. The “residual” in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and, in particular, the prepayment experience on the mortgage assets. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. As described below with respect to stripped mortgage-backed securities, in certain circumstances the Fund may fail to recoup fully its initial investment in a CMO residual.

CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. The CMO residual market currently may not have the liquidity of other more established securities trading in other markets. CMO residuals may be subject to certain restrictions on transferability, may be deemed “illiquid,” and may be subject to the Fund’s limitations on investment in illiquid securities.

Stripped Mortgage-backed Securities. Stripped mortgage-backed securities (“SMBS”) are derivative multi-class mortgage securities. They may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The yield to maturity on an IO class security is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage

assets, and a rapid rate of principal payments may have a material adverse effect on the Fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to recoup fully its initial investment in these securities even if the security is in one of the highest rating categories.

Although SMBS are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed and, accordingly, these securities may be deemed “illiquid” and subject to the Fund’s limitations on investment in illiquid securities.

The Fund may invest in other mortgage-related securities with features similar to those described above, to the extent consistent with the Fund’s investment objectives and policies.

Adjustable Rate Mortgages—Interest Rate Indices. The One-Year Treasury Index is the figure derived from the average weekly quoted yield on U.S. Treasury Securities adjusted to a constant maturity of one year. The Cost of Funds Index reflects the monthly weighted average cost of funds of savings and loan associations and savings banks whose home offices are located in Arizona, California and Nevada (the “FHLB Eleventh District”) that are member institutions of the Federal Home Loan Bank of San Francisco (the “FHLB of San Francisco”), as computed from statistics tabulated and published by the FHLB of San Francisco. The FHLB of San Francisco normally announces the Cost of Funds Index on the last working day of the month following the month in which the cost of funds was incurred.

A number of factors affect the performance of the Cost of Funds Index and may cause the Cost of Funds Index to move in a manner different from indices based upon specific interest rates, such as the One-Year Treasury Index. Because of the various origination dates and maturities of the liabilities of member institutions of the FHLB Eleventh District upon which the Cost of Funds Index is based, among other things, at any time the Cost of Funds Index may not reflect the average prevailing market interest rates on new liabilities of similar maturities. There can be no assurance that the Cost of Funds Index will necessarily move in the same direction or at the same rate as prevailing interest rates since as longer term deposits or borrowings mature and are renewed at market interest rates, the Cost of Funds Index will rise or fall depending upon the differential between the prior and the new rates on such deposits and borrowings. In addition, dislocations in the thrift industry in recent years have caused and may continue to cause the cost of funds of thrift institutions to change for reasons unrelated to changes in general interest rate levels. Furthermore, any movement in the Cost of Funds Index as compared to other indices based upon specific interest rates may be affected by changes instituted by the FHLB of San Francisco in the method used to calculate the Cost of Funds Index. To the extent that the Cost of Funds Index may reflect interest changes more slowly than other indices, mortgage loans which adjust in accordance with the Cost of Funds Index may produce a higher yield later than would be produced by such other indices, and in a period of declining interest rates, the Cost of Funds Index may remain higher than other market interest rates which may result in a higher level of principal prepayments on mortgage loans which adjust in accordance with the Cost of Funds Index than mortgage loans which adjust in accordance with other indices.

LIBOR, the London Interbank Offered Rate, is the interest rate that the most creditworthy international banks dealing in U.S. dollar-denominated deposits and loans charge each other for large dollar-denominated loans. LIBOR is also usually the base rate for large dollar-denominated loans in the international market. LIBOR is generally quoted for loans having rate adjustments at one-, three, six- or twelve-month intervals.

Other Asset-backed Securities. Through trusts and other special-purpose entities, various types of securities based on financial assets other than mortgage loans are increasingly available, in both pass-through structures similar to mortgage pass-through securities described above and in other structures more like CMOs. As with mortgage-related securities, these asset-backed securities are often backed by a pool of financial assets representing the obligations of a number of different parties. They often include credit-enhancement features similar to mortgage-related securities.

Financial assets on which these securities are based include automobile receivables; credit card receivables; loans to finance boats, recreational vehicles, and mobile homes; computer, copier, railcar, and medical equipment leases; and trade, healthcare, and franchise receivables. In general, the obligations supporting these asset-backed securities are of shorter maturities than mortgage loans and are less likely to experience substantial prepayments. However, obligations such as credit card receivables are generally unsecured, and the obligors are often entitled to protection under a number of state and federal consumer credit laws granting, among other things, rights to set off certain amounts owed on the credit cards, thus reducing the balance due. Other obligations that are secured, such as automobile receivables, may present issuers with difficulties in perfecting and executing on the security interests, particularly where the issuer allows the servicers of the receivables to retain possession of the underlying obligations, thus increasing the risk that recoveries on defaulted obligations may not be adequate to support payments on the securities.

The Subadviser expects additional assets will be “securitized” in the future. The Fund may invest in any such instruments or variations on them to the extent consistent with the Fund’s investment objectives and policies.

Interest Rate Considerations. The market value of debt securities that are interest rate sensitive is inversely related to changes in interest rates. That is, an interest rate decline produces an increase in a security’s market value and an interest rate increase produces a decrease in value. The longer the remaining maturity of a security, the greater the effect of interest rate changes. Changes in the ability of an issuer to make payments of interest and principal and in the market’s perception of its creditworthiness also affect the market value of that issuer’s debt securities.

Prepayments of principal of mortgage-related securities by mortgagors or mortgage foreclosures affect the average life of the mortgage-related securities in the Fund’s portfolio. Mortgage prepayments are affected by the level of interest rates and other factors, including general economic conditions and the underlying location and age of the mortgage. In periods of rising interest rates, the prepayment rate tends to decrease, lengthening the average life of a pool of mortgage-related securities. In periods of falling interest rates, the prepayment rate tends to increase, shortening the average life of a pool. Because prepayments of principal generally occur when interest rates are declining, it is likely that the Fund, to the extent that it retains the same percentage of debt securities, may have to reinvest the proceeds of prepayments at lower interest rates than those of its previous investments. If this occurs, that Fund’s yield will correspondingly decline. Thus, mortgage-related securities may have less potential for capital appreciation in periods of falling interest rates than other fixed income securities of comparable duration, although they may have a comparable risk of decline in market value in periods of rising interest rates. To the extent that the Fund purchases mortgage-related securities at a premium, unscheduled prepayments, which are made at par, result in a loss equal to any unamortized premium.

Duration is one of the fundamental tools used by the adviser in managing interest rate risks including prepayment risks. Traditionally, a debt security’s “term to maturity” characterizes a security’s sensitivity to changes in interest rates. “Term to maturity,” however, measures only the time until a debt security provides its final payment, taking no account of prematurity payments. Most debt securities provide interest (“coupon”) payments in addition to a final (“par”) payment at maturity, and some securities have call provisions allowing the issuer to repay the instrument in full before maturity date, each of which affect the security’s response to interest rate changes. “Duration” is considered a more precise measure of interest rate risk than “term to maturity.” Determining duration may involve the adviser’s estimates of future economic parameters, which may vary from actual future values. Fixed income securities with effective durations of three years are more responsive to interest rate fluctuations than those with effective durations of one year. For example, if interest rates rise by 1%, the value of securities having an effective duration of three years will generally decrease by approximately 3%.

Municipal Leases

The Tax-Exempt Bond Fund may acquire participations in lease obligations or installment purchase contract obligations (hereinafter collectively called “lease obligations”) of municipal authorities or entities. Although lease obligations do not constitute general obligations of the municipality for which the municipality’s taxing power is pledged, a lease obligation may be backed by the municipality’s covenant to budget for, appropriate, and make the payments due under the lease obligation. However, certain lease obligations contain “non-appropriation” clauses which provide that the municipality has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. In addition to the “non-appropriation” risk, these securities represent a relatively new type of financing that has not yet developed the depth of marketability associated with more conventional bonds. In the case of a “non-appropriation” lease, the Fund’s ability to recover under the lease in the event of non-appropriation or default will be limited solely to the repossession of the leased property in the event foreclosure might prove difficult.

In evaluating the credit quality of a municipal lease obligation and determining whether such lease obligation will be considered “liquid,” the Subadviser will consider: (1) whether the lease can be canceled; (2) what assurance there is that the assets represented by the lease can be sold; (3) the strength of the lessee’s general credit (e.g., its debt, administrative, economic, and financial characteristics); (4) the likelihood that the municipality will discontinue appropriating funding for the leased property because the property is no longer deemed essential to the operations of the municipality (e.g., the potential for an “event of non-appropriation”); and, (5) the legal recourse in the event of failure to appropriate.

Municipal Securities

The Balanced Allocation Fund, the High Yield Income Fund, the Short/Intermediate Bond Fund, the Tax-Exempt Bond Fund, and the Insight Tax-Exempt Money Market Fund may invest in tax-exempt obligations to the extent consistent with each Fund’s investment objective and policies. Notes sold as interim financing in anticipation of collection of taxes (i.e., tax anticipation notes), a bond sale (i.e., bond anticipation notes) or receipt of other revenues (i.e., revenue anticipation notes) are usually general obligations of the issuer.

Bond Anticipation Notes. Bond anticipation notes are issued to provide interim financing until long-term financing can be arranged. In most cases, the long-term bonds then provide the money for the repayment of the notes.

Construction Loan Notes . Construction loan notes are sold to provide construction financing. After successful completion and acceptance, many projects receive permanent financing through FNMA or GNMA.

General Obligation Bonds . Issuers of general obligation bonds include states, counties, cities, towns, and regional districts. The proceeds of these obligations are used to fund a wide range of public projects, including construction or improvement of schools, highways and roads, and water and sewer systems. The basic security behind general obligation bonds is the issuer’s pledge of its full faith and credit and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to the rate or amount of special assessments.

Industrial Development Bonds . Industrial development bonds, which are considered municipal bonds if the interest paid is exempt from federal income tax, are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business and manufacturing, housing, sports arenas and pollution control. These bonds are also used to finance public facilities such as airports, mass transit systems, ports and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility’s user to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment.

Municipal Bonds . Municipal bonds, which meet longer-term capital needs and generally have maturities of more than one year when issued, have two principal classifications: general obligation bonds and revenue bonds. Another type of municipal bond is referred to as an industrial development bond.

Municipal Notes . Municipal notes generally are used to provide for short-term working capital needs and generally have maturities of one year or less. Municipal notes include:

Revenue Anticipation Notes . Revenue anticipation notes are issued in expectation of receipt of other types of revenue, such as federal revenues available under federal revenue sharing programs.

Revenue Bonds . The principal security for a revenue bond is generally the net revenues derived from a particular facility, group of facilities, or, in some cases, the proceeds of a special excise or other specific revenue source. Revenue bonds are issued to finance a wide variety of capital projects including: electric, gas, water and sewer systems; highways, bridges, and tunnels; port and airport facilities; colleges and universities; and hospitals. Although the principal security behind these bonds may vary, many provide additional security in the form of a debt service reserve fund whose money may be used to make principal and interest payments on the issuer’s obligations. Housing finance authorities have a wide range of security; including partially or fully insured mortgages, rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or other public projects. Some authorities provide further security in the form of a state’s ability (without obligation) to make up deficiencies in the debt service reserve fund.

Tax Anticipation Notes . Tax anticipation notes are issued to finance working capital needs of municipalities. Generally, they are issued in anticipation of various seasonal tax revenue, such as income, sales, use and business taxes, and are payable from these specific future taxes.

Tax-Exempt Commercial Paper . Tax-exempt commercial paper is a short-term obligation with a stated maturity of 365 days or less. It is issued by state and local governments or their agencies to finance seasonal working capital needs or as short-term financing in anticipation of longer-term financing.

In addition, other types of municipal securities similar to the above-described municipal bonds and municipal notes are, or may become, available. For the purpose of the Trust’s investment restrictions set forth in this SAI, the identification of the “issuer” of a municipal security which is not a general obligation bond is made by the investment adviser on the basis of the characteristics of the obligation, the most significant of which is the source of funds for the payment of principal and interest on such security.

Risks Relating to Municipal Securities. Yields on municipal securities are dependent on a variety of factors, including the general conditions of the money market and the municipal bond market, the size of a particular offering, the maturity of the obligations and the rating of the issue. Municipal securities with longer maturities tend to produce higher yields and are generally subject to potentially greater capital appreciation and depreciation than obligations with shorter maturities and lower yields. The market prices of municipal securities usually vary, depending upon available yields. An increase in interest rates will generally reduce the value of portfolio investments, and a decline in interest rates will generally increase the value of portfolio investments. The ability of the Fund to achieve its investment objective is also dependent on the continuing ability of the issuers of municipal securities in which the Fund invests to meet their obligations for the payment of interest and principal when due. The ratings of Moody’s and S&P’s represent their opinions as to the quality of municipal securities which they undertake to rate. Ratings are not absolute standards of quality; consequently, municipal securities with the same maturity, coupon, and rating may have different yields. There are variations in municipal securities, both within a particular classification and between classifications, depending on numerous factors. It should also be pointed out that, unlike other types of investments, municipal securities have traditionally not been subject to regulation by, or registration with, the SEC, although there have been proposals which would provide for such regulation in the future.

The federal bankruptcy statutes relating to the debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material and adverse changes in the rights of holders of their obligations.

Lawsuits challenging the validity under state constitutions of present systems of financing public education have been initiated or adjusted in a number of states, and legislation has been introduced to effect changes in public school financing in some states. In other instances there have been lawsuits challenging the issuance of pollution control revenue bonds or the validity of their issuance under state or federal law which could ultimately affect the validity of those municipal securities or the tax-free nature of the interest thereon.

Tax Anticipation Notes (“TANs”). An uncertainty in a municipal issuer’s capacity to raise taxes as a result of such events as a decline in its tax base or a rise in delinquencies could adversely affect the issuer’s ability to meet its obligations on outstanding TANs. Furthermore, some municipal issuers commingle various tax proceeds in a general fund that is used to meet obligations other than those of the outstanding TANs. Use of such a general fund to meet various other obligations could affect the likelihood of making payments on TANs.

Bond Anticipation Notes (“BANs”). The ability of a municipal issuer to meet its obligations on its BANs is primarily dependent on the issuer’s adequate access to the longer-term municipal bond market and the likelihood that the proceeds of such bond sales will be used to pay the principal of, and interest on, BANs.

Revenue Anticipation Notes (“RANs”). A decline in the receipt of certain revenues, such as anticipated revenues from another level of government, could adversely affect an issuer’s ability to meet its obligations on outstanding RANs. In addition, the possibility that the revenues would, when received, be used to meet other obligations could affect the ability of the issuer to pay the principal of, and interest on, RANs.

The Balanced Allocation Fund, Short/Intermediate Bond Fund, and Tax-Exempt Bond Fund, may also invest in: (1) municipal bonds that are rated at the date of purchase “Baa” or better by Moody’s or “BBB” or better by S&P; (2) municipal notes having maturities at the time of issuance of 15 years or less that are rated at the date of purchase “MIG 1” or “MIG 2” (or “VMIG 1” or “VMIG 2” in the case of an issue having a variable rate with a demand feature) by Moody’s or “SP-1+,” “SP-1,” or “SP-2” by S&P; and (3) municipal commercial paper with a stated maturity of one year or less that is rated at the date of purchase “P-2” or better by Moody’s or “A-2” or better by S&P.

Participation on Creditors’ Committees

The High Yield Income Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such participation may subject the Fund to expenses such as legal fees and may make the fund an “insider” of the issuer for purposes of the federal securities laws, and therefore may restrict the fund’s ability to purchase or sell a particular security when it might otherwise desire to do so. Participation by the Fund on such committees also may expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. The Fund will participate on such committees only when the Adviser believes that such participation is necessary or desirable to enforce the Fund’s rights as a creditor or to protect the value of securities held by the Fund.

Put and Call Options

Each Equity Fund and Fixed Income Fund may invest in covered put and covered call options and write covered put and covered call options on securities in which they may invest directly and that are traded on registered domestic securities exchanges. The writer of a call option, who receives a premium, has the obligation, upon exercise of the option, to deliver the underlying security against payment of the exercise price during the option period. The writer of a put, who receives a premium, has the obligation to buy the underlying security, upon exercise, at the exercise price during the option period.

These Funds each may write put and call options on securities only if they are “covered,” and such options must remain “covered” as long as the Fund is obligated as a writer. A call option is “covered” if the Fund owns the underlying security or its equivalent covered by the call or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional cash consideration if such cash is segregated) upon conversion or exchange of other securities held in its portfolio. A call option is also covered if the Fund holds on a share-for-share or equal principal amount basis a call on the same security as the call written where the exercise price of the call held is equal to or less than the exercise price of the call written or greater than the exercise price of the call written if appropriate liquid assets representing the difference are segregated by the Fund. A put option is “covered” if the Fund maintains appropriate liquid securities with a value equal to the exercise price, or owns on a share-for-share or equal principal amount basis a put on the same security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written.

The principal reason for writing call options is to attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying securities alone. In return for the premium, the Fund would give up the opportunity for profit from a price increase in the underlying security above the exercise price so long as the option remains open, but retains the risk of loss should the price of the security decline. Upon exercise of a call option when the market value of the security exceeds the exercise price, the Fund would receive less total return for its portfolio than it would have if the call had not been written, but only if the premium received for writing the option is less than the difference between the exercise price and the market value. Put options are purchased in an effort to protect the value of a security owned against an anticipated decline in market value. The Fund may forego the benefit of appreciation on securities sold or be subject to depreciation on securities acquired pursuant to call or put options, respectively, written by the Fund. The Fund may experience a loss if the value of the securities remains at or below the exercise price, in the case of a call option, or at or above the exercise price, in the case of a put option.

Each Fund may purchase put options in an effort to protect the value of a security owned against an anticipated decline in market value. Exercise of a put option will generally be profitable only if the market price of the underlying security declines sufficiently below the exercise price to offset the premium paid and the transaction costs. If the market price of the underlying security increases, the Fund’s profit upon the sale of the security will be reduced by the premium paid for the put option less any amount for which the put is sold.

The SEC has taken the position that purchased options not traded on registered domestic securities exchanges and the assets used as cover for written options not traded on such exchanges are illiquid securities. Each of the Funds will treat such options and assets as subject to such Fund’s limitation on investment in securities that are not readily marketable.

Writing of options involves the risk that there will be no market in which to effect a closing transaction. An exchange-traded option may be closed out only on an exchange that provides a secondary market for an option of the same series, and there is no assurance that a liquid secondary market on an exchange will exist.

Real Estate Investment Trusts (REITs)

Each Fund may invest in REITs. REITs are pooled investment vehicles that invest primarily in income producing real estate or real estate related loans or interests. Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs may be affected by changes in the value of the underlying property owned by the REITs or the quality of loans held by the REIT. REITs are dependent upon management skills, are not diversified, and are subject to the risks of financing projects.

REITs are also subject to interest rate risks. When interest rates decline, the value of a REIT’s investment in fixed rate obligations can be expected to rise. Conversely, when interest rates rise, the value of a REIT’s investment in fixed rate obligations can be expected to decline.

Investing in REITs involves risks similar to those associated with investing in small capitalization companies. REITs may have limited financial resources, may trade less frequently and in a limited volume and may be subject to more abrupt or erratic price movements than securities of larger companies.

Repurchase Agreements

Each Fund may enter into repurchase agreements by which the Fund purchases portfolio securities subject to the seller’s agreement to repurchase them at a mutually agreed upon time and price, which includes an amount representing interest on the purchase price. A repurchase agreement must be collateralized by obligations that could otherwise be purchased by the Fund (except with respect to maturity), and these must be maintained by the seller in a segregated account for the Fund. The value of such collateral will be monitored throughout the term of the repurchase agreement in an attempt to ensure that the full value of the collateral, as specified in the agreement, always equals or exceeds the repurchase price (including accrued interest). If the value of the collateral dips below such repurchase price, additional collateral will be requested and, when received, added to the account to maintain full collateralization. Default or bankruptcy of the seller would expose the Fund to possible loss because of adverse market action, delays in connection with the disposition of the underlying obligations or expenses of enforcing its rights.

The Fund may not enter into a repurchase agreement if, as a result, more than 15% (5% with respect to a Money Market Fund) of the market value of the Fund’s total net assets would be invested in repurchase agreements with a maturity of more than seven days and in other illiquid securities. The Fund will enter into repurchase agreements only with registered broker/dealers and commercial banks that meet guidelines established by the Trust’s Board of Trustees.

Reverse Repurchase Agreements

Each of the Equity Funds and the Fixed Income Funds may borrow funds for temporary purposes by entering into an agreement to sell portfolio securities to a financial institution such as a bank or broker-dealer and to repurchase them at a

mutually specified date and price (“reverse repurchase agreement”). A reverse repurchase agreement involves the risk that the market value of the securities sold by the Fund may decline below the repurchase price. The Fund would pay interest on the amount obtained pursuant to the reverse repurchase agreement.

The Fund may not enter into a reverse repurchase agreement if, as a result, more than 15% (5% with respect to a Money Market Fund) of the Fund’s net assets would be invested in reverse repurchase agreements with a maturity of more than seven days and in other illiquid securities. The Funds will enter into reverse repurchase agreements only with registered broker-dealers and commercial banks that meet guidelines established by the Trust’s Board of Trustees.

Rule 2a-7 Matters

Each of the Money Market Funds must comply with the requirements of Rule 2a-7 under the 1940 Act (“Rule 2a-7”). Under the applicable quality requirements of Rule 2a-7, the Funds may purchase only U.S. dollar-denominated instruments that are determined to present minimal credit risks and that are at the time of acquisition “eligible securities” as defined in Rule 2a-7. Generally, eligible securities are divided into “first tier” and “second tier” securities. First tier securities are generally those in the highest rating category (e.g., A-1 by S&P) or unrated securities deemed to be comparable in quality, government securities and securities issued by other money market funds. Second tier securities are generally those in the second highest rating category (e.g., A-2 by S&P) or unrated securities deemed to be comparable in quality. See Appendix A for more information.

Each Money Market Fund may not invest in second tier securities with a remaining maturity of greater than 45 calendars days, invest more than 3% of its total assets in second tier securities nor more than 0.5% of its total assets in the second tier securities of a single issuer.

Each Money Market Fund will maintain a dollar-weighted average maturity of 90 days or less and will limit its investments to securities that have remaining maturities of 397 calendar days or less or other features that shorten maturities in a manner consistent with the requirements of Rule 2a-7, such as interest rate reset and demand features.

Securities Lending

The Fund may lend portfolio securities to broker-dealers and other financial institutions, provided that such loans are callable at any time by the Fund utilizing this investment technique and are at all times secured by collateral held by the Fund at least equal to the market value, determined daily, of the loaned securities. The Fund utilizing this investment technique will continue to receive any income on the loaned securities, and at the same time will earn interest on cash collateral, or a securities lending fee in the case of collateral, in the form of U.S. Government securities. A loan may be terminated at any time by either the Fund or the borrower. Upon termination of a loan, the borrower will be required to return the securities to the Fund, and any gain or loss in the market price during the period of the loan would accrue to the Fund. If the borrower fails to maintain the requisite amount of collateral, the loan will automatically terminate, and the Fund may use the collateral to replace the loaned securities while holding the borrower liable for any excess of the replacement cost over the amount of the collateral.

When voting or consent rights which accompany loaned securities pass to the borrower, the Fund will follow the policy of calling the loan, in whole or in part as may be appropriate, in order to exercise such rights if the matters involved would have a material effect on the Fund’s investment in the securities which are the subject of the loan. The Fund may pay reasonable finders, administrative and custodial fees in connection with the loans of its portfolio securities.

As with any extension of credit, there are risks of delay in recovery of the loaned securities and in some cases loss of rights in the collateral should the borrower of the securities fail financially. However, loans of portfolio securities will be made only to firms considered by the Trust to be creditworthy and when the Adviser believes the consideration to be earned justifies the attendant risks.

Short Sales

When the Fund sells short, it borrows the securities that it needs to deliver to the buyer. The Fund must arrange through a broker to borrow these securities and will become obligated to replace the borrowed securities at whatever their market price may be at the time of replacement. The Fund may have to pay a premium to borrow the securities and must pay any dividends or interest payable on the securities until they are replaced.

The Fund’s obligation to replace the securities borrowed in connection with a short sale will be secured. The proceeds the Fund receives from the short sale will be held on behalf of the broker until the Fund replaces the borrowed securities, and the Fund will deposit collateral with the broker; this collateral will consist of cash or liquid, high-grade debt obligations. In addition, the Fund will deposit collateral in a segregated account with the Fund’s custodian; this collateral will consist of cash or liquid, high grade debt obligations equal to any difference between the market value of (1) the securities sold at the time they were sold short and (2) any collateral deposited with the broker in connection with the short sale (not including the proceeds of the short sale).

If the Fund sells a security short-against-the-box, the fund owns the security but does not want to use it for delivery so instead borrows it from a brokerage firm, typically in order to lock in a profit. If the Fund sells securities short-against-the-box, it may protect unrealized gains, but will lose the opportunity to profit on such securities if the price rises.

Sovereign Debt

The Emerging Markets Opportunities Fund and the High Yield Income Fund may invest in “sovereign debt,” which is issued or guaranteed by foreign governments (including countries, provinces and municipalities) or their agencies and instrumentalities. Sovereign debt may trade at a substantial discount from face value. The Funds may hold and trade sovereign debt of foreign countries in appropriate circumstances to participate in debt conversion programs. Emerging-market country sovereign debt involves a high degree of risk, is generally lower-quality debt, and is considered speculative in nature due, in part, to the extreme and volatile nature of debt burdens in such countries and because emerging market governments can be relatively unstable. The issuer or governmental authorities that control sovereign-debt repayment (“sovereign debtors”) may be unable or unwilling to repay principal or interest when due in accordance with the terms of the debt. A sovereign debtor’s willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash-flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy towards the IMF, and the political constraints to which the sovereign debtor may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearage on their debt. The commitment of these third parties to make such disbursements may be conditioned on the sovereign debtor’s implementation of economic reforms or economic performance and the timely service of the debtor’s obligations. The sovereign debtor’s failure to meet these conditions may cause these third parties to cancel their commitments to provide funds to the sovereign debtor, which may further impair the debtor’s ability or willingness to timely service its debts. In certain instances, the Funds may invest in sovereign debt that is in default as to payments of principal or interest. In the event that the Funds hold non-performing sovereign debt, the Funds may incur additional expenses in connection with any restructuring of the issuer’s obligations or in otherwise enforcing their rights thereunder.

The Fixed Income Funds may invest in “sovereign debt” that is U.S. dollar-denominated and investment-grade.

Stand-by Commitments

The Balanced Allocation Fund and Tax-Exempt Bond Fund may purchase municipal securities together with the right to resell them to the seller or a third party at an agreed-upon price or yield within specified periods prior to their maturity dates. Such a right to resell is commonly known as a stand-by commitment, and the aggregate price which the Fund pays for securities with a stand-by commitment may increase the cost, and thereby reduce the yield, of the security. The primary purpose of this practice is to permit the Fund to be as fully invested as practicable in municipal securities while preserving the necessary flexibility and liquidity to meet unanticipated redemptions. The Balanced Allocation Fund will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. Stand-by commitments acquired by the Fund are valued at zero in determining the Fund’s NAV. Stand-by commitments involve certain expenses and risks, including the inability of the issuer of the commitment to pay for the securities at the time the commitment is exercised, non-marketability of the commitment, and differences between the maturity of the underlying security and the maturity of the commitment.

Swap Agreements

Each of the Funds may enter into interest rate, index and currency exchange rate swap agreements in attempts to obtain a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index. The “notional amount” of the swap agreement is only a fixed basis on which to calculate the obligations the parties to a swap agreement have agreed to exchange. The Fund’s obligations (or rights) under a swap agreement will generally be equal only to the amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). The Fund’s obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund). To the extent required by SEC guidelines to ensure that it is not leveraged, the Fund will only engage in futures contracts or options on futures contracts if it owns either (1) an offsetting position for the same type of financial asset or (2) cash or liquid securities, designated on the Fund’s books or held in a segregated account, with a value sufficient at all times to cover its potential obligations not covered as provided in (1). The Fund’s obligations under a swap agreement will be accrued daily (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counter-party will be covered by specifically designating on the

accounting records of the Fund liquid assets to avoid leveraging of the Fund’s portfolio. Because swap agreements are two-party contracts and may have terms of greater than seven days, they may be considered to be illiquid. Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counter-party. The Subadviser will cause the Fund to enter into swap agreements only with counter-parties that would be eligible for consideration as repurchase agreement counter-parties under the Funds’ repurchase agreement guidelines. Certain restrictions imposed on the Funds by the Code may limit the Funds’ ability to use swap agreements. The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.

Certain swap agreements are exempt from most provisions of the Commodity Exchange Act (“CEA”) and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations of the Commodity Futures Trading Commission (“CFTC”). To qualify for this exemption, a swap agreement must be entered into by “eligible participants,” which include the following, provided the participants’ total assets exceed established levels: a bank or trust company, savings association or credit union, insurance company, investment company subject to regulation under the 1940 Act, commodity pool, corporation, partnership, proprietorship, organization, trust or other entity, employee benefit plan, governmental entity, broker-dealer, futures commission merchant, natural person, or regulated foreign person. To be eligible, natural persons and most other entities must have total assets exceeding $10 million; commodity pools and employee benefit plans must have assets exceeding $5 million. In addition, an eligible swap transaction must meet three conditions. First, the swap agreement may not be part of a fungible class of agreements that are standardized as to their material economic terms. Second, the creditworthiness of parties with actual or potential obligations under the swap agreement must be a material consideration in entering into or determining the terms of the swap agreement, including pricing, cost or credit enhancement terms. Third, swap agreements may not be entered into and traded on or through a multilateral transaction execution facility. Recently, the SEC and the CFTC have developed and finalized rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act to create a new, comprehensive regulatory framework for swap transactions, and as of the date of this SAI they are expected to continue to develop and finalize additional rules through 2012. Under the new regulations, certain swap transactions will be required to be executed on a regulated trading platform and cleared through a derivatives clearing organization. Additionally, the new regulations will impose other requirements on the parties entering into swap transactions, including requirements relating to posting margin, and reporting and documenting swap transactions. Funds engaging in swap transactions may incur additional expenses as a result of these new regulatory requirements. The Adviser is continuing to monitor the finalization and implementation of the new regulations and to assess their impact on the Funds.

In addition, the High Yield Income Fund may enter into credit default swap agreements. The “buyer” in a credit default contract is obligated to pay the “seller” a periodic, stream of payments over the term of the contract provided no event of default has occurred. In the event of default, the seller must pay the buyer the “par value” (full notional value) of the reference obligation in exchange for the reference obligation (typically emerging market debt). The fund may be either the buyer or seller in the transaction. If the fund is a buyer and no event of default occurs, the fund loses its investment and recovers nothing. However, if an event of default occurs, the buyer receives full notional value for a reference obligation that may have little or no value. As a seller, the fund receives a fixed rate of income throughout the term of the contract, which typically is between six months and three years, provided there is no default event. If an event of default occurs, the seller must pay the buyer the full notional value of the reference obligation. The value of the reference obligation received by the seller, coupled with the periodic payments previously received may be less than the full notional value it pays to the buyer, resulting in a loss of value to the fund.

Credit default swaps involve greater risks than if the fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risks. The fund will enter into swap agreements only with counterparties who are rated at least A by Moody’s or S&P at the time of investment.

Temporary Investments

When business or financial conditions warrant, each of the non-Money Market Funds may assume a temporary defensive position by investing in money-market investments. These money-market investments include obligations of the U.S. Government and its agencies and instrumentalities, obligations of foreign sovereigns, other debt securities, commercial paper including bank obligations, certificates of deposit (including Eurodollar certificates of deposit) and repurchase agreements.

For temporary defensive purposes, during periods in which the Subadviser believes adverse changes in economic, financial or political conditions make it advisable, the Funds may reduce their holdings in equity and other securities and may invest up to 100% of their assets in certain short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) debt securities and in cash (U.S. dollars, foreign currencies, or multicurrency units). In the case of the Emerging Markets Opportunities Fund, these short-term and medium-term debt securities consist of (a) obligations of governments, agencies or instrumentalities of any member state of the Organization for Economic Cooperation and

Development (“OECD”); (b) bank deposits and bank obligations (including certificates of deposit, time deposits and bankers’ acceptances) of banks organized under the laws of any member state of the OECD, denominated in any currency; (c) floating rate securities and other instruments denominated in any currency issued by international development agencies; (d) finance company and corporate commercial paper and other short-term corporate debt obligations of corporations organized under the laws of any member state of the OECD meeting the Fund’s credit quality standards; and (e) repurchase agreements with banks and broker-dealers covering any of the foregoing securities. The short-term and medium-term debt securities in which the Fund may invest for temporary defensive purposes will be those that the Subadviser believes to be of high quality, i.e., subject to relatively low risk of loss of interest or principal (there is currently no rating system for debt securities in most emerging countries). If rated, these securities will be rated in one of the three highest rating categories by rating services such as Moody’s or S&P (i.e., rated at least A).

Warrants

The Equity Funds and High Yield Income Fund may invest in warrants, which are options to purchase an equity security at a specified price (usually representing a premium over the applicable market value of the underlying equity security at the time of the warrant’s issuance) and usually during a specified period of time. Unlike convertible securities and preferred stocks, warrants do not pay a fixed dividend. Investments in warrants involve certain risks, including the possible lack of a liquid market for the resale of the warrants, potential price fluctuations as a result of speculation or other factors and failure of the price of the underlying security to reach a level at which the warrant can be prudently exercised (in which case the warrant may expire without being exercised, resulting in the loss of the Fund’s entire investment therein).

When-Issued Purchases and Forward Commitments (Delayed-Delivery)

Each Fund may purchase securities on a when-issued or forward commitment basis. These transactions are also known as delayed-delivery transactions. (The phrase “delayed-delivery” is not intended to include purchases where a delay in delivery involves only a brief period required by the selling party solely to locate appropriate certificates and prepare them for submission for clearance and settlement in the customary way.) Delayed-delivery transactions involve a commitment by the Fund to purchase or sell securities at a future date (ordinarily up to 90 days later). The price of the underlying securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitments are negotiated directly with the selling party.

When-issued purchases and forward commitments enable the Fund to lock in what is believed to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. For example, in periods of rising interest rates and falling bond prices, the Fund might sell debt securities it owns on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising prices, the Fund might sell securities it owns and purchase the same or similar securities on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher yields. The Fund will not enter into such transactions for the purpose of leverage.

The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value will be reflected in the Fund’s NAV starting on the first business day after the date of the agreement to purchase the securities. The Fund will be subject to the rights and risks of ownership of the securities on the agreement date. The Fund will not earn interest on securities it has committed to purchase until they are paid for and received.

When the Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement will be included in the Fund’s assets. Fluctuations in the market value of the underlying securities will not be reflected in the Fund’s NAV as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place up to 90 days after the date of the transaction, but the Fund may agree to a longer settlement period.

The Fund will make commitments to purchase securities on a when-issued basis or to purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, the Fund may dispose of or renegotiate a commitment after it is entered into. The Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions.

When the Fund purchases securities on a when-issued or forward-commitment basis, the Fund will specifically designate on its accounting records securities having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. These procedures are designed to ensure that each Fund will maintain sufficient assets at all times to cover its obligations under when-issued purchases and forward commitments.

Zero Coupon, Deferred Coupon, and PIK Debt Securities

Zero Coupon Securities. Each Fund may invest in zero coupon securities. Zero coupon securities are debt securities that are issued and traded at a discount and do not entitle the holder to any periodic payments of interest prior to maturity. Zero coupon securities may be created by separating the interest and principal components of securities issued or guaranteed by the U.S. Government or one of its agencies or instrumentalities or issued by private corporate issuers. These securities may not be issued or guaranteed by the U.S. Government. Typically, an investment brokerage firm or other financial intermediary holding the security has separated (“stripped”) the unmatured interest coupons from the underlying principal. The holder may then resell the stripped securities. The stripped coupons are sold separately from the underlying principal, usually at a deep discount because the buyer receives only the right to receive a fixed payment on the security upon maturity and does not receive any rights to reinvestment of periodic interest (cash) payments. Because the rate to be earned on these reinvestments may be higher or lower than the rate quoted on the interest-paying obligations at the time of the original purchase, the investor’s return on investments is uncertain even if the securities are held to maturity. This uncertainty is commonly referred to as reinvestment risk. With zero coupon securities, however, there are no cash distributions to reinvest, so investors bear no reinvestment risk if they hold the zero coupon securities to maturity; holders of zero coupon securities, however, forego the possibility of reinvesting at a higher yield than the rate paid on the originally issued security. With both zero coupon securities and interest-paying securities there is no reinvestment risk on the principal amount of the investment. When held to maturity, the entire return from such instruments is determined by the difference between such instrument’s purchase price and its value at maturity. Because interest on zero coupon securities is not paid on a current basis, the values of securities of this type are subject to greater fluctuations than are the values of securities that distribute income regularly. In addition, the Fund’s investment in zero coupon securities will result in special tax consequences. Although zero coupon securities do not make interest payments, for tax purposes, a portion of the difference between the security’s maturity value and its purchase price is imputed income to the Fund each year. Under the Federal tax laws applicable to investment companies, the Fund will not be subject to tax on its income if it pays annual dividends to its shareholders substantially equal to all the income received from, and imputed to, its investments during the year. Because imputed income must be paid to shareholders annually, the Fund may need to borrow money or sell securities to meet certain dividend and redemption obligations. In addition, the sale of securities by the Fund may increase its expense ratio and decrease its rate of return.

Deferred Coupon Debt Securities. The High Yield Income Fund may invest in debt obligations that do not make any interest payments for a specified period of time prior to maturity (“deferred coupon” obligations). Because the deferred coupon bonds do not make interest payments for a certain period of time, they are purchased by the Fund at a deep discount and their value fluctuates more in response to interest rate changes than does the value of debt obligations that make current interest payments. The degree of fluctuation with interest rate changes is greater when the deferred period is longer. Therefore, there is a risk that the value of the Fund’s shares may decline more as a result of an increase in interest rates than would be the case if the Fund did not invest in deferred coupon bonds.

PIK Bonds. PIK Bonds are bonds on which interest is payable in kind. PIK bonds are obligations which provide that the issuer thereof may, at its option, pay interest on such bonds in cash or in the form of additional debt securities. Such securities benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. The Funds will accrue income on such investments for tax and accounting purposes, which is distributable to shareholders from available cash or liquidated assets. PIK bonds generally are more volatile than the market prices of securities that pay interest periodically and are likely to respond to changes in interest rates to a greater degree than do bonds on which regular cash payments of interest are being made that have similar maturities and credit quality.

RATINGS

After purchase by a Fund, a security may cease to be rated or its rating may be reduced below the minimum required for purchase by the Fund. Neither event will require the Fund for such type of security to sell the security unless the amount of the security exceeds the Fund’s permissible limit. However, the Subadviser will reassess promptly whether the security presents minimal credit risks and determine whether continuing to hold the security is in the best interests of the Fund. A Money Market Fund may be required to sell a security downgraded below the minimum required for purchase, absent a specific finding by the Trust’s Board of Trustees that a sale is not in the best interests of the Fund. To the extent the ratings given by any nationally recognized statistical rating organization may change as a result of changes in the organization or in its rating system, the Fund will attempt to use comparable ratings as standards for investments in accordance with the investment policies contained in the Prospectuses and in this SAI. For additional information on ratings, see the Appendix to this SAI.

PERFORMANCE INFORMATION

Performance information for the Funds (and any class of the Funds) may be included in advertisements, sales literature or reports to shareholders or prospective investors. Performance information in advertisements and sales literature may be expressed as a yield of a class of shares and as a total return of a class of shares.

The Funds may from time to time include in advertisements containing total return the ranking of those performance figures relative to such figures for groups of mutual funds having similar investment objectives as categorized by ranking services such as Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc. Additionally, each Fund may compare its performance results to other investment or savings vehicles (such as certificates of deposit) and may refer to results published in various publications such as Changing Times, Forbes, Fortune, Money, Barrons, Business Week and Investor’s Business Daily, Stanger’s Mutual Fund Monitor, The Stanger Register, Stanger’s Investment Adviser, The Wall Street Journal, The New York Times, Consumer Reports, Registered Representative, Financial Planning, Financial Services Weekly, Financial World, U.S. News and World Report, Standard & Poor’s The Outlook and Personal Investor . The Funds may from time to time illustrate the benefits of tax deferral by comparing taxable investments to investments made through tax-deferred retirement plans. The total return may also be used to compare the performance of each Fund against certain widely acknowledged outside standards or indices for stock and bond market performance, such as the Barclays Capital Intermediate Government/Credit Bond Index, Barclays Capital U.S. Aggregate Bond Index, Barclays Capital U.S. High-Yield 2% Capped Bond Index, Barclays Capital Municipal Bond Index, Barclays Capital 3-15 Year Blend (2-17) Municipal Bond Index, MSCI Emerging Markets Free Index (net), Russell 1000 ^® Index, Russell 1000 ^® Value, Russell 2000 ^® Index, and the Standard & Poor’s 500 ^® Index (“S&P 500 ^® Index”).

Advertisements, sales literature and other communications may contain information about the Funds’ and Advisers’ current investment strategies and management style. Current strategies and style may change to allow the Funds to respond quickly to changing market and economic conditions. From time to time the Funds may include specific portfolio holdings or industries in such communications. To illustrate components of overall performance, each Fund may separate its cumulative and average annual returns into income and capital gains components.

Performance information reflects only the performance of a hypothetical investment in each class during the particular time period on which the calculations are based. Performance information should be considered in light of a Fund’s investment objectives and policies, characteristics and quality of the portfolio, and the market condition during the given time period, and should not be considered as a representation of what may be achieved in the future.

Yield

The Trust makes available various yield quotations with respect to shares of each class of shares of the Money Market Funds. These amounts are calculated based on 7-day periods, by calculating the net change in value, exclusive of capital changes, of a hypothetical account having a balance of one share at the beginning of the period, dividing the net change in value by the value of the account at the beginning of the base period to obtain the base period return, and multiplying the base period return by 365/7, with the resulting yield figure carried to the nearest hundredth of one percent. The net change in value of an account consists of the value of additional shares purchased with dividends from the original share plus dividends declared on both the original share and any such additional shares (not including realized gains or losses and unrealized appreciation or depreciation) less applicable expenses. Effective yield quotations for Class I Shares of each of the Money Market Funds are also made available. These amounts are calculated in a similar fashion to yield, except that the base period return is compounded by adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from the result, according to the following formula:

Effective Yield = [(Base Period Return + 1) ^365/7 ] - 1

Current yield for all of the Money Market Funds will fluctuate from time to time, unlike bank deposits or other investments that pay a fixed yield for a stated period of time, and does not provide a basis for determining future yields.

From time to time each of the Money Market Funds may advertise its “30-day average yield” and its “monthly average yield.” Such yields refer to the average daily income generated by an investment in such Fund over a 30-day period, as appropriate, (which period will be stated in the advertisement).

A standardized “tax-equivalent yield” may be quoted for the Tax-Exempt Bond Fund and the Insight Tax-Exempt Money Market Fund, which is computed by: (a) dividing the portion of the Fund’s yield (as calculated above) that is exempt from Federal income tax by one minus a stated Federal income rate; and (b) adding the figure resulting from (a) above to that portion, if any, of the yield that is not exempt from federal income tax.

The Trust makes available 30-day yield quotations with respect to Class A Shares and Class I Shares of the non-money market Funds. As required by regulations of the SEC, the 30-day yield is computed by dividing a Fund’s net investment

income per share earned during the period by the NAV on the last day of the period. The average daily number of shares outstanding during the period that are eligible to receive dividends is used in determining the net investment income per share. Income is computed by totaling the interest earned on all debt obligations during the period and subtracting from that amount the total of all recurring expenses incurred during the period. The 30-day yield is then annualized assuming semiannual reinvestment and compounding of net investment income.

Total Return

Standardized quotations of average annual total return for Class A Shares and Class I Shares will be expressed in terms of the average annual compounded rate of return for a hypothetical investment in either Class A Shares and Class I Shares over periods of 1, 5 and 10 years or up to the life of the class of shares, calculated for each class separately pursuant to the following formula: P((1+T)(n)) = ERV (where P = a hypothetical initial payment of $1,000, T = the average annual total return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). All total return figures reflect the deduction of a proportional share of each class’s expenses (on an annual basis), deduction of the maximum initial sales load in the case of Class A Shares and the maximum contingent deferred sales charge (“CDSC”) applicable to a complete redemption of the investment in the case of Class C Shares, and assume that all dividends and distributions on Class A Shares, Class C Shares and Class I Shares are reinvested when paid.

For average “after-tax” total return, the SEC rules mandate several assumptions, including that the calculations use the historical highest individual federal marginal income tax rates at the time of reinvestment, and that the calculations do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. These returns, for instance, assume that an investor has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption. As a result, returns after taxes on distributions and sale of Fund shares may exceed returns after taxes on distributions (but before sale of Fund shares). These returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements.

The Funds may also compute cumulative total return for specified periods based on a hypothetical account with an assumed initial investment of $10,000. The cumulative total return is determined by dividing the NAV of this account at the end of the specified period by the value of the initial investment and is expressed as a percentage. Calculation of cumulative total return reflects payment of the Class A Share’s maximum sales charge of 5.75% and assumes reinvestment of all income dividends and capital gain distributions during the period.

The Funds also may quote annual, average annual and annualized total return and cumulative total return performance data, for any class of shares of the Funds, both as a percentage and as a dollar amount based on a hypothetical $10,000 investment for various periods other than those noted above. Such data will be computed as described above, except that (1) the rates of return calculated will not be average annual rates, but rather, actual annual, annualized or cumulative rates of return and (2) the maximum applicable sales charge will not be included with respect to annual, annualized or cumulative rate of return calculations.

PORTFOLIO TURNOVER

The Funds pay brokerage commissions for purchases and sales of portfolio securities, generally on equity securities transactions only. Each Fund has a different expected annual rate of portfolio turnover, which is calculated by dividing the lesser of purchases or sales of portfolio securities during the fiscal year by the monthly average of the value of the Fund’s securities (excluding from the computation all securities, including options, with maturities at the time of acquisition of one year or less). A high rate of portfolio turnover generally involves correspondingly greater brokerage commission expenses and other costs, which must be borne directly by a Fund and thus indirectly by its shareholders. Turnover rates may vary greatly from year to year as well as within a particular year and may also be affected by cash requirements for redemptions of each Fund’s shares and by requirements which enable the Trust to receive certain favorable tax treatment (see “Dividends, Distributions and Taxes”). Historical portfolio turnover rates for all Funds except the Money Market Fund (which for this purpose does not calculate a portfolio turnover rate) can be found under the heading “Financial Highlights” in each Fund’s prospectus.

PORTFOLIO TRANSACTIONS AND BROKERAGE

In effecting fund transactions for the Trust, the Adviser or applicable Subadviser (throughout this section, “Adviser”) adheres to the Trust’s policy of seeking best execution and price, determined as described below, except to the extent it is permitted to pay higher brokerage commissions for “brokerage and research services” as defined herein. The determination of what may constitute best execution and price in the execution of a securities transaction by a broker involves a number of considerations including, without limitation, the overall direct net economic result to the Trust (involving both price paid or received and any commissions and other costs paid), the efficiency with which the transaction is effected, the ability to effect the transaction at all where a large block is involved, availability of the broker to stand ready to execute possibly difficult

transactions in the future and the financial strength and stability of the broker. Such considerations are judgmental and are weighed by the Adviser in determining the overall reasonableness of brokerage commissions paid by the Trust.

The Adviser may cause the Trust to pay a broker an amount of commission for effecting a securities transaction in excess of the amount of commission which another broker or dealer would have charged for effecting that transaction if the Adviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker. As provided in Section 28(e) of the Securities Exchange Act of 1934, “brokerage and research services” include advising as to the value of securities, the advisability of investing in, purchasing or selling securities, the availability of securities or purchasers or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts, and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Brokerage and research services provided by brokers to the Trust are considered to be in addition to and not in lieu of services required to be performed by each Adviser under its contract with the Trust and may benefit both the Trust and other accounts of the Adviser. Conversely, brokerage and research services provided by brokers to other accounts of the Adviser may benefit the Trust.

If the securities in which a particular Fund of the Trust invests are traded primarily in the over-the-counter market, where possible the Fund will deal directly with the dealers who make a market in the securities involved unless better prices and executions are available elsewhere. Such securities may be purchased directly from the issuer. Bonds and money market instruments are generally traded on a net basis and do not normally involve either brokerage commissions or transfer taxes.

Some fund transactions are, subject to the Conduct Rules of the Financial Industry Regulatory Authority (“FINRA”) and subject to obtaining best prices and executions, effected through dealers (excluding VP Distributors) who sell shares of the Trust.

The Trust has implemented, and the Board of Trustees has approved, policies and procedures reasonably designed to prevent (i) the Adviser’s and/or Subadvisers’ personnel responsible for the selection of broker-dealers to effect fund portfolio securities transactions from taking into account, in making those decisions, a broker-dealer’s promotion or sales efforts, and (ii) the Trust, its Adviser, Subadvisers and Distributor from entering into any agreement or other understanding under which the Funds direct brokerage transactions or revenue generated by those transactions to a broker-dealer to pay for distribution of Fund shares. These policies and procedures are designed to prevent the Trust from entering into informal arrangements to direct portfolio securities transactions to a particular broker.

The Trust has adopted a policy and procedures governing the execution of aggregated advisory client orders (“bunching procedures”) in an attempt to lower commission costs on a per-share and per-dollar basis. According to the bunching procedures, a Subadviser shall aggregate transactions unless it believes in its sole discretion that such aggregation is inconsistent with its duty to seek best execution (which shall include the duty to seek best price) for the Trust. No advisory account of the Subadviser is to be favored over any other account and each account that participates in an aggregated order is expected to participate at the average share price for all transactions of the Subadviser in that security on a given business day, with all transaction costs share pro rata based on the Trust’s participation in the transaction. If the aggregated order is filled in its entirety, it shall be allocated among the Subadviser’s accounts in accordance with the allocation order, and if the order is partially filled, it shall be allocated pro rata based on the allocation order. Notwithstanding the foregoing, the order may be allocated on a basis different from that specified in the allocation order if all accounts of the Subadviser whose orders are allocated receive fair and equitable treatment and the reason for such different allocation is explained in writing and is approved in writing by the Subadviser’s compliance officer prior to the execution of the order. If an aggregated order is partially filled and allocated on a basis different from that specified in the allocation order, no account that is benefited by such different allocation may intentionally and knowingly effect any purchase or sale for a reasonable period following the execution of the aggregated order that would result in it receiving or selling more shares than the amount of shares it would have received or sold had the aggregated order been completely filled. The Board of Trustees will review these procedures from time to time as they deem appropriate.

For the Emerging Markets Opportunities Fund, Vontobel Asset Management, Inc. currently uses approximately 35 brokerage firms and independent consulting firms in addition to its internal professional staff, including Vontobel’s affiliates for brokerage and research services. Vontobel periodically evaluates the execution performance of the broker-dealers it selects for client transactions. Vontobel attempts to maintain a constant awareness of general street practices and policies with regard to commission levels and rates charged by most reputable brokerage firms, which allows the Subadviser to take full advantage of the competitive environment and obtain rates that are considered fair and reasonable for its clients.

The following table shows aggregate amount of brokerage commissions paid by each Fund. This information is for the past three fiscal years.


	Aggregate Amount of Brokerage Commissions ($)
	2009		2010		2011
Balanced Allocation Fund		53,729		60,962		56,168
Core Equity Fund		111,905		164,043		79,586
Emerging Markets Opportunities Fund		523,956		1,483,511		3,278,771
Value Equity Fund		249,437		202,181		135,734

Investment decisions for the Trust are made independently from those of the other investment companies or accounts advised by the Adviser. It may frequently happen that the same security is held in the portfolio of more than one fund or account. Simultaneous transactions are inevitable when several funds or accounts are managed by the same investment adviser, particularly when the same security is suited for the investment objectives of more than one fund or account. When two or more funds or accounts advised by the Adviser are simultaneously engaged in the purchase or sale of the same security, the transactions are allocated among the funds or accounts in a manner equitable to each fund or account. It is recognized that in some cases this system could have a detrimental effect on the price or volume of the security as far as the Trust is concerned. In other cases, however, it is believed that the ability of the Trust to participate in volume transactions will produce better executions for the Trust. It is the opinion of the Board of Trustees of the Trust that the desirability of utilizing each Adviser or applicable Subadviser as an investment adviser to the Trust outweighs the disadvantages that may be said to exist from simultaneous transactions.

DISCLOSURE OF FUND HOLDINGS

The Board of Trustees of the Trust has adopted policies with respect to the disclosure of the Funds’ portfolio holdings. These policies provide that the Funds’ portfolio holdings information generally may not be disclosed to any party prior to the information becoming public. Certain limited exceptions are described below. Additionally, the Funds’ policies prohibit Virtus and the Funds’ service providers from entering into any agreement to disclose Fund portfolio holdings in exchange for any form of compensation or consideration. These policies apply to disclosures to all categories of persons, including individual investors, institutional investors, intermediaries who sell shares of the Fund, third parties providing services to the Funds (accounting agent, print vendors, etc.), rating and ranking organizations (Lipper, Morningstar, etc.) and affiliated persons of the Funds.

The Board of Trustees has delegated to the Fund’s Administrator the authority to make decisions regarding requests for information on portfolio holdings prior to public disclosure. The Administrator will authorize the disclosure of portfolio holdings only if it determines such disclosure to be in the best interests of Fund shareholders. The Administrator generally carries out this duty through its chief compliance officer, in consultation with other officers representing various areas of management.

The Funds’ Compliance Officer is responsible for monitoring the use of portfolio holdings information, for the Funds’ compliance with these policies and for providing reports to the Board of Trustees regarding their compliance, including information with respect to any potential conflicts of interest between the interests of Fund shareholders and those of Virtus and its affiliates identified during the reporting period and how such conflicts were resolved.

Public Disclosures

In accordance with rules established by the SEC, each Fund sends semiannual and annual reports to shareholders that contain a full listing of portfolio holdings as of the second and fourth fiscal quarters, respectively, within 60 days of quarter end. The Funds also disclose complete portfolio holdings as of the end of the first and third fiscal quarters on Form N-Q, which is filed with the SEC within 60 days of quarter end. The Funds’ shareholder reports are available without charge on Virtus’ Web site at virtus.com . The Funds’ Form N-Q filings are available on the SEC’s Web site at sec.gov . Certain of the Funds also make publicly available on Virtus’ Web site a full listing of portfolio holdings as of the end of each month with a 30-day delay, while other of the Funds make such full listings available as of the end of each quarter with a 60-day delay. The money market funds disclose complete portfolio holdings as of the end of each month on Form N-MFP, which is filed with the SEC within five business days after month end. Additionally, each Fund provides its top 10 holdings and summary composition data derived from portfolio holdings information on Virtus’ Web site. This information is posted to the Web site at the end of each month with respect to the top 10 holdings, and at the end of each quarter with respect to summary composition information, generally within 10 business days. This information will be available on the Web site until full portfolio holdings information becomes publicly available as described above. The Funds also provide publicly-available portfolio holdings information directly to ratings agencies, the frequency and timing of which is determined under the terms of the contractual arrangements with such agencies, and may provide to financial intermediaries, upon request, monthly portfolio holdings for periods included in publicly-available quarterly portfolio holdings disclosures.

Other Disclosures

The Administrator may authorize the disclosure of non-public portfolio holdings information under certain limited circumstances. The Funds’ policies provide that non-public disclosures of a Fund’s portfolio holdings may only be made if (i) the Fund has a legitimate business purpose for making such disclosure and (ii) the party receiving the non-public information enters into a confidentiality agreement, which includes a duty not to trade on the non-public information. The Administrator will consider any actual or potential conflicts of interest between Virtus and its mutual fund shareholders and will act in the best interest of the Funds’ shareholders with respect to any such disclosure of portfolio holdings information. If a potential conflict can be resolved in a manner that does not present detrimental effects to Fund shareholders, the Administrator may authorize release of portfolio holdings information. Conversely, if the potential conflict cannot be resolved in a manner that does not present detrimental effects to Fund shareholders, the Administrator will not authorize such release.

Ongoing Arrangements to Disclose Portfolio Holdings

As previously authorized by the Funds’ Board of Trustees and/or the Funds’ Administrator, the Funds periodically disclose non-public portfolio holdings on a confidential basis to various service providers that require such information in order to assist the Funds in their day-to-day operations, as well as public information to certain ratings organizations. In addition to Virtus and its affiliates, the entities receiving non-public portfolio holdings information as of the date of this SAI are described in the following table. The table also includes information as to the timing of these entities receiving the portfolio holdings information from the Funds.

Non-Public Portfolio Holdings Information


Type of Service Provider	Name of Service Provider	Timing of Release of Portfolio Holdings Information
Adviser	Virtus Investment Advisers, Inc.	Daily, with no delay
Subadviser	Harris Investment Management, Inc.	Daily, with no delay
Subadviser	Vontobel Asset Management, Inc.	Daily, with no delay
Subadviser	HIM Monegy, Inc.	Daily, with no delay
Subadviser Back Office	Northern Trust Co.	Daily, with no delay
Distributor	VP Distributors, LLC	Daily, with no delay
Custodian	BNY Mellon	Daily, with no delay
Sub-Financial Agent	BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”)	Daily, with no delay
Broker-Dealer	Morgan Stanley Smith Barney	Weekly, with one week delay
Independent Registered Public Accounting Firm	PricewaterhouseCoopers, LLP	Annual Reporting Period is within 15 business days of end of reporting period Semiannual Reporting Period is within 31 business days of end of reporting period.
Filing Agent	RR Donnelley & Sons Co.	For filing Form N-MFP by money market funds, monthly, four business day before month end and first business day after month end.
Typesetting and Printing Firm for Financial Reports	RR Donnelley & Sons Co.	Quarterly, within 15 days of end of reporting period
Proxy Voting Service	Risk Metrics Group	Twice weekly, with no delay
TV Financial Markets Talk Shows	CNBC	Monthly, with no delay, for holdings over 1% of issuer equity, in aggregate.*
Class Action Provider	Glass Lewis/Battea	Daily, with no delay


Type of Service Provider	Name of Service Provider	Timing of Release of Portfolio Holdings Information
Financial Consulting Firm	Rogercasey	Monthly, with four day delay
Financial Consulting Firm	Vestek	Fiscal quarter, with 20 day delay

Public Portfolio Holdings Information
Portfolio Redistribution Firms	Bloomberg, Standard & Poor’s and Thomson Reuters	Certain funds are monthly, with 30-day delay. Other funds are quarterly, 60 days after fiscal quarter end.
Rating Agencies	Lipper Inc. and Morningstar	Certain funds are monthly, with 30-day delay. Other funds are quarterly, 60 days after fiscal quarter end.
Rating Agencies	Standard & Poor’s, Fitch, Mercer and Moody’s	Money market funds are weekly.
Virtus Public Web site	Virtus Investment Partners, Inc.	Certain funds are monthly, with 30-day delay. Other funds are quarterly, 60 days after fiscal quarter end. Money market funds are monthly, within the first five business days.

*	A Virtus representative may, from time to time, appear as host or guest of various programming. CNBC requires certain holdings disclosure in order to monitor potential conflicts of interest.

These service providers are required to keep all non-public information confidential and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Funds.

There is no guarantee that the Trust’s policies on use and dissemination of holdings information will protect the Funds from the potential misuse of holdings by individuals or firms in possession of such information.

SERVICES OF THE ADVISER AND SUBADVISERS

The Adviser

The investment adviser to each of the Funds is Virtus Investment Advisers, Inc. (“VIA” or the “Adviser”), which is located at 100 Pearl Street, Hartford, Connecticut 06103. VIA acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. VIA has acted as an investment adviser for over 70 years. As of December 31, 2011, VIA had approximately $20.8 billion in assets under management.

VIA is an indirect, wholly-owned subsidiary of Virtus Investment Partners, Inc. (“Virtus”). The investment advisory agreement, approved by the Board of Trustees, provides that the Trust will bear all costs and expenses (other than those specifically referred to as being borne by the Adviser) incurred in the operation of the Trust. Such expenses include, but shall not be limited to, all expenses incurred in the operation of the Trust and any public offering of its shares, including, among others, interest, taxes, brokerage fees and commissions, fees of Trustees who are not employees of VIA or any of its affiliates, expenses of Trustees, and shareholders’ meetings, expenses of printing and mailing proxy soliciting material, expenses of the insurance premiums for fidelity and other coverage, expenses of the repurchase and redemption of shares, expenses of the issue and sale of shares (to the extent not borne by VP Distributors under its agreement with the Trust), expenses of printing and mailing share certificates representing shares of the Trust, association membership dues, charges of custodians, transfer agents, dividend disbursing agents and financial agents, and bookkeeping, auditing and legal expenses. The Trust will also pay the fees and bear the expense of registering and maintaining the registration of the Trust and its shares with the SEC and registering or qualifying its shares under state or other securities laws and the expense of preparing and mailing prospectuses and reports to shareholders. If authorized by the Board of Trustees, the Trust will also pay for extraordinary expenses and expenses of a non-recurring nature which may include, but shall not be limited to, the reasonable cost of any reorganization or acquisition of assets and the cost of legal proceedings to which the Trust is a party.

Each Fund will pay expenses incurred in its own operation and will also pay a portion of the Trust’s general administration expenses allocated on the basis of the asset values of the respective Funds.

For managing, or directing the management of, the investments of each fund, VIA is entitled to a fee, payable monthly, at the following annual rates:


Fund	Management Fee
High Yield Income Fund		0.45	%
Tax-Exempt Bond Fund		0.45	%

Fund	First $1 billion			$1+ billion
Emerging Markets Opportunities Fund		1.00	%		0.95	%

Fund	First $1 billion			$1+ billion through $2 billion			$2+ billion
Short/Intermediate Bond Fund		0.55	%		0.50	%		0.45	%

Fund	First $2 billion			$2+ billion
Balanced Allocation Fund		0.50	%		0.45	%
Core Equity Fund		0.70	%		0.65	%
Value Equity Fund		0.70	%		0.65	%

The Insight Government Money Market Fund, Insight Money Market Fund and Insight Tax-Exempt Money Market Fund each pay VIA 0.14% on the Fund’s first $100 million of net assets, plus 0.10% on the Fund’s remaining net assets.

VIA may waive any portion of its investment advisory fees or reimburse Fund expenses from time to time. VIA has voluntarily agreed to limit the annual operating expenses (excluding acquired fund fees and expenses (if any), interest, taxes and extraordinary expenses) of the following Funds (expressed as a percentage of daily net assets):


	Class I Shares			Class A Shares			Class C Shares
Short/Intermediate Bond Fund		0.75	%		0.95	%		1.70	%
Tax Exempt Bond Fund		0.65	%		0.85	%		1.60	%

The Adviser may discontinue these voluntary expense caps and/or fee waivers at any time. The Adviser may recapture operating expenses reimbursed under this arrangement, for a period of three years following the fiscal year in which such reimbursement occurred.

The Adviser also may, at its discretion, from time to time pay for other Fund expenses from its own assets, or reduce the management fee of a Fund in excess of that required. Any fee reimbursed and/or any Fund expense absorbed by the Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser, provided the aggregate amount of the Fund’s current operating expense for such fiscal year does not exceed the applicable limitation on Fund expenses.

The following table shows the dollar amount of fees payable to VIA for its services with respect to each Fund, the amount of expenses reimbursed by VIA, if any, and the actual fee received by VIA for the past three fiscal years.


	Gross Advisory Fee ($)						Advisory Fee Waived and/or Expenses Reimbursed* ($)						Net Advisory Fee ($)
	2009		2010		2011		2009		2010		2011		2009		2010		2011
Balanced Allocation Fund		274,753		320,312		349,160		—		—		—		274,753		320,312		349,160
Core Equity Fund		582,270		608,132		546,961		—		—		—		582,270		608,132		546,961
Emerging Markets Opportunities Fund		1,651,656		4,768,823		17,209,434		—		—		—		1,651,656		4,768,823		17,209,434
High Yield Income Fund		182,494		218,119		235,425		—		—		—		182,494		218,119		235,425
Insight Government Money Market Fund		618,539		320,259		1,042,540		2,088		11,848		639,760		616,451		308,411		402,780
Insight Money Market Fund		2,519,405		1,938,584		1,323,558		—		—		73,349		2,519,405		1,938,584		1,250,209
Insight Tax-Exempt Money Market Fund		1,188,268		850,784		268,409		—		—		171,552		1,188,268		850,784		96,857
Short/Intermediate Bond Fund		566,571		472,388		460,640		41,395		69,542		148,854		525,176		402,846		311,786
Tax-Exempt Bond Fund		384,869		565,717		706,295		54,151		103,182		273,833		330,718		462,535		432,462
Value Equity Fund		1,127,462		1,042,718		942,664		—		—		—		1,127,462		1,042,718		942,664

Under the terms of the Transaction Agreement with Harris, VIA is responsible for 50% of the amounts paid for reimbursement of Fund operating expenses for funds subadvised by Harris, with Harris being responsible for the remaining 50%. The amount shown reflects VIA’s portion only. VIA will pay to Harris 50% of any such reimbursements that are subsequently recaptured.

The investment advisory agreement also provides that the Adviser shall not be liable to the Trust or to any shareholder of the Trust for any error of judgment or mistake of law or for any loss suffered by the Trust or by any shareholder of the Trust in connection with the matters to which the agreement relates, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard on the part of such Adviser in the performance of its duties thereunder.

Provided it has been approved by a vote of the majority of the outstanding shares of a Fund of the Trust which is subject to its terms and conditions, the investment advisory agreement continues from year to year with respect to such Fund so long as (1) such continuance is approved at least annually by the Board of Trustees or by a vote of the majority of the outstanding shares of such Fund and (2) the terms and any renewal of the agreement with respect to such Fund have been approved by the vote of a majority of the Trustees who are not parties to the agreement or interested persons, as that term is defined in the 1940 Act, of the Trust or the relevant Adviser, cast in person at a meeting called for the purpose of voting on such approval. On sixty days’ written notice and without penalty the agreement may be terminated as to the Trust or as to a Fund by the Board of Trustees or by the relevant Adviser and may be terminated as to a Fund by a vote of the majority of the outstanding shares of such Fund. The Agreement automatically terminates upon its assignment (within the meaning of the 1940 Act). The agreement provides that upon its termination, or at the request of the relevant Adviser, the Trust will eliminate all reference to Virtus from its name, and will not thereafter transact business in a name using the word Virtus.

The Subadvisers

Harris Investment Management, Inc.

Harris is Subadviser to all of the Funds except for Virtus High Yield Income Fund and Virtus Emerging Markets Opportunities Fund. The Subadvisory Agreement provides that VIA will delegate to Harris the performance of certain of its investment management services under the Investment Advisory Agreement. Harris will furnish at its own expense the office facilities and personnel necessary to perform such services. VIA remains responsible for the supervision and oversight of Harris’ performance.

Harris, an investment adviser registered under the Investment Advisers Act of 1940, as amended, is located at 115 South LaSalle Street, 11th Floor, Chicago, IL 60603. Harris has been an investment adviser since 1989. Harris is a wholly-owned subsidiary of BMO Bankcorp, Inc., which is wholly-owned by BMO Financial Corp. BMO Financial Corp., is wholly-owned by Bank of Montreal, a publicly-traded Canadian banking institution. As of December 31, 2011 Harris had approximately $12.8 billion in assets under management.

For its services as Subadviser, VIA will pay the following annual subadvisory fee rate (expressed as a percentage of average daily net assets):


		Subadvisory Fee (%)*
Balanced Allocation Fund		0.28
Core Equity Fund		0.38
Value Equity Fund		0.38
Short/Intermediate Bond Fund		0.305
Tax-Exempt Bond Fund		0.255
Insight Government Money Market Fund, Insight Money Market Fund and Insight Tax-Exempt Money Market Fund		0.07% on each Fund’s first $100 million of net assets, plus 0.05% on the Fund’s remaining net assets.

*	For each Fund, the subadvisory fee paid to Harris will be reduced by 50% of any reimbursements or waivers by VIA and increased by 50% any such reimbursements of waivers subsequently recaptured.

HIM Monegy, Inc. (“HIM Monegy”)

HIM Monegy, Inc. is Subadviser to the High Yield Income Fund. The subadvisory agreement provides that the Adviser will delegate to HIM Monegy the performance of certain of its investment management services under the Investment Advisory Agreement. HIM Monegy will furnish at its own expense the office facilities and personnel necessary to perform such services. VIA remains responsible for the supervision and oversight of HIM Monegy’s performance.

HIM Monegy is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and has been an investment adviser since 1999. It is located at 302 Bay Street, 12th Floor, Toronto, ON, Canada M5X 1A1. HIM Monegy is owned by Harris Investment Management, Inc. Harris Investment Management, Inc. is a wholly-owned subsidiary of BMO Bankcorp, Inc., which is wholly owned by BMO Financial Corp. BMO Financial Corp. is wholly owned by Bank of Montreal, a publicly-traded Canadian banking institution. As of December 31, 2011, HIM Monegy had approximately $1.93 billion in assets under management.

For its services as Subadviser, VIA will pay HIM Monegy a fee at the rate of 50% of the net advisory fee.

Vontobel Asset Management, Inc. (“Vontobel”)

Vontobel Asset Management, Inc . is the Subadviser to the Emerging Markets Opportunities Fund. The subadvisory agreement provides that the Adviser will delegate to Vontobel the performance of certain of its investment management services under the Investment Advisory Agreement. Vontobel will furnish at its own expense the office facilities and personnel necessary to perform such services. VIA remains responsible for the supervision and oversight of Vontobel’s performance.

Vontobel is registered as an investment adviser under the Investment Advisers Act of 1940, as amended and is located at 1540 Broadway, 38 ^th Floor, New York, NY 10036. Vontobel is a wholly-owned subsidiary of Vontobel Holding AG, a Swiss bank holding company which is traded on the Swiss Stock Exchange. As of December 31, 2011, Vontobel had in excess of $20 billion in assets under management.

For its services as Subadviser, VIA will pay Vontobel a fee at the rate of 50% of the net advisory fee.

The following table shows the dollar amount of fees payable to each Subadviser for managing the applicable Fund(s), the amount of expenses reimbursed by the Subadviser, and the actual fee received by the Subadviser for the fiscal years ended December 31, 2009, 2010 and 2011.


	Gross Subadvisory Fee ($)						Expenses Reimbursed by Subadviser* ($)						Net Subadvisory Fee ($)
	2009		2010		2011		2009		2010		2011		2009		2010		2011
Balanced Allocation Fund		153,862		320,312		349,160		—		—		—		153,862		320,312		349,160
Core Equity Fund		316,089		608,132		546,961		—		—		—		316,089		608,132		549,961
Emerging Market Opportunities Fund		896,435		4,768,823		17,209,434		—		—		—		896,435		4,768,823		17,209,434
High Yield Income Fund		91,247		218,119		235,425		—		—		—		91,247		218,119		235,425
Insight Government Money Market Fund		306,946		313,168		1,042,550		1,681		8,033		320,812		305,266		305,135		721,738
Insight Money Market Fund		1,227,750		1,937,239		1,323,564		—		—		36,675		1,227,750		1,937,239		1,286,889
Insight Tax-Exempt Money Market Fund		594,136		850,784		268,410		—		—		85,863		594,136		850,784		182,547
Short/Intermediate Bond Fund		314,190		472,388		460,640		41,395		69,542		74,427		272,795		402,846		386,213
Tax-Exempt Bond Fund		218,092		565,717		706,295		54,151		130,182		136,917		163,941		462,535		569,378
Value Equity Fund		612,051		1,042,717		942,664		—		—		—		612,051		1,042,717		942,664

Harris is responsible for 50% of the amounts paid by VIA for reimbursement of Fund operating expenses for those funds subadvised by Harris. The amounts shown reflect Harris’ portion only. VIA will pay to Harris 50% of any such reimbursements that are subsequently recaptured.

The Trust, its Adviser, Subadvisers and Distributor have each adopted a Code of Ethics pursuant to Rule 17-j1 under the 1940 Act. Personnel subject to the Codes of Ethics may purchase and sell securities for their personal accounts, including securities that may be purchased, sold or held by the Funds, subject to certain restrictions and conditions. Generally, personal securities transactions are subject to preclearance procedures, reporting requirements and holding period rules. The Codes also restrict personal securities transactions in private placements, initial public offerings and securities in which a Fund has a pending order. The Trust has also adopted a Senior Management Code of Ethics as required by Section 406 of the Sarbanes-Oxley Act of 2002.

Board of Trustees’ Consideration of Investment Advisory Agreement and Subadvisory Agreements

A discussion regarding the basis for the Board of Trustees approving the investment advisory agreement and all subadvisory agreements is available in the Funds’ annual report covering the period January 1, 2011 through December 31, 2011.

Description of Proxy Voting Policy

The Trust has adopted on behalf of the Funds a Statement of Policy with Respect to Proxy Voting (the “Policy”) stating the Trust’s intention to exercise stock ownership rights with respect to portfolio securities in a manner that is reasonably anticipated to further the best economic interests of shareholders of the Funds. The Funds have committed to analyze and vote all proxies that are likely to have financial implications, and where appropriate, to participate in corporate governance, shareholder proposals, management communications and legal proceedings. The Funds must also identify potential or actual conflicts of interest in voting proxies and must address any such conflict of interest in accordance with the Policy.

The Policy stipulates that the Funds’ Adviser will vote proxies, or delegate such responsibility to a Subadviser. The Adviser will vote proxies in accordance with this Policy, or its own policies and procedures, which in no event will conflict with the Trust’s Policy. Any Adviser may engage a qualified, independent organization to vote proxies on its behalf (a “delegate”).

Matters that may affect substantially the rights and privileges of the holders of securities to be voted will be analyzed and voted on a case-by-case basis taking into consideration such relevant factors as enumerated in the Policy. The views of management of a portfolio company will be considered.

The Policy specifies certain factors that will be considered when analyzing and voting proxies on certain issues, including, but not limited to:

_•

Corporate Governance Matters—tax and economic benefits of changes in the state of incorporation; dilution or improved accountability associated with anti-takeover provisions such as staggered boards, poison pills and supermajority provisions.

_•

Stock Option and Other Management Compensation Issues—executive pay and spending on perquisites, particularly in conjunction with sub-par performance and employee layoffs.

_•

Social and Corporate Responsibility Issues—the Adviser or Subadvisers will generally vote against shareholder social and environmental issue proposals.

The Funds and their delegates seek to avoid actual or perceived conflicts of interest of Fund shareholders, on the one hand, and those of the Adviser, Subadviser, delegate, Distributor, or any affiliated person of the Funds, on the other hand. Depending on the type and materiality, any conflicts of interest will be handled by (i) relying on the recommendations of an established, independent third party proxy voting vendor; (ii) voting pursuant to the recommendation of the delegate; (iii) abstaining; or (iv) where two or more delegates provide conflicting requests, voting shares in proportion to the assets under management of each delegate. The Policy requires each Adviser/Subadviser or delegate to notify the President of the Trust of any actual or potential conflict of interest. No Adviser/Subadviser or delegate may waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board of Trustees or the President of the Trust.

The Policy further imposes certain record keeping and reporting requirements on each Adviser/Subadviser or delegate. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ending June 30 will be available free of charge by calling, toll-free, (800) 243-1574, or on the SEC’s Web site at sec.gov.

PORTFOLIO MANAGERS

Compensation of Portfolio Managers

Harris . The compensation program for investment professionals of Harris, including the portfolio managers of the Virtus Insight Funds, is designed to provide a total compensation package that (a) serves to align employees’ interests with those of their clients, and (b) helps management to attract and retain high quality investment professionals.

All investment professionals are compensated through a combination of a fixed base salary and bonus. Senior management retains a national compensation consultant to undertake a study, at least annually, to determine appropriate levels of base compensation for the firm’s investment professionals. Bonus amounts are determined by many factors including: the pre-tax investment performance of the portfolio manager compared to the performance of benchmarks relevant to their managed investment strategies and performance of a peer group of funds and investment managers over a rolling one- and three-year performance period. The relevant benchmarks and peer groups for the Funds are set forth below:


Fund	Performance Benchmark	Peer Group (Lipper Universe Averages)
Balanced Allocation	Peer Group	Lipper Mixed-Asset Target Allocation Growth Funds
Core Equity	S&P 500 Index	Lipper Large-Cap Core Funds
Insight Government Money Market	Peer Group	Lipper Institutional US Government Money Market Funds
Insight Money Market	Peer Group	Lipper Institutional Money Market Funds
Insight Tax-Exempt Money Market	Peer Group	Lipper Institutional Tax-Exempt Money Market Funds
Short/Intermediate Bond	Peer Group	Lipper Short-Intermediate Investment Grade Funds
Tax-Exempt Bond	Peer Group	Lipper General Municipal Debt Funds
Value Equity	Russell 1000 Value Index	Lipper Multi-Cap Value Funds

Additional factors include each individual’s contributions to the success of the firm, and certain other factors at the discretion of senior management. The objective with regard to each component of compensation is to provide competitive compensation to investment professionals.

Harris also has a deferred incentive compensation program (nonqualified plan) which provides that certain key employees (currently, those who have been designated a Partner or Senior Partner of Harris, and including portfolio managers, analysts, and certain non-investment personnel) are granted incentive awards annually and elect to defer receipt of the award and earnings thereon until a future date. The award for each participant, expressed as a percentage of the pre-tax, pre-long-term incentive profits of Harris or an amount otherwise determined by senior management, is communicated to participants early in each award year. The awards vest after a period of three years from the end of the specific year for which the awards are granted, and are payable to participants based on the provisions of the program and the elections of the participants.

HIM Monegy. The High Yield Team’s compensation/incentive program for portfolio managers and research analysts consists of three components: (1) base salary; (2) short-term incentive program (annual bonus); and (3) long-term incentive program (deferred stock units and/or stock options of the parent Bank). All investment professionals (portfolio managers, traders, research analysts, product specialists) are eligible to receive the three components of compensation. Each individual’s annual bonus combines individual contribution with overall firm performance, and the High Yield Team’s bonus pool is funded by a portion of its before-tax profits. Portfolio manager compensation is tied more closely to performance of the composites relative to their respective benchmarks as well as to the overall growth in assets under management, while credit analyst compensation is weighted more toward the quality and timeliness of credit recommendations (buy/sell/hold), and the performance of their sectors relative to benchmark.

The compensation program has a dual mandate to align the investment team’s interests with those of the client, and to attract and retain high caliber investment professionals. Senior management relies on Human Resources professionals to conduct periodic industry surveys, typically on an annual basis, to determine appropriate market levels of base and total compensation for all investment professionals.

With respect to any perceived conflicts of interest relating to the payment model, the risk management focus of the investment process drives all key decision making. Likewise, individual compensation is weighted more toward long term profit from fee-based client relationships than it is on short term fund performance, which further motivates the team to achieve stable long-term fee-based relationships through consistent benchmark outperformance and capital preservation. Finally, the deferred equity-linked component of the incentive compensation plan promotes a long-term interest in firm value.

Vontobel. The portfolio manager for the Emerging Markets Opportunities Fund (“Fund”) is compensated by the Fund’s Subadviser, Vontobel. The portfolio manager’s compensation consists of two components. The first component is base salary, which is fixed. The second component of compensation is a small percentage of the gross revenues received by Vontobel which are generated by the products that the portfolio manager manages. Payment of a portion of the revenue share is deferred for a three-year period. The portfolio manager does not receive any compensation directly from the Fund or the Adviser.

Other Accounts Managed by Portfolio Managers and Potential Conflicts of Interest

There may be certain inherent conflicts of interest that arise in connection with the portfolio managers’ management of a Fund’s investments and the investments of any other accounts they manage. Such conflicts could include the aggregation of orders for all accounts managed by a particular portfolio manager, the allocation of purchases across all such accounts, the allocation of IPOs and any soft dollar arrangements that the Adviser may have in place that could benefit the Funds and/or such other accounts. The Board of Trustees has adopted on behalf of the Funds policies and procedures designed to address any such conflicts of interest to ensure that all transactions are executed in the best interest of the Funds’ shareholders. Each Subadviser is required to certify its compliance with these procedures to the Board of Trustees on a quarterly basis. There have been no material compliance issues with respect to any of these policies and procedures during the Funds’ most recent fiscal year. Additionally, there are no material conflicts of interest between the investment strategies of a Fund and the investment strategies of other accounts managed by portfolio managers since portfolio managers generally manage funds and other accounts having similar investment strategies.

The following table provides information as of December 31, 2011 regarding all accounts managed by the portfolio managers and portfolio management team members for each of the funds as named in the prospectus. As noted in the table, the portfolio managers managing the funds may also manage or be members of management teams for other mutual funds within the Virtus Mutual Fund complex or other similar accounts.


Portfolio Manager (Fund)		Registered Investment Companies	Other Pooled Investment Vehicles	Other Accounts
Peter J. Arts	Number of Accounts Managed: Assets in Accounts Managed:	3 $2.7 billion	1 $45 million	7 $276 million
John D. Boritzke	Number of Accounts Managed: Assets in Accounts Managed:	3 $4.6 billion	3 $121 million	233 $1.1 billion
Boyd R. Eager	Number of Accounts Managed: Assets in Accounts Managed:	None	None	13 $666 million
Jason C. Hans	Number of Accounts Managed: Assets in Accounts Managed:	None	1 $37 million	1 $0.24 million
Rajiv Jain	Number of Accounts Managed: Assets in Accounts Managed:	6 $1,652 billion	16 $5,536 billion	30 $8,974 billion
Thomas P. Lettenberger	Number of Accounts Managed: Assets in Accounts Managed:	2 $110 million	None	7 $15 million
Lori J. Marchildon	Number of Accounts Managed: Assets in Accounts Managed:	2 $69.6 million	2 $62.9 million	None
Daniela Mardarovici	Number of Accounts Managed: Assets in Accounts Managed:	None	None	15 $314 million
Duane A. McAllister	Number of Accounts Managed: Assets in Accounts Managed:	2 $1.1 billion	3 $121 million	233 $1.1 billion
Ernesto Ramos	Number of Accounts Managed: Assets in Accounts Managed:	None	2 $102 million	1 $60 million
Andrew Reed	Number of Accounts Managed: Assets in Accounts Managed:	None	None	84 $205 million
Ovidiu Sandu	Number of Accounts Managed: Assets in Accounts Managed:	2 $69.6 million	None	None
Daniel L. Sido	Number of Accounts Managed: Assets in Accounts Managed:	3 $259 million	5 $1.5 billion	103 $2.8 billion
Sadhana Valia	Number of Accounts Managed: Assets in Accounts Managed:	2 $69.6 million	3 $248.3 million	5 $1.6 billion
Jason D. Weiner	Number of Accounts Managed: Assets in Accounts Managed:	3 $910 million	None	46 $888 million

As of December 31, 2011, the portfolio managers, except for Mr. Jain who manages one separate account totaling $169 million in assets that pays the Subadviser performance fees, did not manage any accounts with respect to which the advisory fee is based on the performance of the account, nor do they manage any hedge funds.

Note:

Registered Investment Companies include all open and closed-end mutual funds. Pooled Investment Vehicles (PIVs) include, but are not limited to, securities of issuers exempt from registration under Section 3(c) of the Investment Company Act, such as private placements and hedge funds. Other accounts would include, but are not limited to, individual managed accounts, separate accounts, institutional accounts, pension funds, collateralized bond obligations and collateralized debt obligations.

Ownership of Fund Securities by Portfolio Managers

The following chart sets forth the dollar range of equity securities beneficially owned by each portfolio manager in each fund described in the funds’ prospectuses that he or she managed as of December 31, 2011:


Portfolio Manager		Dollar Range of Equity Securities Beneficially Owned in Each Fund Managed
Peter J. Arts		Insight Government Money Market Fund – None Insight Money Market Fund – $10,001-$50,000 Insight Tax-Exempt Money Market Fund – None
John D. Boritzke		Tax-Exempt Bond Fund – None
Boyd R. Eager		Insight Government Money Market Fund – None Insight Money Market Fund – $1-$10,000 Insight Tax-Exempt Money Market Fund – None
Rajiv Jain		Emerging Markets Opportunities Fund – $500,001-$1,000,000


Portfolio Manager		Dollar Range of Equity Securities Beneficially Owned in Each Fund Managed
Jason C. Hans		Core Equity Fund – None Value Equity Fund - $1-$10,000
Thomas P. Lettenberger		Balanced Allocation Fund – None
Lori J. Marchildon		High Yield Income Fund – None
Daniela Mardarovici		Balanced Allocation Fund – None Short/Intermediate Bond Fund – None
Duane A. McAllister		Tax-Exempt Bond Fund – None
Ernesto Ramos		Core Equity Fund – None Value Equity Fund – None
Andrew Reed		Short/Intermediate Bond Fund – None
Ovidiu Sandu		High Yield Income Fund – None
Daniel L. Sido		Balanced Allocation Fund – None Core Equity Fund – $100,001 – $500,000 Value Equity Fund – $100,001-$500,000
Sadhana Valia		High Yield Income Fund – None
Jason Weiner		Short/Intermediate Bond Fund – None

NET ASSET VALUE

For non-money market funds, the NAV per share of each class of each fund generally is determined as of the close of regular trading (normally 4:00 PM eastern time) on days when the New York Stock Exchange (the “NYSE”) is open for trading. A non-money market fund will not calculate its NAV per share class on days when the NYSE is closed for trading. For money market funds, the NAV of each class of each fund generally is determined as of the times indicated in the table below on each business day, except on those days the Securities Industry and Financial Markets Association (formerly, the Bond Market Association) (“SIFMA”) recommends that the U.S bond market remains closed.

The Money Market Funds may price their shares at an earlier time if an early close is recommended by SIFMA. Information regarding whether they are expected to do so on any such day will be available to investors who call Mutual Fund Services toll free at (800) 243-1574. A Money Market Fund generally will not calculate its NAV per share class on days SIFMA has recommended that the U.S. bond market remains closed.

Normal Pricing Times for Money Market Funds


Insight Government Money Market Fund		4:30 PM eastern time
Insight Money Market Fund		4:30 PM eastern time
Insight Tax-Exempt Money Market Fund		12:00 Noon eastern time

The NYSE will be closed on the following observed national holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the Trust does not price securities on weekends or United States national holidays, the NAV of a Fund’s foreign assets may be significantly affected on days when the investor may not be able to purchase or sell shares of the Funds. The NAV per share of a Fund is determined by adding the values of all securities and other assets of the Fund, subtracting liabilities, and dividing by the total number of outstanding shares of the Fund. Assets and liabilities are determined in accordance with generally accepted accounting principles and applicable rules and regulations of the SEC. The total liability allocated to a class, plus that class’s distribution fee and any other expenses allocated solely to that class, are deducted from the proportionate interest of such class in the assets of the Fund, and the resulting amount of each is divided by the number of shares of that class outstanding to produce the NAV per share.

A security that is listed or traded on more than one exchange is valued at the official closing price on the exchange determined to be the primary exchange for such security by the Board of Trustees or its delegates. Because of the need to obtain prices as of the close of trading on various exchanges throughout the world, the calculation of NAV may not take place for any Fund which invests in foreign securities contemporaneously with the determination of the prices of the majority of the portfolio securities of such Fund. All assets and liabilities initially expressed in foreign currency values will be converted into United States dollar values at the mean between the bid and ask quotations of such currencies against United States dollars as last quoted by any recognized dealer. If an event were to occur after the value of an investment was so established but before the NAV per share was determined, which was likely to materially change the NAV, then the instrument would be valued using fair value considerations by the Board of Trustees or its delegates. If at any time a Fund has investments where market quotations are not readily available, such investments are valued at the fair value thereof as determined in good

faith by the Board of Trustees although the actual calculations may be made by persons acting according to policies and procedures approved by the Board of Trustees.

Each of the Money Market Funds uses the amortized cost method to determine the value of its portfolio securities pursuant to Rule 2a-7. The amortized cost method involves valuing a security at its cost and amortizing any discount or premium over the period until maturity, regardless of the impact of fluctuating interest rates on the market value of the security. While this method provides certainty in valuation, it may result in periods during which the value, as determined by amortized cost, is higher or lower than the price that a Fund would receive if the security were sold. During these periods the yield to a shareholder may differ somewhat from that which could be obtained from a similar fund that uses a method of valuation based upon market prices. Thus, during periods of declining interest rates, if the use of the amortized cost method resulted in a lower value of a Fund’s portfolio on a particular day, a prospective investor in that Fund would be able to obtain a somewhat higher yield than would result from investments in a fund using solely market values, and existing Fund shareholders would receive correspondingly less income. The converse would apply during periods of rising interest rates.

Rule 2a-7 provides that in order to value its portfolio using the amortized cost method, each of the Money Market Funds must maintain a dollar-weighted average portfolio maturity of 90 days or less, purchase securities having remaining maturities (as defined in Rule 2a-7) of 397 days or less and invest only in securities determined by the Trust’s Board of Trustees to meet the quality and minimal credit risk requirements of Rule 2a-7. The maturity of an instrument is generally deemed to be the period remaining until the date when the principal amount thereof is due or the date on which the instrument is to be redeemed. Rule 2a-7 provides, however, that the maturity of an instrument may be deemed shorter in the case of certain instruments, including certain variable and floating rate instruments subject to demand features. Pursuant to Rule 2a-7, the Board is required to establish procedures designed to stabilize at $1.00, to the extent reasonably possible, the price per share of each of the Money Market Funds as computed for the purpose of sales and redemptions. Such procedures include review of the portfolio holdings of each of the Money Market Funds by the Board of Trustees, at such intervals as it may deem appropriate, to determine whether a Fund’s NAV calculated by using available market quotations deviates from $1.00 per share based on amortized cost. The extent of any deviation will be examined by the Board of Trustees. If such deviation exceeds ¹ /2 of 1%, the Board will promptly consider what action, if any, will be initiated. In the event the Board determines that a deviation exists that may result in material dilution or other unfair results to investors or existing shareholders, the Board will take such corrective action as it regards as necessary and appropriate, including the sale of portfolio instruments prior to maturity to realize capital gains or losses or to shorten average portfolio maturity, withholding dividends or establishing a NAV per share by using available market quotations.

HOW TO BUY SHARES

For Class A Shares and Class C Shares, the minimum initial investment is $2,500 and the minimum subsequent investment is $100. For Class I Shares, the minimum investment is $100,000 and there is no subsequent minimum investment. However, both the minimum initial and subsequent investment amounts are $100 for investments pursuant to the “Systematic Purchase” plan, a bank draft investing program administered by the Distributor, or pursuant to the Systematic Exchange privilege or for an individual retirement account (“IRA”). In addition, there are no subsequent minimum investment amounts in connection with the reinvestment of dividend or capital gain distributions. For purchases of Class I Shares by private clients of the Adviser, Subadviser and their affiliates, or through certain programs and defined contribution plans with which the Distributor has an arrangement, the minimum initial investment is waived. Completed applications for the purchase of shares should be mailed to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074.

The Trust has authorized one or more brokers to accept on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order. Customer orders will be priced at the Funds’ NAVs next computed after they are received in good order by an authorized broker or the broker’s authorized designee.

ALTERNATIVE PURCHASE ARRANGEMENTS

Shares may be purchased from investment dealers at a price equal to their NAV per share, plus a sales charge which, at the election of the purchaser, may be imposed either (i) at the time of the purchase (the “initial sales charge alternative”) or (ii) on a contingent deferred basis (the “deferred sales charge alternative”). Certain Funds also offers Class I Shares that may be purchased by certain institutional investors at a price equal to their NAV per share. For non-money market Funds, orders received by dealers prior to the close of trading on the NYSE are confirmed at the offering price effective at that time, provided the order is received by the authorized agent prior to its close of business. For money market funds, orders received by dealers are confirmed at the next-determined offering price following receipt by the authorized agent, provided the order is received by the authorized agent prior to its close of business.

The alternative purchase arrangements permit an investor to choose the method of purchasing shares that is more beneficial given the amount of the purchase, the length of time the investor expects to hold the shares, whether the investor wishes to receive distributions in cash or to reinvest them in additional shares of the Funds, and other circumstances. Investors should consider whether, during the anticipated life of their investment in the Fund, the accumulated continuing distribution and services fees and CDSC on Class C Shares would be less than the initial sales charge and accumulated distribution services fee on Class A Shares purchased at the same time.

Dividends paid by the Fund, if any, with respect to each class of shares will be calculated in the same manner at the same time on the same day, except that fees such as higher distribution and services fees and any incremental transfer agency costs relating to each class of shares will be borne exclusively by that class. (See “Dividends, Distributions and Taxes”)

Class A Shares—Non-Money Market Funds

Class A Shares incur a sales charge when they are purchased and enjoy the benefit of not being subject to any sales charge when they are redeemed, except that a CDSC may apply on certain redemptions made within 18 months following purchases on which a finder’s fee has been paid. For all Virtus fixed income funds ( and Virtus AlphaSector Rotation Fund), the CDSC is 0.50%, for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charges may be waived under certain conditions as determined by the Distributor. Class A Shares are subject to ongoing distribution and services fees at an annual rate of 0.25% of the Fund’s aggregate average daily net assets attributable to the Class A Shares. In addition, certain purchases of Class A Shares qualify for reduced initial sales charges.

Class A Shares—Money Market Funds

Class A Shares of the Money Market Funds are purchased without any sales charges. Class A Shares are subject to ongoing shareholder servicing (12b-1) fees at an annual rate of 0.10%. In addition, the Money Market Funds have adopted Shareholder Servicing Plans with an annual fee rate of 0.25%. The Funds’ distributor, may from time to time temporarily waive the Distribution (12b-1) Fees and/or shareholder servicing fees on Class A Shares of the Money Market Funds. If waived, the Distribution Fees and/or Shareholder Servicing Fees may be reinstated at any time.

Class C Shares—Non-Money Market Funds

Class C Shares are purchased without an initial sales charge but are subject to a deferred sales charge if redeemed within one year of purchase. The deferred sales charge may be waived in connection with certain qualifying redemptions. Shares issued in conjunction with the automatic reinvestment of income distributions and capital gain distributions are not subject to any sales charges. Class C Shares are subject to ongoing distribution and services fees at an aggregate annual rate of up to 1.00% of the Fund’s aggregate average daily net assets attributable to Class C Shares.

Class I Shares—All Funds

Class I Shares are offered primarily to clients of financial intermediaries that (i) charge such clients an ongoing fee for advisory, investment, consulting, or similar services, or (ii) have entered into an agreement with the distributor to offer Class I Shares through a no-load network, platform or defined contribution plan. Such clients may include pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations. Class I Shares are also offered to private and institutional clients of, or referred by, the Adviser, the Subadvisers or their affiliates.

Class A Shares—Reduced Initial Sales Charges

Investors choosing Class A Shares may be entitled to reduced sales charges. The ways in which sales charges may be avoided or reduced are described below. Investors buying Class A Shares on which a finder’s fee has been paid may incur a CDSC if they redeem their shares within 18 months of purchase. For all Virtus fixed income funds (and Virtus AlphaSector Rotation Fund), the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charge may be waived under certain conditions as determined by the Distributor.

Qualified Purchasers . If you fall within any one of the following categories, you will not have to pay a sales charge on your purchase of Class A Shares: (1) trustee, director or officer of the Virtus Mutual Funds, or any other mutual fund advised, subadvised or distributed by the Adviser, Distributor or any of their corporate affiliates; (2) any director or officer, or any full-time employee or sales representative (for at least 90 days), of the applicable Fund’s Adviser, Subadviser (if any) or Distributor; (3) any private client of an Adviser or Subadviser to any Virtus Mutual Fund; (4) registered representatives and employees of securities dealers with whom the Distributor has sales agreements; (5) any qualified retirement plan exclusively for persons described above; (6) any officer, director or employee of a corporate affiliate of the Adviser, a Subadviser or the Distributor; (7) any spouse, child, parent, grandparent, brother or sister of any person named in (1), (2), (4) or (6) above; (8) employee benefit plans for employees of the Adviser, Distributor and/or their corporate affiliates; (9) any employee or agent who retires from the Distributor and/or their corporate affiliates or from Phoenix Life Insurance Company and its

corporate affiliates (“PNX”), as long as, with respect to PNX employees or agents, such individual was employed by PNX prior to December 31, 2008; (10) any account held in the name of a qualified employee benefit plan, endowment fund or foundation if, on the date of the initial investment, the plan, fund or foundation has assets of $10,000,000 or more or at least 100 eligible employees; (11) any person with a direct rollover transfer of shares from an established Virtus Mutual Fund or Virtus qualified plan; (12) any state, county, city, department, authority or similar agency prohibited by law from paying a sales charge; (13) any unallocated account held by a third party administrator, registered investment adviser, trust company, or bank trust department which exercises discretionary authority and holds the account in a fiduciary, agency, custodial or similar capacity, if in the aggregate such accounts held by such entity equal or exceed $1,000,000; (14) any deferred compensation plan established for the benefit of any Virtus Mutual Fund, or Virtus trustee or director; provided that sales to persons listed in (1) through (14) above are made upon the written assurance of the purchaser that the purchase is made for investment purposes and that the shares so acquired will not be resold except to the Fund; (15) former Class N Shareholders who received Class A Shares as a result of the conversion of Class N Shares to Class A Shares; (16) individuals purchasing through an account with an unaffiliated brokerage firm having an agreement with the Distributor to waive sales charges for its clients; (17) purchasers of Class A Shares bought through investment advisers and financial planners who charge an advisory, consulting or other fee for their services and buy shares for their own accounts or the accounts of their clients; (18) retirement plans and deferred compensation plans and trusts used to fund those plans (including, for example, certain plans qualified or created under Sections 401(a), 403(b) or 457 of the Code), and “rabbi trusts” that buy shares for their own accounts, in each case if those purchasers are made through a broker or agent or other financial intermediary that has made special arrangements with the Distributor for such purchases; (19) 401(k) participants in the Merrill Lynch Daily K Plan (the “Plan”) if the Plan has at least $3 million in assets or 500 or more eligible employees; or (20) clients of investment advisors or financial planners who buy shares for their own accounts but only if their accounts are linked to a master account of their investment advisor or financial planner on the books and records of the broker, agent or financial intermediary with which the Distributor has made such special arrangements. Each of the investors described in (16) through (20) may be charged a fee by the broker, agent or financial intermediary for purchasing shares.

Combination Purchase Privilege. Your purchase of any class of shares of these Funds or any other Virtus Mutual Fund (other than any Virtus money market fund), if made at the same time by the same “person,” will be added together with any existing Virtus Mutual Fund account values, to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as (a) any individual, their spouse and minor children purchasing shares for his or their own account (including an IRA account) including his or their own trust; (b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist); (c) multiple employer trusts or certain Section 403(b) plans for the same employer; (d) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third party administrator; or (e) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.

A “Virtus Mutual Fund” means any other mutual fund advised, subadvised or distributed by the Adviser or Distributor or any corporate affiliate of either or both the Adviser and Distributor provided such other mutual fund extends reciprocal privileges to shareholders of the Virtus Mutual Funds.

Letter of Intent. If you sign a Letter of Intent, your purchase of any class of shares of these Funds or any other Virtus Mutual Fund (other than any Virtus money market fund), if made by the same person within a 13-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding arrangement between you and the Distributor. Since the Distributor doesn’t know whether you will ultimately fulfill the Letter of Intent, shares worth 5% of the amount of each purchase will be set aside until you fulfill the Letter of Intent. When you buy enough shares to fulfill the Letter of Intent, these shares will no longer be restricted. If, on the other hand, you do not satisfy the Letter of Intent, or otherwise wish to sell any restricted shares, you will be given the choice of either buying enough shares to fulfill the Letter of Intent or paying the difference between any sales charge you previously paid and the otherwise applicable sales charge. You will be given 20 days to make this decision. If you do not exercise either election, the Distributor will automatically redeem the number of your restricted shares needed to make up the deficiency in sales charges received. The Distributor will redeem restricted Class A Shares before Class B Shares or Class C Shares, respectively. Oldest shares will be redeemed before selling newer shares. Any remaining shares will then be deposited to your account.

Right of Accumulation. The value of your account(s) in any class of shares of these Funds or any other Virtus Mutual Fund (other than any Virtus money market fund), may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to the Distributor at the time of purchase to exercise this right.

Associations. Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; and (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.

Class A and Class C Shares—Waiver of Deferred Sales Charges

The CDSC is waived on the redemption (sale) of Class A Shares and Class C Shares if the redemption is made (a) within one year of death (i) of the sole shareholder on an individual account, (ii) of a joint tenant where the surviving joint tenant is the deceased’s spouse, (iii) of the beneficiary of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial account; or (iv) of the “grantor” on a trust account; (b) within one year of disability, as defined in Code Section 72(m)(7); (c) as a mandatory distribution upon reaching age 70 ¹ /2under certain retirement plans qualified under Code Sections 401, 408 or 403(b) or resulting from the tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using an approved participant tracking system for participant hardships, death, disability or normal retirement, and loans which are subsequently repaid; (e) based on the exercise of exchange privileges among Class A Shares and Class C Shares of these or any other Virtus Mutual Fund; (f) based on any direct rollover transfer of shares from an established Virtus Mutual Fund qualified plan into a Virtus Mutual Fund IRA by participants terminating from the qualified plan; and (g) based on the systematic withdrawal program. If, as described in condition (a) above, an account is transferred to an account registered in the name of a deceased’s estate, the CDSC will be waived on any redemption from the estate account occurring within one year of the death.

INVESTOR ACCOUNT SERVICES AND POLICIES

The Funds offer accumulation plans, withdrawal plans and reinvestment and exchange privileges. Certain privileges may not be available in connection with all classes. In most cases, changes to account services may be accomplished over the phone. Inquiries regarding policies and procedures relating to shareholder account services should be directed to Mutual Fund Services at (800) 243-1574. Broker-dealers may impose their own restrictions and limits on accounts held through the broker-dealer. Please consult with your broker-dealer for account restriction and limit information. The Funds and the Distributor reserve the right to modify or terminate these services upon reasonable notice.

Exchanges

Under certain circumstances, shares of any Virtus Mutual Fund (except any of the Virtus Money Market Funds) may be exchanged for shares of the same class of another Virtus Mutual Fund on the basis of the relative NAVs per share at the time of the exchange. Class C Shares are also exchangeable for Class T Shares of those Virtus Mutual Funds offering them. Exchanges are subject to the minimum initial investment requirement of the designated Fund, except if made in connection with the Systematic Exchange privilege described below. Shareholders may exchange shares held in book-entry form for an equivalent number (value) of the same class of shares of any other Virtus Mutual Fund, if currently offered. Exchanges will be based upon each Fund’s NAV per share next computed following receipt of a properly executed exchange request without sales charge. On exchanges into Class A Shares of a money market fund from Class A Shares of a non-money market fund made within 18 months of a finder’s fee being paid on such non-money market fund shares, a CDSC may be assessed on exchange proceeds. For all Virtus fixed income funds (and Virtus AlphaSector Rotation Fund), the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC may be waived upon return of the finder’s fee by the dealer. On exchanges with share classes that carry a CDSC, the CDSC schedule of the original shares purchased continues to apply. The exchange of shares is treated as a sale and purchase for federal income tax purposes. (See also “Dividends, Distributions and Taxes”). Exchange privileges may not be available for all Virtus Mutual Funds, and may be rejected or suspended.

In certain circumstances, a Fund or the Distributor may enter into an agreement with a financial intermediary to permit exchanges from one class of a Fund into another class of the same Fund, subject to certain conditions. Such exchanges will only be permitted if, among other things, the financial intermediary agrees to follow procedures established by the Fund or Distributor, which generally will require that the exchanges be carried out (i) within accounts maintained and controlled by the intermediary, (ii) on behalf of all or a particular segment of beneficial owners holding shares of the affected Fund within those accounts, and (iii) all at once or within a given time period, or as agreed upon in writing by the Fund or the Distributor and the financial intermediary. A shareholder’s ability to make this type of exchange may be limited by operational or other limitations of his or her financial intermediary or the Fund. Under the Code, generally if a shareholder exchanges shares from one class of a Fund into another class of the same Fund, the transaction should not be subject to U.S. federal income taxes; however, each shareholder should consult both the relevant financial intermediary and the shareholder’s tax advisor regarding the treatment of any specific exchange carried out under the terms of this paragraph.

Systematic Exchanges. If the conditions above have been met, you or your broker may, by telephone or written notice, elect to have shares exchanged for the same class of shares of another Virtus Mutual Fund automatically on a monthly,

quarterly, semiannual or annual basis or may cancel this privilege at any time. If you maintain an account balance of at least $5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the basis of the NAV of the shares held in a single account), you may direct that shares be automatically exchanged at predetermined intervals for shares of the same class of another Virtus Mutual Fund. Systematic exchanges will be executed upon the close of business on the 10th day of each month or the next succeeding business day. Exchanges will be based upon each Fund’s NAV per share next computed after the close of business on the 10th day of each month (or next succeeding business day), without sales charge. Systematic exchange forms are available from the Distributor.

Dividend Reinvestment Across Accounts

If you maintain an account balance of at least $5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the basis of the NAV of the shares held in a single account), you may direct that any dividends and distributions paid with respect to shares in that account be automatically reinvested in a single account of one of the other Virtus Mutual Funds at NAV. You should obtain a current prospectus and consider the objectives and policies of each Virtus Mutual Fund carefully before directing dividends and distributions to another Virtus Mutual Fund. Reinvestment election forms and prospectuses are available from VP Distributors. Distributions may also be mailed to a second payee and/or address. Requests for directing distributions to an alternate payee must be made in writing with a signature guarantee of the registered owner(s). To be effective with respect to a particular dividend or distribution, notification of the new distribution option must be received by the Transfer Agent at least three days prior to the record date of such dividend or distribution. If all shares in your account are repurchased or redeemed or transferred between the record date and the payment date of a dividend or distribution, you will receive cash for the dividend or distribution regardless of the distribution option selected.

Invest-by-Phone

This expedited investment service allows a shareholder to make an investment in an account by requesting a transfer of funds from the balance of the shareholder’s bank account. Once a request is phoned in, VP Distributors will initiate the transaction by wiring a request for monies to the shareholder’s commercial bank, savings bank or credit union via Automated Clearing House (“ACH”). The shareholder’s bank, which must be an ACH member, will in turn forward the monies to VP Distributors for credit to the shareholder’s account. ACH is a computer based clearing and settlement operation established for the exchange of electronic transactions among participating depository institutions.

To establish this service, please complete an Invest-by-Phone Application and attach a voided check if applicable. Upon VP Distributors’ acceptance of the authorization form (usually within two weeks) shareholders may call toll free (800) 367-5877 prior to 3:00 p.m. (eastern time) to place their purchase request. Instructions as to the account number and amount to be invested must be communicated to VP Distributors. VP Distributors will then contact the shareholder’s bank via ACH with appropriate instructions. The purchase is normally credited to the shareholder’s account the day following receipt of the verbal instructions. The Fund may delay the mailing of a check for redemption proceeds of Fund shares purchased with a check or via Invest-by-Phone service until the Fund has assured itself that good payment has been collected for the purchase of the shares, which may take up to 15 days. The Trust and VP Distributors reserve the right to modify or terminate the Invest-by-Phone service for any reason or to institute charges for maintaining an Invest-by-Phone account.

Systematic Withdrawal Program

The Systematic Withdrawal Program (the “Program”) allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual or annual basis. A sufficient number of full and fractional shares will be redeemed so that the designated payment is made on or about the 20th day of the month. Shares are tendered for redemption by the Transfer Agent, as agent for the shareowner, on or about the 15th of the month at the closing NAV on the date of redemption. The Program also provides for redemptions with proceeds to be directed through ACH to your bank account. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15 ^th of the month. In addition to the limitations stated below, withdrawals may not be less than $25 and minimum account balance requirements shall continue to apply.

Shareholders participating in the Program must own shares of a Fund worth $5,000 or more, as determined by the then current NAV per share, and elect to have all dividends reinvested. The purchase of shares while participating in the Program will ordinarily be disadvantageous to the Class A Shares investor since a sales charge will be paid by the investor on the purchase of Class A Shares at the same time as other shares are being redeemed. For this reason, investors in Class A Shares may not participate in an automatic investment program while participating in the Program.

Through the Program, Class C shareholders may withdraw up to 1% of their aggregate net investments (purchases, at initial value, to date net of non-Program redemptions) each month or up to 3% of their aggregate net investments each quarter without incurring otherwise applicable CDSCs. Class C shareholders redeeming more shares than the percentage permitted by the Program will be subject to any applicable CDSC on all shares redeemed. Accordingly, the purchase of Class C Shares will generally not be suitable for an investor who anticipates withdrawing sums in excess of the above limits shortly after purchase.

HOW TO REDEEM SHARES

Under the 1940 Act, payment for shares redeemed must ordinarily be made within seven days after tender. The right to redeem shares may be suspended and payment postponed during periods when the NYSE is closed, other than customary weekend and holiday closings, or if permitted by rules of the SEC, during periods when trading on the NYSE is restricted or during any emergency which makes it impracticable for a Fund to dispose of its securities or to determine fairly the value of its net assets or during any other period permitted by order of the SEC for the protection of investors. Furthermore, the Transfer Agent will not mail redemption proceeds until checks received for shares purchased have cleared, which may take up to 15 days or more.

The Trust has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order. Customer orders will be priced at the Funds’ NAVs next computed after they are received in good order by an authorized broker or the broker’s authorized designee.

Redemptions by Class C shareholders will be subject to the applicable deferred sales charge, if any.

A shareholder should contact his/her broker-dealer if he/she wishes to transfer shares from an existing broker-dealer street name account to a street name account with another broker-dealer. The Funds have no specific procedures governing such account transfers.

Redemption of Small Accounts

Each shareholder account in the Funds which has been in existence for at least one year and which has a value of less than $200, due to redemption activity may be redeemed upon the giving of not less than 60 days written notice to the shareholder mailed to the address of record. During the 60-day period following such notice, the shareholder has the right to add to the account to bring its value to $200 or more. (See the Funds’ current Prospectuses for more information.)

Redemptions by Mail

Shareholders may redeem shares by making written request, executed in the full name of the account, directly to Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. (See the Funds’ current Prospectuses for more information.)

Redemptions by Telephone

Generally, shareholders may redeem by telephone up to $50,000 worth of their shares held in book-entry form. (See the Funds’ current Prospectuses for more information.) Corporations that have completed a Corporate Authorized Trader form may redeem more than $50,000 worth of shares in most instances.

Redemptions by Check (Fixed Income Funds only)

Any shareholder of these Funds may elect to redeem shares held in his account by check. Checks will be sent to an investor upon receipt by the Transfer Agent of a completed application and signature card (attached to the application). If the signature card accompanies an individual’s initial account application, the signature guarantee section of the form may be disregarded. However, the Trust reserves the right to require that all signatures be guaranteed prior to the establishment of a check writing service account. When an authorization form is submitted after receipt of the initial account application, all signatures must be guaranteed regardless of account value.

Checks may be drawn payable to any person in an amount of not less than $250, provided that immediately after the payment of the redemption proceeds the balance in the shareholder’s account is $250 or more.

When a check is presented to the Transfer Agent for payment, a sufficient number of full and fractional shares in the shareholder’s account will be redeemed to cover the amount of the check. The number of shares to be redeemed will be determined on the date the check is received by the Transfer Agent. Presently there is no charge to the shareholder for the check writing service, but this may be changed or modified in the future upon two weeks written notice to shareholders. Checks drawn from Class B and Class C accounts are subject to the applicable deferred sales charge, if any.

The check writing procedure for redemption enables a shareholder to receive income accruing on the shares to be redeemed until such time as the check is presented to the Transfer Agent for payment. Inasmuch as canceled checks are returned to shareholders monthly, no confirmation statement is issued at the time of redemption.

Shareholders utilizing withdrawal checks will be subject to the Transfer Agent’s rules governing checking accounts. A shareholder should make sure that there are sufficient shares in his account to cover the amount of any check drawn. If insufficient shares are in the account and the check is presented to the Transfer Agent on a banking day on which the Trust does not redeem shares (for example, a day on which the NYSE is closed), or if the check is presented against redemption proceeds of an investment made by check which has not been in the account for at least fifteen calendar days, the check may

be returned marked “Non-sufficient Funds” and no shares will be redeemed. A shareholder may not close his account by a withdrawal check because the exact value of the account will not be known until after the check is received by the Transfer Agent.

Redemptions in Kind

To the extent consistent with state and federal law, the Funds, except the Money Market Funds, may make payment of the redemption price either in cash or in kind. However, the Funds have elected to pay in cash all requests for redemption by any shareholder of record, limited in respect to each shareholder during any 90-day period to the lesser of $250,000 or 1% of the NAV of the Fund at the beginning of such period. This election has been made pursuant to Rule 18f-1 under the 1940 Act and is irrevocable while the Rule is in effect unless the SEC, by order, permits the withdrawal thereof. In case of a redemption in kind, securities delivered in payment for shares would generally represent the shareholder’s proportionate share of the Fund’s current net assets and be valued at the same value assigned to them in computing the NAV per share of the Fund. A shareholder receiving such securities would incur brokerage costs when selling the securities.

Account Reinstatement Privilege

Shareholders who may have overlooked features of their investment at the time they redeemed have a privilege of reinvestment of their investment at NAV. (See the Funds’ current Prospectuses for more information.)

Returned/Uncashed Checks Policy

For the protection of Fund shareholders, if you have elected to receive dividends and other distributions in cash, and the check is returned to the Fund as undeliverable or you do not respond to mailings from Virtus with regard to uncashed distribution checks, we may take any of the following actions:

_•

The distribution option on your account(s) will be changed to reinvest and all subsequent payments will be reinvested in additional shares of the Fund

_•

Any systematic withdrawal plan will be stopped immediately

_•

If a check is not presented for payment within six months, the Fund reserves the right to reinvest the check proceeds

_•

If reinvested, distributions will be reinvested in the Fund at the earliest date practicable after the waiting period at the then-current NAV of such Fund

_•

No interest will accrue on amounts represented by uncashed dividend, distribution or redemption checks

This policy may not apply to certain retirement or qualified accounts; closed accounts or accounts under the Fund’s required minimum threshold.

Reinvestment of future distributions will continue until you notify us of your election to reinstate cash payment of the dividends and other distributions. You will also be required to confirm your current address and daytime telephone number.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Qualification as a Regulated Investment Company

Each Fund within the Trust is separate for investment and accounting purposes and is treated as a separate corporation for United States federal income tax purposes. Each Fund has elected to qualify and intends to qualify as a regulated investment company (“RIC”) under Subchapter M of the Code. In each taxable year that a Fund qualifies as a RIC and distributes to its shareholders as dividends (not including “capital gains dividends,” discussed below) at least 90% of its ordinary investment income and short-term capital gains, with certain modifications, it (but not its shareholders) will be relieved of United States federal income tax on that portion of its net investment income and net capital gains that are currently distributed (or deemed distributed) to its shareholders. To the extent that a Fund fails to distribute all of its taxable income, it will be subject to corporate income tax (currently at a maximum rate of 35%) on any retained ordinary investment income or short-term capital gains, and corporate income tax (currently at a maximum rate of 35%) on any undistributed long-term capital gains.

Each Fund intends to make timely distributions, if necessary, sufficient in amount to avoid the non-deductible 4% excise tax that is imposed on a RIC to the extent that it fails to distribute, with respect to each calendar year, at least 98% of its ordinary income (not including tax-exempt interest) for such calendar year and 98.2% of its capital gain net income as determined for a one-year period ending on October 31 of such calendar year (or as determined on a fiscal year basis if the Fund’s fiscal year ends on November 30 or December 31, if the Fund so elects). In addition, an amount equal to any undistributed investment company taxable income or capital gain net income from the previous calendar year must also be distributed to avoid the excise tax. The excise tax is imposed on the amount by which the RIC does not meet the foregoing distribution requirements. If a Fund has taxable income that would be subject to the excise tax, the Fund intends to distribute such income so as to avoid payment of the excise tax. Notwithstanding the foregoing, there may be certain circumstances under which it would be appropriate for a Fund to pay the excise tax.

Each Fund must satisfy the following tests each year in order to qualify as a RIC: (a) derive in each taxable year at least 90% of its gross income from dividends, interest and gains from the sale or other disposition of securities and certain other investment income; and (b) meet specified diversification requirements at the end of each quarter of each taxable year . Each Fund intends to satisfy these requirements. With respect to the diversification requirement, each Fund must also diversify its holdings so that, at the close of each quarter of its taxable year, (i) at least 50% of the value of its total assets consists of cash, cash items, United States government securities and securities of other RICs, and other securities limited generally with respect to any one issuer to not more than 5% of the total assets of that Fund and not more than 10% of the outstanding voting securities of such issuer, and (ii) not more than 25% of the value of its assets is invested in the securities of any issuer (other than United States government securities or the securities of other RICs). Each Fund intends to comply with all of the foregoing criteria for qualification as a RIC; however, there can be no assurance that each Fund will so qualify and continue to maintain its status as a RIC. If in any taxable year a Fund does not qualify as a RIC or fails to distribute at least 90% of the Fund’s investment company taxable income, all of its taxable income will be taxed at corporate rates, the Fund would not be entitled to deduct distributions to shareholders, and any capital gain dividend would not retain its character in the hands of the shareholder for tax purposes. The Code provides relief for certain de minimis failures to meet the asset or income tests or for certain failures due to reasonable cause. These relief provisions may prevent a Fund from being disqualified as a RIC and/or reduce the amount of tax on the Fund’s income as a result of the failure to meet certain tests.

Taxation of Distributions to Shareholders

Pursuant to the Jobs and Growth Tax Reconciliation Act of 2003, certain qualified dividend income (“QDI”) and long-term capital gains are taxed at a lower tax rate (maximum 15%) for individual shareholders. The reduced rate for QDI applies to dividends from domestic corporations and certain qualified foreign corporations subject to various requirements and a minimum holding period applicable to both a Fund and its shareholders. Ordinary distributions made by a Fund to its shareholders are eligible for the reduced rate to the extent the underlying income in the Fund is QDI. This lower rate is only effective for tax years ending before January 1, 2013. Beginning with 2013, the tax rate will change absent additional legislative action. In addition, beginning with 2013, an additional 3.8% tax will apply to the lesser of (i) an individual’s net investment income or (ii) the excess of modified adjusted gross income over $200,000 (in the case of single filers) or $250,000 (in the case of a joint return).

Distributions made by a Fund from ordinary investment income and net short-term capital gains will be taxed to such Fund’s shareholders as ordinary dividend income to the extent of the earnings and profits of the Fund. Ordinary income dividends received by corporate shareholders of a Fund will qualify for the 70% dividends-received deduction to the extent the Fund designates such amounts as qualifying dividend distributions; however, the portion that may be so designated is subject to certain limitations. Distributions by a Fund that are reported by the Fund as capital gain dividends in written statements furnished to its shareholders (e.g., Form 1099) will be taxed to the shareholders as long-term capital gain, and will not be eligible for the corporate dividends-received deduction.

Dividends declared by a Fund to shareholders of record in October, November or December will be taxable to such shareholders in the year that the dividend is declared, even if it is not paid until the following year (so long as it is actually paid by the Fund in January of such following year). Also, shareholders will be taxable on amounts reported by a Fund in written statements to shareholders as capital gain dividends, even if such amounts are not actually distributed to them. Shareholders will be entitled to claim a credit against their own United States federal income tax liability for taxes paid by each Fund on such undistributed capital gains, if any.

Dividends and capital gain distributions will be taxable to shareholders as described above whether received in cash or in shares under a Fund’s distribution reinvestment plan. With respect to distributions received in cash or reinvested in shares purchased on the open market, the amount of the distribution for tax purposes will be the amount of cash distributed or allocated to the shareholder.

Shareholders should be aware that the price of shares of a Fund that are purchased prior to a dividend or distribution by the Fund may reflect the amount of the forthcoming dividend or distribution. Such dividend or distribution, when made, would be taxable to shareholders under the principles discussed above even though the dividend or distribution may reduce the NAV of shares below a shareholder’s cost and thus represent a return of a shareholder’s investment in an economic sense.

A high portfolio turnover rate may result in the realization of larger amounts of short-term gains, which are taxable to shareholders as ordinary income.

Each Fund intends to accrue dividend income for United States federal income tax purposes in accordance with the rules applicable to RICs. In some cases, these rules may have the effect of accelerating (in comparison to other recipients of the dividend) the time at which the dividend is taken into account by the Fund as taxable income.

Shareholders should consult their own tax advisor about their tax situation.

Income and capital gain distributions are determined in accordance with rules set forth in the Code and the Treasury Regulations promulgated thereunder (the “Regulations”) that may differ from United States Generally Accepted Accounting Principles.

Taxation of Debt Securities

Certain debt securities can be originally issued or acquired at a discount. Special rules apply under the Code to the recognition of income with respect to such debt securities. Under the special rules, a Fund may recognize income for tax purposes without a corresponding current receipt of cash. In addition, gain on a disposition of a debt security subject to the special rules may be treated wholly or partially as ordinary income, not capital gain.

A Fund may invest in certain investments that may cause it to realize income prior to the receipt of cash distributions, including securities bearing original issue discount. The level of such investments is not expected to affect a Fund’s ability to distribute adequate income to qualify as RIC.

Taxation of Derivatives and Foreign Currency Transactions

Many futures contracts and foreign currency contracts entered into by a Fund and all listed non-equity options written or purchased by a Fund (including options on debt securities, options on futures contracts, options on securities indices and options on broad-based stock indices) are governed by Section 1256 of the Code. Absent a tax election to the contrary, gain or loss attributable to the lapse, exercise or closing out of any such position is treated as 60% long-term and 40% short-term capital gain or loss, and on the last trading day of a Fund’s taxable year (and, generally on October 31 for purposes of the 4% excise tax), all outstanding Section 1256 positions are marked-to-market (i.e., treated as if such positions were closed out at their closing price on such day), and any resulting gain or loss is treated as 60% long-term and 40% short-term capital gain or loss. Under certain circumstances, entry into a futures contract to sell a security may constitute a short sale for United States federal income tax purposes, causing an adjustment in the holding period of the underlying security or a substantially identical security in a Fund’s portfolio.

Equity options written by a Fund (covered call options on portfolio stock) will be subject to the provisions under Section 1234 of the Code. If a Fund writes a call option, no gain is recognized upon its receipt of a premium. If such an option lapses or is closed out, any gain or loss is treated as a short-term capital gain or loss. If such an option is exercised, any resulting gain or loss is a short-term or long-term capital gain or loss depending on the holding period of the underlying stock.

Positions of a Fund which consist of at least one stock and at least one stock option or other position with respect to a related security which substantially diminishes the Fund’s risk of loss with respect to such stock could be treated as a “straddle” that is governed by Section 1092 of the Code, the operation of which may cause deferral of losses, adjustments in the holding periods of stock or securities and conversion of short-term capital losses into long-term capital losses. An exception to these straddle rules exists for any “qualified covered call options” on stock options written by a Fund.

Positions of a Fund which consist of at least one debt security not governed by Section 1256 of the Code and at least one futures or currency contract or listed non-equity option governed by Section 1256 of the Code which substantially diminishes the Fund’s risk of loss with respect to such debt security are treated as a “mixed straddle.” Although mixed straddles are subject to the straddle rules of Section 1092 of the Code, certain tax elections exist for them that reduce or eliminate the operation of these rules. Each Fund will monitor these transactions and may make certain tax elections in order to mitigate the operation of these rules and prevent disqualification of the Fund as a RIC for United States federal income tax purposes.

Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time it actually collects such receivables or pays such liabilities generally are treated as ordinary income or loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain futures contracts, forward contracts and options, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also are treated as ordinary income or loss. Generally, these gains and losses, referred to under the Code as Section 988 gains or losses, may increase or decrease the amount of each Fund’s investment company taxable income to be distributed to its shareholders as ordinary income.

These special tax rules applicable to options, futures and currency transactions could affect the amount, timing and character of a Fund’s income or loss and hence of its distributions to shareholders by causing holding period adjustments, converting short-term capital losses into long-term capital losses, and accelerating a Fund’s income or deferring its losses.

The United States Internal Revenue Service (“IRS”) has not provided guidance on the tax consequences of certain investments and other activities that the Funds may make or undertake. While the Funds will endeavor to treat the tax items arising from these transactions in a manner believed to be appropriate, guarantees cannot be given that the IRS or a court will concur with the Funds’ treatment and that adverse tax consequences will not ensue.

Taxation of Foreign Investments

If a Fund invests in stock of certain passive foreign investment companies, the Fund may be subject to special United States federal income taxation rules applicable to any “excess distribution” with respect to such stock or gain from the disposition of such stock treated as an “excess distribution.” The tax would be determined by allocating such distribution or gain ratably to each day of the Fund’s holding period for the stock. The distributions or gain so allocated to any taxable year of the Fund, other than the taxable year of the excess distribution or disposition, would be taxed to the Fund at the highest ordinary income rate in effect for such year, and the tax would be further increased by an interest charge to reflect the value of the tax deferral deemed to have resulted from the ownership of the foreign company’s stock. Any amount of distribution or gain allocated to the taxable year of the distribution or disposition would be included in the Fund’s investment company taxable income and, accordingly, would not be taxable to the Fund to the extent distributed by the Fund as a dividend to its shareholders. The Fund may elect to mark-to-market (i.e., treat as if sold at their closing market price on same day) its investments in certain passive foreign investment companies and avoid any tax and/or interest charge on excess distributions.

The Funds may be subject to tax on dividend or interest income received from securities of non-United States issuers withheld by a foreign country at the source. The United States has entered into tax treaties with many foreign countries that entitle a Fund to a reduced rate of tax or exemption from tax on income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund’s assets to be invested within various countries is not known. Each Fund intends to operate so as to qualify for treaty tax benefits where applicable. If more than 50% of the value of a Fund’s total assets at the close of its taxable year is comprised of stock or securities issued by foreign corporations, the Fund may elect to “pass through” to the Fund’s shareholders the amount of foreign income taxes paid by the Fund. If a Fund does elect to “pass through,” each shareholder will receive a written statement from the Fund identifying the amount of such shareholder’s pro rata share of (i) the foreign taxes paid and (ii) the Fund’s gross income from foreign sources. In addition, if at least 50% of the value of a Fund’s assets at the close of each quarter of the tax year is represented by interests in other RICs, then such Fund may “pass through” foreign income taxes paid without regard to whether more than 50% of the Fund’s total assets at the close of the tax year consisted of stock and securities issued by foreign corporations. If a Fund passes through foreign taxes, each shareholder will be required to include the amount of such shareholder’s pro rata share of such taxes in gross income (in addition to dividends actually received), and the shareholder will be entitled to deduct such foreign taxes (if the shareholder itemizes deductions) in computing taxable income or claim a credit against U.S. federal income tax liability, subject to limitations.

Taxation of Distributions to Shareholders—Virtus Insight Tax-Exempt Money Market Fund, and Virtus Tax-Exempt Bond Fund only

If at least 50% of the value of a Fund’s assets at the close of each quarter of the tax year is comprised of tax-exempt state and local bonds, then such Fund is qualified to pay exempt-interest dividends for United States federal income tax purposes to the Fund’s shareholders. Virtus Insight Tax-Exempt Money Market Fund and Virtus Tax-Exempt Bond Fund (collectively, the “Tax-Exempt Funds”) intend to comply with this standard, and each Tax-Exempt Fund will provide shareholders with a written statement identifying each shareholder’s amount of exempt-interest dividends. Exempt-interest dividends received by a shareholder are treated as items of tax-exempt interest to the shareholder.

Sale or Exchange of Fund Shares

Gain or loss will be recognized by a shareholder upon the sale of his or her shares in a Fund or upon an exchange of his or her shares in a Fund for shares in another Fund. Provided that the shareholder is not a dealer in such shares, such gain or loss will generally be treated as capital gain or loss, measured by the difference between the adjusted basis of the shares and the amount realized from the sale. Under current law, capital gains (whether long-term or short-term) of individuals and corporations are fully includable in taxable income. Capital losses (whether long-term or short-term) may offset capital gains plus (for non-corporate taxpayers only) up to $3,000 per year of ordinary income.

Redemptions, including exchanges, of shares may give rise to recognized gains or losses. All or a portion of a loss realized upon the redemption, including exchanges, of shares may be disallowed under “wash sale” rules to the extent shares are purchased (including shares acquired by means of reinvested dividends) within a 61-day period beginning 30 days before and ending 30 days after such redemption. Any loss realized upon a shareholder’s sale, redemption or other disposition of shares with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any capital gain dividend distributed with respect to such shares. The “wash sale” restrictions also apply to an investor who holds a security both within a tax-deferred account and in a taxable account; sales and repurchases between two accounts will be considered as wash sales.

Under certain circumstances, the sales charge incurred in acquiring shares of a Fund may not be taken into account in determining the gain or loss on the disposition of those shares. This rule applies where shares of a Fund are disposed of within 90 days after the date on which they were acquired and new shares of a RIC are acquired without a sales charge or at a reduced sales charge. In that case, the gain or loss realized on the disposition will be determined by excluding from the tax basis of the shares disposed of all or a portion of the sales charge incurred in acquiring those shares. This exclusion applies to

the extent that the otherwise applicable sales charge with respect to the newly acquired shares is reduced as a result of the shareholder having incurred a sales charge initially. The portion of the sales charge affected by this rule will be treated as a sales charge paid for the new shares.

For shares of a Fund acquired on or after January 1, 2012, each shareholder’s Form 1099 will report the cost basis of any such shares that were redeemed, sold, or exchanged during the year, and the form will report whether the gain or loss is treated as short-term or long-term. This information will be reported to the IRS. Each shareholder should inform the Fund of such shareholder’s cost selection for tax reporting purposes at the time of the sale or exchange of Fund shares or provide in advance a standing cost basis method for the shareholder’s account. If a shareholder does not provide cost basis instructions, the Fund’s default method will be used.

Tax Information

Written notices will be sent by United States mail to shareholders regarding the tax status of all distributions made (or deemed to have been made) during each taxable year, including the amount of QDI for individuals, the amount qualifying for the corporate dividends-received deduction (if applicable) and the amount of capital gain dividends, undistributed capital gains (if any), tax credits (if applicable), and cumulative return of capital (if any).

Important Notice Regarding Taxpayer IRS Certification and Backup Withholding

Pursuant to the Regulations, the Funds may be required to withhold a percentage of all reportable payments, including any taxable dividends, capital gains distributions or share redemption proceeds, at the specified rate in effect when such payments are made, for an account which does not have a taxpayer identification number and certain required certifications. The Funds reserve the right to refuse to open an account for any person failing to provide a taxpayer identification number along with the required certifications. The Funds will furnish shareholders, within 31 days after the end of the calendar year, with the information that is required by the IRS for preparing income tax returns. The Fund will also provide this same information to the IRS in the manner required by the IRS. Depending on your state of residence, the information may also be filed with your state taxing authority.

Some shareholders may be subject to withholding of United States federal income tax on dividends and redemption payments from the Funds (“backup withholding”) at the specified rate in effect when such payments are made. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. Generally, shareholders subject to backup withholding will be (i) those for whom a certified taxpayer identification number is not on file with the Fund, (ii) those about whom notification has been received (either by the shareholder or the Fund) from the IRS that they are subject to backup withholding or (iii) those who, to the Fund’s knowledge, have furnished an incorrect taxpayer identification number. Generally, to avoid backup withholding, a shareholder must, at the time an account is opened, certify under penalties of perjury that the social security number or taxpayer identification number (“TIN”) furnished is correct and that he or she is not subject to backup withholding. From time to time, the shareholder may also be requested to provide certification of the validity of their TIN.

Foreign Shareholders

Dividends paid by any of the Funds from net investment income and net realized short-term capital gains to a shareholder who is a nonresident alien individual, a foreign trust or estate, a foreign corporation or a foreign partnership (a “foreign shareholder”) will be subject to United States withholding tax at a rate of 30% unless a reduced rate of withholding or a withholding exemption is provided under an applicable tax treaty. Foreign shareholders are urged to consult their own tax advisors concerning the applicability of the United States withholding tax and any foreign taxes.

Other Tax Consequences

In addition to the certain United States federal income tax consequences described above, there may be other foreign, United States federal, state or local tax considerations and estate tax considerations applicable to the circumstances of a particular investor. The foregoing discussion is based upon the Code, judicial decisions and administrative regulations, rulings and practices in effect as of December 2011, all of which are subject to change and which, if changed, may be applied retroactively to a Fund, its shareholders and/or its assets. No rulings have been sought from the IRS or any other tax authority with respect to any of the tax matters discussed above.

From time to time, proposals are introduced before the United States Congress that if enacted would affect the foregoing discussion with respect to taxes and could also affect the availability of certain investments to a Fund.

The information included in the Prospectus with respect to taxes, including this section entitled Dividends, Distributions and Taxes, is a general and abbreviated summary of applicable provisions of the Code and Regulations as interpreted by the courts and the IRS as of December 2011 and is not intended as tax advice to any person. The Code and Regulations, as well as the current interpretations thereof, may be changed at any time by legislative, judicial, or administrative action. Accordingly, prospective purchasers are urged to consult their own tax advisors with specific reference to their own tax situation, including the potential application of United States federal, state, local and foreign tax laws.

Except as expressly set forth above, the foregoing discussion of United States federal income tax law relates solely to the application of that law to United States persons, i.e., United States citizens and residents and United States corporations, partnerships, trusts and estates. Each shareholder who is not a United States person should consider the United States and foreign tax consequences of ownership of shares of a Fund, including the possibility that such a shareholder may be subject to a United States withholding tax at a rate of 30% (or at a lower rate under an applicable income tax treaty) on amounts constituting ordinary income received by him or her, where such amounts are treated as income from United States sources under the Code. The foregoing discussion does not address the special tax rules applicable to certain classes of investors, such as dealers in securities or currencies, traders in securities, banks, tax-exempt entities, life insurance companies, persons holding an interest in a Fund as a hedge or as part of a straddle or conversion transaction, or holders whose functional currency is not the United States dollar.

TAX SHELTERED RETIREMENT PLANS

Shares of the Funds are offered in connection with the following retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k), Profit-Sharing, Money Purchase Pension Plans and certain 403(b) Retirement Plans. Write or call VP Distributors at (800) 243-4361 for further information about the plans.

Merrill Lynch Daily K Plan

Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan (the “Plan”) participants at NAV without an initial sales charge if:

(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more in assets invested in broker-dealer funds not advised or managed by Merrill Lynch Asset Management L.P. (“MLAM”) that are made available pursuant to a Service Agreement between Merrill Lynch and the fund’s principal underwriter or distributor and in funds advised or managed by MLAM (collectively, the “Applicable Investments”);

(ii) the Plan is recordkept on a daily valuation basis by an independent recordkeeper whose services are provided through a contract or alliance arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more in assets, excluding money market funds, invested in Applicable Investments; or

(iii) the Plan has 500 or more eligible employees, as determined by a Merrill Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service Agreement.

Plans recordkept on a daily basis by Merrill Lynch or an independent recordkeeper under a contract with Merrill Lynch that are currently investing in Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5 million invested in Applicable Investments, or after the normal holding period of seven years from the initial date of purchase.

THE DISTRIBUTOR

VP Distributors, a registered broker-dealer which is an indirect, wholly-owned subsidiary of Virtus and an affiliate of the Adviser and certain Subadvisers, serves as Distributor of the Trust’s shares. The principal office of VP Distributors is located at 100 Pearl Street, Hartford, Connecticut 06103.

The Trust and VP Distributors have entered into a distribution agreement under which VP Distributors has agreed to use its best efforts to find purchasers for Trust shares and the Trust has granted to VP Distributors the exclusive right to purchase from the Trust and resell, as principal, shares needed to fill unconditional orders for Trust shares. VP Distributors may sell Trust shares through its registered representatives or through securities dealers with whom it has sales agreements. VP Distributors may also sell Trust shares pursuant to sales agreements entered into with bank-affiliated securities brokers who, acting as agent for their customers, place orders for Trust shares with VP Distributors. It is not anticipated that termination of sales agreements with banks and bank affiliated securities brokers would result in a loss to their customers or a change in the NAV per share of a Fund of the Trust.

For its services under the distribution agreements, VP Distributors receives sales charges on transactions in Trust shares and retains such charges less the portion thereof allowed to its registered representatives and to securities dealers and securities brokers with whom it has sales agreements. In addition, VP Distributors may receive payments from the Trust pursuant to the Distribution Plans described below.

The following table shows the dollar amount of sales charges paid to VP Distributors for the fiscal years ended December 31, 2009, 2010, and 2011, with respect to sales of Class A Shares of each Fund and the amount of sales charges retained by the distributor and not reallowed to other persons. There were no sales charges paid to the distributor with respect to Class A Shares of the Funds not mentioned below. However, shareholders of the Emerging Markets

Opportunities Fund paid Class A deferred sales charges of $5,216 and Tax-Exempt Bond Fund paid Class A deferred sales charges of $224.


	Aggregate Underwriting Commissions ($)						Amount Retained by the Distributor ($)						Amount Reallowed ($)
	2009		2010		2011		2009		2010		2011		2009		2010		2011
Balanced Allocation Fund		5,289		8,983		28,068		766		1,226		3,614		4,523		7,757		24,454
Core Equity Fund		3,789		64,299		50,649		532		8,910		6,214		3,257		55,389		44,435
Emerging Markets Opportunities Fund		131,812		919,471		1,322,121		15,065		114,736		149,931		116,747		804,736		1,172,190
High Yield Income Fund		5,088		5,277		1,526		735		574		214		4,353		4,703		1,312
Short/Intermediate Bond Fund		6,130		37,640		8,713		662		4,505		1,749		5,468		33,135		6,964
Tax-Exempt Bond Fund		78,103		330,454		64,831		7,152		34,922		6,126		70,951		295,533		58,705
Value Equity Fund		6,363		1,539		2,347		808		223		347		5,555		1,316		2,000

Dealer Concessions

Dealers with whom the Distributor has entered into sales agreements receive a discount or commission on purchases of Class A Shares as set forth below.

Virtus Short/Intermediate Bond Fund and Virtus Tax-Exempt Bond Fund


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a percentage of Amount Invested			Dealer Discount Percentage of Offering Price
Under $50,000		2.75	%		2.83	%		2.25	%

$50,000 but under $100,000		2.25			2.30			2.00

$100,000 but under $250,000		1.75			1.78			1.50

$250,000 but under $500,000		1.25			1.27			1.00

$500,000 but under $1,000,000		1.00			1.01			1.00

$1,000,000 or more		None			None			None

Virtus High Yield Income Fund


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a Percentage of Amount Invested			Dealer Discount Percentage of Offering Price
Under $50,000		3.75	%		3.90	%		3.25	%

$50,000 but under $100,000		3.50			3.63			3.00

$100,000 but under $250,000		3.25			3.36			2.75

$250,000 but under $500,000		2.25			2.30			2.00

$500,000 but under $1,000,000		1.75			1.78			1.50

$1,000,000 or more		None			None			None

Equity Funds


Amount of Transaction at Offering Price	Sales Charge as a Percentage of Offering Price			Sales Charge as a Percentage of Amount Invested			Dealer Discount Percentage of Offering Price
Under $50,000		5.75	%		6.10	%		5.00	%

$50,000 but under $100,000		4.75			4.99			4.25

$100,000 but under $250,000		3.75			3.90			3.25

$250,000 but under $500,000		2.75			2.83			2.25

$500,000 but under $1,000,000		2.00			2.04			1.75

$1,000,000 or more		None			None			None

With respect to Class C Shares, the Distributor intends to pay investment dealers a sales commission of 1% of the sale price of Class C Shares sold by such dealers. This sales commission will not be paid to dealers for sales of Class C Shares purchased by 401(k) participants of the Merrill Lynch Daily K Plan (the “Plan”) due to waiver of the CDSC for these Plan participants’ purchases. Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.

Dealers and other entities who enter into special arrangements with the Distributor may receive compensation for the sale and promotion of shares of the Trust and/or for providing other shareholder services. Such fees are in addition to the sales commissions referenced above and may be based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of fund shares; access to sales personnel and information dissemination services; provision of recordkeeping and administrative services to qualified employee benefit plans; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the Trust through distribution fees, service fees or transfer agent fees or in some cases, the Distributor may pay certain fees from its own profits and resources.

From its own resources or pursuant to the Trust’s Distribution Plan, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time to time, re-allow the entire portion of the sales charge on Class A Shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.

Administrative Services

VP Distributors also acts as administrative agent (“Administrator”) of the Trust. For its services as Administrator, VP Distributors receives an administration fee based upon the average net assets across all non-money market series of the Virtus Mutual Funds at the following annual rates:


First $15 billion	0.10	%
$15+ billion to $30 billion	0.095	%
$30+ billion to $50 billion	0.09	%
Greater than $50 billion	0.085	%

For the money market funds, the fee is 0.015% of the average net assets across all Virtus money market funds within Virtus Mutual Funds. From April 14, 2010 until December 31, 2010, the fee was based upon the average net assets across all non-money market series of the Virtus Mutual Funds at the annual rate of 0.10%.

Prior to April 14, 2010, VP Distributors was paid at the following incremental annual rates (based upon average net assets across all non-money market series of Virtus Mutual Funds):


First 5 billion	0.09	%
$5 billion to $15 billion	0.08	%
Greater than $15 billion	0.07	%

For the Money Market Funds, the fee was 0.015% of the average net assets across all Virtus Money Market Funds within the Virtus Mutual Funds.

The following table shows the dollar amount of fees paid to VP Distributors for the fiscal years ended December 31, 2009, 2010 and 2011, for its administrative services with respect to each Fund.


	Administration Fee ($)
	2009		2010		2011
Balanced Allocation Fund		46,840		66,960		69,533
Core Equity Fund		70,841		90,850		77,768
Emerging Markets Opportunities Fund		138,926		495,957		1,750,397
High Yield Income Fund		34,260		50,555		52,077
Insight Government Money Market Fund		203,324		68,142		150,381
Insight Money Market Fund		872,644		480,209		192,539
Insight Tax-Exempt Money Market Fund		402,281		211,087		34,297
Short/Intermediate Bond Fund		88,800		88,663		81,851
Tax-Exempt Bond Fund		72,084		132,268		156,728
Value Equity Fund		137,677		155,257		133,933

BNY Mellon acts as sub-administrative and accounting agent of the Trust. For its services in this capacity, BNY Mellon receives a fee based on the average net assets across all non-money market funds within the Virtus Mutual Funds at the following incremental rates:


First $15 billion	0.0358	%
Over $15 billion	0.025	%

For the money market Funds, the fee is 0.02% of the average net assets across all Virtus money market Funds within the Virtus Mutual Funds. For the purposes of applying the fee breakpoints, the Virtus Mutual Funds’ average net assets may be aggregated with the average net assets of a non-affiliated fund complex for which VP Distributors acts as administrator.

SERVICE AND DISTRIBUTION PLANS

The Trust has adopted a service and/or a distribution plan for each class of shares, as indicated below (collectively, the “Plans”), to compensate the Distributor for the services it provides and for the expenses it bears under the Underwriting Agreement. The Service Plans provide for the Funds to pay service fees up to the amounts indicated, but do not authorize payments under the Plan to be made for distribution purposes and have not been adopted under Rule 12b-1 of the 1940 Act. The Distribution Plans provide for the Funds to pay distribution/service fees in the amounts indicated and have been adopted in accordance with Rule 12b-1. Fees are calculated at the indicated annual rate against the average daily net assets of each applicable Fund.


Plan Name	Plan Applicable to Named Funds	Amount Authorized under Plan			Amount Currently Authorized by Board of Trustees
Distribution Plan Pursuant to Rule 12b-1 – Class A Shares	All Funds, except Money Market Funds		0.25	%		0.25	%
Distribution Plan Pursuant to Rule 12b-1 – Class A Shares	Money Market Funds		0.10	%		0.10	%
Distribution Plan Pursuant to Rule 12b-1 –Class C Shares	All Funds		1.00	%		1.00	%
Service Plan – Class A Shares	Money Market Funds		0.25	%		0.25	%
Service Plan – Class I Shares	All Funds		0.25	%		0.05	%

Under each Plan, the Distributor will pay a quarterly fee to qualifying broker-dealer firms, as compensation for providing personal services and/or the maintenance of shareholder accounts, with respect to shares sold by such firms (“service fee”). Under the Distribution Plans, the amounts paid may be used for distribution related activities. This fee will not exceed on an

annual basis 0.25% of the average annual NAV of such shares, and will be in addition to sales charges on Trust shares which are reallowed to such firms. To the extent that the entire amount of the service fee is not paid to such firms, the balance will serve as compensation for personal and account maintenance services furnished by the Distributor.

Each Plan requires that at least quarterly the Board of Trustees of the Trust review a written report with respect to the amounts expended under the Plans and the purposes for which such expenditures were made. While the Plans are in effect, the Trust will be required to commit the selection and nomination of candidates for Trustees who are not interested persons of the Trust to the discretion of other Trustees who are not interested persons (the “Rule 12b-1 Trustees”). Each Plan continues in effect from year to year provided such continuance is approved annually in advance by votes of the majority of both (a) the Board of Trustees of the Trust and (b) the Rule 12b-1 Trustees, cast in person at a meeting called for the purpose of voting on the Plan and any agreements related to the Plan.

In order to receive payments under the Plans, participants (“Service Organization”) must meet such qualifications to be established in the sole discretion of the Distributor, such as services to the Funds’ shareholders; or services providing the Funds with more efficient methods of offering shares to coherent groups of clients, members or prospects of a participant; or services permitting bulking of purchases or sales, or transmission of such purchases or sales by computerized tape or other electronic equipment; or other processing.

The following table shows Service Organization fees paid by the Funds to VP Distributors with respect to Class A Shares, Class C Shares and Class I Shares of each Fund for which such fees were paid for the period ended December 31, 2011. The Rule 12b-1 Fees were primarily used to compensate broker dealers and financial institutions for services that they provided.


	Shareholder Servicing Plan Fees Paid ($)		Shareholder Servicing Plan Fees Waived ($)		Rule 12b-1 Fees Paid ($)		Rule 12b-1 Fees Waived ($)
Balanced Allocation Fund		30,805		30,632		26,617		—
Core Equity Fund		32,555		32,555		36,055		—
Emerging Markets Opportunities Fund		675,540		675,533		1,423,793		—
High Yield Income Fund		25,086		25,150		9,380		—
Insight Government Money Market Fund		729,592		444,254		114,161		399,257
Insight Money Market Fund		1,256,018		488,220		307,119		916,000
Insight Tax-Exempt Money Market Fund		320,003		62,779		102,912		356,894
Short/Intermediate Bond Fund		30,731		30,730		129,192		—
Tax-Exempt Bond Fund		26,428		26,428		410,205		—
Value Equity Fund		62,632		62,631		25,550		—

For the fiscal year ended December 31, 2011, the Funds paid Rule 12b-1 distribution fees in the amount of $2,719,137 of which the principal underwriter paid $1,468,757 and unaffiliated broker-dealers received $1,250,380. Distributor expenses under the 12b-1 Plans consisted of: (1) compensation to dealers, $1,945,874; (2) compensation to sales personnel, $3,232,379; (3) advertising, $301,840; (4) printing and mailing of prospectuses to other than current shareholders, $30,145; and (5) other, $65,582.

For the fiscal year ended December 31, 2011, the Funds paid service fees in the amount of $1,310,480 of which the principal underwriter received $9,564 and unaffiliated broker-dealers received $1,300,916. Distributor expenses under the Services Agreement consisted of compensation to dealers of $270,476.

No interested person of the Trust and no Trustee who is not an interested person of the Trust, as that term is defined in the 1940 Act, had any direct or indirect financial interest in the operation of the Plans or related agreements.

The Board of Trustees has also adopted a Plan Pursuant to Rule 18f-3 under 1940 Act permitting the issuance of shares in multiple classes.

The FINRA regards certain distribution fees as asset-based sales charges subject to FINRA sales load limits. The FINRA’s maximum sales charge rule may require the Board of Trustees to suspend distribution fees or amend the Plans.

MANAGEMENT OF THE TRUST

The Trust is an open-end management investment company known as a mutual fund. The Board of Trustees of the Trust is responsible for the overall supervision of the Trust and performs the various duties imposed on Trustees by the 1940 Act and Massachusetts business trust law.

Trustees and Officers

The Board of Trustees is responsible for the overall supervision of the Funds, including establishing the Funds’ policies, general supervision and review of their investment activities. The officers who administer the Funds’ daily operations, are appointed by the Board of Trustees. The current Trustees and officers of the Trust performing a policy-making function and their affiliations and principal occupations for the past five years are set forth below. Unless otherwise noted, each Trustee of the Trust also serves as a Trustee of the other Virtus Mutual Fund trusts and the address of each individual is 100 Pearl Street, Hartford, Connecticut 06103. There is no stated term of office for Trustees or officers of the Trust.

Independent Trustees


Name and Year of Birth	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years	Other Directorships Held by Trustee During Past 5 Years

Leroy Keith, Jr. YOB: 1939	Served since 2006.	44	Chairman (since 2010), Bloc Global Services Group, LLC (construction and redevelopment company); Managing Director (2007 to 2008), Almanac Capital Management (commodities business).	Director/Trustee (since 2010), Wells Fargo Advantage Funds (149 series) and their predecessors, Evergreen Funds ((1989 to 2010); Director (2003 to 2010), Diversapack Co. (soft packaging company).

Philip McLoughlin Chairman YOB: 1946	Served since 2006.	58	Partner (since 2006), Cross Pond Partners, LLC (strategy consulting firm); Managing Director (2009 to 2010), SeaCap Asset Management Fund I, L.P. and SeaCap Partners, LLC (2009 to 2010) (investment management).	Director (since 1991) and Chairman (since 2010), World Trust Fund; Chairman and Trustee (since 2003), Virtus Variable Insurance Trust (9 portfolios); Director (since 1995), DTF Tax-Free Income Fund, Inc.; Director (since 1995), Duff & Phelps Utility and Corporate Bond Trust, Inc.; Director (since 2009), DNP Select Income Fund Inc.; Director (since 2011), Duff & Phelps Global Utility Income Fund Inc.; Trustee (since 2011), Virtus Global Multi-Sector Fixed Income Fund; Director (1985 to 2009), Argo Group International Holdings Inc. and its predecessor, PXRE Corporation (insurance).


Name and Year of Birth	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years	Other Directorships Held by Trustee During Past 5 Years

Geraldine M. McNamara YOB: 1951	Served since 2006.	48	Retired.	Director (since 2003), DTF Tax-Free Income Fund, Inc.; Director (since 2003), Duff & Phelps Utility and Corporate Bond Trust, Inc.; Director (since 2009), DNP Select Income Fund Inc.; Director (since 2011) Duff & Phelps Global Utility Income Fund Inc.

James M. Oates: YOB: 1946	Served since 2006.	44	Managing Director (since 1994), Wydown Group (consulting firm).	Chairman and Trustee (since 2005), John Hancock Variable Insurance Trust and John Hancock Funds II (collectively, 210 portfolios); Director (since 1996), Stifel Financial; Chairman and Director (since 1999), Connecticut River Bank and Director (since 1998), Connecticut River Bancorp; Chairman (since 2000), Emerson Investment Management, Inc.; Director (since 2002), New Hampshire Trust Company; Non-Executive Chairman (2007 to 2011), Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services).

Richard E. Segerson YOB: 1946	Served since 2006.	44	Managing Director (since 1998), Northway Management Company.	None.

Ferdinand L.J. Verdonck YOB: 1942	Served since 2006.	44	Director (since 1998), The J.P. Morgan European Investment Trust; Director (since 2005), Galapagos N.V. (biotechnology); Mr. Verdonck is also a director of several non-U.S. companies.	None.

Interested Trustee

The individual listed below is an “interested person” of the Trust, as defined in Section 2(a)(19) of the 1940 Act, as amended, and the rules and regulations thereunder.


Name, Positions with Trust and Year of Birth	Length of Time Served	Number of Portfolios in Fund Complex Overseen by Trustee	Principal Occupation(s) During Past 5 Years	Other Directorships During Past 5 Years

George R. Aylward* Trustee and President YOB: 1964	Served since 2006.	47	Director, President and Chief Executive Officer (since 2008), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various senior officer positions with Virtus affiliates (since 2005).	Chairman, President and Chief Executive Officer (since 2006), The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.; Trustee and President (since 2011), Virtus Global Multi-Sector Income Fund.

Mr. Aylward is an “interested person” as defined in the Investment Company Act of 1940, by reason of his position as President and Chief Executive Officer of Virtus Investment Partners, Inc. (“Virtus”), the ultimate parent company of the Adviser, and various positions with its affiliates including the Adviser.

Officers of the Trust Who Are Not Trustees


Name, Address and Year of Birth	Position(s) Held with the Trust and Length of Time Served	Principal Occupation(s) During Past 5 Years

W. Patrick Bradley YOB: 1972	Vice President, since 2011; Chief Financial Officer and Treasurer, since 2006.	Senior Vice President, Fund Services (since 2010), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various officer positions (since 2006) with Virtus affiliates; Vice President (since 2011), Chief Financial Officer and Treasurer (since 2004), Virtus Variable Insurance Trust; Vice President, Chief Financial Officer and Treasurer (since 2011), Virtus Global Multi-Sector Income Fund; Vice President (since 2012) and Treasurer (Chief Financial Officer) (since 2007), The Zweig Fund, Inc. and Zweig Total Return Fund, Inc.; Vice President and Assistant Treasurer (since 2011), Duff & Phelps Global Utility Income Fund Inc.

Kevin J. Carr YOB: 1954	Vice President, Chief Legal Officer, Counsel and Secretary, since 2005.	Senior Vice President (since 2009), Vice President, Counsel and Secretary (2008 to 2009), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various senior officer positions (since 2005) with Virtus affiliates; Vice President, Chief Legal Officer, Counsel and Secretary (since 2010), Virtus Variable Insurance Trust; Vice President, Chief Legal Officer, Counsel and Secretary (since 2011), Virtus Global Multi-Sector Income Fund; Vice President (since 2012), Secretary and Chief Legal Officer (since 2005), The Zweig Fund, Inc. and Zweig Total Return Fund, Inc.; Vice President and Assistant Secretary (since 2011), Duff & Phelps Global Utility Income Fund Inc.

Nancy J. Engberg YOB: 1956	Vice President and Chief Compliance Officer, since 2011.	Vice President (since 2008) and Chief Compliance Officer (2008 to 2011), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various officer positions (since 2003) with Virtus affiliates; Vice President (since 2010), Chief Compliance Officer (since 2011), Virtus Variable Insurance Trust; Vice President and Chief Compliance Officer (since 2011), Virtus Global Multi-Sector Income Fund; Vice President and Chief Compliance Officer (since 2012), The Zweig Fund, Inc. and Zweig Total Return Fund, Inc.


Name, Address and Year of Birth	Position(s) Held with the Trust and Length of Time Served	Principal Occupation(s) During Past 5 Years

Francis G. Waltman YOB: 1962	Senior Vice President, since 2008.	Executive Vice President, Product Development (since 2009), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various senior officer positions (since 2006) with Virtus affiliates; Senior Vice President (since 2010), Virtus Variable Insurance Trust; Senior Vice President (since 2011), Virtus Global Multi-Sector Income Fund.

Qualifications and Experience of the Board

In addition to the information set forth above, the following provides further information about each Trustee’s specific experience, qualifications, attributes or skills. The information in this section should not be understood to mean that any of the Trustees is an “expert” within the meaning of the federal securities laws.

George R. Aylward

In addition to his positions with the Trust, Mr. Aylward is a Director and the President and Chief Executive Officer of Virtus, the ultimate parent company of the Adviser. He also holds various executive positions with the Adviser, certain Subadvisers and the Distributor to the Trust, and previously held such positions with the former parent company of Virtus. He therefore has experience in all aspects of the development and management of registered investment companies, and the handling of various financial, staffing, regulatory and operational issues. Mr. Aylward is a certified public accountant and holds an MBA, and he also serves as an officer and director of two closed-end funds managed by an affiliate of the Adviser and two closed-end funds managed by the Adviser.

Leroy Keith, Jr.

Dr. Keith has served in various roles in business and education, and has over 25 years of experience serving as a trustee to various mutual fund families. He holds both a master’s degree and a doctorate in education and business administration. Dr. Keith has also served as an executive in commodities businesses for a number of years, and he has broad experience with respect to corporate governance and organizational leadership.

Philip R. McLoughlin

Mr. McLoughlin has extensive knowledge regarding asset management and the financial services industry, having served for a number of years in various executive and director positions of the company that is now Virtus and its affiliates, culminating in his role as chairman and chief executive officer. He also served as legal counsel and chief compliance officer to the investment companies associated with those companies at the time, giving him an understanding of the legal and compliance issues applicable to mutual funds. Mr. McLoughlin also has worked with U.S. and foreign companies in the insurance and reinsurance industry. He is also a Director of four closed-end funds managed by an affiliate of the Adviser and two closed-end funds managed by the Adviser.

Geraldine M. McNamara

Ms. McNamara was an executive at U.S. Trust Company of New York for 24 years, where she rose to the position of Managing Director. Her responsibilities at U.S. Trust included the oversight of U.S. Trust’s personal banking business. In addition to her managerial and banking experience, Ms. McNamara’s decades of advising individuals on their personal financial management have given her an enhanced understanding of the goals and expectations that individual investors bring to the Funds, ensuring that this important perspective is regularly included in the deliberations of the Board. Ms. McNamara is also a Director of four closed-end funds managed by an affiliate of the Adviser.

James M. Oates

Mr. Oates was instrumental in the founding of a private global finance, portfolio management and administration company, and he has also served in executive and director roles for various types of financial services companies. As a senior officer and director of investment management companies, Mr. Oates has experience in investment management. He also previously served as chief executive officer of two banks, and holds an MBA. Mr. Oates also has experience as a director of other publicly traded companies and has served for a number of years as the Chairman of the Board of a family of mutual funds unaffiliated with the Trust, with over $100 billion in assets.

Richard E. Segerson

Mr. Segerson has served in financial and other executive roles with various operating companies, including serving as the Chief Financial Officer, Controller and Chief Operating Officer of such entities. These roles have provided him with an understanding of financial and operational issues, as has his experience as a public accountant. Mr. Segerson also has over 28 years of experience serving as a trustee to various mutual funds, and he holds an MBA. Mr. Segerson also has served for a

number of years as the Managing Director of a family office, providing wealth management services to individuals. This experience enhances his understanding of the perspective of individual fund shareholders.

Ferdinand L.J. Verdonck

Mr. Verdonck brings to the Board a broad background in finance, investments, banking and international business. His experience includes serving as the chief financial officer of the U.S. subsidiary of an international company, and as a senior vice president of a major U.S. investment firm. He also holds degrees in both law and economics. Mr. Verdonck has served for more than 26 years on the boards and audit committees of various U.S. and foreign companies.

Leadership Structure of the Board

The Board is currently composed of seven Trustees, including six Trustees who are not “interested persons” of the Trust, as that term is defined in the 1940 Act (each, an “Independent Trustee”). In addition to four regularly scheduled meetings per year, the Board holds special meetings either in person or via telephone to discuss specific matters that may require consideration prior to the next regular meeting. As discussed below, the Board has established several standing committees to assist the Board in performing its oversight responsibilities, and each such committee has a chairperson. The Board may also designate working groups or ad hoc committees as it deems appropriate.

The Board has appointed Mr. McLoughlin, an Independent Trustee, to serve in the role of Chairman. The Chairman’s primary role is to participate in the preparation of the agenda for meetings of the Board and the identification of information to be presented to the Board with respect to matters to be acted upon by the Board. The Chairman also presides at all meetings of the Board and between meetings generally acts as a liaison with the Trust’s service providers, officers, legal counsel, and the other Trustees. The Chairman may perform such other functions as may be requested by the Board from time to time. Except for any duties specified herein or pursuant to the Trust’s Declaration of Trust or By-laws, or as assigned by the Board, the designation of Chairman does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations or liability imposed on such person as a member of the Board, generally.

The Board believes that this leadership structure is appropriate because it allows the Board to exercise informed and independent judgment over matters under its purview, and it allocates areas of responsibility among committees or working groups of Trustees and the full Board in a manner that enhances effective oversight. Mr. McLoughlin previously served as the Chairman and Chief Executive Officer of the company that is now Virtus; however, he is now an Independent Trustee due to (a) the fact that Virtus is no longer affiliated with The Phoenix Companies, Inc. (which was its parent company when Mr. McLoughlin retired), (b) the passage of time and (c) the manner in which Mr. McLoughlin conducts his trusteeship. As a result of this balance, it is believed that Mr. McLoughlin has the ability to provide independent oversight of the Trust’s operations within the context of his detailed understanding of the perspective of the Adviser and the Trust’s other service providers. The Board therefore considers leadership by Mr. McLoughlin as enhancing the Board’s ability to provide effective independent oversight of the Trust’s operations and meaningful representation of the shareholders’ interests.

The Board also believes that having a super-majority of Independent Trustees is appropriate and in the best interest of the Funds’ shareholders. Nevertheless, the Board also believes that having an interested person serve on the Board brings corporate and financial viewpoints that are, in the Board’s view, crucial elements in its decision-making process. In addition, the Board believes that Mr. Aylward, who is currently the Chairman and President of the Adviser, and the President and Chief Executive Officer of Virtus, and serves in various executive roles with other affiliates of the Adviser who provide services to the Trust, provides the Board with the Adviser’s perspective in managing and sponsoring the Virtus Mutual Funds as well as the perspective of other service providers to the Trust. The leadership structure of the Board may be changed at any time and in the discretion of the Board, including in response to changes in circumstances or the characteristics of the Trust.

Risk Oversight by the Board

As a registered investment company, the Trust is subject to a variety of risks, including investment risks, financial risks, compliance risks and regulatory risks. As part of its overall activities, the Board oversees the management of the Trust’s risk management structure by the Trust’s Adviser, Administrator, Distributor, officers and others. The responsibility to manage the Funds’ risk management structure on a day-to-day basis is subsumed within the other responsibilities of these parties. The Board then considers risk management issues as part of its general oversight responsibilities throughout the year at regular meetings of the Board and its committees, and within the context of any ad hoc communications with the Trust’s service providers and officers. The Trust’s Adviser, Subadviser, Distributor, officers and legal counsel prepare regular reports to the Board that address certain investment, valuation, compliance and other matters, and the Board as a whole or its committees may also receive special written reports or presentations on a variety of risk issues at the request of the Board, a committee, the Chairman or a senior officer.

The Board receives regular written reports describing and analyzing the investment performance of the Funds. In addition, the portfolio managers of the Funds and senior management of the Subadvisers meet with the Board periodically to discuss

portfolio performance and answer the Board’s questions with respect to portfolio strategies and risks. To the extent that a Fund changes a primary investment strategy, the Board generally is consulted in advance with respect to such change.

The Board receives regular written reports from the Trust’s Chief Financial Officer that enable the Board to monitor the number of fair valued securities in the Funds’ portfolios, the reasons for the fair valuation and the methodology used to arrive at the fair value. Such reports also include information concerning illiquid securities within the Funds’ portfolios. The Board and/or the Audit Committee may also review valuation procedures and pricing results with the Funds’ independent auditors in connection with the review of the results of the audit of the Funds’ year-end financial statements.

The Board also receives regular compliance reports prepared by the compliance staff of the Adviser and the Adviser’s ultimate parent company, Virtus, and meets regularly with the Trust’s Chief Compliance Officer (“CCO”) to discuss compliance issues, including compliance risks. As required under applicable rules, the Independent Trustees meet regularly in executive session with the CCO, and the CCO prepares and presents an annual written compliance report to the Board. The CCO, as well as the compliance staff of the Adviser and Virtus, provide the Board with reports on their examinations of functions and processes within the Adviser and the Subadvisers that affect the Funds. The Board also adopts compliance policies and procedures for the Trust and approves such procedures for the Trust’s service providers. The compliance policies and procedures are specifically designed to detect and prevent violations of the federal securities laws.

In its annual review of the Funds’ advisory, subadvisory and distribution agreements, the Board reviews information provided by the Adviser, the Subadviser and the Distributor relating to their operational capabilities, financial conditions and resources. The Board may also discuss particular risks that are not addressed in its regular reports and processes.

The Board recognizes that it is not possible to identify all of the risks that may affect the Funds or to develop processes and controls to eliminate or mitigate their occurrence or effects. The Board periodically reviews the effectiveness of its oversight of the Funds and the other funds in the Virtus Mutual Funds family, and the processes and controls in place to limit identified risks. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.

Committees of the Board

The Board of Trustees has established several standing committees to oversee particular aspects of the Funds’ management. They are:

The Audit Committee. The Audit Committee is responsible for overseeing the Funds’ accounting and auditing policies and practices. The Audit Committee reviews the Funds’ financial reporting procedures, their system of internal control, the independent audit process, and the Funds’ procedures for monitoring compliance with investment restrictions and applicable laws and regulations and with the Code of Ethics. The Audit Committee is composed entirely of Independent Trustees; its members are James M. Oates, Chairperson, Dr. Leroy Keith, Jr., Philip R. McLoughlin, Geraldine M. McNamara, Richard E. Segerson and Ferdinand L.J. Verdonck. The Committee met five times during the Trust’s last fiscal year.

The Executive Committee. The function of the Executive Committee is to serve as a delegate of the full Board of Trustees, as well as act on behalf of the Board when it is not in session, subject to limitations as set by the Board. Its members are Philip R. McLoughlin, Chairperson, Dr. Leroy Keith, Jr., and James M. Oates. Each of the members is an Independent Trustee. The Committee met once during the Trust’s last fiscal year.

The Governance and Nominating Committee. The Governance and Nominating Committee is responsible for developing and maintaining governance principles applicable to the Funds, for nominating individuals to serve as Trustees, including as Independent Trustees and annually evaluating the Board and Committees. The Governance and Nominating Committee is composed entirely of Independent Trustees; its members are Dr. Leroy Keith, Jr., Chairperson, Philip R. McLoughlin, Geraldine M. McNamara, James M. Oates, Richard E. Segerson and Ferdinand L.J. Verdonck. The Committee met four times during the Trust’s last fiscal year.

The Governance and Nominating Committee considers candidates for trusteeship and makes recommendations to the Board with respect to such candidates. There are no specific required qualifications for trusteeship. The committee considers all relevant qualifications of candidates for trusteeship, such as industry knowledge and experience, financial expertise, current employment and other board memberships, and whether the candidate would be qualified to be considered an Independent Trustee. The Board believes that having among its members a diversity of viewpoints, skills and experience and a variety of complementary skills enhances the effectiveness of the Board in its oversight role. The committee considers the qualifications of candidates for trusteeship in this context.

The Board has adopted a policy for consideration of Trustee nominees recommended by shareholders. With regards to such policy, an individual shareholder submitting a nomination must hold for at least one full year 5% of the shares of a series of the Trust. Shareholder nominees for Trustee will be given the same consideration as any other candidate provided the nominee meets certain minimum requirements.

Compensation

Trustees who are not employed by the Adviser or its affiliates, receive an annual retainer and fees and expenses for attendance at Board and Committee meetings. Officers and employees of the Adviser of the Funds who are interested persons are compensated for their services by the Adviser of the Funds, or an affiliate of the Adviser of the Funds and receive no compensation from the Funds. The Trust does not have any retirement plan for its Trustees.

For the Trust’s fiscal year ended December 31, 2011, the current Trustees received the following compensation:


Name of Trustee	Aggregate Compensation from Trust		Total Compensation From Trust and Fund Complex (45 Funds) Paid to Trustees

Independent Trustees
Leroy Keith, Jr.	$	44,443	$	155,000	(44 Funds)
Philip R. McLoughlin	$	73,303	$	404,500	(57 Funds)
Geraldine M. McNamara	$	42,977	$	229,000	(48 Funds)
James M. Oates	$	45,909	$	160,000	(44 Funds)
Richard E. Segerson	$	42,977	$	150,000	(44 Funds)
Ferdinand L.J. Verdonck	$	42,977	$	148,000	(44 Funds)

Interested Trustee
George R. Aylward	$	0	$	0

Trustee Ownership of Securities

Set forth in the table below is the dollar range of equity securities owned by each Trustee as of December 31, 2011.


Name of Trustee	Dollar Range of Equity Securities In a Fund of the Trust	Aggregate Dollar Range of Trustee Ownership in all Funds Overseen by Trustee in Family of Investment Companies

Independent Trustees
Leroy Keith, Jr.	None	$10,001-$50,000
Philip R. McLoughlin	Emerging Markets Opportunities Fund – Over $100,000	Over $100,000
Geraldine M. McNamara	Emerging Markets Opportunities Fund – $10,001-$50,000	Over $100,000
James M. Oates	Emerging Markets Opportunities Fund – $50,001-$100,000	Over $100,000
Richard E. Segerson	Insight Money Market Fund – Over $100,000	Over $100,000
Ferdinand L.J. Verdonck	Emerging Markets Opportunities Fund – $1-$10,000 Value Equity Fund – $10,001-$50,000	Over $100,000

Interested Trustee
George R. Aylward	Emerging Markets Opportunities Fund – $10,001-$50,000 Value Equity Fund – $10,001-$50,000	Over $100,000

As of April 3, 2012, the Trustees and Officers of the Trust as a whole owned less than 1% of the outstanding shares of any of the Funds.

Principal Shareholders

The following table sets forth information as of April 3, 2012 with respect to each person who owns of record or is known by the Trust to own of record or beneficially 5% or more of any class of any Fund’s outstanding shares, as noted:


Name of Shareholder	Fund and Class	Percentage of Class			Number of Shares
AMERICAN ENTERPRISE INVESTMENT SVC ⁽¹⁾ PO BOX 9446 MINNEAPOLIS MN 55440-9446	Core Equity Fund – Class C Short/Intermediate Bond Fund – Class A Tax-Exempt Bond Fund – Class A Value Equity Fund – Class C		5.49 18.39 8.69 5.36	% % % %		1,383.887 283,063.038 915,486.443 1,097.106

ROBERT W BAIRD & CO. INC. 777 EAST WISCONSIN AVENUE MILWAUKEE WI 53202-5300	Core Equity Fund – Class C		5.22	%		1,316.377


Name of Shareholder	Fund and Class	Percentage of Class			Number of Shares
MARIA BING TTEE THE BING FAMILY TRUST LOS ANGELES CA 90042-5071	Balanced Allocation Fund – Class C		8.62	%		5,914.258

BMO HARRIS BANK FBO ATTN APPLICATION BALANCING 2000 S FINLEY ROAD LOMBARD IL 60148	Insight Government Money Market Fund – Class A Insight Money Market Fund – Class A Insight Tax-Exempt Money Market Fund – Class A		38.72 25.99 78.09	% % %		29,590,422.170 78,654,027.570 67,210,868.690

BMO HARRIS BANK FBO ATTN APPLICATION BALANCING II 2000 S FINLEY ROAD LOMBARD IL 60148	Insight Government Money Market Fund – Class A Insight Money Market Fund – Class A Insight Tax-Exempt Money Market – Class A		17.96 48.67 7.53	% % %		13,711,763.400 147,275,701.850 6,482,943.810

BNYM I S TRUST CO JANE BINDER CUST FOR NON-DFI SIMPLE IRA MINNEAPOLIS MN 55419-1311	Balanced Allocation Fund – C Core Equity fund – Class C		7.49 9.15	% %		5,139.837 2,304.517

BNYM I S TRUST CO CUST FOR THE IRA OF LAWRENCE W GOUGH HODGDON ME 04730-4047	Core Equity Fund – Class A		5.31	%		47,550.030

BNYM I S TRUST CO CUST FOR THE NON-DFI SIMPLE IRA OF LISA L LAUDANO WEST HAVEN CT 06516-7014	Balanced Allocation Fund – Class C		5.02	%		3,444.303

BNYM I S TRUST CO CUST FOR THE IRA OF WILIAM F WADSWORTH NAPLES FL 34104-0863	Core Equity Fund – Class A		5.82	%		52,074.363

CHARLES SCHWAB & CO INC ⁽¹⁾ SPECIAL CUSTODY ACCOUNT FOR EXCLUSIVE BENEFIT OF CUSTOMERS 101 MONTGOMERY ST SAN FRANCISCO CA 94104-4151	Emerging Markets Opportunities Fund – Class I Tax-Exempt Bond Fund – Class I		5.86 6.94	% %		17,582,840.676 863,892.291

CITIGROUP GLOBAL MARKETS INC ⁽¹⁾ HOUSE ACCOUNT ATTN PETER BOOTH 7TH FLOOR 333 W 34TH ST NEW YORK NY 10001-2402	Core Equity Fund – Class C Emerging Markets Opportunities Fund Class – A Emerging Markets Opportunities Fund – Class C Emerging Markets Opportunities Fund – Class I Value Equity Fund – Class C Short/Intermediate Bond Fund – Class C Tax-Exempt Bond Fund – Class A Tax-Exempt Bond Fund – Class C		6.32 23.85 18.26 18.71 8.61 7.82 5.35 10.17	% % % % % % % %		1,591.793 17,874,871.966 2,130,136.176 56,059,808.933 1,761.914 103,047.176 563,595.456 288,498.446

EDWARD D JONES & CO ⁽¹⁾ ATTN MUTUAL FUND SHAREHOLDER ACCOUNTING 201 PROGRESS PKWY MARYLAND HTS MO 63043-3009	Emerging Markets Opportunities Fund – Class I		5.64	%		16,915,967.745


Name of Shareholder	Fund and Class	Percentage of Class			Number of Shares
FIRST CLEARING, LLC ⁽¹⁾ SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET STREET ST LOUIS MO 63103	Balanced Allocation Fund – Class C Core Equity Fund – Class C Emerging Markets Opportunities Fund – Class C Emerging Markets Opportunities Fund – Class I High Yield Income Fund – Class C Short/Intermediate Bond Fund – Class C Tax-Exempt Bond Fund – Class A Tax-Exempt Bond Fund – Class C Tax-Exempt Bond Fund – Class I		10.06 9.44 12.00 16.55 8.05 8.42 8.64 10.88 15.28	% % % % % % % % %		6,900.633 2,378.537 1,400,194.822 49,606,555.671 6,711.268 110,977.138 909,660.334 308,735.956 1,902,579.356

ANN FOSTER TOD LILYDALE MN 55118-3605	Value Equity Fund – Class C Core Equity Fund – Class C		10.03 5.14	% %		2,051.283 1,294.498

ILLINOIS TOOL WORKS INC EMPLOYEES BENEFIT TRUST CUST FBO NORTHERN TRUST COMPANY TTEE S/D ATTN FELIX RODRIGUEZ GLENVIEW IL 60026-5811	Insight Tax-Exempt Money Market Fund – Class I		35.95	%		33,674,987.430

KEYSTONE FOODS INTERMEDIATE LLC TREASURY DEPARTMENT FIVE TOWER BRIDGE 300 BARR HARBOR DR STE 600 W CNSHOHOCKEN PA 19428-2984	Insight Money Market Fund – Class I		13.87	%		49,708,369.660

SANDRA KINION TOD PHOENIX AZ 85086-5525	High Yield Income Fund – Class C		24.39	%		20,337.858

LPL FINANCIAL SERVICES ⁽¹⁾ 9785 TOWNE CENTRE DRIVE SAN DIEGO CA 92121-1968	Tax-Exempt Bond Fund – Class I		13.99	%		1,741,440.015

MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	High Yield Income Fund – Class I		48.04	%		2,456,020.193

MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	Insight Money Market Fund – Class I		36.14	%		129,509,555.330

MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	Balanced Allocation Fund – Class I		99.06	%		4,824,803.119

MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	High Yield Income Fund – Class I Short/Intermediate Bond Fund – Class I		42.50 53.29	% %		2,172,568.725 3,145,209.870


Name of Shareholder	Fund and Class	Percentage of Class			Number of Shares
MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	Value Equity Fund – Class I		72.51	%		8,057,102.835

MAC & CO ⁽¹⁾ MUTUAL FUND OPERATIONS PO BOX 3198 525 WILLIAM PENN PLACE PITTSBURGH PA 15230-3198	Core Equity Fund – Class I		67.40	%		2,283,228.898

MLPF&S ⁽¹⁾ FOR THE SOLE BENEFIT OF ITS CUSTOMERS ATTN FUND ADMINISTRATION 4800 DEER LAKE DR E FL 3 JACKSONVILLE FL 32246-6484	Balanced Allocation Fund – Class A Balanced Allocation Fund – Class C Core Equity Fund – Class C Emerging Markets Opportunities Fund – Class C High Yield Income Fund – Class A High Yield Income Fund – Class C Short/Intermediate Bond Fund – Class C Short/Intermediate Bond Fund – Class I Tax-Exempt Bond Fund – Class A Tax-Exempt Bond Fund – Class C Tax-Exempt Bond Fund – Class I Value Equity Fund – Class C		6.70 5.87 7.40 11.10 7.94 27.13 27.41 6.66 7.72 21.78 18.95 16.39	% % % % % % % % % % % %		37,466.382 4,026.424 1,864.798 1,295,046.584 19,121.431 22,620.007 361,042.353 393,481.792 813,458.042 617,637.335 2,358,708.724 3,351.773

MORGAN STANLEY SMITH BARNEY ⁽¹⁾ HARBORSIDE FINANCIAL CTR PLZ 2 FL 3 JERSEY CITY NJ 07311	Emerging Markets Opportunities Fund – Class A Emerging Markets Opportunities Fund – Class C Emerging Markets Opportunities Fund – Class I Value Equity Fund – Class C Short/Intermediate Bond Fund – Class C Tax-Exempt Bond Fund – Class A Tax-Exempt Bond Fund – Class C		12.66 22.84 16.57 16.98 13.29 7.84 10.51	% % % % % % %		9,492,874.240 2,665,027.721 49,657,848.240 3,472.410 175,130.880 825,684.842 298,160.038

NAM FAMILY TRUST CREDIT SHELTER TRUST ALISO VIEJO CA 92656-1446	Balanced Allocation Fund – Class C Core Equity Fund – Class C		11.14 7.21	% %		7,639.362 1,816.728

PERSHING LLC P.O. BOX 2052 JERSEY CITY NJ 07303-2052	Core Equity – Class C		10.27	%		2,585.061

PIPEFITTERS LOCAL 537 NEMCA LABOR MANAGEMENT CORP TRUST ATTN MR CHARLES T HANNAFORD 35 TRAVIS ST UNIT 1 ALLSTON MA 02134-1251	Value Equity Fund – Class I		5.54	%		615,655.937

PRIMEVEST FINANCIAL SERVICES (FBO) PRIMEVEST FINL SVCS 400 FIRST STREET SO SUITE 300 P.O. BOX 283 ST CLOUD MN 56302-0283	Value Equity Fund – Class C		6.18	%		1,264.755

RAYMOND JAMES ⁽¹⁾ ATTN COURTNEY WALLER 880 CARILLON PARKWAY ST PETERSBURG FL 33716	High Yield Income Fund – Class A		46.09	%		110,942.432


Name of Shareholder	Fund and Class	Percentage of Class			Number of Shares
DAVID P SANES MPP SKOKIE IL 60077-1141	Balanced Allocation Fund – Class A		5.95	%		33,318.389

SEI PRIVATE TRUST COMPANY ⁽¹⁾ C/O BMO HARRIS BANK ATTN MUTUAL FUNDS ONE FREEDOM VALLEY DRIVE OAKS PA 19456-9989	Core Equity Fund – Class I Core Equity Fund – Class I Short/Intermediate Bond Fund – Class I		19.77 8.52 6.44	% % %		669,845.799 288,677.262 380,569.984

SEI PRIVATE TRUST COMPANY ⁽¹⁾ C/O BMO HARRIS BANK ATTN: MUTUAL FUND ADMINISTRATOR ONE FREEDOM VALLEY DRIVE OAKS PA 19456-9989	Government Money Market Fund – Class I Money Market Fund – Class I Tax-Exempt Money Market Fund – Class A Insight Tax-Exempt Money Market Fund – Class I		98.92 28.46 12.86 63.40	% % % %		998,587,105.290 21,732,278.390 11,070,812.630 59,384,827.760

SEI PRIVATE TRUST COMPANY ⁽¹⁾ C/O BMO HARRIS BANK ATTN MUTUAL FUNDS ONE FREEDOM VALLEY DRIVE OAKS PA 19456-9989	Short/Intermediate Bond Fund – Class I Tax-Exempt Bond Fund – Class I		5.46 8.28	% %		322,233.309 1,031,328.874

ST. OLAF COLLEGE ATTN MARK R GELLE, ASST. TREASURER 1520 SAINT OLAF AVE NORTHFIELD MN 55057-1574	Insight Money Market Fund – Class I		7.28	%		26,102,670.510

TRUST COMPANY OF AMERICA FBO #440 ENGLEWOOD, CO 80155-6503	Core Equity Fund – Class A		7.47	%		66,878.342

UBS WM USA ⁽¹⁾ OMNI ACCOUNT M/F ATTN DEPARTMENT MANAGER 1000 HARBOR BLVD FL 5 WEEHAWKEN NJ 07086-6761	Balanced Allocation Fund – Class A Balanced Allocation Fund – Class C Core Equity Fund – Class A Emerging Markets Opportunities Fund – Class A Emerging Markets Opportunities Fund – Class C High Yield Income Fund – Class A High Yield Income Fund – Class C Short/Intermediate Bond Fund – Class A Short/Intermediate Bond Fund – Class C Tax-Exempt Bond Fund – Class A Tax-Exempt Bond Fund – Class C		8.77 7.37 19.44 17.75 14.76 6.63 19.08 12.97 12.61 13.71 28.16	% % % % % % % % % % %		49,056.201 5,057.873 173,925.258 13,303,936.890 1,722,246.852 15,972.804 15,906.059 199,580.586 166,183.591 1,443,401.481 798,724.260

(1)	These entities are omnibus accounts for many individual shareholder accounts. The Funds are not aware of the size or identity of the underlying individual accounts.

The shares described above as held by Harris N.A., The Harris Bank N.A. and SEI Private Trust Company C/O Harris Bank are being held on behalf of various accounts and not as beneficial owners. To the extent that any shareholder is the beneficial owner of more than 25% of the outstanding shares of any Fund, such shareholder may be deemed to be a “control person” of that Fund for purposes of the 1940 Act.

ADDITIONAL INFORMATION

Capital Stock and Organization

The capitalization of the Trust consists solely of an unlimited number of shares of beneficial interest. The Trust currently offers shares in different series or Funds and different classes of those Funds. Holders of shares of a Fund have equal rights

with regard to voting, redemptions, dividends, distributions, and liquidations with respect to that Fund. Shareholders of all Funds vote on the election of Trustees. On matters affecting an individual Fund (such as approval of an investment advisory agreement or a change in fundamental investment policies) and also on matters affecting an individual class (such as approval of matters relating to a Plan of Distribution for a particular Class of Shares), a separate vote of that Fund or Class is required. The Trust does not hold regular meetings of shareholders. The Board of Trustees will call a meeting when at least 10% of the outstanding shares so request in writing. If the Board of Trustees fails to call a meeting after being so notified, the shareholders may call the meeting. The Board of Trustees will assist the shareholders by identifying other shareholders or mailing communications, as required under Section 16(c) of the 1940 Act.

Shares are fully paid, nonassessable, redeemable and fully transferable when they are issued. Shares do not have cumulative voting rights, preemptive rights or subscription rights. The assets received by the Trust for the issue or sale of shares of each Fund, and any class thereof and all income, earnings, profits and proceeds thereof, are allocated to such Fund, and class, respectively, subject only to the rights of creditors, and constitute the underlying assets of such Fund or class. The underlying assets of each Fund are required to be segregated on the books of account, and are to be charged with the expenses in respect to such Fund and with a share of the general expenses of the Trust. Any general expenses of the Trust not readily identifiable as belonging to a particular Fund or class will be allocated by or under the direction of the Board of Trustees as it determines to be fair and equitable.

As a Massachusetts business trust, the Trust’s operations are governed by its Declaration of Trust dated December 6, 1995, as amended. A copy of the Trust’s Establishment and Designation of Series and Classes of Shares, as amended, is on file with the Office of the Secretary of the Commonwealth of Massachusetts. Upon the initial purchase of shares, the shareholder agrees to be bound by the Trust’s Declaration of Trust, as amended. Generally, Massachusetts business trust shareholders are not personally liable for obligations of the Massachusetts business trust under Massachusetts law. The Trust’s Declaration of Trust expressly provides that the Trust has been organized under Massachusetts law and that the Declaration of Trust is to be governed by Massachusetts law. It is nevertheless possible that a Massachusetts business trust, such as the Trust, might become a party to an action in another state whose courts refused to apply Massachusetts law, in which case the Trust’s shareholders could be subject to personal liability. To guard against this risk, the Declaration of Trust (i) contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides that notice of such disclaimer may be given in each agreement, obligation and instrument entered into or executed by the Trust or its Trustees, (ii) provides for the indemnification out of Trust property of any shareholders held personally liable for any obligations of the Trust or any series of the Trust and (iii) provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a Trust shareholder incurring financial loss beyond his or her investment because of shareholder liability is limited to circumstances in which all of the following factors are present: (1) a court refused to apply Massachusetts law; (2) the liability arose under tort law or, if not, no contractual limitation of liability was in effect; and (3) the Trust itself would be unable to meet its obligations. In the light of Massachusetts law, the nature of the Trust’s business and the nature of its assets, the risk of personal liability to a Fund shareholder is remote.

The Declaration of Trust further provides that the Trust shall indemnify each of its Trustees and officers against liabilities and expenses reasonably incurred by them, in connection with, or arising out of, any action, suit or proceeding, threatened against or otherwise involving such Trustee or officer, directly or indirectly, by reason of being or having been a Trustee or officer of the Trust. The Declaration of Trust does not authorize the Trust to indemnify any Trustee or officer against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person’s duties.

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP serves as the independent registered public accounting firm for the Trust. PricewaterhouseCoopers LLP audits the Trust’s annual financial statements and expresses an opinion thereon.

Custodian and Transfer Agent

The Bank of New York Mellon, One Wall Street, New York, NY 10286, serves as the custodian (the “Custodian”) of the Funds’ assets. The Custodian designated by the Board of Trustees holds the securities in the Funds’ portfolios and other assets for safe keeping. The Custodian does not and will not participate in making investment decisions for the Funds. The Trust has authorized each custodian to appoint one or more subcustodians for the assets of the Funds held outside the United States. The securities and other assets of each Fund are held by its custodian or any subcustodian separate from the securities and assets of each other Fund.

VP Distributors, 100 Pearl Street, Hartford, CT 06103, acts as Transfer Agent for the Trust. Pursuant to a Transfer Agent and Service Agreement, VP Distributors receives a fee, based on the average net assets across all series of Virtus Mutual Funds at an annual rate ranging from 0.045% to 0.0025%, depending on asset class. VP Distributors is authorized to

engage subagents to perform certain shareholder servicing functions from time to time for which such agents shall be paid a fee by the Transfer Agent or the Funds. Pursuant to an agreement among the Trust, VP Distributors and BNY Mellon, BNY Mellon serves as subagent to perform certain shareholder servicing functions for the Funds. For performing such services, BNY Mellon receives a monthly fee from the Trust. Fees paid by the Funds, in addition to the fee paid to VP Distributors, will be reviewed and approved by the Board of Trustees.

Reports to Shareholders

The fiscal year of the Trust ends on December 31. The Trust will send financial statements to its shareholders at least semiannually. An annual report containing financial statements audited by the Trust’s independent registered public accounting firm, PricewaterhouseCoopers LLP, will be sent to shareholders each year and is available without charge upon request.

Financial Statements

The Funds’ financial statements for the Trust’s fiscal year ended December 31, 2011, appearing in the Funds’ 2011 Annual Report to Shareholders, are incorporated herein by reference.

APPENDIX

Moody’s Investors Service, Inc.

Aaa— Bonds that are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as “gilt edge.” Interest payments are protected by a large or exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.

Aa— Bonds that are rated Aa are judged to be of high quality by all standards. Together with the Aaa group the comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.

A— Bonds that are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.

Baa— Bonds that are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.

Moody’s also provides credit ratings for preferred stocks. Preferred stock occupies a junior position to bonds within a particular capital structure and that these securities are rated within the universe of preferred stocks.

aaa— An issue that is rated “aaa” is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.

aa— An issue that is rated “aa” is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance that earnings and asset protection will remain relatively well maintained in the foreseeable future.

a— An issue that is rated “a” is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the “aaa” and “aa” classifications, earnings and asset protections are, nevertheless, expected to be maintained at adequate levels.

baa— An issue that is rated “baa” is considered to be a medium grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.

Moody’s ratings for municipal notes and other short-term loans are designated Moody’s Investment Grade (MIG). This distinction is in recognition of the differences between short-term and long-term credit risk. Loans bearing the designation MIG 1 are of the best quality, enjoying strong protection by establishing cash flows of funds for their servicing or by established and broad-based access to the market for refinancing, or both. Loans bearing the designation MIG 2 are of high quality, with margins of protection ample although not so large as in the preceding group. A short term issue having a demand feature (i.e., payment relying on external liquidity and usually payable on demand rather than fixed maturity dates) is differentiated by Moody’s with the use of the Symbol VMIG, instead of MIG.

Standard & Poor’s Corporation

AAA— Bonds rated AAA have the higher rating assigned by Standard & Poor’s Corporation. Capacity to pay interest and repay principal is extremely strong.

AA— Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from the higher rated issues only in small degree.

A— Bonds rated A have a very strong capacity to pay interest and repay principal, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories.

BBB— Bonds rated BBB are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in higher rated categories.

S&P’s top ratings for municipal notes issued after July 29, 1984 are SP-1 and SP-2. The designation SP-1 indicates a very strong capacity to pay principal and interest. A “+” is added for those issues determined to possess overwhelming safety characteristics. An “SP-2” designation indicates a satisfactory capacity to pay principal and interest.

Commercial paper rated A-2 or better by S&P is described as having a very strong degree of safety regarding timeliness and capacity to repay. Additionally, as a precondition for receiving an S&P commercial paper rating, a bank credit line and/or liquid assets must be present to cover the amount of commercial paper outstanding at all times.

The Moody’s Prime-2 rating and above indicates a strong capacity for repayment of short-term promissory obligations.

GLOSSARY

Commercial Paper: Short-term promissory notes of large corporations with excellent credit ratings issued to finance their current operations.

Certificates of Deposit: Negotiable certificates representing a commercial bank’s obligations to repay funds deposited with it, earning specified rates of interest over given periods.

Bankers’ Acceptances: Negotiable obligations of a bank to pay a draft which has been drawn on it by a customer. These obligations are backed by large banks and usually are backed by goods in international trade.

Time Deposits: Non-negotiable deposits in a banking institution earning a specified interest rate over a given period of time.

Corporate Obligations: Bonds and notes issued by corporations and other business organizations in order to finance their long-term credit needs.

VIRTUS INSIGHT TRUST

PART C — OTHER INFORMATION


Item 28.		Exhibits

a.1.		Declaration of Trust of the Registrant, dated December 6, 1995, filed via EDGAR with initial Registration Statement (File No. 033-64915) on December 12, 1995 and incorporated herein by reference.

a.2.		Amendment to Declaration of Trust of the Registrant, dated November 4, 1996, filed via EDGAR with Post-Effective Amendment No. 3 (File No. 033-64915) on February 28, 1997 and incorporated herein by reference.

a.3.		Amendment to Declaration of Trust of the Registrant, dated June 6, 1997, filed via EDGAR with Post-Effective Amendment No. 5 (File 033-64915) on June 13, 1997 and incorporated herein by reference.

a.4.		Amendment to Declaration of Trust of the Registrant, dated November 2, 1998, filed via EDGAR with Post-Effective Amendment No. 9 (File No. 033-64915) on November 9, 1998 and incorporated herein by reference.

a.5.		Amendment to Declaration of Trust of the Registrant, dated February 18, 1999, filed via EDGAR with Post-Effective Amendment No. 10 (File No. 033-64915) on March 2, 1999 and incorporated herein by reference.

a.6.		Amendment to Declaration of Trust of the Registrant, dated May 1, 2000, filed via EDGAR with Post-Effective Amendment No. 14 (File 033-64915) on May 1, 2000 and incorporated herein by reference.

a.7.		Amendment to Declaration of Trust of the Registrant, dated September 5, 2000, filed via EDGAR with Post-Effective Amendment No. 16 (File No. 033-64915) on September 5, 2000 and incorporated herein by reference.

a.8.		Amendment to Declaration of Trust of the Registrant, dated May 18, 2006, filed via EDGAR with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006 and incorporated herein by reference.

a.9.		Amendment to the Declaration of Trust of the Registrant, dated November 16, 2006, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

a.10.		Amendment to the Declaration of Trust of the Registrant, dated October 20, 2008, filed via EDGAR with Post-Effective Amendment No. 48 (File No. 033-64915) on April 28, 2009 and incorporated herein by reference.

b.1.		Amended and Restated By-Laws of the Registrant, dated August 23, 2006, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

b.2.*		Amendment No. 1 to the Amended and Restated By-Laws of the Registrant, dated November 17, 2011, filed via EDGAR herewith.

c.		Reference is made to Registrant’s Declaration of Trust. See Exhibit a.

d.1.		Investment Advisory Agreement between Registrant and Virtus Investment Advisers, Inc. (“VIA”), dated May 18, 2006, filed via EDGAR with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006 and incorporated herein by reference.

d.2.		Subadvisory Agreement between VIA and Harris Investment Management, Inc. (“Harris”), dated May 18, 2006, filed via EDGAR with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006 and incorporated herein by reference.

d.3.		Subadvisory Agreement between VIA and Vontobel Asset Management, Inc. (“Vontobel”), dated May 18, 2006, filed via EDGAR with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006 and incorporated herein by reference.

d.4.		Subadvisory Agreement between VIA and HIM Monegy, Inc. (“HIM Monegy) dated May 18, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

d.5.		First Amendment to Subadvisory Agreement between VIA and Vontobel, dated January 1, 2010, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

d.6.		First Amendment to Investment Advisory Agreement between Registrant and VIA, dated January 1, 2010, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

e.1.		Distribution Agreement between Registrant and VP Distributors, LLC (formerly, VP Distributors, Inc. (“VP Distributors”)), dated May 18, 2006, filed via EDGAR with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006 and incorporated herein by reference.

e.2.*		Form of Sales Agreement between VP Distributors and dealers (December 20, 2011), filed via EDGAR herewith.

C-1


Item 28.		Exhibits

f.		None.

g.1.		Master Custody Agreement between Registrant and The Bank of New York Mellon dated November 5, 2009, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

g.2.		Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon, dated November 5, 2009, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

g.3.		First Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.4.		Second Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated February 25, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.5.		Third Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated March 15, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.6.		First Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.7.		Second Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.8.		Third Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

g.9.*		Fourth Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated July 18, 2011, filed via EDGAR herewith.

g.10.*		Fifth Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated December 9, 2011, filed via EDGAR herewith.

g.11.*		Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated July 18, 2011, filed via EDGAR herewith.

g.12.*		Fourth Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated December 9, 2011, filed via EDGAR herewith.

h.1.		Second Amended and Restated Expense Limitation Agreement between Registrant and VIA dated August 23, 2007, filed via EDGAR with Post-Effective Amendment No. 47 (File No. 033-64915) on April 28, 2008 and incorporated herein by reference.

h.2.		Fee Waiver Agreement (Class I Shares) between Registrant and VP Distributors dated May 1, 2007, filed via EDGAR with Post-Effective Amendment No. 47 (File No. 033-64915) on April 28, 2008 and incorporated herein by reference.

h.3.		Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated January 1, 2010, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

h.4.		Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and PNC Global Investment Servicing (U.S.) Inc. dated January 1, 2010, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

h.5.		Amended and Restated Transfer Agency and Service Agreement between the Virtus Mutual Funds and VP Distributors dated January 1, 2010, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

h.6.*		Sub-Transfer Agency and Shareholder Services Agreement among the Virtus Mutual Funds, VP Distributors and BNY Mellon Investment Servicing (US) Inc., dated April 15, 2011, filed via EDGAR herewith.

C-2


Item 28.		Exhibits

h.7.		Amendment to Amended and Restated Transfer Agent and Service Agreement between the Virtus Mutual Funds and VP Distributors dated April 14, 2010, filed via EDGAR with Post-Effective Amendment No. 51 (File No. 033-64915) on April 28, 2010 and incorporated herein by reference.

h.8.		First Amendment to Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated April 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.9.		Second Amendment to Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated June 30, 2010 filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.10.		Third Amendment to Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.11.		Fourth Amendment to Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated January 1, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.12.		Fifth Amendment to Amended and Restated Administration Agreement among the Virtus Mutual Funds and VP Distributors dated March 15, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.13.		First Amendment to Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and PNC Global Investment Servicing (U.S.) Inc. dated June 30, 2010 filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.14.		Second Amendment to Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and PNC Global Investment Servicing (U.S.) Inc. dated September 14, 2010 filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.15.		Third Amendment to Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and PNC Global Investment Servicing (U.S.) Inc. dated March 15, 2011 filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.16.		Second Amendment to Amended and Restated Transfer Agent and Service Agreement between the Virtus Mutual Funds and VP Distributors dated March 15, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

h.17.*		Money Market Fund Services Amendment to Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and BNY Mellon Investment Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) and VP Distributors made as of September 28, 2011 and retroactive to December 1, 2010, filed via EDGAR herewith.

i.		Opinion and Consent of Counsel filed via EDGAR with Post-Effective Amendment No. 43 (File No. 033-19423) on May 17, 2006 and incorporated herein by reference.

j.*		Consent of Independent Registered Public Accounting Firm, filed via EDGAR herewith.

k.		Not applicable.

l.1.		Form of Purchase Agreement relating to Initial Capital filed via EDGAR with Post-Effective Amendment No. 3 (File No. 033-64915) on February 28, 1997 and incorporated herein by reference.

l.2.		Subscription Agreement dated January 14, 1999 between Registrant and FDI Distribution Services, Inc. relating to Advisor Shares filed via EDGAR with Post-Effective Amendment No. 10 (File No. 033-64915) on March 2, 1999 and incorporated herein by reference.

l.3.		Subscription Agreement dated December 6, 2000 between Registrant and Provident Distributors, Inc. relating to B Shares filed via EDGAR with Post-Effective Amendment No. 18 (File No. 033-64915) on December 28, 2000 and incorporated herein by reference.

m.1.		Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

C-3



m.2.		Class C Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

m.3.		A Shares Amended and Restated Shareholder Services Plan Not Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

m.4.		I Shares Amended and Restated Shareholder Services Plan Not Pursuant to Rule 12b-1 under the Investment Company Act of 1940, dated March 1, 2007, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

n.1.		Amended and Restated Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940, adopted August 19, 2009, filed via EDGAR with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010 and incorporated herein by reference.

n.2.		First Amendment to Amended and Restated Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940, adopted June 30, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

n.3.		Second Amendment to Amended and Restated Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940, adopted September 14, 2010, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

n.4.		Third Amendment to Amended and Restated Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940, adopted March 15, 2011, filed via EDGAR with Post-Effective Amendment No. 52 (File No. 033-64915) on April 28, 2011 and incorporated herein by reference.

o.		Reserved.

p.1.*		Amended and Restated Code of Ethics of the Virtus Mutual Funds dated February 2012, filed via EDGAR herewith.

p.2.*		Amended and Restated Code of Ethics of the Adviser (VIA) dated February 15, 2012, filed via EDGAR herewith.

p.3.		Standards of Business Conduct and Code of Ethics of Subadvisers (Harris and HIM Monegy) as amended January 3, 2007, filed via EDGAR with Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007 and incorporated herein by reference.

p.4.		Code of Ethics of Subadviser (Vontobel) dated April 23, 2008, filed via EDGAR with Post-Effective Amendment No. 48 (File No. 033-64915) on April 28, 2009 and incorporated herein by reference.

q.		Power of Attorney for all Trustees, filed via EDGAR with Post-Effective Amendment No. 47 (File No. 033-64915) on February 28, 2008 and incorporated herein by reference.

*	Filed herewith.

Item 29.

Persons Controlled by or Under Common Control with the Fund

None.

Item 30.

Indemnification

Under Section 4.3 of the Registrant’s Declaration of Trust, any past or present Trustee or officer of the Registrant (including persons who serve at the Registrant’s request as directors, officers or trustees of another organization in which the Registrant has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a “Covered Person”) shall be indemnified to the fullest extent permitted by law against all liability and all expenses reasonably incurred by him or her in connection with any claim, action, suit or proceeding to which he or she may be a party or otherwise involved by reason of his or her being or having been a Covered Person. That provision does not authorize indemnification when it is determined, in the manner specified in the Declaration of Trust, that such Covered Person has not acted in good faith in the reasonable belief that his or her actions were in or not opposed to the best interests of the Registrant. Moreover, that provision does not authorize indemnification when it is determined, in the manner specified in the Declaration of Trust, that such covered person would otherwise be liable to the Registrant or its shareholders by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of his or her duties. Expenses may be paid by the Registrant in advance of the final disposition of any claim, action, suit or proceeding upon receipt of an undertaking by such Covered Person to repay such expenses to the Registrant in the event that it is ultimately determined that indemnification of such expenses is not authorized under the Declaration of Trust and the Covered Person either provides security for such undertaking or insures the Registrant against losses from such advances or the disinterested Trustees or independent legal counsel determines, in the manner specified in the Declaration of Trust, that there is reason to believe the Covered Person will be found to be entitled to indemnification.

C-4

This description is modified in its entirety by the provision of Section 4.3 of the Registrant’s Declaration of Trust contained in the Registration Statement filed on December 12, 1995 as Exhibit No. 1 and incorporated herein by reference.

The Investment Advisory Agreement, Distribution Agreement, Custodian Agreement and Transfer Agency Agreement, as amended, each provides that the Trust will indemnify the other party (or parties, as the case may be) to the Agreement for certain losses.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to Trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a Trustee, officer or controlling person of the Registrant in connection with the successful defense of any claim, action, suit or proceeding) is asserted against the Registrant by such Trustee, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Registrant and its Trustees, officers and employees are insured, under a policy of insurance maintained by the Registrant, within the limits and subject to the limitations of the policy, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such Trustees or officers. The policy expressly excludes coverage for any Trustee or officer for any claim arising out of any fraudulent act or omission, any dishonest act or omission or any criminal act or omission of the Trustee or officer.

Item 31.

Business and Other Connections of the Investment Adviser and Subadvisers (“Advisers”)

See “Management of the Funds” in the Prospectus and “Services of the Adviser and Subadvisers” and “Management of the Trust” in the Statement of Additional Information for information which is included in this Post-Effective Amendment regarding the business of the Adviser-and Subadvisers. For information as to the business, profession, vocation or employment of a substantial nature of directors and officers of the Adviser and Subadvisers, reference is made to the Adviser’s and Subadvisers’ current Form ADV (VIA: SEC File No. 801-5995; Harris: SEC File No. 801-35533; HIM Monegy: SEC File No. 801-62435 and Vontobel: SEC File No. 801-21953) filed under the Investment Advisers Act of 1940, incorporated herein by reference.

Item 32.

Principal Underwriter

(a) VP Distributors, LLC serves as the principal underwriter for the following registrants:

Virtus Equity Trust, Virtus Insight Trust, Virtus Opportunities Trust, Virtus Variable Insurance Trust and Virtus Total Return Fund.

(b) Directors and executive officers of VP Distributors are as follows:


Name and Principal Business Address	Positions and Offices with Distributor	Positions and Offices with Registrant
George R. Aylward 100 Pearl Street Hartford, CT 06103	Director and Executive Vice President	President and Trustee

Kevin J. Carr 100 Pearl Street Hartford, CT 06103	Vice President, Counsel and Secretary	Vice President, Counsel, Chief Legal Officer and Secretary

Jeffrey Cerutti 100 Pearl Street Hartford, CT 06103	Director and President	None

Nancy J. Engberg 100 Pearl Street Hartford, CT 06103	Vice President and Assistant Secretary	Vice President and Chief Compliance Officer

David Hanley 100 Pearl Street Hartford, CT 06103	Vice President and Treasurer	None

David C. Martin 100 Pearl Street Hartford, CT 06103	Vice President and Chief Compliance Officer	None

C-5

Name and Principal Business Address

Positions and Offices with Distributor

Positions and Offices with Registrant

Francis G. Waltman

100 Pearl Street

Hartford, CT 06103

Director

Senior Vice President

(c) To the best of the Registrant’s knowledge, no commissions or other compensation was received by any principal underwriter who is not an affiliated person of the Registrant or an affiliated person of such affiliated person, directly or indirectly, from the Registrant during the Registrant’s last fiscal year.

Item 33.

Location of Accounts and Records

Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder include:


Secretary of the Trust:		Investment Adviser:
Kevin J. Carr, Esq.		Virtus Investment Advisers, Inc.
100 Pearl Street		100 Pearl Street
Hartford, CT 06103		Hartford, CT 06103

Subadviser to: Balanced Allocation Fund, Core Equity Fund, Intermediate Government Bond Fund, Intermediate Tax-Exempt Bond Fund, Short/Intermediate Bond Fund, Tax-Exempt Bond Fund, Value Equity Fund, Insight Government Money Market Fund, Insight Money Market Fund, and Insight Tax-Exempt Money Market Fund:

Harris Investment Management, Inc.

190 South LaSalle Street, 4th Floor

Chicago, IL 60603

Subadviser to: Emerging Markets Opportunities Fund

Vontobel Asset Management, Inc.

1540 Broadway, 38 ^th Floor

New York, NY 10036

Subadviser to: Virtus High Yield Income Fund

HIM Monegy, Inc.

302 Bay Street, 12 ^th Floor

Toronto, ON M5X 1A1

Canada

Principal Underwriter, Administrator and Transfer Agent:

VP Distributors, LLC

100 Pearl Street

Hartford, CT 06103

Custodian:

The Bank of New York Mellon

One Wall Street

New York, NY 10286

Fund Accountant, Subadministrator, Sub-Transfer Agent and Dividend Dispersing Agent:

BNY Mellon Investment Servicing (US) Inc.

301 Bellevue Parkway

Wilmington, DE 19809

Item 34.

Management Services

None.

Item 35.

Undertakings

None.

C-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this registration statement under rule 485(b) under the Securities Act and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Hartford and the State of Connecticut on the 27 ^th day of April, 2012.


VIRTUS INSIGHT TRUST

		/s/ George R. Aylward
By:
		George R. Aylward
		President

Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to the registration statement has been signed below by the following persons in the capacities indicated on the 27 ^th day of April, 2012.


Signature		Title

/s/ George R. Aylward		Trustee and President (principal executive officer)
George R. Aylward

/s/ W. Patrick Bradley		Vice President, Chief Financial Officer and Treasurer
W. Patrick Bradley

/s/ Leroy Keith, Jr.		Trustee
Leroy Keith, Jr.*

/s/ Philip R. McLoughlin		Trustee and Chairman
Philip R. McLoughlin*

/s/ Geraldine M. McNamara		Trustee
Geraldine M. McNamara*

/s/ James M. Oates		Trustee
James M. Oates*

/s/ Richard E. Segerson		Trustee
Richard E. Segerson*

/s/ Ferdinand L.J. Verdonck		Trustee
Ferdinand L.J. Verdonck*

/s/ George R. Aylward
*George R. Aylward, Attorney-in-Fact, pursuant to a power of attorney

C-7

Exhibit List


b.2.		Amendment No. 1 to the Amended and Restated By-Laws of the Registrant, dated November 17, 2011.

e.2.		Form of Sales Agreement between VP Distributors and dealers (December 20, 2011).

g.9.		Fourth Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated July 18, 2011.

g.10.		Fifth Amendment to Master Custody Agreement between Registrant and The Bank of New York Mellon dated December 9, 2011.

g.11.		Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated July 18, 2011.

g.12.		Fourth Amendment to Foreign Custody Manager Agreement between Registrant and The Bank of New York Mellon dated December 9, 2011.

h.6.		Sub-Transfer Agency and Shareholder Services Agreement among the Virtus Mutual Funds, VP Distributors and BNY Mellon Investment Servicing (US) Inc., dated April 15, 2011.

h.17.		Money Market Fund Services Amendment to Sub-Administration and Accounting Services Agreement among the Virtus Mutual Funds and BNY Mellon Investment Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) and VP Distributors made as of September 28, 2011 and retroactive to December 1, 2010.

j.		Consent of Independent Registered Public Accounting Firm.

p.1.		Amended and Restated Code of Ethics of the Virtus Mutual Funds dated February 2012.

p.2.		Amended and Restated Code of Ethics of the Adviser (VIA) dated February 15, 2012.

C-8

AMENDMENT NO. 1

AMENDED AND RESTATED

BY-LAWS

VIRTUS INSIGHT TRUST

A Massachusetts Business Trust

ARTICLE VIII

General Matters

6. Fiscal Year . The fiscal year of the Trust shall be fixed and refixed or changed from time to time by the Trustees.

Approved: November 17, 2011

100 Pearl Street

Hartford, CT 06103

{PH} 800.248.7971

VIRTUS.COM

VP Distributors, LLC.

100 Pearl Street

Hartford, CT 06103

VIRTUS FUNDS

SALES AGREEMENT

To:	Dealer Name

Attention:

Address

City, State, Zip Code

VP Distributors, LLC (“VPD”, “we”, “us”, or “our”) invites you to participate in the sale and distribution of shares of registered investment companies (which shall collectively be referred to hereinafter as the “Funds”) for which we are national distributor or principal underwriter, and which may be listed in Annex A hereto which such Annex may be amended by us from time to time. Upon acceptance of this agreement by VPD, you may offer and sell shares of each of the Funds (hereafter “Shares”) subject, however, to the terms and conditions hereof including our right to suspend or cease the sale of such shares. For the purposes hereof, the above referenced dealer shall be referred to as “you”.

You understand and agree that in all sales of Shares to the public, you shall act as dealer for your own account. All purchase orders and applications are subject to acceptance or rejection by us in our sole discretion and are effective only upon confirmation by us. Each purchase will be deemed to have been consummated in our principal office subject to our acceptance and effective only upon confirmation to you by us.

2.	You agree that all purchases of Shares by you shall be made only for the purpose of covering purchase orders already received from your customers (who may be any person other than a securities dealer or broker) or for your own bona-fide investment.

You shall offer and sell Shares purchased pursuant to this agreement for the purpose of covering purchase orders of your customers, to the extent applicable, (a) at the current public offering price (“Offering Price”) for Class A Shares or (b) at the Net Asset Value for Class B and Class C shares as set forth in the current prospectus of each of the funds.

You shall pay us for Shares purchased within three (3) business days of the date of our confirmation to you of such purchase or within such time as required by applicable rule or law. The purchase price shall be (a) the Offering Price, less only the applicable dealer discount (Dealer Discount) for Class A Shares, if applicable, or (b) the Net Asset Value, less only the applicable sales commission (Sales Commission) for Class C Shares, if applicable, as set forth in the current prospectus at the time the purchase is received by us. We have the right, without notice, to cancel any order for which payment of good and sufficient funds has not been received by us as provided in this paragraph, in which case you may be held responsible for any loss suffered by us resulting from your failure to make payment as aforesaid.

You understand and agree that any Dealer Discount, Sales Commission or fee is subject to change from time to time without prior notice. Any orders placed after the effective date of any such change shall be subject to the Dealer Discount or Sales Commission in effect at the time such order is received by us.

You understand and agree that Shares purchased by you under this Agreement will not be delivered until payment of good and sufficient funds has been received by us. Delivery of Shares will be made by credit to a shareholder open account unless delivery of certificates is specified in the purchase order. In order to avoid unnecessary delay, it is understood that, at your request, any Shares resold by you to one of your customers will be delivered (whether by credit to a shareholder open account or by delivery of certificates) in the name of your customer.

You understand that on all purchases of Shares to which the terms of this Agreement are applicable by a shareholder for whom you are dealer of record, we will pay you an amount equal to the Dealer Discount, Sales Commission or fees which would have been paid to you with respect to such Shares if such Shares had been purchased through you. You understand and agree that the dealer of record for this purpose shall be the dealer through whom such shareholder most recently purchased Shares of such fund, unless the shareholder or you have instructed us otherwise. You understand that all amounts payable to you under this paragraph and currently payable under this agreement will be paid as of the end of the month unless specified otherwise for the total amount of Shares to which this paragraph is applicable but may be paid more frequently as we may determine in our discretion. Your request for Dealer Discount or Sales Commission reclaims will be considered if adequate verification and documentation of the purchase in question is supplied to us, and the reclaim is requested within three years of such purchase.

We appoint the transfer agent (or identified sub-transfer agent) for each of the Funds as our agent to execute the purchase transaction of Shares and to confirm such purchases to your customers on your behalf, and you guarantee the legal capacity of your customers so purchasing such Shares. You further understand that if a customer’s account is established without the customer signing the application form, you hereby represent that the instructions relating to the registration and shareholder options selected (whether on the application form, in some other document or orally) are in accordance with the customer’s instructions and you agree to indemnify the Funds, the transfer agent (or identified sub-transfer agent) and us for any loss or liability resulting from acting upon such instructions.

9.	Upon the purchase of Class A Shares pursuant to a Letter of Intent, you will promptly return to us any excess of the Dealer Discount previously allowed or paid to you over that allowable in respect to such larger purchases.

10.

Unless at the time of transmitting a purchase order you advise us to the contrary, we may consider that the investor owns no other Shares and may further assume that the investor is not entitled to any lower sales charge than that accorded to a single transaction in the amount of the purchase order, as set forth in the current prospectus.

11.

You understand and agree that if any Shares purchased by you under the terms of this Agreement are, within seven (7) business days after the date of our confirmation to you of the original purchase order for such Shares, repurchased by us as agent for such fund or are tendered to such fund for redemption, you shall forfeit the right to, and shall promptly pay over to us the amount of, any Dealer Discount or Sales Commission allowed to you with respect to such Shares. We will notify you of such repurchase or redemption within ten (10) days of the date upon which certificates are delivered to us or to such fund or the date upon which the holder of Shares held in a shareholder open account places or causes to be placed with us or with such fund an order to have such shares repurchased or redeemed.

12.

You agree that, in the case of any repurchase of any Shares made more than seven (7) business days after confirmation by us of any purchase of such Shares, except in the case of Shares purchased from you by us for your own bona fide investment, you will act only as agent for the holders of such Shares and will place the orders for repurchase only with us. It is understood that you may charge the holder of such Shares a fair commission for handling the transaction.

13.

Our obligations to you under this Agreement are subject to all the provisions of the respective distribution agreements entered into between us and each of the Funds. You understand and agree that in performing your services under this agreement you are acting in the capacity of an independent contractor, and we are in no way responsible for the manner of your performance or for any of your acts or omissions in connection therewith. Nothing in the Agreement shall be construed to constitute you or any of your agents, employees, or representatives as our agent, partner or employee, or the agent, partner of employee of any of the Funds.

In connection with the sale and distribution of shares of Virtus Funds, you agree to indemnify and hold us and our affiliates, employees, and/or officers harmless from any damage or expense as a result of (a) the negligence, misconduct or wrongful act by you or any employee, representative, or agent of yours and/or (b) any actual or alleged violation of any securities laws, regulations or orders. Any indebtedness or obligation of yours to us whether arising hereunder or otherwise, and any liabilities incurred or moneys paid by us to any person as a result of any misrepresentation, wrongful or unauthorized act or omission, negligence of, or failure of you or your employees, representatives or agents to comply with the Sales Agreement, shall be set off against any compensation payable under this agreement. Any differential between such expenses and compensation payable hereunder shall be payable to us upon demand. The terms of this provision shall not be impaired by the termination of this agreement.

In connection with the sale and distribution of shares of Virtus Funds, we agree to indemnify and hold you harmless from any damage or expense on account of the gross and willful negligence, misconduct or wrongful act of us or any employee, representative, or agent of ours which arises out of or is based upon any untrue statement or alleged untrue statement of material fact, or the omission or alleged omission of a material fact in: (i) any registration statement, including any prospectus or any post-effective amendment thereto; or (ii) any material prepared and/or supplied by us for use in conjunction with the offer or sale of Virtus Funds; or (iii) any state registration or other document filed in any state or jurisdiction in order to qualify any Fund under the securities laws of such state or jurisdiction. The terms of this provision shall not be impaired by the termination of this agreement.

14.

We will supply you with reasonable quantities of the current prospectus, periodic reports to shareholders, and sales materials for each of the Funds. You agree not to use any other advertising or sales material relating to the sale of shares of any of the Funds unless other advertising or sales material is pre-approved in writing by us.

15.

You agree to offer and sell Shares only in accordance with the terms and conditions of the then current prospectus of each of the Funds and subject to the provisions of this Agreement, and you will make no representations not contained in any such prospectus or any authorized supplemental sales material supplied by us. You agree to use your best efforts in the development and promotion of sales of the Shares covered by this Agreement, and agree to be responsible for the proper instruction, training and supervision of all sales representatives employed by you in order that such Shares will be offered in accordance with the terms and conditions of this Agreement and all applicable laws, rules and regulations. All expenses incurred by you in connection with your activities under this Agreement shall be borne by you. In consideration for the extension of the right to exercise telephone exchange and redemption privileges to you and your registered representatives, you agree to bear the risk of any loss resulting from any unauthorized telephone exchange or redemption instructions from you or your registered representatives. In the event we determine to refund any amounts paid by any investor by reason of such violation on your part, you shall forfeit the right to, and pay over to us, the amount of any Dealer Discount or Sales Commission allowed to you with respect to the transaction for which the refund is made.

16.

You represent that you are properly registered as a broker or dealer under the Securities and Exchange Act of 1934 and are member of the Financial Industry Regulatory Authority, Inc. (FINRA) and agree to maintain membership with FINRA or in the alternative, that you are a foreign dealer not eligible for membership with FINRA. You agree to notify us promptly of any change, termination or suspension of the foregoing status. You agree to abide by all the rules and regulations of FINRA and NASD Rules, including NASD Conduct Rule 2830, which is incorporated herein by reference as if set forth in full. You further agree to comply with all applicable state and Federal laws and the rules and regulations of applicable regulatory agencies. You further agree that you will not sell, or offer for sale, Shares in any jurisdiction in which such Shares have not been duly registered or qualified for sale. You agree to promptly notify us with respect to (a) the initiation and disposition of any formal disciplinary action by the FINRA or any other agency or instrumentality having jurisdiction with respect to the subject matter hereof against you or any of your employees or agents; (b) the issuance of any form of deficiency notice by the FINRA or any such agency regarding your training, supervision or sales practices; and (c) the effectuation of any consensual order with respect thereto.

16.1

Patriot Act. You shall employ policies and procedures designed to comply with the rules and regulations promulgated from time to time by the Office of Foreign Asset Control (including transactions involving embargoed countries or Specifically Designated Nationals and Blocked Persons) and all other applicable money laundering restrictions, including, without limitation, such restrictions as may be adopted pursuant to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act) of 2001 with respect to similarly situated financial institutions as VPD. You agree that you will perform the Customer Identification Program requirements of the USA Patriot Act, as applicable, with respect to Accounts established and transactions made pursuant to this Agreement.

16.2

Sarbanes-Oxley Act. You agree to cooperate with VPD and will facilitate the filing by VPD, each underlying registered investment companies (collectively, the “Funds”) and/or their respective officers and auditors of any and all certifications or attestations as required by the Sarbanes-Oxley Act of 2002, including, without limitation, furnishing such sub-certifications from your relevant officers with respect to the services performed by you under this Agreement as reasonably requested from time to time.

16.3

Rule 38a-1. Upon reasonable request, you agree to provide your written policies and procedures to the Funds’ chief compliance officer for review and the Funds’ board of trustees’ approval to assist our compliance with Rule 38a-1 under the Investment Company Act of 1940, as amended. You further agree to cooperate with VPD in its review of such written policies and procedures, including, without limitation, furnishing such certifications and sub-certifications as VPD shall reasonably request from time to time. You agree that you shall promptly notify VPD and Funds in the event that a “material compliance matter” (as such term is defined pursuant to Rule 38a-1 under the 1940 Act) arises with respect the services you provide under this Agreement.

16.4

Late Trading. You will accept no orders for the purchase and redemption of Fund shares after 4:00 p.m. Eastern time on any Business Day. For the purposes hereof, a “Business Day” shall mean any day on which the New York Stock Exchange is open for trading and on which a Fund calculates its net asset value pursuant to the rules of the Securities and Exchange Commission (hereinafter, the “SEC”), as amended from time to time, subject to such terms and conditions as may be set forth in the registration statements for the Funds as filed with the SEC, as the same shall be amended from time to time.

16.5

Market Timing. VPD may refuse to sell shares of any Fund (or series thereof) to any person, or suspend or terminate the offering of shares of any Fund (or series thereof), if such action is required by law or by regulatory authorities having jurisdiction with respect to VPD or Fund, as the case may be, or is, in the reasonable discretion of VPD, reasonably necessary in order to protect the best interests of its investors. You shall establish and maintain policies and procedures reasonably designed to detect, monitor and deter (including, without limitation, rejecting specific purchase orders) account owners (or their agents) whose purchase and redemption activity follows a market timing pattern, and to take such other actions as you deem necessary to discourage or reduce market timing activity. For the purposes hereof, “market timing activity” shall mean and refer to any discernable pattern of excessive trading in and out of a Fund (or series thereof) by one or more account owners (or their agents), including, without limitation, any purchase and sale (round trip) in and out of a single series of a Fund within any thirty day period. The parties acknowledge that, if necessary, such policies and procedures may include the identification of account owners engaged in such market timing activity and the imposition of restrictions on their requests to purchase or exchange Fund shares. You shall provide reasonable reports regarding your implementation and enforcement of such restrictions on purchase and redemption activity that follows a market-timing pattern upon request.

17.

Shareholder Information and SEC Rule 22c-2. If trading as an Intermediary (a broker, dealer, bank or other entity that holds securities of record issued by the Funds in nominee name; and in the case of a participant-directed employee benefit plan that owns securities issued by the Funds; a retirement plan administrator under ERISA or any entity that maintains the plan’s participant records) you hereby agree as follows:

17.1

Agreement to Provide Information. Intermediary agrees to provide the Funds, upon written request, the taxpayer information number (“TIN”), if known, of any or all Shareholder(s) of the account and the amount, date, name or other identifier of any investment professional(s) associated with the Shareholder(s) or account (if known), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of Fund shares held through an account maintained by the Intermediary during the period covered by the request.

17.1.1

Period Covered by Request. Requests must set forth a specific period, not to exceed 180 days from the date of the request, for which transaction information is sought. The Fund may request transaction information older than 180 days from the date of the request as it deems necessary to investigate compliance with policies established by the Fund for the purposes of eliminating or reducing any dilution of the value of the outstanding shares issued by the Fund. If requested by the Fund, Intermediary agrees to provide the information specified in 17.1 for each trading day.

17.1.2

Form and Timing of Response. Intermediary agrees to transmit the requested information that is on its books and records to the Funds or its designee promptly, but in any event not later than 10 business days, after receipt of a request. If the requested information is not on the Intermediary’s books and records, Intermediary agrees to use reasonable efforts to: (i) promptly obtain and transmit the requested information; (ii) obtain assurances from the accountholder that the requested information will be

provided directly to the Fund Agent promptly; or (iii) if directed by the Fund Agent, block further purchases of Fund shares from such accountholder. In such instance, Intermediary agrees to inform the Fund Agent whether it plans to perform (i), (ii) or (iii). Responses required by this paragraph must be communicated in writing and in format mutually agreed upon by the parties. To the extent practicable, the format for any transaction information provided to the Fund Agent should be consistent with the NSCC Standardized Data Reporting Format.

17.1.3

Limitations on Use of Information. The Fund Agent agrees not to use the information received for marketing or any other similar purpose without the prior written consent of the Intermediary.

17.2.

Agreement to Restrict Trading. Intermediary agrees to execute written instructions from the Fund Agent to restrict or prohibit further purchases or exchanges of Fund shares by a Shareholder that has been identified by the Fund Agent as having engaged in transactions of the Funds’ shares (directly or indirectly through the Intermediary’s account) that violate policies established by the Funds for the purposes of eliminating or reducing any dilution of the value of the outstanding shares issued by the Funds.

17.2.1

Form of Instructions. Instructions must include the TIN, if known, and the specific restriction(s) to be executed. If the TIN is not known, the instructions must include any equivalent identifying number of the Shareholder(s) or account(s) or other agreed upon information to which the instruction relates.

17.2.2

Timing of Response. Intermediary agrees to execute instructions as soon as reasonably practicable, but not later than five business days after receipt of the instructions by the Intermediary.

17.2.3

Confirmation by Intermediary. Intermediary must provide written confirmation to the Fund Agent that instructions have been executed. Intermediary agrees to provide confirmation as soon as reasonably practicable, but not later than ten business days after the instructions have been executed.

17.3

Definitions. For purposes of this paragraph:

17.3.1

The term “Funds” includes the fund’s principal underwriter and transfer agent. The term not does include any “excepted funds” as defined in SEC Rule 22c-2(b) under the Investment Company Act of 1940.

17.3.2

The term “Shares” means the interests of Shareholders corresponding to the redeemable securities of record issued by the Fund under the Investment Company Act of 1940 that are held by the Intermediary.

17.3.3

The term “Shareholder” means the beneficial owner of Shares, whether the Shares are held directly or by the Intermediary in nominee name or, if applicable, the Plan participant notwithstanding that the Plan may be deemed to be the beneficial owner of Shares.

18.

Either party may terminate this agreement for any reason by written or electronic notice to the other party which termination shall become effective fifteen (15) days after the date of mailing or electronically transmitting such notice to the other party. We may also terminate this agreement for cause or as a result of a violation by you, as determined by us in our discretion, of any of the provisions of this Agreement, said termination to be effective on the date of mailing written or electronic notice to you of the same. Without limiting the generality of the foregoing, your own expulsion from the FINRA will automatically terminate this Agreement without notice. Your suspension from the FINRA or violation of applicable state or Federal laws or rules and regulations of applicable regulatory agencies will terminate this Agreement effective upon the date of our mailing written notice or transmitting electronic notice to you of such termination. Our failure to terminate this Agreement for any cause shall not constitute a waiver of our right to so terminate at a later date.

19.	All communications and notices to you or us shall be sent to the addresses set forth at the beginning of this Agreement or to such other address as may be specified in writing from time to time.

20.

VPD agrees to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of customer information which may from time to time be established. VPD agrees not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by you to VPD in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. You agree to comply with all laws, rules, regulations, and ordinances relating to privacy, confidentiality, security, data security, and the handling of

customer information which may from time to time be established. You agree not to disclose or use any consumer nonpublic personal information (including nonpublic personal financial information and nonpublic personal health information), which may be supplied by VPD to you in performance under this Agreement other than to: a) carry out the purpose for which the information was provided; and b) to use or disclose the information as otherwise permitted or required by law. This provision will survive and continue in full force and effect after the termination of this Agreement.

21.

This agreement shall become effective upon the date of its acceptance by us as set forth herein. This agreement may be amended by VPD from time to time. This Agreement and all rights and obligations of the parties hereunder shall be governed by and construed under the laws of the State of Connecticut. This agreement is not assignable or transferable, except that we may assign or transfer this agreement to any successor distributor of the Shares described herein.


ACCEPTED ON BEHALF OF						ACCEPTED ON BEHALF OF

VP DISTRIBUTORS, LLC
						Name of Dealer Firm

Date						Date



By						By



Name Jeffery T. Cerutti						Print Name



Title President						Print Title



						FINRA CRD Number

VPD 80 (December 20, 2011 rev.)


		100 Pearl Street Hartford, CT 06103		{PH} 800.248.7971		VIRTUS.COM

Virtus Mutual Funds Sales Agreement

Amended Annex A December 20, 2011

VP Distributors, LLC

Virtus Mutual Funds and Available Share Classes


ALTERNATIVES		FIXED INCOME
Virtus Alternatives Diversifier Fund	A C I	Virtus Bond Fund	A C I
Virtus Global Commodities Stock Fund	A C I	Virtus CA Tax-Exempt Bond Fund	A I
Virtus Global Infrastructure Fund	A C I	Virtus High Yield Fund	A C
Virtus Global Real Estate Securities Fund	A C I	Virtus High Yield Income Fund	A C I
Virtus International Real Estate Securities Fund	A C I	Virtus Insight Government Money Market Fund	A I
Virtus Market Neutral Fund	A C I	Virtus Insight Money Market Fund	A E I
Virtus Real Estate Securities Fund	A C I	Virtus Insight Tax-Exempt Money Market Fund	A I
		Virtus Multi-Sector Fixed Income Fund	A C I
ASSET ALLOCATION		Virtus Multi-Sector Short Term Bond Fund	A C I T
Virtus Allocator Premium AlphaSector ^TM Fund	A C I	Virtus Senior Floating Rate Fund	A C I
Virtus Balanced Fund	A C	Virtus Short/Intermediate Bond Fund	A C I
Virtus Balanced Allocation Fund	A C I	Virtus Tax-Exempt Bond Fund	A C I
Virtus Tactical Allocation Fund	A C

		INTERNATIONAL/GLOBAL
EQUITY		Virtus Emerging Market Opportunities Fund	A C I
Virtus AlphaSector ^TM Rotation Fund	A C I	Virtus Foreign Opportunities Fund	A C I
Virtus Core Equity Fund	A C I	Virtus Global Opportunities Fund	A C
Virtus Growth & Income Fund	A C I	Virtus Global Premium AlphaSector ^TM Fund	A C I
Virtus Mid-Cap Core Fund	A C I	Virtus Greater Asia ex Japan Opportunities Fund	A C I
Virtus Mid-Cap Growth Fund	A C I	Virtus Greater European Opportunities Fund	A C I
Virtus Mid-Cap Value Fund	A C I	Virtus International Equity Fund	A C I
Virtus Premium AlphaSector ^TM Fund	A C I
Virtus Quality Large-Cap Value Fund	A C I
Virtus Quality Small-Cap Fund	A C I
Virtus Small-Cap Core Fund	A C I
Virtus Small-Cap Sustainable Growth Fund	A C I
Virtus Strategic Growth Fund	A C I
Virtus Value Equity Fund	A C I

VP Distributors, LLC 100 Pearl Street, Hartford, CT 06103


Marketing: (800) 243-4361		Customer Service: (800) 243-1574		www.Virtus.com

Applicable waivers of Class A sales charges and Class B and C contingent deferred sales charges are described in the prospectus.

Class A Shares


	Equity, Asset Allocation, International/Global, Alternative Funds:						Bond, High Yield, Multi-Sector Fixed Income, and High Yield Income Funds:

Amount of Transaction Plus Applicable Rights of Accumulation:	Sales Charge As Percentage of Offering Price			Dealer Discount or Agency Fee As Percentage of Offering Price			Sales Charge As Percentage of Offering Price			Dealer Discount or Agency Fee As Percentage of Offering Price
Less than $50,000		5.75	%		5.00	%		3.75	%		3.25	%
$50,000 but under $100,000		4.75			4.25			3.50			3.00
$100,000 but under $250,000		3.75			3.25			3.25			2.75
$250,000 but under $500,000		2.75			2.25			2.25			2.00
$500,000 but under $1,000,000		2.00			1.75			1.75			1.50
$1,000,000 or more		None			None			None			None

	Short/Intermediate Bond, Tax-Exempt Bond, CA Tax-Exempt Bond, and Senior Floating Rate Funds:						Multi-Sector Short Term Bond Fund:

Amount of Transaction Plus Applicable Rights of Accumulation:	Sales Charge As Percentage of Offering Price			Dealer Discount or Agency Fee As Percentage of Offering Price			Sales Charge As Percentage of Offering Price			Dealer Discount or Agency Fee As Percentage of Offering Price
Less than $50,000		2.75	%		2.25	%		2.25	%		2.00	%
$50,000 but under $100,000		2.25			2.00			1.25			1.00
$100,000 but under $250,000		1.75			1.50			1.00			1.00
$250,000 but under $500,000		1.25			1.00			1.00			1.00
$500,000 but under $1,000,000		1.00			1.00			0.75			0.75
$1,000,000 or more		None			None			None			None

There is no Class A sales charge for the Virtus Money Market Funds.

Distribution Fee: 0.10% For distribution services with respect to the Virtus Insight Money Market Fund, Virtus Insight Government Money Market Fund and the Virtus Insight Tax-Exempt Money Market Fund, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.10% annually, based on the average daily net asset value of such Funds sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 in each such fund to qualify for payment. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually. The Service Fee is based on the average daily net asset value of Class A shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more in a Fund Class to qualify for payment in that Fund Class. The Service Fee for shares on which a Finder’s Fee has been paid will commence in the thirteenth month following purchase of Class A shares. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

Finder’s Fee and CDSC Applicable to AlphaSector Rotation and Fixed Income Funds (excluding Money Market Funds): VPD may pay broker-dealers a Finder’s Fee in an amount equal to 0.50% of eligible Class A Share purchases from $1,000,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a Finder’s Fee only if such plan has at least 100 eligible employees. A contingent deferred sales charge of 0.50% may apply on certain redemptions made within 18 months following purchases of Class A shares on which a Finder’s Fee has been paid to a dealer. The 18 month period begins on the last day of the month preceding the month in which the purchase was made.

Finder’s Fee and CDSC Applicable to Equity, Asset Allocation, International/Global, and Alternative Funds Class A Shares:

(excluding AlphaSector Rotation Fund) VPD may pay broker-dealers a Finder’s Fee in an amount equal to 1.00% of eligible Class A Share purchases from $1,000,000 to $3,000,000, 0.50% on amounts of $3,000,0001 to $10,000,000 and 0.25% on amounts greater than $10,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a Finder’s Fee only if such plan has at least 100 eligible employees. A contingent deferred sales charge of 1% may apply on certain redemptions made within 18 months following purchases of Class A shares on which a Finder’s Fee has been paid to a dealer. The 18 month period begins on the last day of the month preceding the month in which the purchase was made.

Class B Shares

As of December 1, 2009, Class B shares of the Virtus Mutual Funds are no longer available for purchase by new or existing shareholders, except for the reinvestment of dividends or capital gains distributions into existing Class B share accounts, and for exchanges from existing Class B share accounts to other Virtus Mutual Funds with Class B shares.


	CDSC (Except Virtus Multi-Sector Short Term Bond Fund and Virtus Market Neutral Fund)			CDSC Virtus Multi-Sector Short Term Bond Fund			CDSC Virtus Market Neutral Fund

Years since Each Purchase:	Contingent Deferred Sales Charge:			Contingent Deferred Sales Charge:			Contingent Deferred Sales Charge
First		5.0	%		2.0	%		5.0	%
Second		4.0			1.5			4.0
Third		3.0			1.0			3.0
Fourth		2.0			0.0			3.0
Fifth		2.0			0.0			2.0
Sixth		0.0			0.0			1.0

Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified above, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to VPD.

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class B shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more in a Fund Class to qualify for payment in that Fund Class. The Class B Service Fee is paid beginning in the 13 ^th month following each purchase. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

Class C Shares

Sales Commission:

1% for all Class C Funds except Virtus Multi-Sector Short Term Bond Fund

0% for Virtus Multi-Sector Short Term Bond Fund

For exchanges from Virtus Multi-Sector Short Term Bond Fund Class C to other Class C shares, the dealer will receive 1% sales commission on the exchanged amount.

CDSC: 1% for all Class C Funds, except Virtus Market Neutral Fund (1.25% CDSC) and Virtus Multi-Sector Short Term Bond Fund (no CDSC). Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified below, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to VPD. The CDSC on Class C shares is 1% for one year from each purchase.

Distribution Fee: 0.25% - 0.75% VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually for Virtus Multi-Sector Short Term Bond Fund, 0.70% for the Virtus Market Neutral Fund, and 0.75% annually for all other Class C Funds, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Trail Fee is paid beginning in the 13 ^th month following each purchase. There is no hold for the Class C Trail Fee for the Virtus Multi-Sector Short Term Bond Fund. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Service Fee is paid beginning in the 13 ^th month following each purchase. There is no hold for the Class C Service Fee for the Virtus Multi-Sector Short Term Bond Fund. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

Class I Shares

There is no dealer compensation payable on Class I shares.

Class T Shares – Virtus Multi-Sector Short Term Bond Fund only

Dealer Concession: 1%

CDSC: 1% for one year from the date of each purchase.

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Service Fee is paid beginning in the 13 ^th month following each purchase. See below for Terms and Conditions for Service and Distribution Fees.

Distribution Fee: 0.75% VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.75% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Distribution Fee is paid beginning in the 13 ^th month following each purchase. See below for Terms and Conditions for Service and Distribution Fees.

Terms and Conditions for Service and Distribution Fees – All Share Classes

Applicable Service and Distribution Fees are paid pursuant to one or more distribution and/or service plans (“Plan”) adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the “Act”). Payment of these fees will automatically terminate in the event such Plan terminates or is not continued or in the event that this Agreement terminates, is assigned or ceases to remain in effect. In addition, these fees may be terminated at any time, without the payment of any penalty, by vote of a majority of the members of the Funds’ Board of Trustees who are not interested persons of the Funds and have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan, or by vote of a majority of the outstanding voting securities of any Fund or Funds on not more than sixty days’ written notice to any other party to the Agreement.

VPD80A (December 20, 2011 rev.)

FOURTH AMENDMENT

MASTER CUSTODY AGREEMENT

THIS AMENDMENT made effective as of the 18 ^th day of July, 2011 amends that certain Master Custody Agreement, dated as of November 5, 2009, between the Funds listed on Exhibit A thereto and The Bank of New York Mellon, amended September 14, 2010, February 25, 2011, and March 15, 2011 (the “Master Custody Agreement”) as herein below provided.

W I T N E S S E T H:

WHEREAS, pursuant to Article X, Section 5 of the Master Custody Agreement, the Funds wish to amend Schedule II to the Master Custody Agreement to add new series to each of the Virtus Equity Trust, Virtus Insight Trust, Virtus Institutional Trust, Virtus Opportunities Trust.

NOW, THEREFORE, in consideration of the foregoing premise, the parties to the Master Custody Agreement hereby agree that the Master Custody Agreement is amended as follows:

1. Schedule II to the Master Custody Agreement is hereby replaced with Schedule II attached hereto and made a part hereof.

2. Except as herein provided, the Master Custody Agreement shall be and remain unmodified and in full force and effect. All initial capitalized terms used but not defined herein shall have such meanings as ascribed thereto in the Master Custody Agreement.

3. This Amendment may be executed in any number of counterparts (including executed counterparts delivered and exchanged by facsimile transmission) with the same effect as if all signing parties had originally signed the same document, and all counterparts shall be construed together and shall constitute the same instrument. For all purposes, signatures delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


VIRTUS EQUITY TRUST
VIRTUS INSIGHT TRUST
VIRTUS INSTITUTUIONAL TRUST
VIRTUS OPPORTUNITIES TRUST



By:
Name: W. Patrick Bradley
Title: Chief Financial Officer and Treasurer

THE BANK OF NEW YORK MELLON

By:
Name:
Title:

SCHEDULE II

Series and Effective Dates


Fund	Portfolios	Effective Date
Virtus Equity Trust	Virtus Balanced Fund	July 18, 2011
	Virtus Growth & Income Fund	July 18, 2011
	Virtus Mid-Cap Core Fund	July 18, 2011
	Virtus Mid-Cap Growth Fund	July 18, 2011
	Virtus Mid-Cap Value Fund	July 18, 2011
	Virtus Quality Large-Cap Value Fund	July 18, 2011
	Virtus Quality Small-Cap Fund	July 18, 2011
	Virtus Small-Cap Core Fund	July 18, 2011
	Virtus Small-Cap Sustainable Growth Fund	July 18, 2011
	Virtus Strategic Growth Fund	July 18, 2011
	Virtus Tactical Allocation Fund	July 18, 2011

Virtus Insight Trust	Virtus Balanced Allocation Fund	July 18, 2011
	Virtus Core Equity Fund	July 18, 2011
	Virtus Emerging Markets Opportunities Fund	November 5, 2009
	Virtus High Yield Income Fund	July 18, 2011
	Virtus Insight Government Money Market Fund	July 18, 2011
	Virtus Insight Money Market Fund	July 18, 2011
	Virtus Insight Tax-Exempt Money Market Fund	July 18, 2011
	Virtus Intermediate Government Bond Fund	July 18, 2011
	Virtus Intermediate Tax-Exempt Bond Fund	July 18, 2011
	Virtus Short/ Intermediate Bond Fund	July 18, 2011
	Virtus Tax-Exempt Bond Fund	July 18, 2011
	Virtus Value Equity Fund	July 18, 2011

Virtus Institutional Trust	Virtus Institutional Bond Fund	July 18, 2011

Virtus Opportunities Trust	Virtus Allocator Premium AlphaSector Fund	March 15, 2011
	Virtus AlphaSector Rotation Fund	July 18, 2011


		Virtus Alternatives Diversifier Fund		July 18, 2011
		Virtus Bond Fund		July 18, 2011
		Vitus CA Tax-Exempt Bond Fund		July 18, 2011
		Virtus Foreign Opportunities Fund		November 5, 2009
		Virtus Global Commodities Stock Fund		March 15, 2011
		Virtus Global Infrastructure Fund		November 5, 2009
		Virtus Global Opportunities Fund		November 5, 2009
		Virtus Global Premium AlphaSector Fund		March 15, 2011
		Virtus Global Real Estate Securities Fund		November 5, 2009
		Virtus Greater Asia ex Japan Opportunities Fund		November 5, 2009
		Virtus Greater European Opportunities Fund		November 5, 2009
		Virtus High Yield Fund		July 18, 2011
		Virtus International Equity Fund		September 14, 2010
		Virtus International Real Estate Securities Fund		November 5, 2009
		Virtus Market Neutral Fund		February 25, 2011
		Virtus Multi-Sector Fixed Income Fund		July 18, 2011
		Virtus Multi-Sector Short Term Bond Fund		July 18, 2011
		Virtus Premium AlphaSector Fund		July 18, 2011
		Virtus Real Estate Securities Fund		July 18, 2011
		Virtus Senior Floating Rate Fund		July 18, 2011

FIFTH AMENDMENT

MASTER CUSTODY AGREEMENT

THIS AMENDMENT made effective as of the 9 ^th day of December, 2011 amends that certain Master Custody Agreement, dated as of November 5, 2009, amended September 14, 2010 February 25, 2011, March 15, 2011 and July 18, 2011, between the Funds listed on Exhibit A thereto and The Bank of New York Mellon (the “Master Custody Agreement”) as herein below provided.

W I T N E S S E T H:

WHEREAS, pursuant to Article X, Section 5 of the Master Custody Agreement, the Funds wish to append Schedule II to the Master Custody Agreement to add the Virtus Total Return Fund; and to add Article X Section 11.

NOW, THEREFORE, in consideration of the foregoing premise, the parties to the Master Custody Agreement hereby agree that the Master Custody Agreement is amended as follows:

1. Schedule II to the Master Custody Agreement is attached hereto and made a part hereof.

2. Article X, Section 11 to the Master Custody Agreement is incorporated hereto as follows.

The obligations of the Fund (and Series) entered into in the name or on behalf thereof by any director, trustee, representative, employee or agent thereof are made not individually, but in such capacities, and are not binding upon any of the directors, trustees, shareholders, representatives, employees or agents of the Fund (or Series) personally, but bind only the property of the Fund (or Series), and all persons dealing with the Fund (or Series) must look solely to the property of the Fund (or Series) for the enforcement of any claims against the Fund (or Series). For the avoidance of doubt, it is acknowledged and agreed that the liabilities and obligations of each Fund (or Series) shall be separate and apart from each other Fund (or Series) and under no circumstance shall any Fund (or Series) be liable for the liabilities and obligations of any other Fund (or Series). For the avoidance of doubt, it is acknowledged and agreed that the agreements made herein by the Fund (or Series) bind and obligate only the Fund (or Series) and its assets and no related, affiliated or controlling person of the Fund (or Series) shall have any liability for the debts or obligations of the Fund (or Series) hereunder.

construed together and shall constitute the same instrument. For all purposes, signatures delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


VIRTUS EQUITY TRUST
VIRTUS INSIGHT TRUST
VIRTUS INSTITUTIONAL TRUST
VIRTUS OPPORTUNITIES TRUST
VIRTUS TOTAL RETURN FUND

By:
Name: W. Patrick Bradley
Title: Chief Financial Officer and Treasurer

THE BANK OF NEW YORK MELLON

By:
Name:
Title:

SCHEDULE II

Series and Effective Dates


Series		Effective Date
		(Date Added to Agreement)
Virtus Insight Trust

Virtus Emerging Markets Opportunities Fund		November 5, 2009

Virtus Opportunities Trust

Virtus Allocator Premium Alphasector Fund		March 15, 2011

Virtus Foreign Opportunities Fund		November 5, 2009

Virtus Global Commodities Stock Fund		March 15, 2011

Virtus Global Infrastructure Fund		November 5, 2009

Virtus Global Opportunities Fund		November 5, 2009

Virtus Global Premium Alphasector Fund		March 15, 2011

Virtus Global Real Estate Securities Fund		November 5, 2009

Virtus Greater Asia ex Japan Opportunities Fund		November 5, 2009

Virtus Greater European Opportunities Fund		November 5, 2009

Virtus International Equity Fund		September 14, 2010

Virtus International Real Estate Securities Fund		November 5, 2009

Virtus Market Neutral Fund		February 25, 2011

Virtus Total Return Fund		December 9, 2011

AMENDMENT

FOREIGN CUSTODY MANAGER AGREEMENT

THIS AMENDMENT made effective as of the 18 ^th day of July, 2011 amends that certain Foreign Custody Manager Agreement, dated as of November 5, 2009, between the Funds listed on Exhibit A thereto and The Bank of New York Mellon, amended September 14, 2010 and February 25, 2011 (the “FCM Agreement”) as herein below provided.

W I T N E S S E T H:

WHEREAS, the FCM Agreement provides that the parties to the FCM Agreement may agree to amend Schedule I to the FCM Agreement to add new series to each of the Virtus Equity Trust, Virtus Insight Trust, Virtus Institutional Trust, Virtus Opportunities Trust, from time to time.

NOW, THEREFORE, in consideration of the foregoing premise, the parties to the FCM Agreement hereby agree that the FCM Agreement is amended as follows:

1. Schedule I to the FCM Agreement is hereby replaced with Schedule I attached hereto and made a part hereof.

2. Except as herein provided, the FCM Agreement shall be and remain unmodified and in full force and effect. All initial capitalized terms used but not defined herein shall have such meanings as ascribed thereto in the FCM Agreement.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


VIRTUS EQUITY TRUST
VIRTUS INSIGHT TRUST
VIRTUS INSTITUTUIONAL TRUST
VIRTUS OPPORTUNITIES TRUST

By:
Name: W. Patrick Bradley
Title: Chief Financial Officer and Treasurer

THE BANK OF NEW YORK MELLON

By:
Name:
Title:

SCHEDULE I

Series and Effective Dates


Fund	Portfolios	Effective Date
Virtus Equity Trust	Virtus Balanced Fund	July 18. 2011
	Virtus Growth & Income Fund	July 18. 2011
	Virtus Mid-Cap Core Fund	July 18. 2011
	Virtus Mid-Cap Growth Fund	July 18. 2011
	Virtus Mid-Cap Value Fund	July 18. 2011
	Virtus Quality Large-Cap Value Fund	July 18. 2011
	Virtus Quality Small-Cap Fund	July 18. 2011
	Virtus Small-Cap Core Fund	July 18. 2011
	Virtus Small-Cap Sustainable Growth Fund	July 18. 2011
	Virtus Strategic Growth Fund	July 18. 2011
	Virtus Tactical Allocation Fund	July 18. 2011

Virtus Insight Trust	Virtus Balanced Allocation Fund	July 18. 2011
	Virtus Core Equity Fund	July 18. 2011
	Virtus Emerging Market Opportunities Funds	November 5, 2009
	Virtus High Yield Income Fund	July 18. 2011
	Virtus Insight Government Money Market Fund	July 18. 2011
	Virtus Insight Money Market Fund	July 18. 2011
	Virtus Tax – Exempt Money Market Fund	July 18. 2011
	Virtus Intermediate Government Bond Fund	July 18. 2011
	Virtus Intermediate Tax-Exempt Bond Fund	July 18. 2011
	Virtus Short/ Intermediate Bond Fund	July 18. 2011
	Virtus Tax-Exempt Bond Fund	July 18. 2011
	Virtus Value Equity Fund	July 18. 2011

Virtus Institutional Trust	Virtus Institutional Bond Fund	July 18. 2011

Virtus Opportunities Trust	Virtus Allocator Premium AlphaSector Fund	March 15, 2011


		Virtus AlphaSector Rotation Fund		July 18. 2011
		Virtus AlphaSector Allocation Fund		July 18. 2011
		Virtus Alternatives Diversifier Fund		July 18. 2011
		Virtus Bond Fund		July 18. 2011
		Virtus CA Tax-Exempt Bond Fund		July 18. 2011
		Virtus Foreign Opportunities Fund		November 5, 2009
		Virtus Global Commodities Stock fund		March 15, 2011
		Virtus Global Infrastructure Fund		November 5, 2009
		Virtus Global Opportunities Fund		November 5, 2009
		Virtus Global Premium AlphaSector Fund		March 15, 2011
		Virtus Global Real Estate Securities Fund		November 5, 2009
		Virtus Great Asia ex Japan Opportunities Fund		November 5, 2009
		Virtus Greater European Opportunities Fund		November 5, 2009
		Virtus High Yield Fund		July 18. 2011
		Virtus International Equity		September 14, 2010
		Virtus International Real Estate Fund		November 5, 2009
		Virtus Market Neutral Fund		February 25, 2011
		Virtus Multi-Sector Fixed Income Fund		July 18. 2011
		Virtus Multi-Sector Short Term Bond Fund		July 18. 2011
		Virtus Premium AlphaSector Fund		July 18. 2011
		Virtus Real Estate Securities Fund		July 18. 2011
		Virtus Senior Floating Rate Fund		July 18. 2011

FOURTH AMENDMENT

FOREIGN CUSTODY MANAGER AGREEMENT

THIS AMENDMENT made effective as of the 9 ^th day of December, 2011 amends that certain Foreign Custody Manager Agreement, dated as of November 5, 2009, amended September 14, 2010, February 25, 2011, and March 15, 2011, between the Funds listed on Annex I thereto and The Bank of New York Mellon (the “Foreign Custody Manager Agreement”) as herein below provided.

W I T N E S S E T H:

WHEREAS, pursuant to Article VI, Section 4 of the Foreign Custody Manager Agreement, the Funds wish to amend Schedule I to the Foreign Custody Manager Agreement; and to add Article VI, Section 10.

NOW, THEREFORE, in consideration of the foregoing premise, the parties to the Foreign Custody Manager Agreement hereby agree that the Foreign Custody Manager Agreement is amended as follows:

1. Schedule I to the Foreign Custody Manager Agreement is hereby replaced with Schedule I attached hereto and made a part hereof.

2. Article VI, Section 10 to the Foreign Custody Manager Agreement is incorporated hereto as follows.

The obligations of the Fund (and Series) entered into in the name or on behalf thereof by any director, trustee, representative, employee or agent thereof are made not individually, but in such capacities, and are not binding upon any of the directors, trustees, shareholders, representatives, employees or agents of the Fund (or Series) personally, but bind only the property of the Fund (or Series), and all persons dealing with the Fund (or Series) must look solely to the property of the Fund (or Series) for the enforcement of any claims against the Fund (or Series). For the avoidance of doubt, it is acknowledged and agreed that the liabilities and obligations of each Series shall be separate and apart from each other Series and under no circumstance shall any Series be liable for the liabilities and obligations of any other Series. For the avoidance of doubt, it is acknowledged and agreed that the agreements made herein by the Fund (or Series) bind and obligate only the Fund (or Series) and its assets and no related, affiliated or controlling person of the Fund (or Series) shall have any liability for the debts or obligations of the Fund (or Series) hereunder.

4. Except as herein provided, the Foreign Custody Manager Agreement shall be and remain unmodified and in full force and effect. All initial capitalized terms used but not defined herein shall have such meanings as ascribed thereto in the Foreign Custody Manager Agreement.

5. This Amendment may be executed in any number of counterparts (including executed counterparts delivered and exchanged by facsimile transmission) with the same effect as if all signing parties had originally signed the same document, and all counterparts shall be construed together and shall constitute the same instrument. For all purposes, signatures delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.


VIRTUS EQUITY TRUST
VIRTUS INSIGHT TRUST
VIRTUS INSTITUTIONAL TRUST
VIRTUS OPPORTUNITIES TRUST
VIRTUS TOTAL RETURN FUND

By:
Name: W. Patrick Bradley
Title: Chief Financial Officer and Treasurer

THE BANK OF NEW YORK MELLON

By:
Name:
Title:

SCHEDULE I


Series		Effective Date
		(Date added to Agreement)
Virtus Insight Trust

Virtus Emerging Markets Opportunities Fund		November 5, 2009

Virtus Opportunities Trust

Virtus Allocator Premium Alphasector Fund		March 15, 2011

Virtus Foreign Opportunities Fund		November 5, 2009

Virtus Global Commodities Stock Fund		March 15, 2011

Virtus Global Infrastructure Fund		November 5, 2009

Virtus Global Opportunities Fund		November 5, 2009

Virtus Global Premium Alphasector Fund		March 15, 2011

Virtus Global Real Estate Securities Fund		November 5, 2009

Virtus Greater Asia ex Japan Opportunities Fund		November 5, 2009

Virtus Greater European Opportunities Fund		November 5, 2009

Virtus International Equity Fund		September 14, 2010

Virtus International Real Estate Securities Fund		November 5, 2009

Virtus Market Neutral Fund		February 25, 2011

Virtus Total Return Fund		December 9, 2011


Confidential And Proprietary		Execution Version

SUB-TRANSFER AGENCY AND SHAREHOLDER SERVICES AGREEMENT

This Sub-Transfer Agency And Shareholder Services Agreement (“ Agreement ”) is made as of April 15, 2011 (“ Effective Date ”) by and among BNY Mellon Investment Servicing (US) Inc., a Massachusetts corporation (“ BNYM ”), each of the investment companies listed on the signature page to this Agreement and known as the Virtus Mutual Funds (individually, “ Investment Company ”; collectively, “ Investment Companies ”), and VP Distributors, Inc., a Connecticut corporation (“ Company ”). Capitalized terms, and certain noncapitalized terms, not otherwise defined shall have the meanings set forth in Schedule A ( Schedule A also contains an index of defined terms providing the location of all defined terms).

Background

A. The Company is registered as a transfer agent under the 1934 Act and services as transfer agent of record for the Funds (as defined immediately below).

B. The Company and each Investment Company wish to retain BNYM to perform various transfer agency, registrar, dividend disbursing and shareholder servicing services for and on behalf of each of the Portfolios listed on Schedule B attached hereto and made a part hereof, as such Schedule B may be amended from time to time, and BNYM wishes to furnish such services. The term “Fund” as used hereinafter in this Agreement means, as applicable, (i) each Investment Company which is not further divided into one or more Portfolios on Schedule B , and (ii) each Portfolio listed on Schedule B of those Investment Companies which are further divided into Portfolios, in each case each Fund shall be considered in its individual and separate capacity.

Terms

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto agree to the statements made in the preceding paragraphs and as follows:

1. Appointment . The Company and each Investment Company hereby engage BNYM to provide the transfer agency, registrar, dividend disbursing and shareholder servicing services set forth in Section 3 to and on behalf of each Fund in accordance with this Agreement, including without limitation in accordance with procedures established from time to time between the Company and BNYM in accordance with this Agreement, and BNYM accepts such engagement and agrees in connection with such engagement to furnish the services expressly set forth in Section 3. BNYM shall be under no duty to provide any service to or on behalf of a Fund except as specifically set forth in Section 3 or as BNYM and the Investment Companies may specifically agree in a written amendment hereto. BNYM shall not bear, or otherwise be responsible for, any fees, costs or expenses charged by any third party service providers engaged by the Company or a Fund or by any other third party service provider to the Company or a Fund not engaged by BNYM.

2. Records; Visits . The books and records pertaining to a Fund, which are in the possession or under the control of BNYM, shall be the property of the Fund and shall be prepared and maintained by BNYM in accordance with the Securities Law and regulations thereunder applicable to open-end investment companies registered with the SEC under the 1940 Act, including without limitation Section 31 of the 1940 Act and the regulations thereunder. The Authorized Persons of the Company shall have access to all such books and records at all times during BNYM’s normal business hours and Authorized Persons of each Fund shall have access to the books and records of the relevant Fund at all times during BNYM’s normal business hours. Upon the reasonable request of the Company or a Fund, copies of any such books and records shall be provided by BNYM to the Company or the requesting Fund, respectively, at the relevant Fund’s expense.

Page 1


Confidential And Proprietary		Execution Version

3.	Services .

(a)

Transfer Agent, Registrar, Dividend Disbursing and Shareholder Servicing :

(1)	Services to be provided on an ongoing basis to the extent applicable to a particular Fund:

(i)

Calculate 12b-1 payments;

(ii)

Maintain shareholder registrations;

(iii)

Review new applications and correspond with the Company to obtain complete or correct information;

(iv)

Direct payment processing of checks or wires;

(v)

Prepare and certify shareholder lists in conjunction with proxy solicitations;

(vi)

Prepare for mailing to shareholders confirmation of activity;

(vii)

Provide toll-free lines for direct shareholder use;

(viii)

Prepare duplicate confirmations for mailing to broker-dealers of their clients’ activity, whether executed through the broker-dealer or directly with BNYM;

(ix)

Provide periodic shareholder lists and statistics to the Fund;

(x)

Provide detailed data for underwriter/broker confirmations;

(xi)

Prepare periodic mailing of year-end statement information;

(xii)

Prepare and mail year-end tax information;

(xiii)

Notify on a timely basis the Fund’s investment adviser, accounting agent, and custodian (“ Fund Custodian ”) of Share activity;

(xiv)

Perform other participating broker-dealer shareholder services as may be agreed upon from time to time;

(xv)

Accept and post daily Share purchases and redemptions;

(xvi)

Accept, post and perform shareholder transfers and exchanges;

(xvii)

Issue and cancel certificates (when requested in writing by the shareholder);

(xviii)

Remediation Services, as required;

(xviii)

Perform certain administrative and ministerial duties relating to opening, maintaining and processing transactions for shareholders or financial intermediaries that trade shares through the NSCC;

(xix)

Issue replacement checks and place stop orders on original checks based on shareholder’s representation that a check was not received or was lost;

Page 2


Confidential And Proprietary		Execution Version

(xx)

Record the issuance of Shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of Shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. (For clarification: for so long as an Investment Company is registered with the SEC as an open-end investment company the total number of authorized Shares for all Funds constituting Portfolios of such Fund shall be “unlimited”); and

(xxi)

Transmit Fund data in the BNYM System to a Fund’s provider of blue sky compliance services permitting such provider to monitor the number of shares sold in each state and perform other customary blue sky compliance activities.

(2) Purchase of Shares . BNYM shall issue and credit an account of an investor, in the manner described in the Fund’s prospectus, once it receives:

(i)

A purchase order in completed proper form;

(ii)

Proper information to establish a shareholder account; and

(iii)

Confirmation of receipt or crediting of funds for such order to the Fund Custodian.

(3) Redemption of Shares . BNYM shall process requests to redeem Shares as follows:

(i)

All requests to transfer or redeem Shares and payment therefor shall be made in accordance with the Fund’s prospectus, when the shareholder tenders Shares in proper form, accompanied by such documents as BNYM reasonably may deem necessary.

(ii)

BNYM reserves the right to refuse to transfer or redeem Shares until it is satisfied that the endorsement on the instructions is valid and genuine and that the requested transfer or redemption is legally authorized, and it shall incur no liability for the refusal, in good faith, to process transfers or redemptions which BNYM, in its good judgment, deems improper or unauthorized, or until it is reasonably satisfied that there is no basis to any claims adverse to such transfer or redemption.

(iii)

When Shares are redeemed, BNYM shall deliver to the Fund Custodian and the Fund or its designee a notification setting forth the number of Shares redeemed. Such redeemed Shares shall be reflected on appropriate accounts maintained by BNYM reflecting outstanding Shares of the Fund and Shares attributed to individual accounts.

(iv)

BNYM shall, upon receipt of the monies provided to it by the Fund Custodian for the redemption of Shares, pay such monies as are received from the Fund Custodian, all in accordance with the procedures established from time to time between BNYM and the Fund.

(v)

BNYM shall not process or effect any redemption requests with respect to Shares of the Fund after receipt by BNYM or its agent of notification of the suspension of the determination of the net asset value of the Fund.

(4) Dividends and Distributions . Upon receipt by BNYM of Written Instructions containing all requisite information that may be reasonably requested by BNYM, including payment directions and authorization, BNYM shall issue Shares in payment of the dividend or distribution, or, upon shareholder election, pay such dividend or distribution in cash, if provided for in the Fund’s prospectus. If requested by BNYM, the Fund shall furnish a certified resolution of the Fund’s Board of Trustees declaring and

Page 3


Confidential And Proprietary		Execution Version

authorizing the payment of a dividend or other distribution but BNYM shall have no duty to request such. Issuance of Shares or payment of a dividend or distribution as provided for in this Section 3(a)(4), as well as payments upon redemption as described in Section 3(a)(3), shall be made after deduction and payment of any and all amounts required to be withheld in accordance with any applicable tax laws or other laws, rules or regulations. BNYM shall (i) mail to the Fund’s shareholders such tax forms and other information, or permissible substitute notice, relating to dividends and distributions paid by the Fund as are required to be filed and mailed by applicable law, rule or regulation; and (ii) prepare, maintain and file with the IRS and other appropriate taxing authorities reports relating to all dividends by the Fund paid to its shareholders (above threshold amounts stipulated by applicable law) as required by tax or other laws, rules or regulations; provided , however , notwithstanding the foregoing and notwithstanding any other provision of this Section 3(a)(4) or this Agreement: (A) BNYM’s exclusive obligations with respect to any written statement that Section 19(a) of the 1940 Act may require to be issued with respect to a Fund shall be, upon receipt of specific Written Instructions to such effect, to receive from the Fund the information which is to be printed on the statement, to print such information on appropriate paper stock and to mail such statement to shareholders, and (B) BNYM’s sole obligation with respect to any dividend or distribution that Section 19(a) of the 1940 Act may require be accompanied by such a written statement shall be to act strictly in accordance with the first three sentences of this Section 3(a)(4).

(5) Shareholder Account Services . BNYM may arrange, in accordance with the prospectus:

(i)

for issuance of Shares obtained through:

(A)

Any pre-authorized check plan; and

(B)

Direct purchases through broker wire orders, checks and applications.

(ii)

for a shareholder’s:

(A) Exchange of Shares for shares of another fund with which the Fund has exchange privileges;

(B) Automatic redemption from an account where that shareholder participates in an automatic redemption plan; and/or

(C)

Redemption of Shares from an account with a checkwriting privilege.

(6) Communications to Shareholders . Subject to receipt by BNYM of timely Written Instructions where appropriate, BNYM shall prepare and/or mail all communications by the Fund to its shareholders, including:

(i)

Preparing mail files for reports to shareholders;

(ii)

Preparing confirmations of purchases and sales of Fund shares;

(iii)

Preparing monthly or quarterly statements;

(iv)

Preparing dividend and distribution notices; and

(v)

Preparing and mailing tax form information.

Page 4


Confidential And Proprietary		Execution Version

(7) Records . BNYM shall maintain records of the accounts for each shareholder showing the following information:

(i)

Name, address and United States Tax Identification or Social Security number;

(ii)

Number and class of Shares held and number and class of Shares for which certificates, if any, have been issued, including certificate numbers and denominations;

(iii)

Historical information regarding the account of each shareholder, including dividends and distributions paid and the date and price for all transactions on a shareholder’s account;

(iv)

Any stop or restraining order placed against a shareholder’s account;

(v)

Any correspondence relating to the current maintenance of a shareholder’s account;

(vi)

Information with respect to withholdings; and

(vii)

Any information required in order for BNYM to perform any calculations required by this Agreement.

(8) Lost or Stolen Certificates . BNYM shall place a stop notice against any certificate reported to be lost or stolen and comply with all applicable federal regulatory requirements for reporting such loss or alleged misappropriation. A new certificate shall be registered and issued only upon:

(i)

The shareholder’s pledge of a lost instrument bond or such other appropriate indemnity bond issued by a surety company approved by BNYM;

(ii)

Completion of a release and indemnification agreement signed by the shareholder to protect BNYM and its affiliates; and

(iii)

Satisfaction of any other requirements that may be agreed upon in writing by the Company and BNYM pursuant to Section 14(b).

(9) Shareholder Inspection of Stock Records . Upon a request from any Fund shareholder to inspect stock records, BNYM will notify the Fund and the Fund will issue instructions granting or denying each such request. Unless BNYM has acted contrary to the Fund’s instructions, the Fund agrees to and does hereby release BNYM from any liability for refusal of permission for a particular shareholder to inspect the Fund’s stock records.

(10) Withdrawal of Shares and Cancellation of Certificates . Upon receipt of Written Instructions, BNYM shall cancel outstanding certificates surrendered by the Fund to reduce the total amount of outstanding shares by the number of shares surrendered by the Fund.

(11) Lost Shareholders .

(A) BNYM shall perform such services as are required in order to comply with Rule 17Ad-17 of the 1934 Act (the “ Lost Shareholder Rule ”) without charge to the shareholder, including, but not limited to, those set forth below. BNYM may, in its sole discretion, use the services of a third party to perform some of or all such services.

(i)

documentation of search policies and procedures;

(ii)

execution of required searches;

Page 5


Confidential And Proprietary		Execution Version

(iii)

tracking results and maintaining data sufficient to comply with the Lost Shareholder Rule; and

(iv)

preparation and submission of data required under the Lost Shareholder Rule.

(B) For purposes of clarification: (i) Section 3(a)(11)(A) does not obligate BNYM to perform the services described therein for broker-controlled accounts, omnibus accounts and similar accounts with respect to which BNYM does not receive or maintain information which would permit it to determine whether the account owner is a “lost securityholder”, as that term is defined in the Lost Shareholder Rule.

(C) BNYM shall perform abandoned and unclaimed property reporting and escheat services for the Funds in accordance with applicable law and in accordance with any procedures the Company and BNYM may agree to in writing in accordance with Section 14(b).

(12) Tax Favored Accounts .

(A) Certain definitions:

(i)

“ Eligible Assets ” means shares of the Fund and such other assets as the Fund and BNYM may mutually agree.

(ii)

“ Participant ” means a beneficial owner of a Tax Favored Account.

(iii)

“ Tax Favored Account ” means any of the following accounts: (i) a Traditional, SEP, Roth, or SIMPLE individual retirement account, (ii) an account in a money purchase or profit sharing plan, (iii) a single participant “k” plan account, and (iv) a Coverdell educational savings account, all within the meaning of Sections 408, 401, or 530 of the Code; which is facilitated or sponsored by the Fund or affiliates of the Fund and with respect to which the contributions of Participants are used to purchase or invest in solely Eligible Assets.

(B) To the extent requested by the Fund, BNYM shall provide the following administrative services to Tax Favored Accounts, to the extent a particular administrative service is appropriate to the Tax Favored Account under the Code:

(i)

Establish a record of types and reasons for distributions (i.e., attainment of age 59-1/2, disability, death, return of excess contributions, etc.);

(ii)

Record method of distribution requested and/or made;

(iii)

Receive and process designation of beneficiary forms requests;

(iv)

Examine and process requests for direct transfers between custodians/trustees; transfer and pay over to the successor assets in the account and records pertaining thereto as requested;

(v)

Prepare any annual reports or returns required to be prepared and/or filed by a custodian of Tax Favored Accounts, including, but not limited to, an annual fair market value report, Forms 1099R and 5498; and file same with the Internal Revenue Service and provide same to the Participant or Participant’s beneficiary, as applicable; and

Page 6


Confidential And Proprietary		Execution Version

(vi)

Perform applicable federal withholding and send to the Participant or Participant’s beneficiary, as applicable, an annual TEFRA notice regarding required federal tax withholding.

(C) BNYM shall arrange for PFPC Trust, BNY Mellon Bank or other qualified institution (which may be an Affiliate of BNYM) to serve as custodian (the “ Custodian ”) for the Tax Favored Accounts (“ Custodied Accounts ”). In consideration for such service, the Fund agrees:

(i)

The Fund will provide sixty (60) days advance written notice, or as much advance written notice as is practicable under the circumstances if 60-day advance written notice is not possible, to BNYM, the Custodian and Participants in connection with a Fund liquidation or any other event or circumstance or act or course of conduct involving the Fund or assets held in a Custodied Account that would result in an involuntary liquidation of any asset held in a Custodied Account or would otherwise materially affect the Custodied Account, its operation, the rights or obligations of a Participant, any asset in a Custodied Account or the terms or provisions of a Custodied Account (“ Material Event ”), regardless of whether the Material Event was or was not described in an amendment to the Fund’s prospectus or statement of additional information. In the event that at least one viable investment option for all liquidation proceeds of a liquidating Fund is not provided for in another Fund in the Prospectus for the liquidating Fund for all holders of Shares of the liquidating Fund in Custodied Accounts, then the Company will reimburse BNYM and the Custodian for all reasonable costs, including costs of legal counsel, incurred in determining, in consideration of the Material Event, an appropriate course of conduct with respect to the liquidation proceeds under the law, including the Code, and under agreements with Participants and in implementing the course of conduct determined to be appropriate;

(ii)

Upon the termination of this Agreement, or if one or more Funds engage in a course of conduct which reasonably requires the Custodian or BNYM to provide services with respect to the Tax Favored Accounts which are significantly different than the services contemplated by this Section 3(a)(12), whether in addition to such services or in replacement of such services, then the Company or the Investment Company will, at its cost and expense, at the request of BNYM or the Custodian and in accordance with all applicable provisions of the Code:

(aa)

appoint and provide for a qualified successor custodian for all Custodied Accounts and provide for any interim custodial or transfer arrangements made appropriate by the circumstances described above, and

(bb)

cause all Custodied Accounts and all assets in the Custodied Accounts to transfer to such successor or interim custodians;

(iii)

The Custodian may require Participants and all employers, advisors or other parties involved in any manner in the creation, sponsorship or administration of Custodied Accounts or their relevant plans or involved in any other capacity with Custodied Accounts or their relevant plans (“ Related Parties ”) to adopt, execute or otherwise agree to disclosure documents, custodial agreements, account agreements and such other forms, agreements and materials which it reasonably determines to be appropriate for the establishment and administration of the Custodied Accounts or relevant plans under applicable law, including the Code (“ Account Documentation ”) or for the services provided as custodian; and

(iv)

The Custodian may directly furnish Account Documentation and all other written

Page 7


Confidential And Proprietary		Execution Version

notifications, materials and communications which it reasonably determines to be appropriate to its role as custodian (“ Related Materials ”) to Participants and Related Parties and the Fund will upon the reasonable request of BNYM or the Custodian coordinate joint mailings of Account Documentation and Related Materials with Fund materials.

(D) BNYM shall make available to shareholders of the Funds all agreements, disclosures and other written materials reasonably required to allow such shareholders to establish and to maintain Custodied Accounts in compliance with all applicable provisions of the Code and the regulations promulgated thereunder.

(E) With respect to accounts of shareholders of the Funds established under Section 403(b) of the Code prior to the execution of this Agreement (“ 403(b) Accounts ”):

(i)

BNYM agrees to:

(A) Arrange for PFPC Trust, BNY Mellon Bank or other qualified institution (which may be an Affiliate of BNYM) to serve as custodian;

(B) Perform all appropriate recordkeeping services provided for other Fund shareholder accounts under this Agreement;

(C) Accept and process distributions from the 403(b) Accounts in accordance with instructions received in good order from the record owners and beneficiaries, as appropriate, of such accounts;

(D) Provide federal tax reporting appropriate to federal Form 1099-R; and

(E) Provide to record owners of the 403(b) Accounts the custodial documents in use by BNYM as of the Effective Date and provide custodial documents in amendment or supplement thereto or in replacement thereof as appropriate in the commercially reasonable judgment of BNYM in accordance any changes to the Code or regulations thereunder.

(ii) The Company and the Investment Companies agree they shall have the same responsibilities and obligations with respect to the 403(b) Accounts as they have with respect to the Custodied Accounts pursuant to Section 3(a)(12)(C).

(F) In consideration for BNYM or the Custodian furnishing any one or more of the services provided for in this Section 3(a)(12), whether alone or in combination with others, each Investment Company shall pay to BNYM the related Fees and Reimbursable Expenses as set forth in the Fee Agreement. The Investment Company may direct BNYM to collect such Fees and Reimbursable Expenses from the assets in relevant Tax Favored Accounts upon appropriate disclosure to Participants, but shall remain responsible for such Fees and Reimbursable Expenses to the extent it does not so direct BNYM or such amounts are not collected or collectable from Participants or the Tax Favored Accounts.

(G) Any obligations of the Company or an Investment Company under this Section 3(a)(12) not satisfied or fulfilled prior to any termination of this Agreement shall survive any such termination of this Agreement.

(b) Anti-Money Laundering Program Services. BNYM will perform one or more of the services described in this Section 3(b) if requested by the Fund (“ AML Services ”).

Page 8


Confidential And Proprietary		Execution Version

(1) Anti-Money Laundering .

(A) To the extent the other provisions of this Agreement require BNYM to establish, maintain and monitor accounts of investors in the Fund consistent with the Securities Laws, BNYM shall perform reasonable actions necessary to assist the Fund in complying with Section 352 of the USA PATRIOT Act, as follows: BNYM shall: (a) establish and implement written internal policies, procedures and controls reasonably designed to help prevent the Fund from being used to launder money or finance terrorist activities; (b) provide for independent testing, by an employee who is not responsible for the operation of BNYM’s anti-money laundering (“ AML ”) program or by an outside party, for compliance with BNYM’s written AML policies and procedures; (c) designate a person or persons responsible for implementing and monitoring the operation and internal controls of BNYM’s AML program; and (d) provide ongoing training of BNYM personnel relating to the prevention of money-laundering activities.

(B) Upon the reasonable request of the Fund, BNYM shall provide to the Fund: (x) a copy of BNYM’s written AML policies and procedures; (y) at the option of BNYM, a copy of a written assessment or report prepared by the party performing the independent testing for compliance, or a summary thereof, or a certification that the findings of the independent party are satisfactory; and (z) a summary of the AML training provided for appropriate BNYM personnel.

(C) Without limiting or expanding subsections (A) or (B) above, the parties agree this Section 3(b)(1) relates solely to Fund compliance with Section 352 of the USA PATRIOT Act and does not relate to any other obligation the Fund may have under the USA PATRIOT Act, including without limitation Section 326 thereof.

(2) Foreign Account Due Diligence .

(A) To assist the Fund in complying with requirements regarding a due diligence program for “foreign financial institution” accounts in accordance with applicable regulations promulgated by U.S. Department of Treasury under Section 312 of the USA PATRIOT Act (“ FFI Regulations ”), BNYM will do the following:

(i)

Implement and operate a due diligence program that includes appropriate, specific, risk-based policies, procedures and controls that are reasonably designed to enable the Fund to detect and report, on an ongoing basis, any known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered or managed by the Fund for a “foreign financial institution” (as defined in 31 CFR 103.175(h))(“ Foreign Financial Institution ”);

(ii)

Conduct due diligence to identify and detect any Foreign Financial Institution accounts in connection with new accounts and account maintenance;

(iii)

Assess the money laundering risk presented by each such Foreign Financial Institution account, based on a consideration of all appropriate relevant factors (as generally outlined in 31 CFR 103.176), and assign a risk category to each such Foreign Financial Institution account;

(iv)

Apply risk-based procedures and controls to each such Foreign Financial Institution account reasonably designed to detect and report known or suspected money laundering activity, including a periodic review of the Foreign Financial Institution account activity sufficient to determine consistency with information obtained about the type, purpose and anticipated activity of the account;

Page 9


Confidential And Proprietary		Execution Version

(v)

Include procedures to be followed in circumstances in which the appropriate due diligence cannot be performed with respect to a Foreign Financial Institution account;

(vi)

Adopt and operate enhanced due diligence policies for certain Foreign Financial Institution accounts in compliance with 31 CFR 103.176(b);

(vii)

Record due diligence program and maintain due diligence records relating to Foreign Financial Institution accounts; and

(viii)

Report to the Fund about measures taken under (i)-(vii) above.

(B) Nothing in Section 3(b)(2) shall be construed to require BNYM to perform any course of conduct that is not required for Fund compliance with the FFI Regulations.

(C) Without limiting or expanding subsections (A) or (B) above, the parties agree this Section 3(b)(2) relates solely to Fund compliance with Section 312 of the USA PATRIOT Act and does not relate to any other obligation the Fund may have under the USA PATRIOT Act, including without limitation Section 326 thereof.

(3) Customer Identification Program .

(A) To assist the Fund in complying with requirements regarding a customer identification program in accordance with applicable regulations promulgated by U.S. Department of Treasury under Section 326 of the USA PATRIOT Act (“ CIP Regulations ”), BNYM will do the following:

(i)

Implement procedures which require that prior to establishing a new account in the Fund BNYM obtain the name, date of birth (for natural persons only), address and government-issued identification number (collectively, the “ Data Elements ”) for the “ Customer ” (defined for purposes of this Agreement as provided in 31 CFR 103.131) associated with the new account.

(ii)

Use collected Data Elements to attempt to reasonably verify the identity of each new Customer promptly before or after each corresponding new account is opened. Methods of verification may consist of non-documentary methods (for which BNYM may use unaffiliated information vendors to assist with such verifications) and documentary methods (as permitted by 31 CFR 103.131), and may include procedures under which BNYM personnel perform enhanced due diligence to verify the identities of Customers the identities of whom were not successfully verified through the first-level (which will typically be reliance on results obtained from an information vendor) verification process(es).

(iii)

Implement procedures concerning action(s) to be taken in the event that a Customer’s identity cannot be verified.

(iv)

Record the Data Elements and maintain records relating to verification of new Customers consistent with 31 CFR 103.131(b)(3).

(v)

Regularly report to the Fund about measures taken under (i)-(iii) above.

Page 10


Confidential And Proprietary		Execution Version

(vi)

If BNYM provides services by which prospective Customers may subscribe for shares in the Fund via the Internet or telephone, work with the Fund to notify prospective Customers, consistent with 31 CFR 103.131(b)(5), about the program conducted by the Fund in accordance with the CIP Regulations.

(B) Nothing in Section 3(b)(3) shall be construed to require BNYM to perform any course of conduct that is not required for Fund compliance with the CIP Regulations, including by way of illustration not limitation the collection of Data Elements or verification of identity for individuals opening Fund accounts through financial intermediaries which use the facilities of the National Securities Clearing Corporation.

(4) FinCEN Requests Under USA PATRIOT Act Section 314(a) . The Fund hereby engages BNYM to provide certain services as set forth in this subsection (b) with respect to FinCEN Section 314(a) information requests (“Information Requests”) received by the Fund. Upon receipt by BNYM of an Information Request delivered by the Fund in full compliance with all 314(a) Procedures (as defined below), BNYM will compare appropriate information contained in the Information Request against relevant information contained in account records maintained for the Fund. Information relating to potential matches resulting from these comparisons, after review by BNYM for quality assurance purposes (“Comparison Results”), will be made available to the Fund in a timely manner. The Fund will retain responsibility for filing reports with FinCEN that may be appropriate based on the Comparison Results. In addition, (i) a potential match involving a tax identification number will be forwarded by BNYM to BNYM’s SAR Service for analysis in conjunction with other relevant activity contained in records for the particular relevant account, and (ii) if, after such analysis, BNYM’s SAR Service determines that the potential match could constitute a “suspicious activity”, as that term is used for purposes of the USA Patriot Act, then BNYM’s SAR Service will deliver a suspicious activity referral to the Fund. “314(a) Procedures” means the procedures adopted from time to time by BNYM governing the delivery and processing of Information Requests transmitted by BNYM’s clients to BNYM, including without limitation requirements governing the timeliness, content, completeness, format and mode of transmissions to BNYM.

(5) U.S. Government List Matching Services .

(A) BNYM will compare Appropriate List Matching Data (as defined in subsection (C) below) contained in BNYM databases which are maintained for the Fund pursuant to this Agreement (“ Fund Data ”) to “ U.S. Government Lists ”, which is hereby defined to mean the following:

(i)

data promulgated in connection with the list of Specially Designated Nationals published by the Office of Foreign Asset Control of the U.S. Department of the Treasury (“ OFAC ”) and any other sanctions lists or programs administered by OFAC to the extent such lists or programs remain operative and applicable to the Fund (“ OFAC Lists ”);

(ii)

data promulgated in connection with the list of Non-Cooperative Countries and Territories (“ NCCT List ”) published by the Financial Action Task Force;

(iii)

data promulgated in connection with determinations by the Director (the “ Director ”) of the Financial Crimes Enforcement Network of the U.S. Department of the Treasury that a foreign jurisdiction, institution, class of transactions, type of account or other matter is a primary money laundering concern (“ PMLC Determination ”); and

(iv)

data promulgated in connection with any other lists, programs or determinations (A) which BNYM determines to be substantially similar in purpose to any of the foregoing lists, programs or determinations, or (B) which BNYM and the Fund agree in writing to add to the service described in this subsection (a).

Page 11


Confidential And Proprietary		Execution Version

(B) In the event that following a comparison of Fund Data to a U.S. Government List as described in subsection (a) BNYM determines that any Fund Data constitutes a “match” with the U.S. Government List in accordance with the criteria applicable to the particular U.S. Government List, BNYM:

(i)

will notify the Fund of such match;

(ii)

will send any other notifications required by applicable law or regulation by virtue of the match;

(iii)

if a match to an OFAC List, will to the extent required by applicable law or regulation assist the Fund in taking appropriate steps to block any transactions or attempted transactions to the extent such action may be required by applicable law or regulation;

(iv)

if a match to the NCCT List or a PMLC Determination, will to the extent required by applicable law or regulation conduct a suspicious activity review of accounts related to the match and if suspicious activity is detected will deliver a suspicious activity referral to the Fund;

(v)

if a match to a PMLC Determination, will assist the Fund in taking the appropriate special measures imposed by the Director; and

(vi)

will assist the Fund in taking any other appropriate actions required by applicable law or regulation.

(C) “ Appropriate List Matching Data ” means (A) account registration and alternate payee data, to the extent made appropriate by statutes, rules or regulations governing the U.S. Government Lists, (ii) data determined by BNYM in good faith in light of statutes, rules or regulations governing the U.S. Government Lists to be necessary to provide the services described in this Section 3(b)(5), and (iii) data the parties agree in writing to be necessary to provide the services described in this Section 3(b)(5).

(D) BNYM shall perform the comparisons described in this Section 3(b)(5) on a regular period basis and within a commercially reasonable period of time following each update of the U.S. Government Lists.

(E) In order to appropriately carry out the comparisons described in this Section 3(b)(5), BNYM will take commercially reasonable measures to keep its records of the U.S. Government Lists up to date.

(6) Legal Process . The Fund hereby engages BNYM to provide certain services as set forth in this subsection (6) with respect to legal process (civil and criminal subpoenas, civil or criminal seizure orders, IRS civil or criminal notices including notices of lien or levy, other functionally equivalent legal process as the parties mutually agree) received by the Fund and furnished to BNYM Regulatory Management at a time and in a manner affording BNYM Regulatory Management reasonable opportunity to act on it (“Legal Process”). The Fund shall have the sole and exclusive obligation to furnish the information, documentation or other material requested by the Legal Process but BNYM will assist the Fund in complying with the Legal Process after reviewing appropriate customer account activity. In addition, if BNYM, after a review of the Legal Process based on preliminary criteria, determines an investigation of

Page 12


Confidential And Proprietary		Execution Version

potential suspicious activity is warranted, (i) BNYM will perform an analysis of other activity contained in records for the particular relevant account(s), and (ii) if, after such analysis, BNYM determines that the Legal Process together with activity contained in relevant account records could indicate the existence of “suspicious activity”, then BNYM will deliver a suspicious activity referral to the Fund.

(7) BNYM agrees to permit governmental authorities with jurisdiction over the Fund to conduct examinations of the operations and records relating to the services performed by BNYM under this Section 3(b) upon reasonable advance request and during normal business hours and to furnish copies at the Fund’s cost and expense of information reasonably requested by the Fund or such authorities and relevant to the services.

(8) For purposes of clarification: All Written Procedures relating to the services performed by BNYM pursuant to this Section 3(b) and any information, written matters or other recorded materials relating to such services and maintained by BNYM shall constitute Confidential Information of BNYM, except to the extent, if any, such materials constitute Fund records under the Securities Laws.

(9) The Fund is solely and exclusively responsible for determining the applicability to the Fund of the Bank Secrecy Act, the USA PATRIOT Act, regulations of FinCEN, and all other laws and regulations, as they may be constituted from time to time (“ Fund Applicable Laws ”), for complying with the Fund Applicable Laws, for determining the extent to which the AML Services assist the Fund in complying with the Fund Applicable Laws, and for furnishing any supplementation or augmentation to the AML Services it determines to be appropriate, and acknowledges that BNYM has given no advice and makes no representations with respect to such matters. Section 3(b) of the Agreement shall not be construed to impose on BNYM any obligation other than to engage in the specific course of conduct specified by the provisions therein, and in particular shall not be construed to impose any other obligation on BNYM to design, develop, implement, administer, or otherwise manage compliance activities of the Fund. The services provided pursuant to this Section 3(b) may be changed at any time and from time to time by BNYM in its reasonable sole discretion to include commercially reasonable provisions appropriate to the relevant requirements of the Fund Applicable Laws and the description of services contained in Section 3 shall be deemed revised accordingly without written amendment pursuant to Section 16(a).

(c) Red Flags Services . In the event the Fund elects to receive the Red Flags Services, the provisions of Schedule C , which is hereby incorporated by reference into this Agreement as if fully set forth herein, shall apply.

(d) Access To And Use Of The BNYM System . The terms of Schedule D to this Agreement shall apply to the Company’s access to and use of any component of the BNYM System (as defined in Schedule D). BNYM acknowledges and agrees that to the extent the Company’s or an Investment Company’s use of the BNYM System pursuant to Schedule D is contingent upon or enhanced by BNYM’s performance of the services set forth at Section 3(a) of the Agreement, including the inputting of data, BNYM remains responsible for providing the data in accordance with its obligation under Section 3(a).

(e) Performance of Certain Services by the Fund or the Company or Agents . New procedures as to who shall provide certain of the Services listed herein may be established in writing from time to time by agreement among the parties. BNYM may at times perform only a portion of the Services and the Company, the Fund or others appointed by the Company or the Fund may perform the remainder of the Services. As of the commencement of this Agreement, the parties agree that the division of the services as between the Company and BNYM shall be as outlined in Schedule E , entitled “Division of Services” and the fees set forth in the Fee Agreement shall be payment for such division of services. Any material change to Schedule E shall be by mutual written agreement of the parties and in connection therewith, the fees set forth in the Fee Agreement shall be modified accordingly by the mutual written agreement of the parties.

Page 13


Confidential And Proprietary		Execution Version

(f) Key Personnel . BNYM will use commercially reasonable efforts to maintain the stability and continuity of Key Personnel (defined below) to provide services to the Company and the Fund, and will not arbitrarily replace or reassign Key Personnel during the term of this Agreement. For purposes of this Agreement, Key Personnel shall mean the Relationship Manager and the Client Service Officer assigned to the Company and the Fund as of the date of this Agreement.

(g) Processing Team . BNYM will use its best efforts to maintain a consistent transaction processing team based in the United States to provide Services to Fund shareholders, and will not arbitrarily replace or reassign team members during the term of this Agreement.

(h) Service Level Agreement .

(a) The service levels agreed upon by the Company and BNYM with respect to BNYM’s performance under Section 3(a) of this Agreement (“ Services ”) are set forth on Schedule F hereto, entitled “Service Levels” (the “ Service Levels ”). BNYM shall (i) measure, monitor and track the performance of the Services and compare such performance to the Service Levels, and (ii) report such performance to the Company on a quarterly or other basis as mutually agreed by the Company and BNYM in a form mutually agreed by the Company and BNYM. Such assessment of the performance of the Services shall include providing the Company an opportunity to assess and/or comment to BNYM on BNYM’s performance of the Services, including the performance of the Key Personnel, irrespective of any other measurements.

(b)(1) In the event that BNYM fails to satisfy any single service level standard for three consecutive months (a “ SLA Failure ”), the Company, or the Investment Companies as a group, may terminate the Agreement (i) if it or they give BNYM written notice of the SLA Failure and its or their intention to terminate the Agreement due to the SLA failure, (ii) BNYM does not within 60 days of receiving the notice correct the performance failure (i.e., continuously perform in accordance with the relevant service level standard), and (iii) the Company or the Investment Companies, as appropriate, provides written notice to BNYM that the Agreement is terminated as of the date specified in the notice.

(2) For purposes of this provision, the service level standards shall not become operative until the full calendar month which follows the date which is the 2-month anniversary of the Service Effective Date.

(3) The Company or the Investment Companies as a group may exercise the termination right under this Section 3(h) at any time after the right arises; provided , however , if BNYM over any continuous 90-day period satisfies the service level standard involved in the SLA Failure the termination right shall terminate with respect to that SLA Failure. Any delay in exercising this right while it is in effect pursuant to the foregoing sentence shall not be construed as a waiver or other extinguishment of that right. Any exercise by a party of its termination right under this Section 3(h) shall be without any prejudice to any other remedies or rights available to such party and shall not be subject to any fee or penalty, whether monetary or equitable.

(i) Safekeeping . BNYM hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Company and the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices.

(j) Back-up Support . In the event there occurs circumstances which incapacitate the call center facilities of the Investment Companies in Greenfield, Massachusetts (“ Greenfield Call Center ”) and with respect to which the Investment Companies invoke their disaster recovery plan, BNYM agrees to provide at its facility in Westborough, Massachusetts, if such facility is fully operational at such time with respect

Page 14


Confidential And Proprietary		Execution Version

to the support services for call center activity required by the Investment Companies, within a commercially reasonable period of time after receiving notice of the incapacitating circumstances from the Investment Companies, (i) up to three computer terminals for a total of up to three individuals employed by one or more of the Investment Companies or the Company to perform call center functions for the Investment Companies, and (ii) access to and use of the BNYM System from such terminals comparable to the access and use provided to the Greenfield Call Center for the performance of such call center functions.

(k) 22-c2 System Services . During such times as BNYM provides the Company and the Investment Companies, as Permitted Users (as defined in Schedule D), with access to and use of the 22c-2 System (as defined in Schedule D), the Company and the Investment Companies shall have sole responsibility for accessing and using the 22c-2 System to accomplish the purposes and utilize the functionalities of the 22c-2 System. BNYM agrees to make available to the Company and the Investment Companies members of its staff who support the 22c-2 System to answer questions and provide information regarding the functionalities and use of the 22c-2 System, including questions and information relating to the topics listed below, but such support personnel of BNYM will not be permitted to perform any services utilizing the 22c-2 System on behalf of the Company or the Investment Companies:

(1)

Financial Intermediary Surveillance Schedules

(i)

Creation of a system profile and infrastructure to establish and maintain Financial Intermediary surveillance schedules and communication protocol/links.

(ii)

Initiation of information requests to the Financial Intermediaries.

(2)

Data Management Monitoring

(i)

Monitoring the status of information requests until all supplemental data is received.

(ii)

Acceptance of various data file formats from Financial Intermediaries.

(C)

Customized Reporting for Market Timing Analysis

(i)

Running information received from the Financial Intermediaries through BNYM system functionalities.

(ii)

Generating exception reports.

(D)

Daily Exception Analysis of Market Timing Policies for Supplemental Data Provided

(i)

Review of daily short-term trader exceptions, daily excessive trader exceptions, and daily supplemental data reconciliation exceptions.

(ii)

Analysis of Financial Intermediary supplemental data (items), which are identified as “Potential Violations”.

(iii)

Confirmation of exception trades.

(E)

Management Reporting

(i)

Periodic reports from BNYM system.

(F)

Support Due Diligence Programs

(i)

Updating system watch list with pertinent information on trade violators.

Page 15


Confidential And Proprietary		Execution Version

(l) Additional Services . The parties acknowledge and agree that subsequent to the Effective Date the Company may request that certain additional services (“ Day 2 Services ”) be added to the services provided by BNYM under this Agreement. BNYM agrees to negotiate in good faith with the Company with respect to any Day 2 Services requested by the Company and the fees and terms and conditions applicable to such additional services. For purposes of clarification, nothing in this Section 3(l) does, or should be read to, obligate any party hereto to agree to provide or obtain the Day 2 Services.

(m) Harris Accounts .

(1) BNYM will perform the following services for “ Harris Accounts ”, which is hereby defined to mean the accounts existing under defined contribution plans, including money purchase pension plans and profit sharing plans, originally holding shares of the Harris Insight Funds and later holding shares of the Phoenix Insight Funds and Virtus Insight Trust, which as of the Effective Date are held by State Street Bank and Trust Company (“ State Street ”) as custodian:

(i) Accept conversion of Harris Accounts from State Street into the BNYM System as self-managed non-custodial accounts;

(ii) Perform all appropriate recordkeeping services provided for other Fund shareholder accounts under this Agreement;

(iii) Accept and process distributions from the accounts in accordance with instructions received in good order from the record owners and beneficiaries, as appropriate, of such accounts;

(iv) Accept and process subsequent investment purchases in accordance with instructions received in good order from the record owners of such accounts; and

(v) Provide federal tax reporting appropriate to federal Form 1099-R using a qualified plan distribution form of the Company or a relevant Investment Company.

(2) The Company agrees to use its best efforts to locate and appoint a financial institution qualified and willing to serve as a successor custodian to State Street for the Harris Accounts. In the event the Company fails to find a successor custodian prior to any termination of this Agreement and in connection with any termination of the Agreement fails to provide for the transfer of all Harris Accounts to a successor service provider, the Company shall remain responsible for, and shall pay BNYM upon demand, all reasonable fees charged and expenses incurred by BNYM in connection with providing servicing to the Harris Accounts following the termination of the Agreement which it shall determine in good faith to be appropriate under the circumstances, including escheatment. The Company will indemnify BNYM and hold it harmless for all Loss incurred in connection with the services provided under this Section 3(l), except that in connection with providing the services described in clauses (i) through (v) above the indemnification shall be applicable only in the absence of a breach by BNYM of its Standard of Care. This Section 3(l)(2) shall survive any termination of the Agreement.

4. Confidentiality .

(a) Each party shall keep the Confidential Information (as defined in subsection (b) below) of the other party in confidence and will not use or disclose or allow access to or use of such Confidential Information except as further set forth herein or as otherwise expressly agreed in writing. Each party acknowledges that the Confidential Information of the disclosing party will remain the sole property of such party. In complying with the first sentence of this subsection (a), each party will use the same degree of care it uses to protect its own confidential information, but in no event less than a commercially reasonable degree of care.

Page 16


Confidential And Proprietary		Execution Version

(b) Subject to subsections (c) and (d) below, “ Confidential Information ” means (i) this Agreement and its contents, all compensation agreements, arrangements and understandings (including waivers) respecting this Agreement, disputes pertaining to the Agreement, and information about a party’s exercise of rights hereunder, performance of obligations hereunder or other conduct of a party in connection with the Agreement, (ii) non-public personal information of the Fund’s shareholders, (iii) information and data of, owned by or about a disclosing party or its affiliates, customers, or subcontractors that may be provided to the other party or become known to the other party in the course of the relationship established by this Agreement, regardless of form or content, including but not limited to (A) competitively sensitive material, and not generally known to the public, including, but not limited to, studies, plans, reports, surveys, summaries, documentation and analyses, regardless of form, information about product plans, marketing strategies, finances, operations, customer relationships, customer profiles, customer lists, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of the Fund, the Company or BNYM, their respective subsidiaries and Affiliates and the customers, clients and suppliers of any of them; (B) scientific, technical or technological information, a design, process, procedure, formula, or improvement that is commercially valuable and secret in the sense that its confidentiality affords the Fund, the Company or BNYM a competitive advantage over its competitors; (C) a confidential or proprietary concept, documentation, report, data, specification, computer software, source code, object code, flow chart, database, invention, know how, trade secret, whether or not patentable or copyrightable; (D) information related to security, disaster recovery, business continuity and any other operational plans, procedures, practices and protocols, and (E) anything designated as confidential, and (iii) to any extent not included within clause (i) or clause (ii) above, with respect to BNYM, the Proprietary Items (as defined in Schedule D).

(c) Information or data that would otherwise constitute Confidential Information under subsection (b) above shall not constitute Confidential Information to the extent it:

(i)	is already known to the receiving party without a duty of confidentiality at the time it is obtained;

(ii)	is or becomes publicly known or available through no wrongful act of the receiving party;

(iii)

is rightfully received from a third party who, to the receiving party’s knowledge, is not under a duty of confidentiality;

(iv)	is released by the protected party to a third party without restriction; or

(v)	has been or is independently developed or obtained by the receiving party without reference to the Confidential Information provided by the protected party.

(d) Confidential Information of a disclosing party may be used or disclosed by the receiving party only to the extent required in the circumstances set forth below and except for such permitted use or disclosure shall remain Confidential Information subject to all applicable terms of this Agreement:

(i)	as appropriate in connection with activities contemplated by this Agreement;

(ii)

as required pursuant to a court order, subpoena, governmental or regulatory or self-regulatory authority or agency, law, regulation, or binding discovery request in pending litigation (provided the receiving party will provide the other party written notice of such requirement, to the extent such notice is permitted, and subject to proper jurisdiction, if applicable);

(iii)

as requested by a governmental, regulatory or self-regulatory authority or agency or independent third party in connection with an inquiry, examination, audit or other review; or

(iv)	the information or data is relevant and material to any claim or cause of action between the parties or the defense of any claim or cause of action asserted against the receiving party.

Page 17


Confidential And Proprietary		Execution Version

(e) Subject to the exceptions in (d), each party agrees not to publicly disseminate Confidential Information of the other party or mutual Confidential Information.

(f) To the extent that a party hereto discloses the Confidential Information of another party hereto in accordance with this Section 4, such disclosing party shall make reasonable efforts to ensure that the recipient of such Confidential Information is bound, contractually or otherwise, to confidentiality terms consistent with and no less stringent than the terms of this Section 4.

(g) The provisions of this Section 4 shall survive termination of this Agreement for a period of three (3) years after such termination.

5. Privacy . Each party hereto acknowledges and agrees that, subject to the reuse and re-disclosure provisions of Regulation S-P, 17 CFR Part 248.11, it shall not disclose the non-public personal information of investors in the Fund obtained under this Agreement, except disclosures in connection with carrying out the services set forth in this Agreement or as otherwise permitted by law or regulation. BNYM agrees to implement and maintain appropriate security measures to protect “personal information”, as that term is defined in 201 CMR 17.00: Standards For The Protection Of Personal Information Of Residents Of The Commonwealth (“ Massachusetts Privacy Regulation ”), consistent with the Massachusetts Privacy Regulation and any applicable federal regulations. The electronic delivery or transmission by BNYM to the Company or the Fund of any reports containing the non-public personal information of investors in the Fund shall be made only in accordance with mutually agreed upon commercially reasonable procedures. To the extent that BNYM delegates any duties or responsibilities under this Agreement, and pursuant to such delegation BNYM discloses the non-public personal information of investors in the Fund to such delegee, BNYM shall ensure that such delegee is contractually bound to confidentiality and security terms consistent with and no less stringent than the terms of this Section 5. The provisions of this Section 5 shall survive termination of this Agreement.

6. Cooperation with Accountants . BNYM shall cooperate with the independent public accountants for the Fund and shall take commercially reasonable measures to furnish or to make available to such accountants information relating to this Agreement and BNYM’s performance of the obligations hereunder as requested by such accountants and necessary for the expression of their opinion.

7. Ownership Rights . Ownership rights to property utilized in connection with the parties’ use of the BNYM System shall be governed by applicable provisions of Schedule D which are hereby incorporated by reference into this Section 7, and shall apply, as if fully set forth herein.

8. Disaster Recovery . BNYM agrees to maintain a business continuity and disaster recovery plan appropriate for an entity performing the Services as discussed in this Agreement, and agrees to resume performance as soon after any such delay or failure as is commercially reasonable under the circumstances. Without limiting the foregoing, BNYM shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provisions for emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, BNYM shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions. Providing the requirements of this paragraph are met, BNYM shall have no liability with respect to service interruptions caused by equipment failure, provided such interruption is not caused by BNYM’s own intentional misconduct, bad faith or reckless disregard in the performance of its duties under this Agreement.

9. Fees and Expenses .

(a) As compensation for services rendered by BNYM during the term of this Agreement, each Investment Company will pay to BNYM such fees and charges (the “ Fees ”) as may be agreed to from

Page 18


Confidential And Proprietary		Execution Version

time to time in writing by the Investment Company and BNYM (the “ Fee Agreement ”). In addition, the Investment Company agrees to pay, and will be billed separately in arrears for, reasonable expenses incurred by BNYM in the performance of its duties hereunder (“ Reimbursable Expenses ”).

(b) In connection with cash management accounts that BNYM may establish in its own name for the benefit of the Investment Company at third party institutions, including without limitation institutions that may be an affiliate or client of BNYM (a “ Third Party Institution ”) for the purpose of administering the funds received by BNYM in the course of performing its services hereunder (“ Service Accounts ”):

(i)

BNYM will pay all Bank Charges (as defined immediately below) incurred by BNYM in connection with the Investment Companies’ Service Accounts. “ Bank Charges ” is hereby defined to mean the bank charges and banking service fees imposed by the Third Party Institution for the establishment and maintenance of the Investment Companies’ Service Accounts. BNYM and its Affiliated Third Party Institutions may derive a benefit from the funds placed on deposit with the Affiliated Third Party Institutions in Service Accounts through use of the funds in the business of the Affiliated Third Party Institutions and BNYM may retain any benefits accruing to it by virtue of the Service Accounts; and

(ii)	the Company acknowledges and agrees:

(A)

that one or more of the Service Accounts will be utilized by BNYM to perform same day funds settlements on behalf of the Investment Companies through the NSCC (“ SDFS Accounts ”);

(B)

that in order to satisfy an Investment Company’s same day settlement obligations with the NSCC, BNYM may be required to transfer to the NSCC an amount of funds which exceeds the amount of funds then available for transfer in the relevant SDFS Account (“ Excess SDFS Amount ”);

(C)

that BNYM is not obligated to transfer any funds to the NSCC representing Excess SDFS Amounts and may in its sole discretion decline to transfer to the NSCC funds representing Excess SDFS Amounts without liability hereunder, except for conduct constituting willful misconduct;

(D)

that notwithstanding the absence of any obligation to do so, BNYM may elect to transfer to the NSCC funds representing Excess SDFS Amounts as a courtesy to an Investment Company and to maintain its good standing with the NSCC and that by electing to transfer funds to the NSCC representing Excess SDFS Amounts BNYM does not, even if it has transferred such funds as part of a regular pattern of conduct, waive any rights under this Section 9(b)(ii) or assume the obligation its has expressly disclaimed in clause (C) and BNYM may at any time in its sole discretion and without notice decline to continue to make such transfers;

(E)

that BNYM may reverse and cancel any shareholder transaction without liability hereunder, except for conduct constituting willful misconduct, in order to adjust the amount of funds owed by an Investment Company to the NSCC in same day funds settlement to be equal to or less than the amount then available for transfer in the relevant SDFS Account or to recover from the NSCC funds already transferred to the NSCC; and

(F)

that any and all Excess SDFS Amounts that may be transferred to the NSCC by BNYM on behalf of an Investment Company represent obligations of the Investment Company to BNYM and are payable by the Investment Company immediately upon demand by BNYM.

(c) The undersigned hereby represent and warrant to BNYM that (i) the terms of this Agreement, (ii) the fees and expenses associated with this Agreement, and (iii) to the extent they have been disclosed to the Investment Companies, any benefits accruing to BNYM or to the adviser or sponsor to the Investment Companies in connection with this Agreement, including but not limited to any fee waivers, conversion

Page 19


Confidential And Proprietary		Execution Version

cost reimbursements, up front payments, signing payments or periodic payments made or to be made by BNYM to such adviser or sponsor or any affiliate of the Investment Companies relating to the Agreement have been fully disclosed to the Board of Trustees of the relevant Investment Company and that, if required by applicable law, such Board of Trustees has approved or will approve the terms of this Agreement, any such fees and expenses, and any such benefits.

(d) No termination of this Agreement shall cause, and no provision of this Agreement shall be interpreted in any manner that would cause, BNYM’s right to receive payment of its fees and charges for services actually performed hereunder, and the Investment Company’s obligation to pay such fees and charges, to be barred, limited, abridged, conditioned, reduced, abrogated, or, except as provided in Section 9(e) with respect to disputed fees and Section 13(e) with respect to the Conversion Expense Cap, subject to a cap or other limitation or exclusion of any nature.

(e) Payment of all fees, charges, reimbursable costs and expenses and any other amounts an Investment Company becomes obligated to pay hereunder shall be due within thirty (30) days after receipt by the Investment Company of BNYM’s invoice for same. In the event an Investment Company disputes the amount or validness of any fees, charges, reimbursable costs or expenses, or other amounts invoiced it may refrain from paying the disputed amount if within 15 days of receiving the related invoice it sends written notice to BNYM listing each amount disputed and the reason for disputing each amount. BNYM shall furnish any supporting documentation reasonably related to the disputed amounts requested by the Investment Company. The parties shall endeavor to resolve the dispute as promptly as practicable and fees, charges, costs or expenses or other amounts so disputed shall be deemed immediately due and payable upon resolution of the billing dispute by the parties, but in no event sooner than the thirty (30) days provided for in the first sentence of this Section 9(e).

(f) To the extent that any service or course of conduct of BNYM or the Custodian provided hereunder is configured or performed as it is in whole or in part due to parameters set forth in Shareholder Materials, standards imposed by clearing corporations or other industry-wide service bureaus or organizations, Fund policies or laws, rules or regulations in effect on the Effective Date and due to new or amended provisions of any of the foregoing after the Effective Date BNYM or the Custodian develops, implements or provides significantly modified, different, or new processes, procedures, resources or functionalities to perform such service or course of conduct or to perform a related new service or course of conduct, BNYM shall be entitled to fees appropriate for such processes, procedures, resources or functionalities or as otherwise mutually agreed by the parties ; provided, however, that BNYM hereby agrees that, to the extent reasonably practicable, before making any such modification or addition BNYM will notify the Company and/or the Fund of the need or intention to modify or add such processes, procedures, resources or functionalities, and estimated or anticipated costs associated with such modification or addition.

(g) While the Fee Agreement sets forth the Fees and certain of the expenses constituting Reimbursable Expenses, BNYM’s rights hereunder to receive compensation and the reimbursement of expenses from the Investment Company for services or a course of conduct performed in accordance with the Agreement shall not be diminished to any degree solely due to such fees and reimbursable expenses not being expressly set forth in the Fee Agreement, including by way of illustration and not limitation fees and reimbursable expenses arising from a service or a course of conduct performed pursuant to Non-Standard Instructions and other Fund Communications, in connection with a Response Failure, and responding to Fund Error; provided, however, that BNYM hereby agrees that, to the extent reasonably practicable, before performing any such service or course of conduct BNYM will notify the Company and/or the Fund of the need for such service or course of conduct and estimated or anticipated costs associated with such service or course of conduct.

(h) In the event an Investment Company or any Portfolio of an Investment Company is liquidated, ceases operations, dissolves or otherwise winds down operations (“ Dissolution Event ”) and effects a final

Page 20


Confidential And Proprietary		Execution Version

distribution to shareholders (a “ Final Distribution ”), the relevant Investment Company shall be responsible for paying to BNYM all fees and reimbursing BNYM for all reasonable expenses associated with services to be provided by BNYM following the Final Distribution, whether provided pursuant to a specific request of the Investment Company or the Portfolio or provided by BNYM due to industry standards or due to obligations under applicable law or regulation by virtue of the services previously performed for the Investment Company or the Portfolio (“ Final Expenses ”). In connection with the foregoing, the Company or the relevant Investment Company shall (i) notify BNYM as promptly as practicable following first approval of the Dissolution Event or any aspect of the Dissolution Event by its Board of Trustees, and furnish BNYM with copies of all materials filed with the SEC or distributed to shareholders related thereto, (ii) calculate, set aside, reserve and withhold from the Final Distribution all amounts necessary to pay the Final Expenses and shall notify BNYM as far in advance as practicable of any deadline for submitting materials appropriate or necessary for the determination of such amounts, and (iii) provide sufficient staff or other accommodations to ensure timely payment of Final Expenses as they come due.

10. Instructions .

(a) Unless the terms of this Agreement or BNYM’s Written Procedures expressly provide, in the reasonable discretion of BNYM, all requisite details and directions for it to take a specific course of conduct, BNYM may, prior to engaging in a course of conduct on a particular matter, require the Fund to provide it with Oral Instructions or Written Instructions with respect to the matter.

(b) Whether received from the Fund or Company in response to a request described in Section 10(a) or otherwise, BNYM shall be obligated to act only on “ Standard Instructions ”, which is hereby defined to mean (i) Instructions it receives which direct a course of conduct substantially similar in all material respects to a course of conduct provided for in BNYM’s Written Procedures, or (ii) if BNYM’s Written Procedures provide for a particular form of instructions to be used in connection with a matter (“ Form ”), Instructions it receives on the Form or conforming in all material respects to the Form in the BNYM’s sole judgment.

(c) BNYM may in its sole discretion decline to follow any course of conduct contained in an Instruction that is not a Standard Instruction (such course of conduct being a “ Non-Standard Instruction ”) for a bona fide legal, commercial or business reason (“ Bona Fide Reason ”), including by way of example and not limitation the following: (i) the course of conduct is not consistent or compliant with, is in conflict with, or requires a deviation from an Industry Standard, (ii) the course of conduct is not reasonably necessary or appropriate to or consistent with the services contemplated by this Agreement, (iii) the course of conduct requires a deviation from BNYM’s Written Procedures, (iv) the course of conduct is in conflict or inconsistent with or violates a law, rule, regulation, or order or legal process of any nature, (v) the course of conduct is in conflict or inconsistent with or will violate a provision of this Agreement, or (vi) the course of conduct imposes on BNYM a risk, liability or obligation not contemplated by this Agreement, including without limitation sanction or criticism of a governmental, regulatory or self-regulatory authority, civil or criminal action, a loss or downgrading of membership, participation or access rights or privileges in or to organizations providing common services to the financial services industry, out-of-pocket costs and expenses the Fund does not agree to reimburse, requires performance of a course of conduct customarily performed pursuant to a separate service or fee agreement, requires a material increase in required resources, or is reasonably likely to result in a diversion of resources, disruption in established work flows, course of operations or implementation of controls, or (vii) BNYM lacks sufficient information, analysis or legal advice to determine that the conditions in clauses (iv) and (vi) do not exist.

(d) Notwithstanding the right reserved to BNYM by subsection (c) above:

(i)	BNYM may in good faith consider implementing a Non-Standard Instruction if the Fund agrees

Page 21


Confidential And Proprietary		Execution Version

in a prior written authorization to reimburse BNYM for: the costs and expenses incurred in consulting with and obtaining the opinions or other work product of technical specialists, legal counsel or other third party advisors, consultants or professionals reasonably considered by BNYM to be appropriate to fully research, develop and implement the policies, procedures, operational structure and controls required to perform the Non-Standard Instruction (“ External Research ”), the costs and expenses associated with utilizing or expanding internal resources to research, develop and implement the policies, procedures, operational structure and controls required to perform the Non-Standard Instruction (“ Internal Research ”, and together with the External Research, the “ Research ”), and the fees and charges reasonably established by BNYM for performing the Non-Standard Instruction following its implementation. The Company may, in place of agreeing to reimburse BNYM for the costs of Research, agree in such written authorization to provide BNYM at the Company’s cost and expense with all Research reasonably requested by BNYM.

(ii)

Following receipt of all requested Research, BNYM may, in its sole discretion, as an accommodation and not pursuant to any obligation, agree to follow a Non-Standard Instruction if it subsequently receives a Written Instruction containing terms satisfactory to it in its sole discretion, including without limitation terms constituting additional agreements with respect to fees, charges, and expenses, terms constituting appropriate warranties, representations and covenants, and terms specifying with reasonable particularity the course of conduct constituting the Non-Standard Instruction.

(iii)

BNYM reserves the right following receipt of all External Research and Internal Research and notwithstanding such receipt to continue to decline to perform the Non-Standard Instruction for a Bona Fide Reason.

(e) BNYM will also not be obligated to act on any Instruction with respect to which it has reasonable uncertainty about the meaning of the Instruction or which appears to conflict with another Instruction. BNYM will advise the Company or relevant Fund if it has uncertainty about the meaning of an Instruction or if it appears to conflict with another Instruction, but BNYM will have no liability for any delay between issuance of the initial Instruction and its receipt of a clarifying Instruction.

(f) In addition to any other provision of this Agreement that may be applicable to a particular Instruction, BNYM may include in a form of instruction constituting a Standard Instruction, in addition to appropriate functional terms and provisions, indemnification terms that are substantially similar in all material respects to indemnification terms of this Agreement and representations and covenants that BNYM reasonably believes to be appropriate due to risks, liabilities or obligations incurred by it by virtue of acting in an agency capacity for the Fund or imposed on it by law, regulation, or governmental, regulatory or self-regulatory authority by virtue of its agency conduct. In addition, BNYM may require third parties who purport to be authorized, or who the Company or a Fund indicates has been authorized, to act on behalf of or for the benefit of the Company or relevant Fund in connection with this Agreement to execute an instrument containing indemnification terms, representations and covenants as BNYM may reasonably require prior to accepting the authority of the persons to so act or prior to engaging in a course of conduct with them.

(g) BNYM shall not be under any duty or obligation to inquire into and shall not be liable for the validity or invalidity, authority or lack thereof, truthfulness or accuracy or lack thereof, or genuineness or lack thereof of any Instruction, direction, notice, instrument or other information or communication from the Company or a Fund which BNYM reasonably believes to have been given by the Company or relevant Fund (“ Fund Communication ”). BNYM shall have no liability for engaging in a course of conduct in accordance with any of the foregoing provided it otherwise acts in compliance with the Agreement. BNYM shall be entitled to rely upon any Instruction it receives from an Authorized Person or from a person BNYM reasonably believes to be an Authorized Person relating to this Agreement. In

Page 22


Confidential And Proprietary		Execution Version

the absence of written notification knowledge to the contrary, BNYM may assume that any Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents of a Fund or this Agreement or of any vote, resolution or proceeding of a Fund’s Board of Trustees or of the Fund’s shareholders.

(h) (1) BNYM may, in its discretion, decline to accept Oral Instructions with respect to a particular matter under this Agreement and may require Written Instructions before engaging in a course of conduct with respect to a particular matter under this Agreement. In the event BNYM accepts Oral Instructions, the Fund agrees as a condition to BNYM’s acceptance of the Oral Instructions, to deliver to BNYM, for receipt by 5:00 PM (Eastern Time) on the same business day as the day the Oral Instructions were given, Written Instructions which confirm the Oral Instructions. In the event Written Instructions confirming Oral Instructions are received late, are never received, or fail to contain terms which confirm the Oral Instructions in all material respects: (i) the validity, authorization and enforceability of the Oral Instructions, all actions, transactions, and conduct occurring as a result of the Oral Instructions, and BNYM’s ability to rely on the Oral Instructions shall not be abridged, abrogated, nullified or adversely impacted in any manner; and (ii) BNYM’s memorialization of the Oral Instructions shall be conclusively presumed to be the controlling Written Instructions in the event confirming Written Instructions are never received or are received but fail to confirm the Oral Instructions in all material respects.

(2) Where Written Procedures expressly provide for communication from the Company or a Fund to BNYM by electronic mail or “email”, emails sent in full compliance with the provisions of such Written Procedures shall constitute Written Instructions. Other emails sent by Authorized Persons of the Company or a Fund shall constitute Written Instructions if acknowledged by an officer of BNYM. In the event the Company or a Fund intend any email other than those described above in this subsection (h)(2) to be an Instruction, the procedure described in subsection (h)(1) applies.

(i) In the event facts, circumstances, or conditions exist or events occur, other than due to a breach by BNYM of its Standard of Care, including without limitation situations contemplated by Section 10(e), and BNYM reasonably determines that it must take a course of conduct in response to such situation and must receive an Instruction from the Company or a relevant Fund to direct its conduct, and BNYM so notifies the Company or relevant Fund, and the Company or relevant Fund fails to furnish adequate Instructions or unreasonably delays furnishing adequate Instructions (“ Response Failure ”):

(i)

BNYM will first endeavor to utilize internal resources to determine the appropriate course of conduct in response to the situation but will be entitled, at the Fund’s sole cost and expense, to consult with legal counsel or other third parties reasonably determined by BNYM to be appropriate to determine the appropriate course of conduct and the Fund will reimburse BNYM for out-of-pocket expenses so incurred upon being invoiced for same; and

(ii)

BNYM may implement a course of conduct on behalf of the Company or relevant Fund and BNYM will have all rights hereunder with respect to such course of conduct as if such course of conduct was taken pursuant to and contained in Written Instructions. The Fund will pay BNYM all fees reasonably charged by BNYM, if any, for engaging in the particular course of conduct and reimburse BNYM for all reasonably related out-of-pocket expenses incurred upon being invoiced for same.

11. Terms Relating to Liability .

(a) Subject to the terms of this Section 11 and Section 12, BNYM shall be liable hereunder to the Company and the Investment Companies considered as a whole (“ Company Group ”) (or any person or entity claiming through the Company Group), and the Company Group shall be liable hereunder to BNYM (or any person or entity claiming through BNYM) for Loss the recovery of which is not otherwise excluded by another provision of this Agreement only to the extent the Loss is caused by (i) such party’s

Page 23


Confidential And Proprietary		Execution Version

intentional misconduct, reckless disregard, bad faith or negligence in the performance of its duties under this Agreement (“ Standard of Care ”) or (ii) a material breach of this Agreement by such party or a breach of any material representation or warranty hereunder, and only if the claiming party provides the other party with written notice of the Loss containing a reasonably detailed description of the amount of Loss, the conduct alleged to have caused the Loss and the provision of the Agreement with respect to which the failure to comply or breach is alleged In the absence of a finding to the contrary, the acceptance, processing and/or negotiation of a fraudulent payment for the purchase of Shares shall be presumed not to have been a failure of BNYM to meet its Standard of Care.

(b) Except as provided in Section 11(c), BNYM’s maximum aggregate cumulative liability hereunder to the Company Group and all persons or entities claiming through the Company Group, and the Company Group’s maximum aggregate cumulative liability hereunder to BNYM and all persons or entities claiming through BNYM, for all Losses the recovery of which is not otherwise excluded by another provision of this Agreement shall not exceed: (i) the fees actually paid to BNYM by the Investment Companies for services provided hereunder during the twelve (12) months immediately prior to the last Loss Date; or (ii) if the last Loss Date occurs during the period commencing with the Effective Date and ending on the first anniversary of the Effective Date, the greater of the amount calculated in accordance with clause (i) or $3,000,000.

(c) This Section 11(c), not Section 11(b) above, shall apply to any BNYM breaches of Section 5 as follows: BNYM’s maximum aggregate cumulative liability hereunder to the Company Group and all persons or entities claiming through the Company Group for all Losses, the recovery of which is not otherwise excluded by another provision of this Agreement, attributable to, caused by or arising in connection with breaches of Section 5 shall not exceed $6,000,000.

(d) Notwithstanding any other provision, and for all purposes, of this Agreement: No party nor its Affiliates shall be liable for any Loss (including Loss caused by delays, failure, errors, interruption or loss of data) or breach hereunder occurring directly or indirectly by reason of any event or circumstance, whether foreseeable or unforeseeable, which despite the taking of commercially reasonable measures is beyond its reasonable control, including without limitation: natural disasters, such as floods, hurricanes, tornados, earthquakes and wildfires; epidemics; action or inaction of civil or military authority; war, terrorism, riots or insurrection; criminal acts; job action by organized labor; interruption, loss or malfunction of utilities, transportation, computer or communications capabilities; non-performance by third parties (other than subcontractors of BNYM for causes other than those described herein); or functions or malfunctions of the internet, firewalls, encryption systems or security devices caused by any of the foregoing (all and any of the foregoing being an “ Event Beyond Reasonable Control ”) . Upon the occurrence of an Event Beyond Reasonable Control, the affected Party shall be excused from any non-performance caused by the Event Beyond Reasonable Control for so long as the Event Beyond Reasonable Control or damages caused by it prevail and such party continues to use commercially reasonable efforts to attempt to perform the obligation so impacted.

(e) BNYM shall not be liable for any Loss arising out of any action, omission or conduct of any prior service provider of the Company or a Fund or for any failure to discover any action, omission or conduct of any prior service provider of the Company or a Fund that caused or could cause Loss.

(f) NOTWITHSTANDING ANY OTHER PROVISION OF THE AGREEMENT, IN NO EVENT SHALL ANY PARTY HERETO, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS, FOR EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, OR FOR ANY OTHER DAMAGES WHICH ARE NOT DIRECT DAMAGES REGARDLESS OF WHETHER SUCH DAMAGES WERE OR SHOULD HAVE BEEN FORESEEABLE AND REGARDLESS OF WHETHER ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ALL AND EACH OF WHICH

Page 24


Confidential And Proprietary		Execution Version

DAMAGES IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES. FOR PURPOSES OF CLARIFICATION: NO OTHER PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED TO CONDITION, LIMIT, MODIFY, NULLIFY OR OTHERWISE PREVAIL IN WHOLE OR IN PART OVER THIS SECTION 11(e).

(g) No party may assert a claim or cause of action (or, if applicable, commence an arbitration or other alternate dispute resolution proceeding) relating to this Agreement against any other party hereto or any of its affiliates more than 15 months after the first event or occurrence comprising the conduct or alleged conduct upon which the cause of action is based; provided , however , that this limitation shall not apply to any claim or cause of action based upon a breach by BNYM of Section 5 of this Agreement.

(h) Each party shall have a duty to mitigate damages for which any other party may become responsible hereunder.

(i) With respect to securities data, information and research furnished to BNYM by third parties and included in the BNYM System (“ Securities Data ”), Company acknowledges that BNYM and such third parties make no warranty concerning the Securities Data and BNYM disclaims all responsibility for the Securities Data, including its content, accuracy, completeness, availability or timeliness of delivery, and BNYM shall not be liable for Loss caused by Securities Data not being provided to it with the content and at the time which is standard for the industry or which is required for performance of any service provided for herein, including without limitation performance of the Licensed Services (as defined in Schedule D) and other BNYM services provided for in Schedule D.

(j) BNYM hereby represents and warrants that it is experienced in the provision of the services covered by this Agreement. The parties hereto agree that in assessing whether BNYM has breached its Standard of Care, BNYM shall be expected to exercise at least the care that would be exercised by a similarly situated service provider, supplying substantially the same services under substantially similar circumstances.

(k) This Section 11 shall survive termination of this Agreement.

12. Indemnification . Except with respect to matters where BNYM has breached its Standard of Care, committed a material breach of this Agreement or committed a breach of any material representation or warranty hereunder: the Fund agrees to indemnify, defend and hold harmless BNYM and its affiliates, and to indemnify, defend and hold harmless the Custodian and its affiliates in connection with services it provides pursuant to Section 3(a)(12), and the respective directors, trustees, officers, agents and employees of each, from any and all Losses and all attorneys’ fees, court costs, travel costs and other reasonable out-of-pocket costs and expenses related to the investigation, discovery, litigation, settlement, mediation or alternative dispute resolution of any Claim arising directly or indirectly from: (a) conduct of the Company or a Fund in connection with activities contemplated by this Agreement, or the conduct of a Company or Fund contractor, subcontractor or prior service provider in connection with providing services to the Company or a Fund; (b) conduct of BNYM as agent of the Company or a Fund not constituting a breach of its Standard of Care; (c) conduct of BNYM pursuant to a Fund Communication or in reliance on written legal analysis or advice, provided BNYM’s performance of the conduct shall remain subject to the Standard of Care; (d) a course of conduct taken by BNYM pursuant to Section 10(i) due to a Response Failure; and (e) a Fund Error. BNYM shall have no liability to the Company or any person claiming through the Company for any Loss caused in whole or in part by any conduct described in the preceding sentence. This Section 12 shall survive termination of this Agreement.

Page 25


Confidential And Proprietary		Execution Version

13. Duration and Termination .

(a) This Agreement shall be effective on the Effective Date and continue, unless validly terminated pursuant to this Section 13 prior thereto, until the date which is the third (3 ^rd ) anniversary of the Service Effective Date (the “ Initial Term ”).

(b) This Agreement shall automatically renew on the final day of the Initial Term and the final day of each Renewal Term for an additional term which will continue until the first (1 ^st ) anniversary of such renewal date (each such additional term being a “ Renewal Term ”), unless the Company, the Fund or BNYM gives written notice to each other party of its intent not to renew and such notice is received by each other party not less than sixty (60) days prior to the expiration of the Initial Term or the then-current Renewal Term (a “ Non-Renewal Notice ”). In the event a party provides a Non-Renewal Notice, this Agreement shall terminate at 11:59 PM (Eastern Time) on the last day of the Initial Term or Renewal Term, as applicable.

(c) If a party materially breaches this Agreement (a “ Defaulting Party ”) the other party (the “ Non-Defaulting Party ”) may give written notice thereof to the Defaulting Party (“ Breach Notice ”), and if such material breach shall not have been remedied within thirty (30) days after the Breach Notice is given, then the Non Defaulting Party may terminate this Agreement by giving written notice of termination to the Defaulting Party (“ Breach Termination Notice ”), in which case this Agreement shall terminate as of 11:59 PM (Eastern Time) on the 30th day following the date the Breach Termination Notice is given, or such later date as may be specified in the Breach Termination Notice (but not later than the last day of the Initial Term or then-current Renewal Term, as appropriate). In all cases, termination by the Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party of any other rights it might have under this Agreement or otherwise against the Defaulting Party.

(d) Notwithstanding anything contained in this Agreement to the contrary, if in connection with a Change in Control of the Investment Companies the Investment Companies give notice to BNYM terminating this Agreement or terminating it as the provider of any of the services hereunder before the expiration of the Initial Term (“ Early Termination ”) (in all cases, other than in accordance with Sections 13(b) or (c) above or Section 13(f) below) the following terms shall apply:

(i)	BNYM shall, if requested by the Company or the Fund, make a good faith effort to facilitate a conversion to a Fund’s successor service provider; provided that BNYM does not guarantee that it will be able to effect a conversion on the date(s) requested by the Company or the Fund, as applicable.

(ii)	Before the effective date of the Early Termination and before any conversion of Fund records and accounts to a successor service provider, the Investment Company shall pay to BNYM:

(A)

an early termination fee (“ Early Termination Fee ”) based upon the product of (x) the average of the monthly fees and other amounts due to BNYM under this Agreement or with respect to the services being terminated, as applicable, during the last three calendar months before the date of the notice of Early Termination (or, if not given, the date services are terminated hereunder), which for the avoidance of doubt shall not include any fees for non-recurring events or costs passed through to any other person or entity, and (y) the number of months remaining in the Initial Term after termination (such product, the “ Early Termination Fee Multiple ”), and shall be calculated as follows: (i) if termination occurs on or prior to the first anniversary of the Service Effective Date, the Early Termination Fee shall be equal to 100% of the Early Termination Fee Multiple and (ii) if termination occurs on or prior to the second anniversary of the Service Effective Date, the Early Termination Fee shall be equal to 50% of the Early Termination Fee Multiple. If termination occurs after the second anniversary of the Service Effective Date, there shall be no Early Termination Fee; and

Page 26


Confidential And Proprietary		Execution Version

(B)

the unamortized portion of the Prior Provider De-Conversion Expenses (as defined immediately below) as of the early termination date, amortizing on a straight-line basis for 3 years. “ Prior Provider De-Conversion Expenses ” means the sum of (i) the total amount, not to exceed $925,000, to be paid by BNYM to the current providers of transfer agency and shareholder services to the Company and the Investment Companies which are required by such current services providers in order to perform the services required to transfer Investment Company data from the recordkeeping systems of the current service providers to the BNYM System, plus (ii) $583,000, which represents the fees waived and the expenses incurred by BNYM in connection with the modifications to the BNYM System and the other implementation and conversion services provided by BNYM prior to the Service Effective Date.

(iii)

The Company and the Fund acknowledge and agree that the Early Termination Fee is not a penalty but reasonable compensation to BNYM for the termination of services before the expiration of, as appropriate, the Initial Term or the then-current Renewal Term.

(iv)	For purposes of this Section 13(d), “ Change in Control ” means a merger, consolidation, adoption, acquisition, change in control, re-structuring, or re-organization of or any other similar occurrence involving the Company or any affiliate of the Company or a Fund or an affiliate of a Fund.

(v)

If the Company or the Fund gives notice of Early Termination (or an Early Termination without such notice occurs) after expiration of the notice period specified in Section 13(b), the references above to “expiration of, as appropriate, the Initial Term or the then-current Renewal Term” shall be deemed to mean “expiration of the Renewal Term immediately following, as appropriate, the Initial Term or the then-current Renewal Term.”

(vi)

If any of the accounts serviced by BNYM under this Agreement, or assets in such accounts, are removed from the coverage of this Agreement other than pursuant to a shareholder transaction (“ Removed Assets ”) and are subsequently serviced by another service provider (including the Company or a Fund or an affiliate of either): (i) the relevant Investment Company will be deemed to have caused an Early Termination with respect to such Removed Assets as of the day immediately preceding the first such removal of assets and be obligated to BNYM for an Early Termination Fee calculated as if the Removed Assets constituted a “Fund”; and, (ii) at, BNYM’s option, either (a) all Investment Companies will be deemed to have caused an Early Termination with respect to all non-Removed Assets as of a date selected by BNYM resulting in the Investment Companies owing BNYM the Early Termination Fee, or (b) this Agreement will remain in full force and effect with respect to all non-Removed Assets.

(e) In the event of termination, all expenses (“ Conversion Expenses ”) associated with movement of records and materials and conversion thereof to a successor transfer agent (“ Conversion Actions ”) will be borne by the Investment Companies and paid to BNYM prior to any such conversion, including without limitation (i) reasonable expenses incurred by BNYM associated with de-conversion to a successor service provider, (ii) reasonable expenses associated with the transfer or duplication of records and materials, (iii) reasonable expenses associated with the conversion of records or materials and (iv) reasonable trailing expenses (expenses or fees incurred in providing services after accounts have been transferred to a successor service provider, such as answering shareholder inquiries, furnishing shareholder account information and providing tax services with respect to transactions occurring before such transfer); provided , however , such Conversion Expenses shall be commercially reasonable and shall not exceed $750,000 (“ Conversion Expense Cap ”) unless the Fund or successor service provider requests services in connection with the termination that are more complex or more extensive than those commercially reasonable for a fund of the Fund’s size and characteristics. For the avoidance of doubt, the parties agree that the Conversion Expense Cap shall be applicable to all fees charged and all out-of-pocket

Page 27


Confidential And Proprietary		Execution Version

expenses incurred by BNYM in connection with Conversion, including without limitation, as appropriate, any expenses related to conversion of print/mail services (which are governed by another agreement between the Company and BNYM); provided , however , that the term “Conversion Expenses” as used herein is not intended to, and does not, include expenses associated with the successor transfer agent (or print/mail vendor) readying its systems to provide the services or the fees or expenses of other third party providers. In addition, in the event of termination, if BNYM continues to perform any Conversion Actions or provides any other services hereunder, beyond any termination date or time specified in any notice or in any other manner, the Company shall be obligated to pay BNYM immediately upon being invoiced therefor, all reasonable Conversion Expenses and all other Fees and Reimbursable Expenses associated with the services BNYM continues to provide hereunder during such period.

(f) Notwithstanding any other provision of this Agreement, BNYM may in its sole discretion terminate this Agreement immediately by sending notice thereof to the Company upon the happening of any of the following: (i) the Company commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against the Company any such case or proceeding; (ii) the Company commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for the Company or any substantial part of its property or there is commenced against the Company any such case or proceeding; (iii) the Company makes a general assignment for the benefit of creditors; or (iv) the Company states in any medium, written, electronic or otherwise, any public communication or in any other public manner its inability to pay debts as they come due. Notwithstanding any other provision of this Agreement, the Company Group may in its sole discretion terminate this Agreement immediately by sending notice thereof to BNYM upon the happening of any of the following: (i) BNYM commences as debtor any case or proceeding under any bankruptcy, insolvency or similar law, or there is commenced against BNYM any such case or proceeding; (ii) BNYM commences as debtor any case or proceeding seeking the appointment of a receiver, conservator, trustee, custodian or similar official for BNYM or any substantial part of its property or there is commenced against BNYM any such case or proceeding; (iii) BNYM makes a general assignment for the benefit of creditors; or (iv) BNYM states in any medium, written, electronic or otherwise, any public communication or in any other public manner its inability to pay debts as they come due. Each of BNYM and the Company Group may exercise its termination right under this Section 13(f) at any time after the occurrence of any of the foregoing events notwithstanding that such event may cease to be continuing prior to such exercise, and any delay in exercising this right shall not be construed as a waiver or other extinguishment of that right. Any exercise by a party of its termination right under this Section 13(f) shall be without any prejudice to any other remedies or rights available to such party and shall not be subject to any fee or penalty, whether monetary or equitable. Notwithstanding clause (iii) of Section 15, notice of termination under this Section 13(f) shall be considered given and effective when given, not when received.

14. Policies and Procedures .

(a) The parties acknowledge that the services described in and to be provided under this Agreement involve processes, actions, functions, instructions, consents, choices, the exercise of rights or performance of obligations, communications and other components, both internal to BNYM and interactive between the parties, necessitated or made appropriate by business or by legal or regulatory considerations, or both, that in most cases are far too numerous and minutely detailed to expressly include in this Agreement and that, accordingly, the parties agree that BNYM shall perform the services provided for in this Agreement in accordance with the written policies, procedures, manuals, documentation and other operational guidelines of BNYM governing the performance of the services in effect at the time the services are performed (“ Written Procedures ”), that BNYM may from time to time revise its Written Procedures, and that the Written Procedures are expressly intended to supplement the description of services provided for herein, but that the express terms of this Agreement will always prevail in any conflict with the Written Procedures. BNYM may embody in its Written Procedures any course of conduct which it reasonably determines is commercially reasonable or consistent with generally accepted industry

Page 28


Confidential And Proprietary		Execution Version

practices, principles or standards (“ Industry Standard ”) and in making such determination may rely on such information, data, research, analysis and advice, including legal analysis and advice, as it reasonably determines appropriate under the circumstances.

(b) Notwithstanding any other provision of this Agreement, the following terms of this Section 14(b) shall apply in the event facts, circumstances or conditions exist or events occur, other than due to a breach by BNYM of its Standard of Care, which would require a service to be provided hereunder other than in accordance with BNYM’s Written Procedures, or if BNYM is requested by the Company or a Fund, or a third party authorized to act for the Company or a Fund, to deviate from a Written Procedure in connection with the performance of a service hereunder (collectively, “ Exception Services ”):

(i)

BNYM shall not be obligated to perform any particular Exception Service. However, BNYM may in good faith consider developing and implementing an Exception Service if the Fund agrees in a prior written authorization to reimburse BNYM for all costs and expenses incurred in consulting with and obtaining the opinions of specialists, legal counsel or other third parties reasonably considered by BNYM to be appropriate in light of the Exception Service requested (“ Exception Research ”) and the costs associated with utilizing internal resources to develop and implement the Exception Service, and to pay the fees and charges established by BNYM for performing the Exception Service. The Company or an Investment Company may, in place of agreeing to reimburse BNYM for the costs of Exception Research, agree in such written authorization to provide BNYM with all Exception Research reasonably requested by BNYM at the Investment Company’s cost and expense.

(ii)

Following receipt of all requested Exception Research, BNYM may, in its sole discretion, as an accommodation and not pursuant to any obligation, agree to provide an Exception Service if it receives a Written Instruction containing terms satisfactory to it in its sole discretion, including without limitation terms constituting additional agreements with respect to fees, charges, and expenses, terms constituting appropriate warranties, representations and covenants, and terms specifying with particularity the course of conduct constituting the Exception Service.

(iii)

BNYM reserves the right following receipt of all Exception Research and not withstanding such receipt to continue to decline to perform the Exception Service for a bona fide legal, commercial or business reason.

(c) In the event that Fund requests documentation, analysis or verification in whatsoever form regarding the commercial reasonableness or industry acceptance of conduct provided for in a Written Procedure, BNYM will cooperate to furnish such materials as it may have in its possession at the time of the request without cost to the Company or relevant Investment Company, but the Investment Companies agree to reimburse BNYM for all out of pockets costs and expenses incurred, including the costs of legal or expert advice or analysis, in obtaining additional materials in connection with the request.

(d) Prior to the execution of this Agreement, BNYM and the Company agreed to amended terms of certain of BNYM’s Written Procedures to reflect the business needs of the Investment Companies (“ Custom Procedures ”). BNYM agrees not to amend any Custom Procedures or Exception Service unless such amendment is approved in writing by the relevant Investment Company or Fund.

15. Notices . Notices permitted or required by this Agreement shall be in writing and:

(i)	addressed as follows, unless a notice provided in accordance with this Section 19 shall specify a different address or individual:

(A)

if to BNYM, to BNYM Global Investment Servicing (U.S.) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: President; with a copy to BNYM Global Investment Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Senior Counsel – TA & SubAccounting; and

Page 29


Confidential And Proprietary		Execution Version

(B)

if to the Company, to VP Distributors, Inc., 101 Munson Street, Suite 104, Greenfield, MA 01301, Attention: Heidi Griswold; with a copy to: Virtus Investment Partners, 100 Pearl Street, Hartford, CT 06103, Attention: Counsel;

(ii)

delivered: by hand (personal delivery by an Authorized Person to addressee); private messenger, with signature of recipient; U.S. Postal Service (with return receipt or other delivery verification provided); overnight national courier service, with signature of recipient, facsimile sending device providing for automatic confirmation of receipt; and

(iii)

deemed given on the day received by the receiving party.

16. Amendments .

(a) This Agreement, or any term thereof, including without limitation the Schedules, Exhibits and Appendices hereto, may be changed or waived only by a written amendment, signed by the party against whom enforcement of such change or waiver is sought.

(b) Notwithstanding subsection (a) above, in the event an officer of the Company or an Investment Company or other person acting with apparent authority on behalf of the Company or an Investment Company requests that BNYM perform some or all of the services provided for in this Agreement for an Investment Company or a Portfolio not listed on Schedule B , as amended, and such Investment Company or Portfolio accepts such services and the relevant Investment Company pays amounts for such services in accordance with the Fee Agreement as Fees and Reimbursable Expenses, then in the absence of an express written statement to the contrary such services are provided in accordance with the terms of this Agreement and the Investment Company or Portfolio, as appropriate, shall be bound by the terms of this Agreement with respect to all matters addressed herein, except that BNYM may terminate such amendment by convenience to this Agreement if within 60 days of the first such acceptance of services by the Investment Company or Portfolio the Investment Company, the Company and BNYM do not execute a written amendment to Schedule B on terms mutually acceptable to the parties in their respective sole discretion. The parties each reserve the right to negotiate terms appropriate to such additional Investment Companies or Portfolios which differ from the terms herein.

17. Delegation; Assignment . Except as expressly provided in this Section 17, no party may assign or transfer this Agreement or assign or transfer any right or obligation hereunder without the written consent of the other party and any attempt at such assignment or transfer, or any such assignment or transfer, shall be void. A merger, a sale of a majority or more of the assets, equity interests or voting control, or a transfer by operation of law shall be considered a “transfer” under this Section. Notwithstanding the foregoing: To the extent appropriate under rules and regulations of the NSCC, BNYM may satisfy its obligations with respect to services involving the NSCC through an Affiliate that is a member of the NSCC by delegation or subcontracting; and BNYM may assign or transfer this Agreement to any Affiliate or transfer this Agreement in connection with a sale of a majority or more of its assets, equity interests or voting control, provided that BNYM gives the Company thirty (30) days’ prior written notice of such assignment or transfer, such assignment or transfer does not impair the Company’s receipt of services under this Agreement in any material respect, and the assignee or transferee agrees to be bound by all terms of this Agreement, and BNYM and such assignee promptly provide such information as the Company or an Investment Company may request, and respond to such questions as the Company or an Investment Company may ask, relative to such delegation, including without limitation questions regarding the capabilities of the assignee. BNYM may subcontract with, hire, engage or otherwise outsource to any third party with respect to the performance of any one or more of the functions, services, duties or obligations of BNYM under this Agreement but any such

Page 30


Confidential And Proprietary		Execution Version

subcontracting, hiring, engaging or outsourcing, and any delegation of duties pursuant to the preceding provisions of this Section 17, shall not relieve BNYM of any of its liabilities hereunder. For the avoidance of doubt, nothing in this Section 17 is intended to, nor shall be read to, relieve BNYM of its obligations pursuant to Section 3(g) of this Agreement.

18. Facsimile Signatures; Counterparts . This Agreement may be executed in one more counterparts; such execution of counterparts may occur by manual signature, facsimile signature, manual signature transmitted by means of facsimile transmission or manual signature contained in an imaged document attached to an email transmission; and each such counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed copies of this Agreement or of executed signature pages to this Agreement by facsimile transmission or as an imaged document attached to an email transmission shall constitute effective execution and delivery hereof and may be used for all purposes in lieu of a manually executed copy of this Agreement.

19. Representations and Warranties .

(a)	Representations and Warranties of BNYM . BNYM represents and warrants to the Company and the Fund that:

(i)

Governance . BNYM is a corporation duly organized, validly existing, and in good standing under the laws of the Commonwealth of Massachusetts, duly registered as a transfer agent under the Securities Exchange Act of 1934, as amended, and has full power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by BNYM has been duly authorized by all necessary action and constitutes the legal, valid and binding obligation of BNYM enforceable against BNYM in accordance with its terms;

(ii)

Compliance with Laws . The execution, delivery and performance of this Agreement by BNYM will not violate, conflict with or result in the breach of any material term, condition or provision of, or require the consent of any other party to (i) any existing law, ordinance, or governmental rule or regulation to which BNYM is subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to BNYM, (iii) the incorporation documents or by-laws of BNYM, or (iv) any material agreement to which BNYM is a party;

(iii)

Facilities, Equipment and Personnel . BNYM has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement;

(iv)

Agent . BNYM is engaged in an independent business and will perform its obligations under this Agreement as an agent of the Company and the Fund;

(v)

Internal Controls . BNYM will provide to the Company and the Fund, upon request, BNYM’s certification relating to its internal controls for handling of the Fund’s information. Upon request, BNYM will provide a copy of its SAS 70 report to the Company and the Fund.

(b)	Representations and Warranties of the Company and the Fund .

(i)

The Company represents and warrants to BNYM that it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Connecticut and has

Page 31


Confidential And Proprietary		Execution Version

full power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by the Company has been duly authorized by all necessary action and constitutes the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. The execution, delivery and performance of this Agreement by the Company will not violate, conflict with or result in the breach of any material term, condition or provision of, or require the consent of any other party to (i) any existing law, ordinance, or governmental rule or regulation to which the Company is subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to the Company, (iii) the incorporation documents or by-laws of the Company, or (iv) any material agreement to which the Company is a party;

(ii)

The Fund represents and warrants to BNYM that it is a trust duly organized, validly existing and in good standing under the laws of the state of its formation and has full power, authority and legal right to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by the Fund has been duly authorized by all necessary action and constitutes the legal, valid and binding obligation of the Fund enforceable against the Fund in accordance with its terms. The execution, delivery and performance of this Agreement by the Fund will not violate, conflict with or result in the breach of any material term, condition or provision of, or require the consent of any other party to (i) any existing law, ordinance, or governmental rule or regulation to which the Fund is subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to the Fund, (iii) the declaration of trust or by-laws of the Fund, or (iv) any material agreement to which the Fund is a party.

20. Miscellaneous .

(a) Entire Agreement . This Agreement embodies the final, complete, exclusive and fully integrated record of the agreement of the parties on the subject matter herein and supersedes all prior agreements and understandings relating to such subject matter, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties.

(b) Non-Solicitation . During the effectiveness of this Agreement and for one year thereafter, neither the Company nor any Fund shall, directly or indirectly, knowingly solicit or recruit for employment or hire, or make a recommendation, or referral or otherwise knowingly assist or facilitate the solicitation or recruitment of any BNYM employee, for employment by any other entity. To “knowingly” solicit, recruit, hire, assist or facilitate, within the meaning of this provision, does not include, and therefore does not prohibit, solicitation, recruitment or hiring of a BNYM employee by another entity if the BNYM employee was identified solely as a result of the BNYM employee’s response to a general advertisement in a publication of trade or industry interest or other similar general solicitation.

(c) No Changes that Materially Affect Obligations . Notwithstanding any other provision of this Agreement, the Company agrees not to make or permit any modification to the registration statement of a Fund or other Shareholder Materials of a Fund or to adopt any policies which would affect materially the obligations or responsibilities of BNYM hereunder without the prior written approval of BNYM, which approval shall not be unreasonably withheld or delayed. Such approval, if given, shall not constitute a waiver or abridgment of any rights under this Agreement. The scope of services to be provided by BNYM under this Agreement shall not be increased as a result of new or revised regulatory or other requirements that may become applicable with respect to the Company or a Fund, unless the parties hereto expressly agree in writing to any such increase.

Page 32


Confidential And Proprietary		Execution Version

(d) Captions . The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect.

(e) Information . The Company will provide such information and documentation as BNYM may reasonably request in connection with services provided by BNYM.

(f) Governing Law . This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law, without regard to its principles of conflicts of law that would apply the law of another jurisdiction. This Agreement will not be governed by the United Nations Convention on Contracts for the International Sale of Goods. The Uniform Computer Information Transaction Act drafted by the National Conference Of Commissioners On Uniform State Laws, or a version thereof, or any law based on or similar to such Act (“ UCITA ”), if and as adopted by the jurisdiction whose laws govern with respect to this Agreement in any form, shall not apply to this Agreement or the activities contemplated hereby. To the extent UCITA is applicable notwithstanding the foregoing, the Parties agree to opt out of the applicability of UCITA pursuant to the “opt out” provisions contained therein.

(g) Partial Invalidity . If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.

(h) Parties in Interest . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except with respect to those certain provisions providing for rights of the Custodian or obligations of the Company or a Fund with respect to the Custodian, and those certain provisions benefitting affiliates of the parties, including without limitation the indemnification provisions, this Agreement is not for the benefit of any other person or entity and there shall be no third party beneficiaries hereof.

(i) No Representations or Warranties . Except as expressly provided in this Agreement, BNYM hereby disclaims all representations and warranties, express or implied, made to the Fund or any other person, including, without limitation, any warranties regarding quality, suitability, merchantability, fitness for a particular purpose or otherwise (irrespective of any course of dealing, custom or usage of trade), of any services or any goods provided incidental to services provided under this Agreement. BNYM disclaims any warranty of title or non-infringement except as expressly set forth in this Agreement.

(j) Customer Identification Program Notice . To help the U.S. government fight the funding of terrorism and money laundering activities, U.S. Federal law requires each financial institution to obtain, verify, and record certain information that identifies each person who initially opens an account with that financial institution on or after October 1, 2003. Certain of BNYM’s affiliates are financial institutions, and BNYM may, as a matter of policy, request (or may have already requested) the name, address and taxpayer identification number or other government-issued identification number of the Company, a Fund, and others, and, if such other is a natural person, that person’s date of birth. BNYM may also ask (and may have already asked) for additional identifying information, and BNYM may take steps (and may have already taken steps) to verify the authenticity and accuracy of these data elements.

(k) Compliance with Law . Each of BNYM and the Company agrees to comply in all material respects with the respective laws, rules, regulations and legal process applicable to the operation of its business (“ Applicable Laws ”). The Company agrees that BNYM is not obligated to assist the Company or any Fund with compliance, or to bring the Company or a Fund into compliance, with Company’s Applicable Laws, and that the Company and the Fund are solely responsible for such compliance, except where BNYM has expressly agreed to provide that compliance service as a service hereunder.

(l) Requests to Transfer Information to Third Parties . In the event that the Company or a Fund, whether pursuant to Written Instructions or otherwise, requests or instructs BNYM to send, deliver, mail, transmit or otherwise transfer to a third party which is not a subcontractor of BNYM and which is not the

Page 33


Confidential And Proprietary		Execution Version

DTCC, NSCC or other SEC-registered clearing corporation, or to make available to such a third party for retrieval from within the BNYM System, information which constitutes Confidential Information of the Fund or non-public personal information of current or former investors in the Fund: BNYM may decline to provide the information requested on the terms contained in the request, but will in good faith discuss the request and attempt to accommodate the Company or the Fund with respect to the request, and BNYM will not be obligated to act on any such request unless it agrees in writing to the terms of the information transfer. In the event BNYM so agrees in writing to transfer information or make it available within the BNYM System: the Company shall pay a reasonable fee for such activities upon being invoiced for same by BNYM; BNYM shall have no liability or duty with respect to such information after it releases the information or makes it available within the BNYM System, provided BNYM has acted in accordance with its Standard of Care in executing the express instructions of the written information transfer request; and BNYM shall be entitled to the indemnification provided for at Section 12 in connection with the activities contemplated by any such written information transfer request.

(m) Service Indemnifications; Survival . Any indemnification provided to BNYM by the Company in connection with any service provided under the Agreement, including by way of illustration and not limitation, indemnifications provided in connection with Non-Standard Instructions and indemnifications contained in any agreements regarding Exception Services (“ Service Indemnifications ”), shall survive any termination of this Agreement. In addition, Sections 4, 5, 7, 9(d), 9(f), 9(g), 11, 12 and provisions necessary to the interpretation of such Sections and any Service Indemnifications and the enforcement of rights conferred by any of the foregoing shall survive any termination of this Agreement. In the event the Board of the Investment Company authorizes a liquidation of the Investment Company or termination of the Agreement, BNYM may require as a condition of any services provided in connection with such liquidation or termination that the Investment Company make provisions reasonably satisfactory to BNYM for the satisfaction of contingent liabilities outstanding at the time of the liquidation or termination.

(n) Further Actions . Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof.

(o) Insurance . BNYM, or an Affiliate of BNYM for BNYM, shall maintain a fidelity bond covering larceny and embezzlement and an insurance policy covering errors and omissions with respect to the Services under this Agreement, in an amount reasonable under the circumstances. Upon the request of the Company or the Fund, BNYM shall provide evidence that such coverage is in place. BNYM shall promptly notify the Company and the Fund in the event that such coverage is cancelled, or in the event that there are material claims made with respect to the Services under this Agreement.

(p) Separate Agreements . Although the parties have executed this Agreement in the form of a single Sub-Transfer Agency and Shareholder Services Agreement for administrative convenience, each Investment Company has entered into this Agreement severally and not jointly. No rights, responsibilities or liabilities of any Investment Company shall be attributed to any other Investment Company. This Agreement shall be deemed to be a separate agreement with each Investment Company in respect of its Portfolios, and each reference herein to “Fund” shall be deemed to be a reference to each such Portfolio severally and not jointly. The term “Fund” is used collectively herein for the sake of convenience only and shall in no way be deemed to impose or create any joint duties, obligations or liabilities among the Investment Companies.

(q) Limitation of Liability of the Fund . A copy of the Declaration of Trust of each Investment Company that is a Massachusetts business trust is on file with the Secretary of the Commonwealth of Massachusetts, and a copy of the Declaration of Trust of each Investment Company that is a Delaware statutory trust is on file with the Secretary of the State of Delaware. Notice is hereby given that this instrument is executed on behalf of the Board of Trustees of the Investment Company as trustees and not individually, and that the obligations of this instrument are not binding upon any of the trustees or

Page 34


Confidential And Proprietary		Execution Version

shareholders of the Investment Company individually but are binding only upon the assets and property of the Investment Company; provided, however, that the Declaration of Trust of the Investment Company provides that the assets of a particular Portfolio of the Investment Company shall under no circumstance be charged with liabilities attributable to any other Portfolio of the Investment Company and that all persons extending credit to, or contracting with, or having any claim against, a particular Portfolio of the Investment Company shall look only to the assets of that particular Portfolio for payment of such credit, contract or claim.

[Signatures Appear On Following Page]

Page 35


Confidential And Proprietary		Execution Version

IN WITNESS WHEREOF , the parties hereto have caused this Sub-Transfer Agency And Shareholder Services Agreement to be executed as of the day and year first above written.


BNY Mellon Investment Servicing (US) Inc.		VP Distributors, Inc.

By:	/s/ Michael DoNofrio	By:	/s/ Heidi S. Griswold
Name:	Michael DoNofrio	Name:	Heidi S. Griswold
Title:	Ex.V.P.	Title:	Vice President, Mutual Fund Services

Virtus Equity Trust		Virtus Insight Trust

By:	/s/ W. Patrick Bradley	By:	/s/ W. Patrick Bradley
Name:	W. Patrick Bradley	Name:	W. Patrick Bradley
Title:	CFO & Treasurer	Title:	CFO & Treasurer

Virtus Institutional Trust		Virtus Opportunities Trust

By:	/s/ W. Patrick Bradley	By:	/s/ W. Patrick Bradley
Name:	W. Patrick Bradley	Name:	W. Patrick Bradley
Title:	CFO & Treasurer	Title:	CFO & Treasurer

[Fax/PDF Signature Page]

Page 36


Confidential And Proprietary		Execution Version

SCHEDULE A

Definitions

As used in this Agreement:

“ 1933 Act ” means the Securities Act of 1933, as amended.

“ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

“ 1940 Act ” means Investment Company Act of 1940, as amended.

“ Affiliate ” means an entity controlled by, controlling or under common control with the subject entity, with “control” for this purpose defined to mean direct or beneficial ownership of 50% or more of the equity interests of an entity and possession of the power to elect 50% or more of the entity’s directors, trustees or similar persons performing policy-making functions.

“ Authorized Person ” means Company Authorized Persons and Fund Authorized Persons considered collectively or individually. Any limitation on the authority of an Authorized Person to give Instructions must be expressly set forth in a written document signed by BNYM and the party imposing the restriction.

“ BNY Mellon Bank ” means The Bank of New York Mellon, a New York chartered commercial bank and affiliate of BNYM, and its lawful successors and assigns.

“ Claim ” means any claim, demand, suit, action, obligation, liability, suit, controversy, breach, proceeding or allegation of any nature, including any threat of any of the foregoing (including but not limited to those arising out of or related to this Agreement) and regardless of the form of action or legal theory or forum.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Company Authorized Person ” means any officer of the Company and any other person duly authorized by the Company in a manner reasonably satisfactory to BNYM to give Instructions on behalf of the Company.

“ conduct ” or “ course of conduct ” means a single act, two or more acts, a single instance of an action not being taken or of forbearance given, two or more instances of an action not being taken or of forbearance given, or any combination of the foregoing.

“ FinCEN ” means the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.

“ Fund Authorized Person ” means any officer of a Fund and any other person duly authorized by the Fund in a manner reasonably satisfactory to BNYM to give Instructions on behalf of the Fund.

“ Fund Error ” means the Fund or a third party acting on behalf of the Fund or conveying Fund data or information committing an error, furnishing inaccurate, incorrect or incomplete data or information to BNYM or PFPC Trust or by other act or omission requiring Remediation.

“ Fund Shares ” (see “Shares”)

“ Instructions ” means Oral Instructions and Written Instructions considered collectively or individually.

Page 37


Confidential And Proprietary		Execution Version

“ Intellectual Property Rights ” means copyright, patent, trade secret, trademark and any other proprietary or intellectual property rights.

“ Investment Company ” means an entity registered with the SEC under the 1940 Act as an open end investment company.

“ Loss ” and “ Losses ” means any one, or any series of related, losses, costs, damages, expenses, awards, judgments, assessments, fines, penalties, payments, reimbursements, adverse consequences, liabilities or obligations of any nature, including without limitation any of the foregoing arising out of any Claim and all costs of litigation or threatened litigation such as but not limited to court costs, costs of counsel, discovery, experts, settlement and investigation.

“ Loss Date ” means the date of occurrence of the event or circumstance causing a particular Loss, or the date of occurrence of the first event or circumstance in a series of events or circumstances causing a particular Loss.

“ Oral Instructions ” means oral instructions received by BNYM from an Authorized Person or from a person reasonably believed by BNYM to be an Authorized Person. BNYM may, in its sole discretion in each separate instance, consider and rely upon instructions it receives from an Authorized Person via electronic mail as Oral Instructions.

“ PFPC Trust ” means PFPC Trust Company, an affiliate of BNYM, and its lawful successors and assigns.

“ Portfolio ” means each separate subdivision of the Investment Company, whether characterized or structured as a portfolio, class, tier, series or otherwise.

“ Remediation Services ” means the additional services required to be provided hereunder by BNYM or PFPC Trust in connection with a Fund Error in order to correct, remediate, adjust, reprocess, repeat, reverse or otherwise modify conduct previously taken in accordance with the Agreement to achieve the outcome originally intended by the previous conduct.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Securities Laws ” means the 1933 Act, the 1934 Act and the 1940 Act.

“ Service Effective Date ” means the date, following the completion of all implementation services, in the event the Fund is a new start-up Fund, or following the completion of all conversion services, in the event BNYM will be providing services to the Fund as a successor to a prior service provider, that the first live transaction is processed by the BNYM System for the Fund on a production basis.

“ Shareholder Materials ” means the Fund’s prospectus, statement of additional information and any other materials relating to the Fund provided to Fund shareholders by the Fund.

“ Shares ” or “ Fund Shares ” means the shares or other units of beneficial interest of each Fund.

“ Written Instructions ” means (1) written instructions (i) which are signed by a Company Authorized Person (or a person reasonably believed by BNYM to be an Company Authorized Person), and if the written instructions apply to a specific Fund, written instructions signed by a Fund Authorized Person of the relevant Fund (or a person reasonably believed by BNYM to be such a Fund Authorized Person), (ii) which are agreed to in writing by BNYM on the instrument containing the written instructions, (iii) which are addressed to and received by BNYM, and (iv) which are delivered by (A) hand (personally delivery by the Authorized Person), (B) private messenger, U.S. Postal Service or overnight national courier which provides confirmation of receipt with respect to the particular delivery, or (C) facsimile sending device

Page 38


Confidential And Proprietary		Execution Version

which provides automatic confirmation of the standard details of receipt, or (2) trade instructions transmitted to and received by BNYM by means of an electronic transaction reporting system which requires use of a password or other authorized identifier in order to gain access.

INDEX OF DEFINED TERMS

(excludes terms defined in Schedule D solely for Schedule D)


Term		Location
1933 Act		Schedule A
1934 Act		Schedule A
1940 Act		Schedule A
314(a) Procedures		§ 3(b)(4)
403(b) Accounts		§ 3(a)(12)(E)
Account		Schedule C, § (b)(i)(G)
Account Documentation		§ 3(a)(12)(C)(iii)
Affiliate		Schedule A
Agreement		Preamble
AML		§ 3(b)(l)
AML Services		§ 3(b)
Applicable Laws		§ 20(k)
Appropriate List Matching Data		§ 3(b)(5)(C)
Audit Report		Schedule C, § (b)(iv)
Authorized Person		Schedule A
BNY Mellon Bank		Schedule A
BNYM		Preamble
BNYM System		§ 7
Bona Fide Reason		§ 10(c)
Breach Notice		§ 13(c)
Breach Termination Notice		§ 13(c)
Change in Control		§ 13(d)(iv)
CIP Regulations		§ 3(b)(3)(A)
Claim		Schedule A
Code		Schedule A
Company		Preamble
conduct		Schedule A
Confidential Information		§ 4(b)
Company Authorized Person		Schedule A
Comparison Results		§ 3(b)(4)
Controls		Schedule C, § (b)(i)
Conversion Actions		§ 13(e)
Conversion Expenses		§ 13(e)
course of conduct		Schedule A
Covered Account		Schedule C, § (b)(i)(F)
Covered Person		Schedule C, § (b)(i)(D)
Custodian		§ 3(a)(12)(C)
Customer		§ 3(b)(3)(A)(i)
Custodied Account		§ 3(a)(12)(C)
Data Elements		§ 3(b)(3)(A)(i)
Day 2 Services		§ 3(l)
Defaulting Party		§ 13(c)

Page 39


Confidential And Proprietary		Execution Version


Direct Account		Schedule C, § (b)(i)(E)
Director		§ 3(b)(5)(A)(iii)
Dissolution Event		§ 9(g)
Early Termination		§ 13(d)
Early Termination Fee		§ 13(d)(ii)(A)
Early Termination Fee Multiple		§ 13(d)(ii)(A)
Effective Date		Preamble
Eligible Assets		§ 3(a)(12)(A)(i)
Event Beyond Reasonable Control		§ 11(d)
Exception Research		§ 14(b)(i)
Exception Services		§ 14(b)
Excess SDFS Amount		§ 9(b)(ii)(B)
External Research		§ 10(d)(i)
Fee Agreement		§ 9(a)
Fees		§ 9(a)
FFI Regulations		§ 3(b)(2)(A)
Final Distribution		§ 9(h)
Final Expenses		§ 9(h)
FinCEN		Schedule A
Foreign Financial Institution		§ 3(b)(2)(A)(i)
Form		§ 10(b)
Fund		Background
Fund Applicable Laws		§ 3(b)(11)
Fund Authorized Person		Schedule A
Fund Communication		§ 10(g)
Fund Custodian		§ 3(a)(1)(xiii)
Fund Data		§ 3(b)(5)(A)
Fund Error		Schedule A
Fund Registry		Schedule C, § (b)(i)(C)
Fund Shares		Schedule A
Identity Theft		Schedule C, § (b)(i)(B)
Industry Standard		§ 14(a)
Information Requests		§ 3(b)(4)
Initial Term		§ 13(a)
Instructions		Schedule A
Intellectual Property Rights		Schedule A
Internal Research		§ 10(d)(i)
Investment Company		Preamble
Legal Process		§ 3(b)(6)
Loss, Losses		Schedule A
Loss Date		Schedule A
Lost Shareholder Rule		§ 3(a)(11)(A)
Massachusetts Privacy Regulation		§ 5
Material Event		§ 3(a)(12)(C)(i)
NCCT List		§ 3(b)(5)(A)(ii)
Non-Defaulting Party		§ 13(c)
Non-Renewal Notice		§ 13(b)
Non-Standard Instruction		§ 10(c)
OFAC		§ 3(b)(5)(A)(i)
OFAC Lists		§ 3(b)(5)(A)(i)
Oral Instructions		Schedule A

Page 40


Confidential And Proprietary		Execution Version


Participants		§ 3(a)(12)(A)(ii)
PFPC Trust		Schedule A
PMLC Determination		§ 3(b)(5)(A)(iii)
Portfolio		Schedule A
Possible Identity Theft		Schedule C, § (b)(iii)
Prior Provider De-Conversion Expenses		§ 13(d)(ii)(B)
Red Flag		Schedule C, § (b)(i)(A)
Red Flags Requirements		Schedule C, § (c)
Red Flags Section		Schedule C, § (a)
Red Flags Services		Schedule C, § (b)
Registered Owner		Schedule C, § (b)(i)(C)
Reimbursable Expenses		§ 9(a)
Related Materials		§ 3(a)(12)(C)(iv)
Related Parties		§ 3(a)(12)(C)(iii)
Remediation Services		Schedule A
Removed Assets		§ 13(d)(vi)
Renewal Term		§ 13(b)
Research		§ 10(d)(i)
Response Failure		§ 10(i)
SAR		§ 3(b)(7)
SAR Confidential Information		§ 3(b)(7)
SDFS Accounts		§ 9(b)(ii)(A)
SEC		Schedule A
Securities Data		§ 11(i)
Securities Laws		Schedule A
Service Accounts		§ 9(b)
Service Effective Date		Schedule A
Service Failure		§ 3(h)
Service Indemnifications		§ 20(m)
Shareholder Materials		Schedule A
Shares		Schedule A
Standard Instructions		§ 10(b)
Standard of Care		§ 11(a)
Tax Favored Account		§ 3(a)(12)(A)(iii)
Third Party Institution		§ 9(b)
U.S. Government Lists		§ 3(b)(5)(A)
UCITA		§ 20(f)
Written Instructions		Schedule A
Written Procedures		§ 14(a)

[End of Schedule A]

Page 41


Confidential And Proprietary		Execution Version

SCHEDULE B

(Dated: April 15, 2011)

THIS SCHEDULE B is Schedule B to that certain Transfer Agency Services Agreement dated as of April 15, 2011, by and among BNY Mellon Investment Servicing (US) Inc., VP Distributors, Inc. and the Virtus Mutual Funds, as further set forth below.

Portfolios

Investment Company: Virtus Equity Trust

Portfolios:

Virtus Balanced Fund

Virtus Growth & Income Fund

Virtus Mid-Cap Core Fund

Virtus Mid-Cap Growth Fund

Virtus Mid-Cap Value Fund

Virtus Quality Large-Cap Value Fund

Virtus Quality Small-Cap Fund

Virtus Small-Cap Core Fund

Virtus Small-Cap Sustainable Growth Fund

Virtus Strategic Growth Fund

Virtus Tactical Allocation Fund

Investment Company: Virtus Insight Trust

Portfolios:

Virtus Balanced Allocation Fund

Virtus Core Equity Fund

Virtus Emerging Markets Opportunities Fund

Virtus High Yield Income Fund

Virtus Insight Government Money Market Fund

Virtus Insight Money Market Fund

Virtus Insight Tax-Exempt Money Market Fund

Virtus Intermediate Government Bond Fund

Virtus Intermediate Tax-Exempt Bond Fund

Virtus Short/Intermediate Bond Fund

Virtus Tax-Exempt Bond Fund

Virtus Value Equity Fund

Investment Company: Virtus Institutional Trust

Portfolio: Virtus Institutional Bond Fund

Investment Company: Virtus Opportunities Trust

Portfolios:

Virtus Allocator Premium AlphaSector Fund

Virtus AlphaSector ^SM Allocation Fund

Virtus AlphaSector ^SM Rotation Fund

Virtus Alternatives Diversifier Fund

Page 42


Confidential And Proprietary		Execution Version

Virtus Bond Fund

Virtus CA Tax-Exempt Bond Fund

Virtus Foreign Opportunities Fund

Virtus Global Commodities Stock Fund

Virtus Global Infrastructure Fund

Virtus Global Opportunities Fund

Virtus Global Premium AlphaSector Fund

Virtus Global Real Estate Securities Fund

Virtus Greater Asia ex Japan Opportunities Fund

Virtus Greater European Opportunities Fund

Virtus High Yield Fund

Virtus International Equity Fund

Virtus International Real Estate Securities Fund

Virtus Market Neutral Fund

Virtus Multi-Sector Fixed Income Fund

Virtus Multi-Sector Short Term Bond Fund

Virtus Premium AlphaSector ^SM Fund

Virtus Real Estate Securities Fund

Virtus Senior Floating Rate Fund

Page 43


Confidential And Proprietary		Execution Version

SCHEDULE C

Red Flags Services

(a) The provisions of this Schedule C shall apply in the event the Company requests and BNYM provides Red Flags Services for the Funds. Section 3(c) of the Agreement together with this Schedule C is referred to collectively as the “Red Flags Section”.

(b) BNYM agrees, commencing as of the effective date of the Red Flags Requirements (as defined in Section (b) below) or the Execution Date, whichever is later, to provide each Fund with the “Red Flags Services”, which is hereby defined to mean the following services:

(i)

BNYM will maintain written controls reasonably designed to detect the occurrence of Red Flags (as defined below) in connection with (i) account opening and other account activities and transactions conducted directly through BNYM with respect to Direct Accounts (as defined below), and (ii) transactions effected directly through BNYM by Covered Persons (as defined below) in Covered Accounts (as defined below). Such controls, as they may be revised from time to time hereunder, are referred to herein as the “Controls”. Solely for purposes of the Red Flags Section, the capitalized terms below will have the respective meaning ascribed to each:

(A)

“Red Flag” means a pattern, practice, or specific activity or a combination of patterns, practices or specific activities which may indicate the possible existence of Identity Theft (as defined below) affecting a Registered Owner (as defined below) or a Covered Person.

(B)

“Identity Theft” means a fraud committed or attempted using the identifying information of another person without authority.

(C)

“Registered Owner” means the owner of record of a Direct Account on the books and records of the Fund maintained by BNYM as the provider of registrar services to the Fund (the “Fund Registry”).

(D)

“Covered Person” means the owner of record of a Covered Account on the Fund Registry.

(E)

“Direct Account” means an Account established directly with and through BNYM as a registered account on the Fund Registry and through which the owner of record has the ability to directly conduct account and transactional activity with and through BNYM.

(F)

“Covered Account” means an Account established by a financial intermediary for another as the owner of record on the Fund Registry and through which such owner of record has the ability to conduct transactions in Fund shares directly with and through BNYM.

(G)

“Account” means (1) an account holding Fund Shares with respect to which a natural person is the owner of record, and (2) any other account holding Fund Shares with respect to which there is a reasonably foreseeable risk to the particular account owner’s customers from identity theft, including financial, operational, compliance, reputation, or litigation risks.

(ii)	BNYM will provide the Fund with a printed copy of or Internet viewing access to the Controls.

(iii)

BNYM will notify the Fund of Red Flags which it detects and reasonably determines to indicate a significant risk of Identity Theft to a Registered Owner or Covered Person (“Possible Identity Theft”) and assist the Fund in determining the appropriate response of the Fund to the Possible Identity Theft.

Page 44


Confidential And Proprietary		Execution Version

(iv)	BNYM will (A) engage an independent auditing firm or other similar firm of independent examiners to conduct an annual evaluation of the Controls and issue a report on the results of the testing (the “Audit Report”), and (B) furnish a copy of the Audit Report to the Company; and

(v)	Upon Company request, issue a certification in a form determined to be appropriate by BNYM in its reasonable discretion, certifying to BNYM’s continuing compliance with the Controls after the date of the most recent Audit Report.

(b) The Company agrees that it and the Funds are responsible for complying with and determining the applicability to the Fund of Section 114 of the Fair and Accurate Credit Transaction Act of 2003 and regulations promulgated thereunder by the Federal Trade Commission (the “Red Flags Requirements”), for determining the extent to which the Red Flags Services assist a Fund in complying with the Red Flags Requirements, and for furnishing any supplementation or augmentation to the Red Flags Services it determines to be appropriate, and that BNYM has given no advice and makes no representations with respect to such matters. This Red Flags Section shall not be interpreted in any manner which imposes a duty on BNYM to act on behalf of the Company or a Fund or otherwise, including any duty to take any action upon the occurrence of a Red Flag, other than as expressly provided for in this Red Flags Section. The Controls and the Red Flags Services may be changed at any time and from time to time by BNYM in its reasonable sole discretion to include commercially reasonable provisions appropriate to the Red Flags Requirements, as they may be constituted from time to time. The relevant Investment Company shall pay BNYM the fee for Red Flags Services, if any, as established by BNYM in the Fee Agreement.

(i)

BNYM’s cumulative, aggregate liability to the Company for any and all Loss caused directly or indirectly by any act, omission or conduct related to the terms of this Red Flags Section, the recovery of which is not otherwise excluded or barred by another provision of this Agreement, shall not exceed the greater of (i) $25,000, or (ii) fees received by BNYM for the Red Flags Services during the six (6) months immediately prior to the last relevant Loss Date, up to a maximum of $50,000.

(ii)

In the event of a material breach of this Red Flags Section by BNYM, the Company’s sole and exclusive termination remedy shall be to terminate the Red Flags Services by complying with any notice and cure period provisions in the Agreement applicable to a material breach of the Agreement, but the Company shall not be entitled to terminate any other provision of the Agreement. For purposes of clarification: The foregoing provision is not intended to restrict, modify or abrogate any remedy available to the Company under another provision of the Agreement for a breach of the Red Flags Section by BNYM other than the termination remedy.

[End of Schedule C]

Page 45


Confidential And Proprietary		Execution Version

SCHEDULE D

Terms And Conditions Governing Use Of The BNYM System

SECTION 0.

GENERAL

0.1 Capitalized Terms. Capitalized terms not defined in this Schedule D shall have the meaning ascribed to them in the Main Agreement. Capitalized terms defined in this Schedule D shall have that meaning solely in this Schedule D and not in any other part of the Agreement unless expressly stated otherwise in a specific instance. References to Section numbers in this Schedule D shall mean Sections of this Schedule D unless expressly stated otherwise in a specific instance. References to the “Agreement” in this Schedule D means the Main Agreement and this Schedule D.

0.2 Purpose. BNYM utilizes some components of the BNYM System to perform the Core Services. But BNYM does not utilize all components of the BNYM System to provide the Core Services. Some components of the BNYM System are maintained by BNYM and offered to customers solely to permit customers to access the data and information maintained in the BNYM System in connection with the Core Services and put it to additional uses. Consequently, the Company is given rights pursuant to this Schedule D (i) to access and use components of the BNYM System, from the Company System (as defined in Section 2.7), to engage in activities that are separate and distinct and apart from the activities engaged in by BNYM to provide the Core Services, and (ii) to authorize third parties, the “Permitted Users”, to access and use certain Component Systems to engage in activities that are also separate and distinct and apart from the activities engaged in by BNYM to provide the Core Services. The foregoing activities by the Company and Permitted Users represent services supplemental to the Core Services. This Schedule D governs solely those supplemental activities engaged in by the Company and Permitted Users. No part of this Schedule D is intended to apply to the use of the BNYM System by BNYM or by the Company in connection with BNYM’s performance of the Core Services; only the Main Agreement is applicable to such use.

SECTION 1.

CERTAIN DEFINITIONS

“ Authorized Person ” means the employees of Company and Permitted Users who have been authorized by the Company in accordance with the applicable Documentation and procedures of BNYM to access and use the Licensed System and in connection with such access and use to be issued Security Codes (as defined at Section 2.6(b) below).

“ BNYM Web Application ” means with respect to a relevant Component System the collection of electronic documents and files, content, text, graphics, processes, functions, and software code, including, but not limited to, HTML and XML files, Java and JavaScript files, graphics files, animation files, data, technology, scripts, programs, interfaces and databases residing on a computer system maintained by or for BNYM, accessible via the Internet at an Internet address furnished by BNYM for use of the particular Component System.

“ Company ” has the meaning set forth on page 1 of the Main Agreement.

“ Company Data ” means (i) data and information regarding each Fund and its shareholders and shareholder accounts, including the “nonpublic personal information”, “credit information” and similar information of natural persons which is the subject of federal and state privacy laws and regulations, inputted into the Licensed System and all records, files and reports generated from such data and information by the Licensed System, and (ii) Company 22c-2 Data (as defined in Section 6.16(a) of this Schedule D).

“ Company Web Application ” means the collection of electronic documents and files, content, text, graphics, processes, functions, and software code, including, but not limited to, HTML and XML files, Java and JavaScript files, graphics files, animation files, data, technology, scripts, programs, interfaces and databases residing on a computer system maintained by or for the Company, connected to the Internet and utilized by the Company in connection with its use of a Component System as contemplated by applicable Documentation.

“ Component System ” means, as of its relevant License Effective Date, each Listed System and each Support Function that is part of the Licensed System and, subsequent to a relevant License Effective Date, such Listed Systems and Support Functions as they may be changed as provided in subsection (b) of the definition of Licensed System.

Page 46


Confidential And Proprietary		Execution Version

“ Copy ” , whether or not capitalized, means any paper, disk, tape, film, memory device, or other material or object on or in which any words, object code, source code or other symbols are written, recorded or encoded, whether permanent or transitory.

“ Core Services ” means the services described in the Main Agreement that BNYM is obligated to perform for Company (for clarification: excluding the products and services provided pursuant to this Schedule D).

“ Documentation ” means any user manuals, reference guides, specifications, documentation, instruction materials and similar recorded data and information, whether in electronic or physical output form, that BNYM makes available to, provides access to or provides to the Company, and that describe how the Licensed System is to be operated by users and set forth the features, functionalities, user responsibilities, procedures, commands, requirements, limitations and capabilities of and similar information about the Licensed System.

“ Exhibit 1 ” means Exhibit 1 to this Schedule D.

“ Fund ” has the meaning set forth on page 1 of the Main Agreement.

“ General Upgrade ” means (i) an Upgrade that BNYM in its sole and absolute discretion incorporates into the Licensed System at no additional fees or charges to Company or an Investment Company, and (ii) an Upgrade that BNYM offers to incorporate into the Licensed System without charge or at such additional fees and charges as the parties shall agree in writing and that Company or relevant Investment Company accepts for incorporation into the Licensed System.

“ Harmful Code ” means any computer code intentionally designed to (a) disable, impair, delete, damage or corrupt a computer processing system, computer network, computer service, a deliverable for any of the foregoing, interface, data, files, software, storage media, or computer or electronic hardware or equipment; (b) impair in any way the operation of any of the foregoing based on the elapsing of a period of time, advancement of a particular date or other numeral (sometimes referred to as “time bombs,” “time locks,” or “drop dead” devices); or (c) permit a non-authorized party to access, transmit or utilize, as appropriate, any computer processing system, computer network, computer service, deliverable for any of the foregoing, interface, data, files, software, storage media, or computer or electronic hardware or equipment without proper consent, (sometimes referred to as “lockups,” “traps,” “access codes,” or “trap door” devices); or (d) any other similar harmful or hidden procedures, routines or mechanisms.

“ Intellectual Property Rights ” means the legal rights, interests and protections afforded under applicable patent, copyright, trademark, trade secret and other intellectual property laws.

“ Investment Company ” has the meaning set forth in the Main Agreement.

“ License Effective Date ” means, with respect to each Component System of the Licensed System that Company is given the right to access and use, the date as of which the Company is first given such right to access and use.

“ Licensed Services ” means all functions performed by the Licensed System.

“ Licensed System ” means, collectively:

(a) as of its applicable License Effective Date, any one or more of the of the following: (i) any Listed System to which the Company is given access to and use of by BNYM in its entirety; and (ii) any “ Support Function ” , which is hereby defined to mean any system, subsystem, software, program, application, interface, process, subprogram, series of commands or function, regardless of the degree of separability from or integration with a Listed Program, that Company is given access to and use of to support its utilization of a Listed System - items within “Support Function” and this clause (ii) could be one or more parts of a Listed System or could be items which exist apart from any Listed System but which are provided to support utilization of a Listed System.

(b) Updates, General Upgrades and Company Modifications (as defined at Section 2.16) to the Listed Systems included within clause (a)(i) above and the systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands and functions included within clause (a)(ii) above.

Page 47


Confidential And Proprietary		Execution Version

“ Listed Systems ” means the computer systems listed on Exhibit 1, whether mainframe systems, surround systems, subsystems or component systems, and in the case of the NSCC and CMS means as well the separate and distinct component systems of NSCC and CMS that BNYM may give Company access to and use of at Company’s request in lieu of access to and use of the entire NSCC or CMS.

“ Listed Systems ” means the computer systems listed on Exhibit 1, whether mainframe systems, surround systems, subsystems or component systems.

“ Main Agreement ” means the part of this Agreement that commences on the first page and ends with but includes Schedule A, excluding Section 3(d) (which incorporates this Schedule D into the Agreement).

“ Marks ” means trademarks, service marks and trade names as those terms are generally understood under applicable intellectual property laws and any other marks, names, words or expressions of a similar character.

“ Permitted User ” means a person other than an employee of the Company who is authorized by the Company pursuant to and in accordance with Section 2.1(a)(ii) and all applicable Documentation to access and use one or more specific Component Systems.

“ Product Assistance ” means assistance provided by BNYM personnel regarding the Licensed System, including regarding its impact on other software, functionality, usage and integration.

“ Proprietary Items ” means:

(a)(i) All contents of the Listed Systems, (ii) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions, regardless of the degree of separability from or integration with a Listed Program, and whether or not part of a Listed Program, that BNYM may at any time provide any customer with access to and use of to support the customer’s s utilization of a Listed System, including the Support Functions, (iii) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions which BNYM utilizes in providing any of the services, or engaging in any of the activities, contemplated by this Agreement, (iv) all systems, subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions owned, leased, licensed or sublicensed by BNYM which interface with, provide data to or receive data from any of the foregoing, and (v) all updates, upgrades, revisions, modifications, refinements, releases, versions, instances, translations, enhancements and improvements to and of all or any part of the foregoing, whether in existence on, or occurring prior to or subsequent to, the Effective Date (collectively, the “ BNYM Software ” );

(b) all facilities, central processing units, nodes, equipment, storage devices, peripherals and hardware utilized by BNYM in connection with the BNYM Software (the “ BNYM Equipment ” );

(c) all documentation materials relating to the BNYM Software, including materials describing functions, capabilities, dependencies and responsibilities for proper operation of the Licensed System, including the Documentation, and all updates, upgrades, revisions, modifications, refinements, releases, versions, translations, enhancements and improvements to or of all or any part of foregoing (the “ BNYM Documentation ” , and together with the BNYM Software and the BNYM Equipment, the “ System ” or the “ BNYM System ” ) and all versions of the BNYM System as they may exist after the Effective Date or may have existed at any time prior to the Effective Date;

(d) all methods, concepts, visual expressions, screen formats, file and report formats, interactivity techniques, engine protocols, models and design features used in the BNYM System;

(e) source code and object code for all of the foregoing, as applicable;

(f) all derivative works, inventions, discoveries, patents, copyrights, patentable or copyrightable items and trade secrets prepared or furnished by or for BNYM in connection with the performance of the services or in connection with any activities of the parties related to this Agreement;

(g) all materials related to the testing, implementation, support and maintenance of all of the foregoing;

Page 48


Confidential And Proprietary		Execution Version

(h) all other documentation, manuals, tutorials, guides, instructions, policy and procedure documents and other materials in any recorded medium prepared or furnished by or for BNYM in connection with the performance of the Licensed Services or in connection with any activities of the parties related this Agreement;

(i) the contents of all databases and other data and information of whatsoever nature in the BNYM System, other than Company Data, whether residing in the BNYM System or existing outside the BNYM System in recorded form whether in hardcopy, electronic or other format; and

(j) all copies of any of the foregoing in any form, format or medium.

“ Terms of Use ” means any privacy policy, terms of use or other terms and conditions made applicable by BNYM in connection with the Company’s or a Permitted User’s access to and use of a Component System or a BNYM Web Application or other access site or access method.

“ Third Party Products ” means the products or services of parties other than BNYM that constitute part of the Licensed System.

“ Third Party Provider ” means licensors, subcontractors and suppliers of BNYM furnishing the Third Party Products.

“ United States ” means the states and the District of Columbia of the United States.

“ Update ” means a modification to a Component System necessary to maintain the operation of the Component System in compliance with the Documentation in effect as of the Component System’s applicable License Effective Date and includes without limitation modifications correcting any design or operational errors in the Component System and modifications enabling the Component System to be operated in any revised operating environment issued by BNYM and excludes Upgrades.

“ Upgrade ” means an enhancement to a Component System as it exists on its applicable License Effective Date, new features and new functionalities added to the Component System as it exists on its applicable License Effective Date, and all revisions, modifications, refinements, releases, enhancements and improvements to a Component System as it exists on its applicable License Effective Date which change the operation of Component System rather than just bring it into compliance with the applicable Documentation.

SECTION 2.

LICENSED RIGHTS AND COMPANY OBLIGATIONS

2.1 Licensed Rights .

(a)(i) BNYM hereby grants to Company a limited, nonexclusive, nontransferable license to access and use the Licensed System in the United States through its employees (other than as expressly permitted otherwise by Section 2.1(a)(ii) below), solely in accordance with applicable Documentation, through the interfaces and telecommunication lines designated by BNYM, strictly for the internal business purposes of the Company, solely in support of the Core Services and solely for so long as any applicable fees are paid by the Investment Companies.

(ii) The license granted by Section 2.1(a)(i) includes, where such access and use is expressly contemplated by the Documentation applicable to a particular Component System to which the Company has been given access and use, the right to authorize persons not employees of the Company to access and use in the United States the specified Component System strictly in compliance with applicable Documentation, through the interfaces and telecommunication lines designated by BNYM, solely in support of the Core Services and solely for so long as any applicable fees are paid by the Investment Companies. Except with respect to Fund shareholders seeking to access IAM, to exercise the right contained in this Section 2.1(a)(ii) the Company must designate such persons to BNYM and approve them in a writing that conforms to the requirements of applicable Documentation and procedures of BNYM and furnish any information reasonably requested by BNYM. Access to IAM for Fund shareholders shall occur in accordance with the Documentation applicable to IAM. Upon the exercise by Company of the right contained in this Section 2.1(a)(ii), the term Company shall be redefined for all purposes of this Agreement to mean the Company and all Permitted Users, individually and collectively, unless in an individual case the context clearly requires that the definition be restricted solely to the Company. The Company shall be responsible and liable for compliance by Permitted Users with all applicable terms of the Agreement as if the Permitted Users were its own employees.

Page 49


Confidential And Proprietary		Execution Version

(iii) Company may not, and shall not under any circumstances grant sublicenses to any right granted by this Section 2.1 or subcontract or delegate any right granted by this Section 2.1 or use the Licensed System to provide services to third parties, other than shareholders of its Funds, or for any other purpose other than that described in Sections 2.1(a)(i) and (ii).

(b) The grant of rights in this Section 2.1 shall be construed narrowly. No grant of license is made hereunder to Company or any other party, except the license to Company expressly provided in this Section 2.1. The rights granted by this Section 2.1 shall immediately terminate without further action required on anyone’s part, including without prior notification, upon the termination or expiration of the Agreement. BNYM and its licensors reserve all rights in the BNYM System not expressly granted to Company in this Section 2.1. Nothing in this Section 2.1 shall be construed to give Company rights of any nature in source code. The rights granted to Company by this Section 2.1 are sometimes referred to herein as the “ Licensed Rights ” .

Company may be given access to and use of a Listed System which contains integration points or links to one or more Support Functions that are part of a Listed System to which the Company has not been given access and use ( “ Linked Functions ” ). The Licensed Rights granted by this Section 2.1 to access and use a particular Listed System containing integration points or links to Linked Functions includes the right to access and use such Linked Functions, does not include the right to use the entire Listed System containing the Linked Functions or other subsystems, software, programs, applications, interfaces, processes, subprograms, series of commands or functions in that Listed System. To the extent exercise of Licensed Rights hereunder inadvertently or otherwise results in access to or use of a Component System or other system, subsystem, software, program, application, interface, process, subprogram, series of commands or function which is not part of the its Licensed System, all terms of this Agreement shall apply to such access and use.

2.2 Documentation . Company shall use the Licensed System solely and strictly in accordance and compliance with the Documentation provided or made available to Company by BNYM from time to time and any specifications contained therein. Company may use only the number of copies of the Documentation that are provided to Company and may not make any additional copies of such Documentation, except that Company may copy the Documentation to the extent reasonably necessary for routine backup and disaster recovery purposes and upon request of an applicable regulatory authority. The Investment Companies shall pay BNYM such fees as it has established for copies of the Documentation, if any, as listed in the Fee Agreement.

2.3 Third Party Software and Services . Company acknowledges that Third Party Products may constitute part of the Licensed System. Company’s use of Third Party Products shall be subject to the terms and conditions of this Agreement; provided , however , access, use, maintenance and support of Third Party Products made available to Company after an applicable License Effective Date may be conditioned upon Company’s execution of an agreement with the applicable Third Party Provider ( “ Third Party Agreement ” ) which would provide for certain rights and obligations between the Company and the Third Party Provider ( “ Direct Third Party Product ” ), in which case the terms of the Third Party Agreement will also apply to Company’s use of the particular Third Party Product. Notwithstanding the foregoing sentences of this Section 2.3, Company acknowledges that BNYM is not responsible for, nor does BNYM warrant the performance or other features of, nor can it fix errors or defects in, third party software and services and BNYM’s sole obligation with respect to third party software and services is to inform the third party of any errors, defects, deficiencies or other matters regarding the third party software and services of which BNYM is made aware by Company.

2.4 Compliance With Applicable Law . Company shall comply with all laws, regulations, rules and orders of whatsoever nature of governmental bodies and authorities (whether legislative, executive, independent, self-regulatory or otherwise) applicable to the business or activities in connection with which it utilizes the Licensed System.

Page 50


Confidential And Proprietary		Execution Version

2.5 Responsibility For Use .

(a) Each Investment Company hereby warrants, represents and agrees that (i) it consents to and authorizes the Company to agree to the applicable terms of this Schedule D on behalf of the Investment Companies where so provided, to grant the rights provided for herein to BNYM with respect to the rights and property of the Investment Companies and to act on all matters for the Investment Companies to the extent action by the Investment Companies is contemplated by applicable Documentation.

(b) The Company alone will be responsible for furnishing, or arranging for a third party to furnish, all data and information, including the Company Data, required by the Documentation and the specifications therein for the Licensed System to function and perform in accordance with the Documentation. BNYM shall have no liability or responsibility for any Loss caused in whole or in part by the Company’s or a Permitted User’s exercise of the Licensed Rights or use of the Licensed System or by data or information of any nature inputted into the Licensed System by or under the direction or authorization of Company or a Permitted User; provided , however , this Section 2.5 shall not relieve BNYM of its obligation to act in accordance with the Standard Of Care with respect to the services described in Section 3 of the Main Agreement or of its obligation to support and maintain the Licensed System. Under this Agreement each Investment Company shall be responsible and solely liable for the cost or expense of regenerating any output or other remedial action if the Company, a Permitted User or an agent of either shall have failed to transmit properly and in the correct format any data or information, shall have transmitted erroneous or incorrect information or data, or shall have failed to timely verify or reconcile any such data or information when it is generated by the System ( “ Data Faults ” ). (For the avoidance of doubt, nothing herein is intended to, or shall be read to, limit the remedies available to the Investment Companies pursuant to any other agreements or arrangements for any such failures.)

(c) Company warrants that the data transmitted to the Licensed System by or under the direction or authorization of Company or Permitted Users will not disrupt, disable, harm, or otherwise impede in any manner the operation of the Licensed System or any associated software, firmware, hardware, or BNYM computer system or network.

2.6 Internal Control Obligations .

(a) Company shall adopt and implement commercially reasonable internal control procedures regarding the use of the Licensed System, which internal control procedures shall be reasonably designed to ensure that any use of the Licensed System complies with (i) Sections 2.1, 2.2, 2.6, 2.12, 2.17, 2.20 and 3.4 of this Schedule D, and (ii) applicable Documentation.

(b) Company shall establish and adhere to security policies and procedures intended to (i) safeguard the System from unauthorized or improper access and use from equipment utilized by the Company, (ii) safeguard the integrity and validity of any user identifications, access passwords, mnemonics and other security data elements related to accessing the Licensed System or any Component System ( “ Security Codes ” ), and (iii) prevent unauthorized access to and protect electronically stored, processed or transmitted information. Such policies and procedures shall be at least equal to industry standards and any higher standard agreed upon by the Parties.

(c) Unless Company obtains prior written permission from BNYM, Company shall permit only Authorized Persons to use Security Codes assigned to or selected by Company with respect to the Licensed System. The Security Codes shall constitute Confidential Information of both Company and BNYM under the Agreement subject to all obligations thereunder, and Company shall not permit access to Security Codes to any person other than Authorized Persons. Company shall notify BNYM immediately if Company has reason to believe that any person who is not an Authorized Person has obtained access to a Security Code or accessed or used the Licensed System, that an Authorized Person has accessed or used the Licensed System using Security Codes not assigned to that Authorized Person, that any other loss of confidentiality with respect to a Security Code has occurred or the security of the Licensed System has otherwise been breached.

(d) Company shall verify and confirm all information entered on the Licensed System and shall notify BNYM of any error in any information entered on the Licensed System as soon as practicable following Company’s knowledge of such error.

(e) Company will not recirculate, redistribute or otherwise retransmit or re-rout the Licensed System to any third party or authorize the use of any information included on the Licensed System on any equipment or display not authorized by BNYM without BNYM’s prior express written approval.

Page 51


Confidential And Proprietary		Execution Version

2.7 Company Resources .

(a) Company will be solely responsible, at Company’s expense, for procuring, maintaining, and supporting all third-party software and all workstations, personal computers, printers, controllers or other hardware or peripheral equipment at Company’s sites (“ Company System ”) required for Company to operate the Licensed System in accordance with the Documentation and specifications provided by BNYM from time to time. BNYM will provide Company with specifications for Company System, including any requirements relating to the connection and operation of Company System with the Licensed System and Third Party Products. Company shall conform its operating system environment to the operating system requirements provided by BNYM for the Licensed System. Company will support and maintain Company’s System as necessary to ensure its operation does not impact the Licensed System adversely or otherwise in a manner not contemplated by the Documentation.

(b) Company shall, at its own expense, devote such of the Company System and other equipment, facilities, personnel and resources reasonably necessary to (a) implement the Licensed System, (b) be trained in the use of the Licensed System, (c) perform timely any electrical work and cable installation necessary for Company’s use of the Licensed System, and (d) begin using the Licensed System on a timely basis. BNYM shall not be responsible for any delays or fees and costs associated with Company’s failure to timely perform its obligations under this Section 2.7.

2.8 Company Telecommunications and Data Transmissions . Company will be solely responsible for complying at all times with telecommunications requirements designated by BNYM for use of the Licensed System. Any data or information electronically transmitted by or on behalf of Company to the Licensed System will be so transmitted solely and exclusively in the format specified by BNYM.

2.9 Notices Of Material Increase In Use. Company shall give advance written notice to BNYM whenever Company intends to increase its scope of use of the Licensed System in any material respect. Upon receipt of such notice, Company and BNYM shall mutually agree in writing on any required changes to the Company’s scope of use for the Licensed System and, if applicable, the corresponding fees with respect to such increased scope.

2.10 Certifications and Audits . Company shall promptly complete and return to BNYM any certifications which BNYM in its sole discretion may from time to time send to Company, certifying that Company is using the Licensed System in strict compliance with the terms and conditions set forth in this Agreement. BNYM may, at its expense and after giving reasonable advance written notice to Company, enter Company locations during normal business hours and audit Company’s utilization of the Licensed System, the number of copies of the Documentation in Company’s possession, and the scope of use and information pertaining to Company’s compliance with the provisions of this Agreement. The foregoing right may be exercised directly by BNYM or by delegation to an independent auditor acting on its behalf. If BNYM discovers that there is any unauthorized scope of use or that Company is not in compliance with the aforementioned provisions, Company shall reimburse BNYM for the full costs incurred in conducting the audit.

2.11 Taxes . The amounts payable by each Investment Company to BNYM in consideration of the performance of services by BNYM under the Agreement, including providing access to and use of the Licensed System pursuant to this Schedule D, do not include, and the Investment Company will timely pay, all federal, state and local taxes (including sales, use, excise and property taxes), if any, assessed or imposed in connection therewith, excluding any taxes imposed upon BNYM based upon BNYM’s net income.

2.12

Use Restrictions .

(a) Company will not do or attempt to do, and Company will not permit any other person or entity to do or attempt to do, any of the following, directly or indirectly:

(i)	use any Proprietary Item for any purpose, at any location or in any manner not specifically authorized by this Agreement;

(ii)	make or retain any copy of any Proprietary Item except as specifically authorized by this Agreement;

(iii)

create, recreate or obtain the source code for any Proprietary Item;

(iv)	refer to or otherwise use any Proprietary Item as part of any effort to develop other software, programs, applications, interfaces or functionalities or to compete with BNYM or a Third Party Provider;

Page 52


Confidential And Proprietary		Execution Version

(v)	modify, adapt, translate or create derivative works based upon any Proprietary Item, or combine or merge any Proprietary Item or part thereof with or into any other product or service not provided for in this Agreement and not authorized in writing by BNYM;

(vi)	remove, erase or tamper with any copyright or other proprietary notice printed or stamped on, affixed to, or encoded or recorded in any Proprietary Item, or fail to preserve all copyright and other proprietary notices in any copy of any Proprietary Item made by Company;

(vii)

sell, transfer, assign or otherwise convey in any manner any ownership interest or Intellectual Property Right of BNYM, or market, license, sublicense, distribute or otherwise grant, or subcontract or delegate to any other person, including outsourcers, vendors, consultants, joint venturers and partners, any right to access or use any Proprietary Item, whether on Company’s behalf or otherwise;

(viii)

subcontract for or delegate the performance of any act or function involved in accessing or using any Proprietary Item, whether on Company’s behalf or otherwise;

(ix)	reverse engineer, re-engineer, decrypt, disassemble, decompile, decipher, reconstruct, re-orient or modify the circuit design, algorithms, logic, source code, object code or program code or any other properties, attributes, features or constituent parts of any Proprietary Item;

(x)	take any action that would challenge, contest, impair or otherwise adversely effect an ownership interest or Intellectual Property Right of BNYM;

(xi)	use any Proprietary Item to provide remote processing, network processing, network communications, a service bureau or time sharing operation, or services similar to any of the foregoing to any person or entity, whether on a fee basis or otherwise;

(xii)

allow Harmful Code into any Proprietary Item, as applicable, or into any interface or other software or program provided by it to BNYM, through Company’s systems or personnel or Company’s use of the Licensed Services or Company’s activities in connection with this Agreement.

(b) Company shall, promptly after becoming aware of such, notify BNYM of any facts, circumstances or events regarding its or a Permitted User’s use of the Licensed System that are reasonably likely to constitute or result in a breach of this Section 2.12, and take all reasonable steps requested by BNYM to prevent, control, remediate or remedy any such facts, circumstances or events or any future occurrence of such facts, circumstances or events.

2.13 Restricted Party Status . Company warrants at all times that it is not a “ Restricted Party ” , which shall be defined to mean any person or entity: (i) located in or a national of Cuba, Iran, Libya, North Korea, Sudan, Syria, or any other countries that may, from time to time, become subject to U.S. export controls for anti-terrorism reasons or with which U.S. persons are generally prohibited from engaging in financial transactions; (ii) on the U.S. Department of Commerce Denied Person’s List, Entity List, or Unverified List; U.S. Department of the Treasury list of Specially Designated Nationals and Blocked Persons; or U.S. Department of State List of Debarred Parties; (iii) engaged in activities involving nuclear materials or weapons, missile or rocket technologies, or proliferation of chemical or biological weapons; (iv) affiliated with or a part of any non-U.S. military organization, or (v) designated by the U.S. Government to have a status equivalent to any of the foregoing. If Company becomes a Restricted Person during the term of this Agreement, the Licensed Rights shall terminate immediately without notice and Company shall have no further rights to use the Licensed System.

2.14 Mitigation Measures . Company shall take commercially reasonable measures (except measures causing it to incur out-of-pocket expenses which BNYM does not agree in advance to reimburse) to mitigate losses or potential losses to BNYM, including taking verification, validation and reconciliation measures that are commercially reasonable or standard practice in the Company’s business.

2.15 Company Dependencies . To the extent an obligation of BNYM under this Schedule D is dependent and contingent upon Company’s or Permitted User’s performance of an action or refraining from performing an action that has been specified or described in this Schedule D or the Documentation or that is part of practices and procedures which are commercially reasonable or standard in the user’s industry ( “ Company Dependency ” ), BNYM shall not be liable for Loss to the extent caused by or resulting from, or that could have been avoided but for, a failure to properly perform or a delay in properly performing a Company Dependency and BNYM’s obligation to perform an obligation contemplated by this Agreement shall be waived or delayed to the extent the performance of the related Company Dependency is not properly performed or is delayed.

2.16 Software Modifications . Company may request that BNYM, at the Company’s or an Investment Company’s expense, develop modifications to the software constituting a part of the Licensed System that BNYM generally makes available to customers for modification ( “ Software ” ) that are required to adapt the Software for

Page 53


Confidential And Proprietary		Execution Version

Company’s unique business requirements. Such requests, containing the material features and functionalities of all such modifications in reasonable detail, will be submitted by Company in writing to BNYM in accordance with the applicable, commercially reasonable procedures maintained by BNYM at the time of the request. Company shall be solely responsible for preparing, reviewing and verifying the accuracy and completeness of the business specifications and requirements relied upon by BNYM to estimate, design and develop such modifications to the Software. BNYM shall have no obligation to develop modifications to the Licensed System requested by Company, but may in its discretion agree to develop requested modifications which it, in its sole discretion, reasonably determines it can accomplish with existing resources or with readily obtainable resources without disruption of normal business operations provided the Company or the relevant Investment Company agrees at such time in writing to pay all costs and expenses, including out-of-pocket expenses, associated with the customized modification. BNYM shall be obligated to develop modifications under this Section 2.16 only upon the execution of and in accordance with a writing containing, to BNYM’s reasonable satisfaction, all necessary business and technical terms, specifications and requirements for the modification as determined by BNYM in its sole judgment ( “ Customization Order ” ) and Company’s or relevant Investment Company’s agreement to pay all costs and expenses, including out-of-pocket expenses, associated with the customized modification ( “ Customization Fee Agreement ” ). All modifications developed and incorporated into the Licensed System pursuant to a Customization Order are referred to herein as “ Company Modifications ” . BNYM may make Company Modifications available to all users of the Licensed System, including BNYM, at any time after implementation of the particular Company Modification and any entitlement of the Company or relevant Investment Company to reimbursement on account of such action must be contained in the Customization Fee Agreement.

2.17 Export of Software . The Company and Permitted Users are without exception prohibited from (i) accessing or using the BNYM System outside the United States, or (ii) exporting, transmitting, transferring or shipping any Proprietary Item to a country or jurisdiction outside the United States. No provision of the Agreement shall be interpreted to require BNYM to permit access or use outside the United States or to export any Proprietary Item to a country or jurisdiction outside the United States. The Company shall comply with all applicable export and re-export restrictions and regulations of the U.S. Department of Commerce or other U.S. agency or authority and the Company may not transfer a Proprietary Item in violation of any such restrictions and regulations.

2.18 Permitted Users Contemplated By Documentation . Notwithstanding any other provision of the Agreement, to the extent Documentation applicable to a particular Component System contemplates that Company Data will be transmitted or transferred to a Permitted User outside the BNYM System, that Company Data will be made available within the BNYM System for retrieval by a Permitted User for use outside the BNYM System, that the Company Data will be provided or made available to Permitted Users within the BNYM System for use by the Permitted User within the BNYM System or within a system of the Permitted User, or that the Company may authorize Permitted Users to access and use Company Data contained within the Licensed System in any other manner:

(i)

The Company hereby grants to BNYM a worldwide, royalty-free, non-exclusive right and license to display the Company Data through any BNYM Web Application contemplated by the Documentation for the applicable Component System and hereby authorizes and directs BNYM, as appropriate, to transmit, transfer, make available and provide the Company Data to Permitted Users, as contemplated by the Documentation applicable to the particular Component System, including without limitation through the Internet or other communication link or method and a BNYM Web Application or other access site or method designated by BNYM for use of the particular Component System, provided , however , that this right and license does not, and shall not be read to, in any way relieve BNYM of its obligation to employ commercially reasonable security measures in connection therewith;

(ii)

The Company hereby authorizes and directs BNYM, (A) to permit Permitted Users to view and use Company Data within the Licensed System as contemplated by applicable Documentation, (B) to act on behalf of a shareholder in any way contemplated by applicable Documentation and authorized by the Company in accordance with applicable Documentation, including to effect purchases, sales, redemptions, distributions, exchanges, transfers and other activities and to change the status, data or information involving a shareholder account or assets in a shareholder account, and (C) to the extent contemplated by applicable Documentation, to permit Permitted Users to download and store, copy in on-line and off-line form, reformat, perform calculations with, and distribute, publish, transmit, and display the Company Data in the systems of the Permitted User and to and through any relevant BNYM Web Application;

Page 54


Confidential And Proprietary		Execution Version

(iii)

The Company shall have sole responsibility for imposing any desired use restrictions on Permitted Users to the extent use restrictions are contemplated by the applicable Documentation and BNYM shall cooperate in a commercially reasonable manner in imposing such use restrictions to the extent the applicable Documentation contemplates a role for BNYM in imposing such use restrictions;

(iv)

The Company acknowledges and agrees that it alone is responsible for entering into agreements with Permitted Users governing the terms and conditions, as between the Company and the Permitted User, of the Permitted User’s use of the Company Data; the Company releases BNYM from any and all responsibility and duty for obtaining any such agreements, including agreements relating to confidentiality and privacy of the data and information, and for any monitoring, supervision or inspection of Permitted Users of any nature, provided , however , that nothing herein does, nor shall be read to, in any way relieve BNYM of its obligation to employ commercially reasonable security measures in connection with the BNYM Web Application; the Company releases BNYM from any Loss the Company or a Fund may incur, and will indemnify and defend BNYM for any Loss it may incur, arising or resulting from or in connection with Company Data after BNYM, as appropriate, transmits, transfers, makes available or provides the Company Data to the Permitted User in accordance with applicable Documentation, whether through a BNYM Web Application or otherwise;

(v)

The Company shall be responsible and liable to BNYM for the acts and omissions of Permitted Users while accessing and using a Component System pursuant to authorization from the Company and shall indemnify and defend BNYM for all Loss arising from or related to acts or omissions by a Permitted User that would constitute a breach of this Agreement if committed by the Company, that constitute reckless or intentional misconduct or that constitute a material breach of a duty of the Permitted User imposed by this Schedule D; and

(vi)

BNYM may immediately terminate access to and use of the Licensed System by a Permitted User if BNYM reasonably believes conduct of the Permitted User would constitute a breach of this Agreement if committed by the Company, constitutes reckless or intentional misconduct, or constitutes a breach of a duty of the Permitted User imposed by this Schedule D, applicable Documentation or applicable Terms of Use.

2.19 Communications with Third Parties regarding Component System Services . The Company shall be solely responsible for communicating with third parties and for obtaining and maintaining any consents, waivers or authorizations from the Fund with respect to third party participation in the services contemplated by this Agreement, to the extent any of the foregoing is reasonably required for services to be provided in accordance with the Documentation.

2.20 Compliance with Terms Of Use . The Company’s and, to the extent applicable in connection with a particular Component System, each Permitted User’s use of a Component System, a BNYM Web Application and any other access site or access method to a particular Component System shall be conducted in full compliance with applicable Terms of Use. In addition, Permitted Users shall be required to comply with requirements set forth in applicable Documentation, including requirements relating to Security Codes, as a condition to use of particular Component Systems.

2.21 Third Party Providers To The Company . The Company and/or each Investment Company shall have sole responsibility to maintain through itself or its agents all agreements with third party providers that may be appropriate for use of a Component System and to pay as they come due all fees and charges associated with such agreements either directly or as passed through on invoices of BNYM.

2.22 Fees . Each Investment Company shall be obligated to pay to BNYM such fees and charges for access and use of any part of the Licensed System, if any, as may be set forth in the Fee Agreement and such fees and charges shall be paid in accordance with any applicable provisions set forth in the Main Agreement.

SECTION 3.

PROVISIONS REGARDING BNYM

3.1 Right to Modify . BNYM may alter, modify or change the Licensed System or any component, code, language, format, design, architecture or element of the Licensed System and present such alterations, modifications and changes to Company as Updates or Upgrades; provided , however , at no time shall this section be interpreted in such a manner as to allow BNYM by such alterations, modifications or changes to fail to comply with any term of this Schedule D.

Page 55


Confidential And Proprietary		Execution Version

3.2 Training and Product Assistance . BNYM agrees to use commercially reasonable efforts to provide requested training and Product Assistance for Company’s personnel at BNYM’s facilities or at Company’s facilities in connection with access to and use of the Licensed System and subsequent Updates, as reasonably requested by Company, at BNYM ‘s then-current charges and rates for such services. All reasonable travel and out-of-pocket expenses incurred by BNYM personnel in connection with and during such training or Product Assistance shall be borne by the relevant Investment Company upon pre-approval in writing.

3.3 Monitoring . BNYM is not responsible for Company’s or Permitted User’s use of the Licensed System but shall have the right to monitor such use on BNYM’s network solely to verify compliance with the terms and conditions set forth herein and for operational purposes related to the delivery of services by the Licensed System.

3.4 Additional Security Measures . BNYM shall have the right to institute and require additional security measures in connection with Company’s and Permitted User’s access to and use of the Licensed System that it in its sole discretion determines to be appropriate under the circumstances upon reasonable advance notice, and Company and Permitted Users shall be required to comply with any additional security requirements adopted pursuant to this Section 3.4.

3.5 BNYM Failure to Receive Data . BNYM shall not be liable for data or information which the Company, a Permitted User or an agent of either transmits or attempts to transmit to BNYM in connection with its use of a Component System and which is not received by BNYM or for any failure of a Component System to perform a function in connection with any such data or information. BNYM shall not be obligated to ascertain the accuracy, actual receipt by it or successful transmission to it of any data or information in connection with the Company’s or a Permitted User’s use of a Component System or to confirm the performance of any function by a Component System based on the transmission of instructions, data or information to BNYM in connection with such use by the Company or a Permitted User. Sole responsibility for the foregoing shall rest with the party initiating the transmission.

3.6 ACH Activity . To the extent contemplated by the Documentation, and to the extent authorized by the Company in its sole discretion and agreed to by BNYM in its sole discretion, BNYM will accept bank account information over the Internet or other communication channel from Permitted Users and take such other actions as may be appropriate to facilitate movement of money to and from shareholder accounts through the Automated Clearing House (“ ACH ”). The Company shall be solely responsible for all market risk (gain/loss liability) associated with transactions utilizing the ACH process.

SECTION 4.

OWNERSHIP AND OTHER RIGHTS

4.1 BNYM Ownership .

(a) BNYM and its licensors, subcontractors and suppliers will continue to own all of their respective right, title, and interest, including Intellectual Property Rights, in and to the BNYM System and the Proprietary Items, regardless of any participation, contributions, collaboration or other participation of the Company in or to the foregoing, and including any part of the foregoing that may be created by or on behalf of, at the direction of or pursuant to business requirements and other specifications provided by the Company, such as, but not limited to, Company Modifications. For purposes of clarification: the BNYM System and any modifications to the BNYM System or a Proprietary Item, whether or not ordered or paid for by the Company as a customization, are not intended to be and are not a “works made for hire” under Section 101 of the Copyright Act or under any other applicable law, remain proprietary to and the exclusive property of BNYM and accordingly Company hereby transfers, conveys and assigns any ownership interests or intellectual property rights it may have in and to Proprietary Items to BNYM. To the extent requested by BNYM, Company shall cooperate with BNYM, at BNYM’s expense, to cause to vest in BNYM any ownership interests or Intellectual Property Rights in any of the forgoing that do not automatically vest in BNYM.

(b) In the event a Company Web Application contains a Proprietary Item or other intellectual property of BNYM, including, but not limited to, rights in copyrighted works, trademarks and trade dress, BNYM shall retain all rights in such Proprietary Item or other intellectual property. To the extent a Proprietary Item or other intellectual

Page 56


Confidential And Proprietary		Execution Version

property of BNYM is duplicated within a Company Web Application to replicate the “look and feel,” “trade dress” or other aspect of the appearance or functionality of a BNYM Web Application or other component of the BNYM System, BNYM grants to the Company a limited, non-exclusive, non-transferable license to such a Proprietary Item or other intellectual property for the duration of its authorized use of the applicable Component System. The license granted by the foregoing sentence is limited to the intellectual property needed to replicate the appearance of the particular BNYM Web Application or other component of the BNYM System and does not extend to any other Proprietary Item or other intellectual property owned by BNYM. Company shall immediately cease using such Proprietary Item or other intellectual property immediately upon termination of the Licensed Rights governing the relevant Component System.

(c) This Agreement is not an agreement of sale, and no title, patent, copyright, trademark, service mark, trade secret, intellectual property or other ownership rights to any Proprietary Items are transferred to Company by virtue of this Agreement. Upon BNYM’s request, the Company shall promptly inform BNYM in writing of the quantity and location of any tangible Proprietary Item furnished to Company in connection with this Agreement. Nothing contained in this Agreement, no disclosure of BNYM Confidential Information and no use of Proprietary Items hereunder shall be construed as granting to or conferring on Company any rights, by license or otherwise, for any invention, discovery or improvement made, conceived, or acquired by BNYM prior to or after the date hereof. No patent application that may hereafter be made, and no claim to any trade secret or other protection, shall be prejudiced by any disclosure of Confidential Information or use of Proprietary Items hereunder. Any sale, assignment or transfer of any nature or in any manner, or any attempt to do such, by Company or any party through Company of any ownership interest or Intellectual Property Right of BNYM in the Proprietary Items shall be void. Any subcontracting or delegation of any right to access or use a Proprietary Item and any subcontracting for or delegation of the performance of any activities or functions involved in accessing or using a Proprietary Item shall be void and unenforceable against BNYM.

4.2 Company Ownership . Company will own its respective right, title, and interest, including Intellectual Property Rights, in and to the Company Data. Company hereby grants BNYM a limited, nonexclusive, nontransferable license to access and use the Company Data, and consents to BNYM’s permitting access to, transferring and transmitting Company Data, all as appropriate to Company’s use of the Licensed Rights or as contemplated by the Documentation.

4.3 Mutual Retention of Certain Rights . Each party acknowledges and agrees that, other than the Licensed Rights provided for by Section 2.1 of this Schedule D, this Agreement does not give a party any right, title or interest in or to any ownership or other rights of the other party to property. Any software, interfaces or other programs a party provides to the other party hereunder (i) shall be used solely by such receiving party and only during the term of the Agreement and only for the purpose it was provided and in accordance with the provisions of this Agreement, and (ii) shall not be used by such party or any affiliate for any other purpose or to connect to or with any other person. To the extent the Intellectual Property Rights of one party are cached to expedite communication, such party grants to the other party a limited, non-exclusive, non-transferable license to such Intellectual Property Rights for a period of time no longer than that reasonably necessary for the communication and a party shall immediately cease using such Intellectual Property Rights immediately upon termination of the Licensed Rights governing the relevant Component System.

4.4 Use of Hyperlinks . To the extent use of hyperlinks is contemplated by the Documentation for a particular Component System: The Company hereby grants to BNYM a royalty-free, nonexclusive, nontransferable and revocable right and license to use the Company’s hyperlink in connection with the relevant Licensed Services; BNYM hereby grants to the Company a royalty-free, nonexclusive, nontransferable and revocable right and license to use BNYM ‘s hyperlink in connection with providing the relevant Licensed Services; each party shall reasonably cooperate with the other party concerning the placement, location and destination of such hyperlinks; and a party shall immediately cease using another party’s hyperlink immediately upon termination of the Licensed Rights governing the relevant Component System.

4.5 Use of Marks . To the extent one party’s Marks must be utilized by the other party in connection with the operation of a particular Component System or the Licensed Services related to the particular Component System: the Company hereby grants to BNYM a non-exclusive, limited license to use its Marks solely in connection with the Licensed Services provided by the Component System; BNYM hereby grants to the Company a non-exclusive, limited license to use its Marks solely in connection with the Licensed Services provided by the Component System; all use of Marks shall be in accordance with the granting party’s reasonable policies regarding the advertising and

Page 57


Confidential And Proprietary		Execution Version

usage of its Marks as established from time to time; the Company hereby grants BNYM the right and license to display the Company’s Mark’s on applicable BNYM Web Applications and in advertising and marketing materials related to the BNYM Web Application and the Licensed Services provided by the relevant Component System; each party shall retain all right, title and interest in and to its Marks worldwide, including any goodwill associated therewith, subject to the limited license granted in this Section 4.5; use of the Marks hereunder by the grantee pursuant to this limited license shall inure to the benefit of the trademark owner and grantees shall take no action that is inconsistent with the trademark owner’s ownership thereof; each party shall exercise reasonable efforts within commercially reasonable limits, to maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided to it by the other party in writing from time to time, and all “point and click” features relating to Authorized Persons’ acknowledgment and acceptance of such disclaimers and notifications; and a party shall immediately cease using another party’s Marks immediately upon termination of the Licensed Rights governing the relevant Component System.

SECTION 5.

REPRESENTATIONS, WARRANTIES & COVENANTS; INDEMNIFICATION

5.1 Mutual Representations, Warranties and Covenant . Each party warrants, represents and covenants to the other party that it will use commercially reasonable efforts to avoid engaging in any act, omission or conduct which would result in the introduction into the software or systems of the other party any computer software routines, code or programming devices designed to permit unauthorized persons to access or use the other party’s software, systems or Confidential Information or data resident in the other party’s systems or to disrupt, interfere, impair, reprogram, recode, disable, modify, destroy or damage the other party’s software or systems or the operation thereof, any data resident in the other party’s systems, or any party’s lawful and valid access to or use of the other party’s software or systems, including without limitation any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus”, “preventative routine,” “disabling code,” or “cookie”.

5.2 Right to Grant Licensed Rights; No Infringement; BNYM Indemnification .

(a) BNYM warrants to Company that BNYM has the full legal right to grant Company the right to use the Licensed System, as and to the extent permitted under this Agreement, and that the Licensed System when properly used for the purpose and in the manner specifically authorized by this Agreement, does not to BNYM’s knowledge infringe in any material respect upon any United States patent or copyright or any trade secret or other proprietary right of any person. BNYM shall defend and indemnify Company against any third party claim to the extent attributable to a violation of the foregoing warranty. BNYM shall have no liability or obligation under this Section 5.2 unless Company gives written notice to BNYM within ten (10) days (provided that later notice shall relieve BNYM of its liability and obligations under this Section 5.2 only to the extent that BNYM is prejudiced by such later notice) after any applicable infringement claim is initiated against Company and allows BNYM to have sole control of the defense or settlement of the claim. The remedies provided in this Section 5.2 are the sole remedies for a breach of the warranty contained in this Section 5.2. If any applicable claim is initiated, or in BNYM’s sole opinion is likely to be initiated, then BNYM shall have the option, at its expense, to:

(i)	modify or replace the Licensed System or the infringing part of the Licensed System so that the Licensed System is no longer infringing; or

(ii)	procure the right to continue using or providing the infringing part of the Licensed System; or

(iii)

if neither of the remedies provided for in clauses (i) and (ii) can be accomplished in a commercially reasonable fashion, limit or terminate the Licensed Rights with respect to the infringing part of the Licensed System and refund any fees paid by the Investment Companies with respect to future periods affected by such limitation or termination.

(b) Neither BNYM nor any Third Party Provider shall have any liability under any provision of this Agreement with respect to any performance problem, warranty, claim of infringement or other matter to the extent attributable to (i) Company’s use of a Proprietary Item in a negligent manner or any manner not consistent with this Schedule D or Company’s breach of this Schedule D; (ii) any modification or alteration of a Proprietary Item made by anyone other than BNYM or made by BNYM at the request or direction of the Company, (iii) BNYM’s compliance with the instructions or requests of Company relating to a Proprietary Item; (iv) any combination of a Proprietary Item with any item, service, process or data not provided by BNYM, (v) third parties gaining access to a Proprietary Item due to acts or omissions of Company, (vi) third party software not recommended by BNYM or the use of open source

Page 58


Confidential And Proprietary		Execution Version

software, (vii) Company’s failure to license and maintain copies of any third-party software required to operate the any BNYM Software, (viii) Company’s failure to operate the BNYM Software in accordance with the Documentation, or (ix) Data Faults. (collectively, “ Excluded Events ” ). Company will indemnify, and with respect to third party claims will defend, and hold harmless BNYM and Third Party Providers from and against any and all Loss and claims resulting or arising from any Excluded Events.

5.3 BNYM Warranties . BNYM warrants that:

(i)

except for Direct Third Party Products, with respect to which no warranty is made, and subject to the last sentence of Section 2.3, the Licensed System, if used in accordance with applicable Documentation, will operate in material conformity with applicable Documentation, and in the event of a breach of this clause (i) BNYM shall take commercially reasonable actions to restore performance of the Licensed System to the requirements of the foregoing warranty;

(ii)	BNYM owns, or has the right to use under valid and enforceable agreements, all Intellectual Property Rights reasonably necessary for and related to the provision of the Licensed Rights and to grant the license granted under Section 2.1;

(iii)

BNYM’s business is in material compliance with applicable law and regulations the failure to comply with which would have a material adverse effect on BNYM’s performance of its obligations under this Schedule D; and

(iv)

BNYM has all requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of BNYM.

5.4 Warranty Disclaimer . THE LICENSED SYSTEM AND ALL RELATED SERVICES ARE MADE AVAILABLE TO COMPANY ON AN “AS IS”, “AS AVAILABLE” BASIS. UNLESS A SPECIFIC WARRANTY IS EXPRESSLY GIVEN IN THIS SCHEDULE D, NO WARRANTY OF ANY NATURE, EXPRESS OR IMPLIED, IS MADE IN THIS SCHEDULE D, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO THE AVAILABILITY, CONDITION, MERCHANTABILITY, NON-INFRINGEMENT, DESIGN, OPERATION OR FITNESS FOR OR SATISFACTION IN REGARDS TO A PARTICULAR PURPOSE.

5.5 Limitation of Warranties . The warranties made by BNYM in this Schedule D, and the obligations of BNYM under this Schedule D, run only to Company and not to its affiliates, its customers or any other persons.

SECTION 6

OTHER PROVISIONS

6.1 Scope of Services . The scope of services to be provided by BNYM under this Agreement shall not be increased as a result of new or revised regulatory or other requirements that may become applicable with respect to the Company, unless the parties hereto expressly agree in writing to any such increase. BNYM shall not be obligated to develop or implement Upgrades, but to the extent it elects to do so Section 3.1 shall apply.

6.2 Additional Provision Regarding Governing Law . This Agreement will not be governed by the United Nations Convention on Contracts for the International Sale of Goods. The Uniform Computer Information Transaction Act drafted by the National Conference Of Commissioners On Uniform State Laws, or a version thereof, or any law based on or similar to such Act ( “ UCITA ” ), if and as adopted by the jurisdiction whose laws govern with respect to this Agreement in any form, shall not apply to this Agreement or the activities contemplated hereby. To the extent UCITA is applicable notwithstanding the foregoing, the parties agree to opt out of the applicability of UCITA pursuant to the “opt out” provisions contained therein.

6.3 Third Party Providers . Except for those terms and conditions that specifically apply to Third Party Providers, under no circumstances shall any other person be considered a third party beneficiary of the terms of this Schedule D or otherwise entitled to any rights or remedies under the terms of this Schedule D. With respect to the provisions of this Schedule D, except as may be provided in Third Party Agreements, Company shall have no rights or remedies against Third Party Providers, Third Party Providers shall have no liability of any nature to the Company, and the aggregate cumulative liability of all Third Party Providers to the Company shall be $1.

Page 59


Confidential And Proprietary		Execution Version

6.4 Liability Provisions .

(a) Notwithstanding any provision of the Main Agreement or this Schedule D, no party shall be liable under this Schedule D under any theory of tort, contract, strict liability or other legal or equitable theory for lost profits, for exemplary, punitive, special, incidental, indirect or consequential damages, or for any other damages which are not direct damages regardless of whether such damages were or should have been foreseeable and regardless of whether any entity has been advised of the possibility of such damages, all and each of which damages is hereby excluded by agreement of the parties.

(b) Notwithstanding any provision of the Main Agreement or this Schedule D, BNYM’s cumulative, aggregate liability to the Company for any and all Loss, including Loss arising from Claims for indemnification pursuant to the Main Agreement and this Schedule D, that arises or relates to a term of this Schedule D, the recovery of which is not otherwise excluded or barred by another provision of this Agreement, shall not exceed the fees paid by all Investment Companies to BNYM for use of the particular Component System with respect to which the claim of Loss was made for the six (6) months immediately prior to the date the last claim of Loss relating to the particular Component System arose.

(c) In the event of a material breach of this Schedule D by BNYM with respect to the operation of a particular Component System, Company’s sole and exclusive termination remedy shall be to terminate the Licensed Rights granted by this Schedule D to the particular Component System with respect to which the material breach occurred by complying with the notice and cure period provisions in the Main Agreement applicable to a material breach of the Agreement, but the Company shall not be entitled to terminate any other provision of the Agreement or the Licensed Rights with respect to any other Component System. For purposes of clarification: The foregoing sentence is not intended to restrict, modify or abrogate any remedy available to a Company under another provision of the Agreement for a breach of Schedule D by BNYM other than the termination remedy.

6.5 Assignment . Company may not, and shall not under any circumstances, assign, sublicense or otherwise transfer any Licensed Rights or any part thereof or any obligation under this Schedule D, and any such assignment or transfer or attempted assignment or transfer shall be void.

6.6 Return of Proprietary Items . Upon a termination of this Agreement or a termination of the license to use the Licensed System or a license to use a particular Component System, or at the end of a Continuation Period (as defined in Section 6.16), as applicable, Company shall immediately cease attempts to access and use the relevant Component Systems and related Proprietary Items, and Company shall promptly return to BNYM all copies of the relevant Documentation and any other related Proprietary Items then in Company’s possession. Company shall remain liable for any payments due to BNYM with respect to the period ending on the date of termination or any Continuation Period, as applicable, and any charges arising due to the termination.

6.7 Conflicts . Applicable terms of the Main Agreement shall apply to this Schedule D but any conflict between a term of the Main Agreement and this Schedule D shall be resolved to the fullest extent possible in favor of the term in this Schedule D.

6.8 Exclusivity . Company shall solely and exclusively use the Licensed System to perform the computing functions and services made available to the Company by the Licensed System. For clarification: this means the Company will not use any system, subsystem, component or functionality of another service provider to perform functions or services similar to those provided by the Licensed System.

6.9 Term . The term of this Schedule D shall be the same as the term in effect for the Main Agreement, including with respect to any renewal terms. Additionally, with respect to each Component System to which the Company is given access and use, the term applicable to BNYM’s obligation to furnish the Component System and the Company’s obligation to pay the fees and charges applicable to the Component System ( “ Component System Obligations ” ) shall be the same as the term applicable to the Core Services, including with respect to any renewal term. For clarification: this Schedule D and the Component System Obligations may be terminated only in connection with a termination of the Main Agreement in accordance with the termination provisions set forth in the Main Agreement, except where this Schedule specifically sets forth an additional termination right.

Page 60


Confidential And Proprietary		Execution Version

6.10 Confidentiality . Company agrees to maintain the confidentiality of and protect the Proprietary Items and to prevent access and use not permitted hereunder with at least the same degree of care that it utilizes with respect to its own proprietary and nonpublic material, including without limitation agreeing:

(i)

not to disclose to or otherwise permit any person access to, in any manner, the Proprietary Items, or any part thereof in any form whatsoever, except that such disclosure or access shall be permitted to an employee of Company in the course of his or her employment and who is bound to maintain the confidentiality thereof;

(ii)	not to use the Proprietary Items for any purpose other than in connection with the Company’s exercise of the Licensed Rights, without the consent of BNYM; and

(iii)

to promptly report to BNYM any facts, circumstances or events that are reasonably likely to constitute or result in a breach of this Section 6.10 or a breach of Section 4 of the Main Agreement with respect to the Proprietary Items, and take all reasonable steps requested by BNYM to prevent, control, remediate or remedy any such facts, circumstances or events or any future occurrence of such facts, circumstances or events.

6.11 Use of Internet . Each party acknowledges that the Internet is an unsecured, unstable, unregulated, unorganized and unreliable network, and that to the extent the ability of the other party to provide or perform services or duties hereunder is dependent upon the Internet and equipment, software, systems, data and services provided by various telecommunications carriers, equipment manufacturers, firewall providers, encryption system developers and other vendors and third parties, each party agrees that the other shall not be liable in any respect for the functions or malfunctions of the Internet.

6.12 Provisions Applicable Solely to IAM . In connection with any permitted access and use of IAM, the Company agrees, at its expense, to;

(a) Provide, or retain other persons to provide, all computers, telecommunications equipment, encryption technology and other materials, services, equipment and software reasonably necessary to develop and maintain a Company Web Application as contemplated by IAM Documentation, including the functionality necessary to maintain the hypertext links to IAM ( “ Company IAM Site ” );

(b) Promptly provide BNYM written notice of changes in Fund policies or procedures requiring changes to the IAM settings or parameters or services ( “ Parameter Changes ” ); provided, however, this provision shall be interpreted to require BNYM to modify only adjustable settings and parameters already provided for in IAM in response to a Parameter Change and not to require BNYM to effect any Upgrade;

(c) Work with BNYM to develop Internet marketing materials for Permitted Users and forward a copy of appropriate marketing materials to BNYM;

(d) Promptly revise and update applicable prospectuses and other pertinent materials, such as user agreements, to include the appropriate consents, notices and disclosures, including disclaimers and information reasonably requested by BNYM;

(e) With respect to the Company IAM Site, maintain all on-screen disclaimers and copyright, trademark and service mark notifications, if any, provided by BNYM in writing from time to time, and all “point and click” features relating to acknowledgment and acceptance of such disclaimers and notifications; and

(f) Design and develop the Company IAM Site functionality necessary to facilitate, implement and maintain the hypertext links to IAM and the various inquiry and transaction web pages and otherwise make the Company IAM Site available to Permitted Users.

Page 61


Confidential And Proprietary		Execution Version

6.13 Termination and Suspension by BNYM .

(a) In the event of a material breach of this Schedule D by Company, BNYM may terminate the Licensed Rights in their entirety and all access to and use of the Licensed System by complying with the notice and cure period provisions in the Main Agreement applicable to a material breach of the Agreement.

In the event BNYM reasonably believes in good faith that activity constituting a material breach of a “ Use Provision ” (which is hereby defined to mean each of the following Sections: 2.1, 2.2, 2.6, 2.12, 2.13, 2.15, 2.17, 2.18, 2.20, 3.4, 4.1, 4.3, 4.4, 4.5, 6.5, 6.6, 6.8, 6.10 and 6.16 (c) and 6.16 (d)) is occurring by Company or a Permitted User, BNYM may, upon prior written notice to Company describing in reasonable detail such alleged activity, without incurring any liability, temporarily suspend access to and use of the Licensed System or a Component System solely for the amount of time necessary for the investigation and resolution of the issues. In the event such advance notice is not reasonably practicable, BNYM shall provide such notice as is reasonably practicable under the circumstances. BNYM shall exercise this right with diligence to minimize the impact of any such suspension. The parties agree to promptly cooperate in good faith to address such issues. The Company shall indemnify BNYM for any Loss, and to the extent applicable defend BNYM against Loss, resulting from or arising out of or in connection with a breach of a Use Provision.

6.14 Equitable Relief . Company agrees that BNYM would not have an adequate remedy at law in the event of a breach or threatened breach of a Use Provision by the Company and that BNYM would suffer irreparable injury and damage as a result of any such breach. Accordingly, in the event Company breaches or threatens to breach a Use Provision, in addition to and not in lieu of any legal or other remedies BNYM may pursue hereunder or under applicable law, Company hereby consents to the granting of equitable relief (including the issuance of a temporary restraining order, preliminary injunction or permanent injunction) against it by a court of competent jurisdiction, without the necessity of proving actual damages or posting any bond or other security therefore, prohibiting any such breach or threatened breach. In any proceeding upon a motion for such equitable relief, BNYM’s ability to answer in damages shall not be interposed as a defense to the granting of such equitable relief.

6.15 Survival . Sections 2.1(b), 2.3, 2.5, 2.11, 2.12, 2.14, 2.18(iv), 2.18(v), 3.5, 4.1, 4.3, the last clause of Sections 4.4 and 4.5, 4, 5, 6.2, 6.3, 6.4, 6.6, 6.7, 6.10, 6.13(b), 6.14, 6.15, 6.16(i) through (m), 6.16(p) and 6.16(q) shall survive any termination of the Agreement and any termination of Licensed Rights.

6.16 Provisions Applicable Solely to the 22c-2 System . In connection with any permitted access and use of the 22c-2 System, the Company agrees as follows:

(a) Definitions . The following terms have the following meanings solely for purposes of this Section 6.16:

“ Commercially Reasonable Efforts ” means taking all such steps and performing in such a manner as a well managed company in the securities processing industry would undertake where such company was acting in a prudent and reasonable manner under the same or similar circumstances.

“ Company 22c-2 Data ” means, collectively, the Fund Data, the Shareholder Data and the Supplemental Data.

“ Company Database ” means the database maintained within the 22c-2 System by and for Company containing the Fund Data, the Shareholder Data and Supplemental Data.

“ Financial Intermediary ” means a financial intermediary as that term is defined in Rule 22c-2.

“ Front End Data ” means the transaction data relating to the Funds and the accounts of Shareholders of the Funds (i) specified by applicable Documentation for use within the 22c-2 System to yield reports intended to assist the Company in determining the Financial Intermediaries from which additional transactional details could be requested for purposes of compliance with SEC Rule 22c-2, and (ii) which has been selected by the Company and transmitted to the Company Database.

“ Fund Data ” means, collectively, the Front End Data and the Fund Settings.

“ Fund Settings ” means the Fund preferences, parameters, rules and settings inputted into the Company Database and 22c-2 System by Company to administer a Fund’s Rule 22c-2 policies.

“ Rule 22c-2 ” means Rule 22c-2 of the SEC promulgated under the 1940 Act.

Page 62


Confidential And Proprietary		Execution Version

“ Shareholder ” means a shareholder, as that term is defined in Rule 22c-2, of any of the Funds.

“ Shareholder Data ” means the transaction data with respect to Shareholders in a Fund requested by Company that a Financial Intermediary, for access and use by Company in the 22c-2 System, (i) delivers to BNYM by a Designated Method, or (ii) delivers to Company and is inputted into the Company Database by Company.

“ Software ,” whether capitalized or not, means computer software in human readable form that is not suitable for machine execution without intervening interpretation or compilation.

“ SRO ” means any self-regulatory organization, including national securities exchanges and national securities associations.

“ Supplemental Data ” means any data or information, other than the Shareholder Data and Fund Data, inputted into the Company Database by Company, or provided to BNYM and inputted into the Company Database by BNYM as an additional service, that Company has reasonably determined is necessary in the operation of the 22c-2 System for purposes of compliance with Rule 22c-2.

(b) Availability . BNYM shall make the 22c-2 System available to Company from 8:00 a.m. to 6:00 p.m., Eastern Time, during days the New York Stock Exchange is open for trading, except for periods therein in which BNYM suspends access for maintenance, backup, updates, upgrades, modifications required due to changes in Applicable Law, or other commercially reasonable purposes as reasonably determined by BNYM. BNYM will use Commercially Reasonable Efforts to limit any periods of nonavailability due to the foregoing activities.

(c) Third Party Provisions . Company’s use of the 22c-2 System shall be subject to the terms and conditions contained in BNYM’s agreements with Third Party Providers that BNYM is required by such agreements to apply to users of the software or services of the particular Third Party Provider to the extent notified of such terms and conditions by BNYM.

(d) BNYM Modifications . Subject to BNYM’s duties under the Agreement, Company hereby accepts all reasonable modifications, revisions and updates, including changes in programming languages, rules of operation and screen or report format, as and when they are implemented by BNYM, and agrees to take no action intended to have or having the effect of canceling, reversing, nullifying or modifying in any fashion the operation or results of such modifications, revisions and updates. BNYM will make Commercially Reasonable Efforts to give Company advance written notice before any such modifications, revisions or updates to the 22c-2 System go into effect.

(e) Shareholder Data .

(1) Company acknowledges that Financial Intermediaries, not BNYM, provide the Shareholder Data, that Company’s access to the Shareholder Data through use of the 22c-2 System is dependent upon delivery of the Shareholder Data by the Financial Intermediaries, and that BNYM is not responsible or liable in any manner for any act or omission by a Financial Intermediary with respect to the delivery of Shareholder Data. Company also acknowledges that Financial Intermediaries may deliver Shareholder Data which modifies Shareholder Data previously delivered or may refuse to provide Shareholder Data and that BNYM is not responsible or liable in any manner for any such modification of Shareholder Data or any such refusal to deliver Shareholder Data.

(2) Company has sole responsibility for authorizing and directing a Financial Intermediary to deliver Shareholder Data that Company may require for purposes of Rule 22c-2. BNYM shall be obligated to receive and input into the Company Database only that Shareholder Data which has been delivered by a Financial Intermediary through the facilities maintained for such purpose by the NSCC or through the internal communications links provided in the 22c-2 System ( “ Designated Methods ” ). Company shall be solely responsible for inputting into the Company Database and the 22c-2 System any Shareholder Data delivered by a method other than a Designated Method.

(f) Company 22c-2 Data . As between Company and BNYM, Company alone shall be responsible for obtaining all Fund Data, Shareholder Data and Supplemental Data that Company determines is required in connection with its use of the 22c-2 System. Company is exclusively responsible for (i) the accuracy and adequacy of all Company 22c-2 Data; (ii) the review of and the accuracy and adequacy of all output of the 22c-2 System

Page 63


Confidential And Proprietary		Execution Version

before reliance or use (provided the 22c-2 System is operating in accordance with the Documentation); and (iii) the establishment and maintenance of appropriate control procedures and back up procedures to reduce any loss of information, interruption or delay in processing Company 22c-2 Data. Company shall comply with all Applicable Laws and obtain all necessary consents from any person, including Financial Intermediaries, regarding the collection, use and distribution to BNYM of Company 22c-2 Data as contemplated herein and of any other information or data regarding Company and the Funds that Company provides or causes to be provided for the purposes set forth herein.

(g) Communications Configuration . Company shall be responsible, at its expense, for procuring and maintaining the communications equipment, lines and related hardware and software reasonably specified by BNYM to comprise the communications configuration required for Company to use the 22c-2 System and any Updates and General Upgrades to the communications configuration.

(h) Front End Data . As between Company and BNYM, Company shall be solely responsible for selecting Front End Data, identifying it to BNYM and directing BNYM to transmit the identified Front End Data from the BNYM transfer agent system to the Company 22c-2 Database in the 22c-2 System. Company hereby authorizes BNYM to transmit Front End Data to the 22c-2 System without further action on anyone’s part upon receiving a communication from Company identifying Front End Data for transmission to the 22c-2 System.

(i) Restricted Use of Company 22c-2 Data . The Company 22c-2 Data constitutes “Confidential Data” for all purposes of Section 4 and other applicable provisions of the Main Agreement. As between the Company and BNYM, title to all Company 22c-2 Data and all related intellectual property and other ownership rights shall remain exclusively with Company. Company authorizes BNYM to maintain and use Company 22c-2 Data solely in the manner contemplated by applicable Documentation and this Agreement and to aggregate Company 22c-2 Data in the Company Database with data of other users of the 22c-2 System to analyze and enhance the effectiveness of the 22c-2 System and to create broad-based statistical analyses and reports for users and potential users of the 22c-2 System and industry forums.

(j) Application of Results . Except to the extent that the results are inaccurate due to BNYM’s gross negligence, willful misconduct or bad faith, neither BNYM nor any Third Party Provider shall have liability for any loss or damage resulting from any application of the results, or from any unintended or unforeseen results, obtained from the use of the 22c-2 System or any related service provided by BNYM.

(k) Exclusion for Unauthorized Actions . Neither BNYM nor any Third Party Provider shall have any liability with respect to any performance problem, warranty, claim of infringement or other matter to the extent attributable to any unauthorized or improper use, alteration, addition or modification of the 22c-2 System by Company, any combination of the 22c-2 System with software not specified by applicable Documentation and any other use of the 22c-2 System in a manner inconsistent with this Agreement or applicable Documentation.

(l) Disclaimer . BNYM DOES NOT WARRANT THAT USE OF THE 22C-2 SYSTEM BY COMPANY GUARANTEES COMPLIANCE WITH RULE 22C-2 OR ANY OTHER FEDERAL, STATE, LOCAL OR SRO LAW OR REGULATION. BNYM DOES NOT ASSUME ANY RESPONSIBILITY FOR ANY ASPECT OF LEGAL AND REGULATORY COMPLIANCE BY OR ON BEHALF OF COMPANY, NOR SHALL COMPANY REPRESENT OTHERWISE TO ANY PERSON. COMPANY’S USE OF THE 22C-2 SYSTEM AND ANY OTHER SERVICES PROVIDED UNDER THIS AGREEMENT SHALL NOT BE DEEMED LEGAL ADVICE.

(m) Hardware Disclaimer . Under no circumstance shall BNYM or a Third Party Provider be liable to Company or any other Person for any loss of profits, loss of use, or for any damage suffered or costs and expenses incurred by Company or any Person, of any nature or from any cause whatsoever, whether direct, special, incidental or consequential, arising out of or related to computer hardware.

(n) Termination by BNYM . BNYM may immediately terminate Company’s license to use and Company’s access to and use of the 22c-2 System upon the occurrence of any of the following events:

(i) Company engages in conduct which infringes or exceeds the scope of the license granted to Company by Section 2.1 of this Schedule D and does not cure the breach within ten (10) business days after receiving written notice from BNYM; or

Page 64


Confidential And Proprietary		Execution Version

(ii) A Third Party Provider terminates any relevant agreement the Third Party Provider has with BNYM that is necessary in order for BNYM to be able to license (or continue to license) the 22c-2 System to Company. BNYM agrees to provide Company with as much notice of such termination as BNYM receives from the Third Party Provider.

(o) Continuation Period . In the event the Agreement is terminated and in connection with such a termination the parties agree that Company will continue to have access to and use of the 22c-2 System, then the terms of this Agreement shall apply during any such continuation period. The term of any such continuation period shall be day to day and the continuation period may be terminated immediately by either party at any time by written notice notwithstanding the contents of any notice or other communication the parties may exchange, unless both parties agree in writing to such contents. A continuation period as described in this subsection (o) is referred to herein as a “ Continuation Period ” .

(p) Effect of Termination . Following a termination of the Agreement or at the end of a Continuation Period, as applicable, BNYM will (i) dispose of all Company 22c-2 Data in accordance with its applicable backup and data destruction policies, and (ii) use good faith efforts to make electronic copies of Company 22c-2 Data in existing report formats of the 22c-2 System to the extent reasonably requested by Company no less than thirty (30) days in advance of the termination of the Agreement.

(q) This Agreement shall benefit and be enforceable by Third Party Providers of the 22c-2 System.

[Remainder of Page Intentionally Blank]

Page 65


Confidential And Proprietary		Execution Version

EXHIBIT 1 TO SCHEDULE D


AdvisorCentral		A portal for trusts, financial advisors, broker/dealers and other financial intermediaries to view mutual fund and client account data on the transfer agent mainframe via the Internet if permitted access by the Company and for Company back offices to view the same data.


ACE		(Automated Control Environment) - Windows database and reporting capability which automates accounting functions for mutual fund settlement, gain/loss tracking, dividend/capital gains settlement and tax withholding tracking.

AOS		(Advanced Output Solutions) – performs print mail and tax form production and fulfillment services.

CMS*		(Customer Management Suite) - the combination of functionalities, systems and subsystems which together provide the following capabilities: workflow management, electronic document processing, integrated Web-based front-end processing, customer relationship management and automated servicing of brokers and investors.

COLD		(Computer Output to Laser Disk) - document management system that provides for the laser disc storage in a PC/server environment of certain data and documents generated on a mainframe and quick retrieval.

DAZL		(Data Access Zip Link) - application which extracts broker/dealer data at the representative level, branch level and broker/dealer level and third party administrator data from the transfer agent mainframe and transmits it to Company designated end users for viewing.

DRAS		(Data Repository and Analytics Suite) - a relational data base for management reporting which consists of the management company’s entire customer information base as copied nightly from the transfer agent mainframe and includes an integrated reporting tool.

FSR		(Full Service Retail) - principal transfer agent mainframe system which performs comprehensive processing and shareholder recordkeeping functions, including: transaction processing (purchases, redemptions, exchanges, transfers, adjustments, and cancellations), distribution processing (dividends and capital gains), commission processing and shareholder event processing (automatic investment plans, systematic withdrawal plans, systematic exchanges); creating and transmitting standard and custom data feeds to support printed output (statements, confirmations, checks), sales and tax reporting. FSR interfaces and exchanges data with various surround systems and subsystems and includes a functionality providing for direct online access.

FPT		(Fund Pricing Transmission) - application automating price and rate uploads and downloads used to perform daily fund and rate pricing from fund accounting.

IAM		(Internet Account Management) - application permitting account owners via the Internet to view account information and effect certain transactions and account maintenance changes.

NSCC*		(National Securities Clearing Corporation) - application allowing web-based utility at user’s desktop to support processing linked to NSCC activity, including networking, Fund/SERV, DCC&S, Commission/SERV, mutual fund profile, and transfer of retirement assets, and includes NEWS (NSCC Exception Workflow Processing) which provides for the inputting of reject and exception information to the NSCC system.

RECON		(Reconciliation) - application automating bank DDA (Demand Deposit Account) reconciliation.

TRS		(Tax Reporting Service) - functionality performing all applicable federal and state tax reporting (tax form processing and corrections), tax-related information reporting, and compliance mailings (including W-9, W-8, RMD, B-Notice, and C-Notice).



22c-2 System		The data warehousing, analytic and administrative applications together with the related software, interfaces, functionalities, databases and other components provided by BNYM to assist fund sponsors and their principal underwriters in satisfying requirements imposed by Rule 22c-2.

For clarification: A Fund may be given access to and use of one or more separable components of this system (for example, with respect to the CMS system, “Correspondence”, “Image”, “Customer Relationship Manager” and “Operational Desktop”) rather than the entire system and a license granted by this Schedule D to use separable components is limited to the functionalities of the separable components even if certain of functionalities of the separable components may include integration points with functionalities of the non-licensed components.

[End to Exhibit 1 to Schedule D] [End to Schedule D]

Page 66


Confidential And Proprietary		Execution Version

SCHEDULE E

Division of Services

As of April 15, 2011


Function	VPD Transfer Agent	BNY Sub-Transfer Agent
*Transaction Processing*
Remittance Cash Processing		X
Offline Cash Deposits		X
Remittance Cash Processing - Items not in good order	X
Check Imaging -		X
Plan Allocation Group Purchase Lists/Transmissions		X
Prepare Cash Estimates		X
ACH Payroll		X
ACH Payroll QC		X
Federal Fund Wire Purchases		X
Federal Fund Wire Purchases QC		X
New Account Setup		X
New Account Quality Control		X
Transfers (Re-registrations)		X
Transfers QC		X
Exchanges		X
Exchanges QC		X
Redemptions		X
Redemptions QC		X
Federal Funds Wire Redeems		X
Federal Funds Wire Redeems QC		X
Wire Order
Trade Establishment		X
Trade Settlement (Checks to Sub-TA)		X
QC		X
Monitoring of Outstanding Trades		X
Maintenance		X
Maintenance QC		X
After-hours trade pricing		X
After-hours trade pricing QC		X
Certificates		N/A
Certificates QC		N/A

Page 67


Confidential And Proprietary		Execution Version

SCHEDULE F

SERVICE LEVELS

As of April 15, 2011

PART I

Company may set the Severity Level of an incident it discovers and reports to BNYM. BNYM will set the Severity Level of all other incidents or incidents subject to the foregoing sentence not set by Company. Company may reset the Severity Level for any incident, whether initially set by the Company or BNYM. The Parties shall be bound by standards of commercial reasonableness in setting Severity Levels for incidents. In the event of a disagreement with respect to the ultimate Severity Level designation of an incident the parties shall negotiate in good faith to resolve the ultimate designation.

BNYM agrees to respond to incidents reported to BNYM by the Company or an Investment Company and assigned a Severity Level designation in the manner and time periods specified for the Severity Level. BNYM agrees to respond to incidents it discovers and assigns a Severity Level designation in the manner and time periods specified for the Severity Level.

Severity Level 1 – Critical (Restore-to-service is Zero to 4 hours)

A disruption in Service with no adequate backup or workaround available. Impact to critical business function, company image and/or financial.

Severity 2 – Major (Restore-to-service is 4 standard business hours)

A disruption in Service that degrades a critical business function of a customer and adequate backup is in place to meet all service level commitments.

Severity 3 – Minor (Restore-to-service is 2 standard business days)

A disruption in Service (s) that degrades a Service Partner’s non-critical business function (s) and adequate backup is in place.

Severity 4 – Informational (Restore-to-service is 10 standard business days)

A disruption in Service (s) that degrades a Service Partner’s business function (s) and does not affect normal functionality.

PART II

General

All references to hours are based on Business Days (defined as a day on which the New York Stock Exchange* is open for business) unless otherwise expressly noted. All references to time are Eastern Time (“ET”).

Service Levels are to be measured in Business Days, not calendar days, unless otherwise expressly stated. Reference to “Days,” “day” or “days” means Business Day(s).

*Money Market Funds follow Securities Industry and Financial Markets Association(SIFMA)

Page 68


Confidential And Proprietary		Execution Version

Transaction Processing

Financial Transactions

Service Description: On normal business Days, BNY Mellon is required to maintain the below specified throughput for the processing of all financial transactions received in good order based on date of receipt (by fund close which is generally 4:00 pm ET). When NYSE or SIFMA is scheduled to close early, all processing must be complete for transactions received by specified market closing time. Quality is assessed and reported on a monthly basis.


Transaction Description	Throughput*	Accuracy	All Transactions Completed
Purchases	99%	98%	2 Days
Redemptions	99%	98%	2 Days
Exchanges	99%	98%	2 Days
New Business (New Accounts)	98%	98%	2 Days
Adjustments	98%**	98%	5 Days***
Same Day Cash Transacations	100%	99%	Same Day
Transfer of Assets – Entry/Initiation	100% within 5 Days	98%	5 Days

*	same day unless otherwise specified

**	processing will be initiated same day

***	depending on the complexity of the adjustment

Non-Financial Transactions

Service Description: On normal Business Days, BNY Mellon is required to maintain the below specified throughput for the processing of all non-financial transactions received in good order based on date of receipt (by 4:00pm ET). When NYSE is scheduled to close early, all processing must be complete for transactions received by specified market closing time. Accuracy is assessed and reported on a monthly basis.


Transaction Description	Throughput	Accuracy	All Transactions Completed
Shareholder Account Maintenance	95% within 5 days	95%	7 Days
Transfers	95% within 3 days	98%	5 Days

Correspondence


Correspondence Description	Throughput	Accuracy	All Transactions Completed
Complaint Correspondence Routing to Client	100%	100%	Same Day
CAST Team - Issue Resolution	98% within 5 days	98%	5 Days
Resolve Not in Good Order Items – Financial (Includes items related to new account applications)	100% within 3 days	98%	3 Days
Resolve Not in Good order Items – Non-Financial	100% within 5 days	98%	5 Days

Page 69


Confidential And Proprietary		Execution Version

Cast Throughput – Please note that if information or action is required beyond BNY Mellon’s scope of influence causing an item to age beyond 5 days it shall not be counted towards the Service Level Agreement (As an example: When there is a dependency upon the prior transfer agent to provide information.)

Data Files


Data File Description		Delivery Time Standard (All delivery time references to “AM” are Tuesday through Saturday unless otherwise expressly noted)
Salespage		5:00AM
ICI		5:00AM

Financial Controls


Function Description	Throughput	Accuracy	All Transactions Completed
Delivery of Settlement inclusive of estimated activity provided to Fund Accounting based on mutually agreed upon times by BNY Mellon and Client for Same Day Cash Products	100%	100%	Intra Day
Daily Delivery of Settlement inclusive of estimated activity provided to Fund Accounting based on mutually agreed upon times by BNY Mellon and Client	100%	100%	Same Day
Reconcile Open Items	95% Within 3 days; 98% within 10 days	100%	5 Days (Attempted to Reconcile All Transactions)

NSCC Processing


Function Description	Throughput	Accuracy	All Transactions Completed
Resolve FundServ Rejects	100%	N/A	Same Day
Reconcile Daily Aged Trade Report	95%	N/A	2 days
Process Trade Corrections	100%	99%	Same Day

Dealer Payment Processing


Function Description	Throughput	Accuracy	All Transactions Completed
Semi-Monthly system generated Commissions including Finder Fee, Underwriter, Advanced Commissions – BNY will ensure reporting on Day 1 after period end	100% within 3 days of period end	100%	3 Days
Monthly/Quarterly Trails BNY Mellon will ensure reporting by noon on day 2 of period end	100% within 2 days of period end	100%	2 Days
BNY Mellon will ensure payment within 2 Days of receipt of funding	100% within 2 days of funding	100%	2 Days
Sub Transfer / Networking Payment Processing - BNY	100% within 14 Days of receipt	100%	14 Days

Page 70


Confidential And Proprietary		Execution Version

Systems


Function	Availability	Service Level*
Processing System (FSR)	7am – 8:30pm	99.9%
Internet Account Management Solution	24/7	99.9%
AdvisorCentral	24/7	99.9%
CMS (CRM – Client Relationship Manager) includes Image, Corro and Reports	7am – 8:30pm	99.9%
VRU	24/7	99.9%
FSRProduction Response time within 2 seconds	7am – 8:30pm	97%
DRAS	7am – 8:30pm	99.9%

Systems Availability (Notwithstanding scheduled maintenance):

*	As measured monthly

Page 71

Execution Copy

MONEY MARKET FUND SERVICES AMENDMENT

SUB-ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT

(Virtus)

This Money Market Fund Services Amendment is made as of September 28, 2011 and is retroactive to and effective as of December 1, 2010 by and among BNY Mellon Investment Servicing (US) Inc. (f/k/a PNC Global Investment Servicing (U.S.) Inc.) (“BNY Mellon”), VP Distributors, Inc. (“VP Distributors”) and each investment company listed on Exhibit A (as the same may be amended from time to time) attached to the Agreement (as defined below) each a “Virtus Fund”).

BACKGROUND:

BNY Mellon, VP Distributors and each Virtus Fund are parties to a Sub-Administration and Accounting Services Agreement dated as of January 1, 2010 (the “Agreement”). This Amendment is an amendment to the Agreement and shall be applicable solely with respect to the portfolios identified at Exhibit 1 hereto.

B.	Each Virtus Fund and VP Distributors desire that BNY Mellon provide, with respect to the applicable portfolios, the money market fund services described in this Amendment. All “Rules” referenced herein are rules promulgated under the Investment Company Act of 1940, as amended.

C.	BNY Mellon, VP Distributors and each Virtus Fund desire to amend the Agreement with respect to the foregoing.

D.	This Background section is hereby incorporated by reference in and made a part of this Amendment.

TERMS:

In consideration of the premises and mutual covenants herein contained, each party hereto agrees as follows:

BNY Mellon has entered into an agreement with a financial printer (the “Print Vendor”) for the Print Vendor to provide to BNY Mellon the ability to generate monthly portfolio holdings reports on Form N-MFP as required by Rule 30b1-7 and an electronic file of the monthly portfolio holdings information required by Rule 2a-7(c)(12) for public website disclosure (collectively “Money Market Reports”) with respect to its clients. BNY Mellon will provide 60 days prior written notice to VP Distributors and each Virtus Fund when a valid Print Vendor agreement will be terminated or otherwise not be in effect (the “Non-Effective Notice”). Notwithstanding anything to the contrary in this Amendment, BNY Mellon shall not be obligated to perform any of the services described in this Amendment unless an agreement, including all relevant

schedules and appendices thereto, between BNY Mellon and the Print Vendor for the provision of such services is then-currently in effect; and no Virtus Fund shall be obligated to compensate BNY Mellon for any services described in this Amendment that are not so performed.

BNY Mellon will inform VP Distributors and each Virtus Fund of the identity of the Print Vendor, and each such entity is free to attempt to contract directly with the Print Vendor with respect to the provision of the services described in this Amendment.

BNY Mellon shall provide the following services with respect to the applicable portfolios:

3.1

BNY Mellon, subject to its timely receipt of all necessary information related thereto, will, or will cause the Print Vendor to, as applicable for the particular Money Market Report: (i) prepare, on a monthly basis, Form N-MFP; (ii) prepare, on a monthly basis, an electronic file of the portfolio holdings information required by Rule 2a-7(c)(12) for public website disclosure; (iii) file Form N-MFP with the Securities and Exchange Commission; and (iv) provide the electronic file prepared pursuant to Section 2.1(ii) herein to the applicable Virtus Fund, or at such Virtus Fund’s written direction, to another entity (together, the “Services”).

3.2

Neither BNY Mellon nor the Print Vendor, in connection with a particular Money Market Report, will: (i) access, post reports to or perform any service on any Virtus Fund’s website; or (ii) prepare, provide or generate any reports, forms or files not specifically agreed to by the parties hereto. Each Virtus Fund acknowledges that it shall be responsible for the retention of the Money Market Reports applicable to its portfolios in accordance with Rule 2a-7 or any other applicable rule or regulation.

3.3

Unless mutually agreed in writing among BNY Mellon, VP Distributors and a particular Virtus Fund, BNY Mellon will use the same layout and format for every successive reporting period for the Money Market Reports relating to such Virtus Fund.

BNY Mellon shall not be responsible for: (a) delays in the transmission to it by VP Distributors, any Virtus Fund’s adviser and entities unaffiliated with BNY Mellon (collectively, for this Amendment, “Third Parties”) of data required for the preparation of the Money Market Reports provided such delay is not the result of any action or inaction of BNY Mellon, (b) inaccuracies of, errors in or omissions of, such data provided to it by any Third Party, and (c) review of such data provided to it by any Third Party provided that BNY Mellon is not required to review such data pursuant to the Agreement. This Section 3 is a limitation responsibility provision for the benefit of BNY Mellon, and shall not be used to imply any responsibility or liability against BNY Mellon.

Execution Copy

BNY Mellon is providing the Services relating to a particular Virtus Fund based on the representation and warranty of each of VP Distributors and such Virtus Fund, that the Services together with the activities of VP Distributors and such Virtus Fund in accordance with their respective internal policies, procedures and controls shall together satisfy requirements of the laws applicable to such Virtus Fund and Money Market Reports.

Notwithstanding any provision of this Amendment, the Services are not, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of VP Distributors, any Virtus Fund or any other person. Neither this Amendment nor the provision of the Services establishes or is intended to establish an attorney-client relationship between BNY Mellon and VP Distributors, any Virtus Fund or any other person.

As compensation for the Services, each applicable Virtus Fund will pay to BNY Mellon such fees as may be agreed to in writing by the Virtus Funds and BNY Mellon. In turn, BNY Mellon will be responsible for paying the Print Vendor’s fees. For the avoidance of doubt, BNY Mellon anticipates that the fees it charges hereunder will be more than the fees charged to it by the Print Vendor.

Each Virtus Fund hereby represents and warrants to BNY Mellon, with respect to itself, that (i) the terms of this Amendment, (ii) the fees and expenses associated with this Amendment and (iii) any benefits accruing to any of its affiliates relating to this Amendment have been fully disclosed to its Board of Trustees and that, if required by applicable law, such Board of Trustees has approved or will approve the terms of this Amendment, any such fees and expenses, and any such benefits.

Miscellaneous .

(a)

As hereby amended and supplemented, the Agreement shall remain in full force and effect. In the event of a conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall control with respect to the Services.

(b)

This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The facsimile signature of any party to this Amendment shall constitute the valid and binding execution hereof by such party.

(c)

If any provision or provisions of this Amendment shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

Execution Copy

IN WITNESS WHEREOF , each party hereto has caused this Amendment to be executed by its duly authorized officer designated below on the date and year first above written.


BNY MELLON INVESTMENT SERVICING (US) INC.

By:


Name:		Jay F. Nusblatt
Title:		Managing Director


VP DISTRIBUTORS, INC.

By:


Name:


Title:

VIRTUS EQUITY TRUST

VIRTUS INSIGHT TRUST

VIRTUS INSTITUTIONAL TRUST

VIRTUS OPPORTUNITIES TRUST


By:


Name:
Title:

Execution Copy

EXHIBIT 1

Entity

Virtus Insight Trust

Virtus Insight Government Money Market Fund

Virtus Insight Money Market Fund

Virtus Insight Tax-Exempt Money Market fund

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated February 24, 2012, relating to the financial statements and financial highlights which appears in the December 31, 2011 Annual Report to Shareholders of Virtus Insight Trust, which is also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings “Financial Highlights”, “Non-Public Portfolio Holdings Information”, “Independent Registered Public Accounting Firm” and “Reports to Shareholders” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

April 27, 2012

CODE OF ETHICS

VIRTUS MUTUAL FUNDS

VIRTUS VARIABLE INSURANCE TRUST

VIRTUS TOTAL RETURN FUND

VIRTUS GLOBAL MULTI-SECTOR FUND

ZWEIG FUND, INC.

ZWEIG TOTAL RETURN FUND, INC.

PURSUANT TO RULE 17j-1

OF THE 1940 ACT

Amended and Restated 2/2012

1.	*Introduction*

This Code of Ethics (the “Code”) has been adopted individually by the above listed registered investment companies, referred to herein (individually) as the “Fund” or “Funds”. This Code shall be administered by the respective Fund’s Chief Compliance Officer or their delegate. Each Fund may attach to this Code a schedule describing any unique provisions that the respective Fund may make to provide additional requirements or to modify requirements set forth by this code. This Code does not amend or supercede any other Code(s) of Ethics that may affect the duties and obligations of any person affected hereby. This Code applies to all Access Persons of each Virtus Investment Partners, Inc. advisory and broker-dealer subsidiary in their management and administration of the Funds. VP Distributors, LLC, a registered broker/dealer, is a related subsidiary which currently provides services to the Funds and acts as the principal underwriter of the Funds. Access Persons of non-affiliated investment advisers and subadvisers to the funds are governed by separate codes. Each subsidiary may impose further limitations of personal trading subject to notifying the Chief Legal Officer and the Chief Compliance Officer of the applicable fund. Any additional limitations are specified in the Adviser’s Code.

Notwithstanding the above, the prohibitions in Section 3 below are imposed by Rule 17j-1, and apply to all Affiliated persons of the Funds and their investment advisers and subadvisers, whether or not they are governed by this Code of Ethics.

2.	*Standard of Business Conduct*

Statement of Ethical Principles

Each Fund and Adviser holds its Access Persons to a high standard of integrity and business practices. In serving their respective shareholders and clients, each Fund and Adviser strives to avoid conflicts of interest or the appearance of conflicts of interest in connection with the personal trading activities of its Access Persons and the Fund’s securities transactions.

The Funds acknowledge their confidence in the integrity and good faith of all of their employees, officers, trustees, and directors. Each Fund and/or Adviser recognizes that the knowledge of present or future portfolio transactions or the power to influence portfolio transactions, if held by such individuals, could place them in a position where their personal interests might conflict with the interests of the Fund, if they were to trade in securities eligible for investment by the Fund.

In view of the foregoing and of the provisions of Rule 17j-1 under the Investment Company Act of 1940, as amended (the “1940 Act”), each Fund and Adviser has determined to adopt this Code of Ethics to specify and prohibit certain types of transactions deemed to create conflicts of interest (or at least the potential for or the appearance of such a conflict) and to establish reporting requirements and enforcement procedures.

The Funds cannot foresee all possible situations, therefore, the Funds ultimately rely upon the integrity and judgement of their personnel and the Advisers, in addition to requirements set forth by this Code. This Code presents a framework against which all Access Persons should seek to measure their conduct.

When Access Persons covered by the terms of this Code of Ethics engage in personal securities transactions, they must adhere to the following general principles as well as to the Code’s specific provisions:

(a)

At all times, the interests of Fund shareholders must be paramount;

(b)

Personal transactions must be conducted consistent with this Code of Ethics in a manner that avoids any actual or potential conflict of interest;

(c)

No inappropriate advantage should be taken of any position of trust and responsibility;

(d)

Non-public information regarding security holdings in any Fund must remain confidential;

(e)

Compliance with all applicable federal securities laws must be maintained; and

(f)

Access Persons are required to adhere to the standards of business conduct in the Virtus Code of Conduct.

Unlawful Actions

It is unlawful for any Affiliated person of any Fund or any of its Advisers, in connection with the purchase or sale, directly or indirectly, by the person of a Security Held or to be Acquired by any Fund:

(a)

to employ any device, scheme or artifice to defraud any Fund;

(b)

to make any untrue statement of a material fact to any Fund or omit to state a material fact necessary in order to make the statements made to any Fund, in light of the circumstances under which they are made, not misleading;

(c)

to engage in any act, practice or course of business that operates or would operate as a fraud or deceit on any Fund; or to engage in any manipulative practice with respect to any Fund.

(d)

to divulge or act upon any material, non-public information, as such term is defined under relevant securities laws.

3.	*Definitions*

“Access Person”: pursuant to Rule 17j-1 of the Investment Company Act of 1940, means any Advisory Person of a Fund or of a Fund’s investment adviser. All of an Adviser’s directors, officers, and general partners are presumed to be Access Persons of any Fund advised by the investment adviser. All of the Fund’s directors, officers, and general partners are presumed to be Access Persons of the Fund.

In addition, Access Persons include any director, officer or general partner of VP Distributors, the principal underwriter of the Funds, who, in the ordinary course of business, makes, participates in or obtains information regarding the purchase or sale of Covered Securities by the Fund for which VP Distributors acts as distributor or principal underwriter, or whose functions or duties in the ordinary course of business relate to the making of any recommendation to the Fund regarding the purchase or sale of Covered Securities.

C.	Advisory Person of a Fund or of a Fund’s investment adviser means:

(a)

Any director, officer, general partner or employee of the Fund or investment advisor (or of any company in a control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding, the purchase or sale of Covered Securities by a Fund, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and

(b)

Any natural person in a control relationship to the Fund or investment adviser who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of Covered Securities by the Fund.

(c)

Any Investment Personnel.

“Affiliated Open-End Mutual Fund” means any open-end mutual fund to which the Firm or its control affiliate(s) serve as the investment adviser or principal underwriter. Currently, this means all open-end (non-exchange traded) Virtus Mutual Funds. See also the definition of “Unaffiliated Open-End Mutual Fund” in Section XX below.

E.	“Affiliated person” of an issuer is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such issuer.

F.	“Being considered for Purchase or Sale” means a security for which a recommendation to purchase or sell has been made and communicated; and with respect to the Advisory Person making the recommendation, when such person seriously considers making such a recommendation.

“Beneficial Ownership” shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations there under. Generally, Beneficial Ownership means having or sharing, directly or indirectly through any contract, arrangement, understanding, relationship, or otherwise, a direct or indirect “pecuniary interest” in the security. For the purposes hereof,

(a)

“Pecuniary interest” means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security.

(b)

“Indirect pecuniary interest” includes, but is not limited to:

(i) securities held by members of the person’s “immediate family” (this means any child, child-in-law, stepchild, grandchild, parent, parent-in-law, stepparent, grandparent, spouse, partner, sibling, or sibling-in-law and includes adoptive relationships) sharing the same household (which ownership interest may be rebutted);

(ii) a general partner’s proportionate interest in portfolio securities held by a general or limited partnership;

(iii) a person’s right to dividends that is separated or separable from the underlying securities (otherwise, a right to dividends alone will not constitute a pecuniary interest in securities);

(iv) a person’s interest in securities held by a trust;

(v) a person’s right to acquire securities through the exercise or conversion of any derivative security, whether or not presently exercisable; and

(vi) a performance-related fee, other than an asset based fee, received by any broker, dealer, bank, insurance company, investment company, investment manager, trustee, or person or entity performing a similar function, with certain exceptions (see Rule 16a-1(a)(2) of the Exchange Act).

H.	“Chief Compliance Officer” or “CCO” refers to the person appointed by the Boards of the funds pursuant to the provisions of Rule 38a-1. Such person is identified on Schedule A hereto.

I.	“Compliance Officer” may refer to the Fund’s designated Compliance Officer or an Adviser’s Compliance Officer or any person designated by each such to perform the administrative functions of this Code. Such persons are identified on Schedule B hereto.

J.	“Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act.

“Covered Security” means a security as defined in Section 2(a)(36) of the Act, except securities that are direct obligations of the Government of the United States, bankers’ acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments, including repurchase agreements and shares of traditional , unaffiliated registered open-end investment companies. Reportable Securities are further defined under section U. below.

L.	“Disinterested Trustee” means a Trustee of a Fund who is not an “interested person” of the Fund within the meaning of Section 2(a)(19) of the 1940 Act.

“Immediate Family Member” shall have the following meaning: With respect to personal securities reporting requirements, terms such as “Employee”, “Personal Brokerage Account”, and “Access Person” are defined to include any Access Person’s spouse or domestic partner who share their household and any relative by blood, adoption or marriage living the Access Person’s household. This definition includes children (including financially dependent children away at school), stepchildren, grandchildren, parents, stepparents, grandparents, siblings and parents, children, or siblings-in-law.

N.	“Initial Public Offering” or “IPO” means an offering of securities registered under the Securities Act of 1933, as amended, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

O.	“Investment Personnel” shall mean:

(a)

any employee of the Fund or Adviser (or of any company in a control relationship to the Fund or Adviser) who, in connection with his or her regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund; and

(b)

any natural person who controls the Fund or an Adviser and who obtains information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund. Investment Personnel includes any Portfolio Manager or other investment person, such as an analyst or trader, who provides information and advice to a Portfolio Manager or assists in the execution of the investment decisions.

P.	“Limited Offering” or “Private Placement” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) thereof, or pursuant to Rule 504, Rule 505, or Rule 506 there under.

Q.	“Managed Portfolio” shall mean those Funds, individually and collectively, for which the Portfolio Manager makes buy and sell decisions. For those Funds operating as series companies, Managed Portfolio shall include only the series for which the Portfolio Manager serves as the Portfolio Manager.

“Personal Brokerage Account” refers to any account (including, without limitation, a custody account, safekeeping account, and an account maintained by an entity that may act in a brokerage or a principal capacity) in which securities may be traded or custodied, and in which an Access Person has any Beneficial Ownership, and any such account of an Immediate Family member, through which an Access Person may hold or acquire Reportable Securities, even though the account currently holds only non-Reportable Securities (such as unaffiliated open-end mutual funds). To the extent that the Virtus 401(k) plan and potentially 401(k) plans of an Access Person’s prior employ(s) or 401(k) plans of Immediate Family Members have the capacity to invest in Affiliated Open-end Mutual Funds and/or other Reportable Securities, such accounts are considered “Personal Brokerage Accounts.” Furthermore, Individual Retirement Accounts (“IRA’s”) that are constructed within a brokerage account capable of transacting in Reportable Securities are also considered “Personal Brokerage Accounts.”

The meaning of “Personal Brokerage Account” does not include the following: Open-end mutual funds held directly with the sponsor in an account that is not capable of transacting in Reportable Securities; 401(k) accounts that may only hold non-affiliated open-end mutual funds; other accounts that cannot transact in Reportable Securities as determined by the Compliance Department; and direct purchase accounts such as “DRIP” plans.

S.	“Portfolio Manager” means the person or portfolio management team entrusted to make or participate in the making of the buy and sell decisions for a Fund, or series thereof; as disclosed in the Fund(s) prospectus.

T.	“Purchase or sale of a Reportable Security” includes, among other things, the writing of an option to purchase or sell a security or the purchase or sale of a security that is exchangeable for or convertible into a security.

“Reportable Security” shall have the meaning set forth in Section 2(a)(36) of the 1940 Act and includes common stocks, preferred stocks, stock options (put, call and straddle), debt securities, privilege on any security or an any group or index of securities (including any interest therein or based on the value thereof) and derivative instruments. ETFs, UIT ETFs, closed end funds, other well-known stock indices vehicles, such as the Standard & Poor’s Composite Stock Indices (such as but not limited to SPDR S&P 500, SPDR S&P MidCap 400, “iShares”, etc.); affiliated open-end mutual funds and municipal securities. The meaning of “Reportable Security” shall not include transactions and holdings in direct obligations of the Government of the United States; money market instruments; bankers’ acceptances; bank certificates of deposit, commercial paper, repurchase agreements and other high quality short-term debt instruments; shares of money market funds; transactions and holdings in shares of non-affiliated open-end mutual funds; and transactions in units of a unit investment trust if the unit investment trust is invested exclusively in unaffiliated open-end mutual funds. Note: This exception extends only to open end funds registered in the U.S.; therefore, transactions and holdings in offshore funds ARE reportable.

V.	“Security Held or to be Acquired” by a Fund means:

(i)

any Covered Security which, within the most recent 15 days:

(A)

is or has been held by the Fund; or

(B)

is being or has been considered by the Fund or any of its investment advisers for purchase by the Fund; and

(ii)

any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in paragraph (p)(i) of this Section.

A security is “being considered for purchase or sale” when a recommendation to purchase or sell a security has been made and communicated and, with respect to the Investment Personnel making the recommendation, when such person seriously considers making such a recommendation.

“Unaffiliated Open-End Mutual Fund” means any open-end mutual fund not falling within the definition of “Affiliated Open-End Mutual Fund” defined in Section X above, i.e. any open end mutual fund to which the Form or its control affiliate(s) do not serve as the investment adviser or principal underwriter for the fund. Currently, this means all open-end (non-exchange traded) mutual funds except for the Virtus Mutual Funds.

4.	*Disclosure of Personal Brokerage Accounts*

All Access Persons must disclose their Personal Brokerage Accounts to their respective Compliance Department. It is each Access Person’s responsibility to notify their respective

Compliance Department of all Personal Brokerage Accounts and to direct the broker to provide their Compliance Department with Brokerage transaction confirmations and account statements (and verify that it has been done). Access Persons cannot assume that the broker-dealer will automatically arrange for this information to be set up and forwarded correctly. Access Persons do not need to disclose the existence of their Virtus-Fidelity 401(k) account, however, any other Virtus Fidelity account holding securities, options or restricted stock of Virtus must be disclosed. 401(k) plans of an Access Person’s prior employer(s) or 401(k) plans of Immediate Family Members must be disclosed if such accounts have the capacity to invest in Affiliated Open-End Mutual Funds and/or other Reportable Securities.

5.	*Prohibited Activities for Access Persons*

Initial Public Offering (“IPO”) Rule : No Access Person may directly or indirectly acquire beneficial ownership in any securities in an Initial Public Offering (including IPOs offered through the Internet), except with the prior written approval of the Adviser’s Compliance Officer. No FINRA registered person may participate in an IPO pursuant to FINRA Rule 5130.

B.	Limited Offering/Private Placement Rule : No Access Person may directly or indirectly acquire beneficial ownership in any securities in a Limited Offering or Private Placement except with the prior written approval of the Adviser’s Compliance Officer.

Preclearance Rule : No Advisory Person may directly or indirectly acquire or dispose of beneficial ownership in a Reportable Security unless such transaction has been precleared by the Compliance Department. Preclearance is valid through the next business day to the close of the U.S. Market following the approval. An order not executed within that time must be resubmitted for pre-clearance approval. Access Persons must wait for approval before placing the other with their broker.

Exceptions: The following Reportable Securities Transactions do not require pre-clearance:

(a)

Purchases or sales of up to and including 500 shares per month of Reportable Securities of an issuer ranked in the Standard & Poor’s 500 Composite Stock Index (S&P 500) at the time of the transaction. An S&P 500 constituent list is updated quarterly and available on the Virtus intranet website. A copy is also available for review in the Compliance Department. The Compliance Department monitors deminimis trading for patterns of abuse. If a pattern of abuse is determined to have occurred, the Compliance Department reserves the right to suspend or cancel the ability of an Advisory Person to conduct deminimis transactions.

(b)

Affiliated open-end mutual funds. (However such funds are subject to Quarterly Transaction and Annual Holdings reporting requirements.)

(c)	Purchases or sales which are non-volitional on the part of either the Advisory Person or the Fund.

(d)	Purchase orders of Reportable Securities sent directly to the issuer via mail (other than in connection with a Private Placement or Limited Offering) or sales of such securities that are redeemed directly by the issuer via mail.

(e)	Purchases of shares of Reportable Securities necessary to establish an automatic investment or dividend reinvestment plan, as well as any subsequent purchases and sales pursuant to any such plan.

(f)

Purchases or sales effected in any account over which the Advisory Person has no direct or indirect influence or control in the reasonable estimation of the Adviser’s Compliance Officer. This exemption will also apply to personal brokerage accounts for which a third party (e.g. broker or financial adviser) makes all investment decisions on behalf of the Advisory Person. The discretionary arrangement must be documented to the Chief Compliance Officer or designated Compliance Officer.

(g)	Purchases or sales of Reportable Securities not eligible for purchase or sale by the Fund(s).

(h)	Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired.

(i)	Purchase or sale of securities issued under an employee stock purchase or incentive program unless otherwise restricted.

Each Adviser’s Compliance Officer may deny approval of any transaction requiring preclearance under this Preclearance Rule, even if the transaction is nominally permitted under this Code of Ethics, if he or she reasonable believes that denying preclearance is necessary for the protection of a Fund.

Open Order Rule: No Advisory Person may directly or indirectly acquire or dispose of Beneficial Ownership in any Reportable Security which requires PreClearance on a day during which a Fund has a pending “buy” or “sell” order for that security of the same type (i.e. buy or sell) as the proposed personal trade, until the Fund’s order is executed or withdrawn.

Black-Out Rule : Portfolio Managers and Advisory Persons may not directly or indirectly acquire or dispose of Beneficial Ownership in a Reportable Security within seven calendar days before and after the portfolio(s) associated with the Portfolio Manager’s and Advisory Person’s assigned duties trades in that security. The seven day period is exclusive of the execution date. The Black-Out Rule applies to transactions in securities that are required to be precleared.

Holding Period Rule : Advisory Persons must hold all Reportable Securities, including options, for no less than sixty (60) days, whether or not the purchase was an exempt transaction under any other provision of Section 5. A FIFO accounting methodology will be applied for determining compliance with this holding rule.

Gifts and Entertainment : Access Persons may not give or receive gifts or entertainment that may be construed to have an influence on business transactions conducted by the Adviser or the Fund(s). Gifts to or from Consultants or Clients must not exceed $100 per person per year. Gifts include any items of value, including sports paraphernalia or equipment, wine or food baskets, gift certificates for shopping, or to a restaurant or spa. Tickets to events are considered gifts if the associate does not attend the event. The $100 limit that applies to gifts does not apply to entertainment. Nonetheless, entertainment must be neither so frequent nor so extensive as to raise any question or impropriety. The CCO or other designated personnel will maintain records of all gifts and all entertainment. All gifts and entertainment received or given must be reported to the Advisor’s Compliance Department.

Service as Director: No Advisory Person shall serve on the board of directors of a publicly traded company without prior authorization by the President or the Chief Compliance Officer of the Fund. If board service is authorized, such Advisory Person shall have no role in making investment decisions with respect to the publicly traded company.

Excessive Trading Rule : No Portfolio Manager shall engage in excessive trading or market timing activities with respect to any mutual fund whether or not such mutual fund is a Managed Portfolio, or is managed by such Adviser/Subadviser or any affiliated adviser or subadviser. For the purposes of the foregoing, “market timing” shall be defined as a purchase and redemption, regardless of size, in and out of the same mutual fund within any sixty (60) day period. The foregoing restrictions shall not apply to Portfolio Managers investing in mutual funds through asset allocation programs, automatic reinvestment programs, and any other non-volitional investment vehicles.

6.	*Reporting and Compliance Procedures*

The Code of Ethics, and any amendments thereto, shall be provided to every Access Person. Access Persons will provide written acknowledgement of receipt.

Duplicate Trade Confirmations and Personal Brokerage Account Statements: All Access Persons (other than Disinterested Trustees) shall direct their brokers to supply, at the same time that they are sent to the Access Person, a copy of the confirmation for each Reportable Securities trade in a Personal Brokerage Account, and a copy, at least quarterly, of an account statement for each Personal Brokerage Account to their respective Compliance Department (an electronic feed from the broker will satisfy these requirements). Access to duplicate confirmations and account statements will be restricted to those persons assigned to perform review functions, and all materials will be kept confidential except as required by law.

Quarterly Reports: Access Person s shall report to the Fund the information (specified further below) with respect to transactions in any Reportable Security in which such Access Person has, or by reason of such transaction acquires, any direct or indirect Beneficial Ownership in the Reportable Security.

Access Persons shall not be required to make a report with respect to transactions effected for any account over which that person lacks any direct or indirect influence or control in the reasonable estimation of the Fund’s CCO.

Every Quarterly report shall be made not later than 15 days after the end of the calendar quarter, and shall include all transactions in Reportable Securities effected during the calendar quarter being reported on. Quarterly Reports shall contain the following information:

(i)

The date of the transaction, in the Reportable Security, the title and number of shares of equity securities; or the maturity date, principal amount and interest rate of debt securities, of each Reportable Security involved; and, as applicable, the exchange ticker symbol or CUSIP number;

(ii)

The type of transaction (i.e., purchase, sale, or any other type of acquisition or disposition);

(iii)

The price of the Reportable Security at which the transaction was effected; and

(iv)

The name of the broker, dealer or bank with or through whom the transaction was effected; and

To the extent that the Access Person certified the Compliance Department is receiving duplicate statements of Personal Brokerage Accounts, the above disclosures are considered to have been made for transactions in Reportable Securities occurring in those Personal Brokerage Accounts.

(v)

With respect to any account established during the quarter in which Securities were held during the quarter for the direct or indirect benefit of the Access Person:

(a)

The name of the broker, dealer, or bank with whom the Access Person established the account; and

(b)

The date the account was established;

(vi)

The Date the report is submitted by the Access Person.

Initial and Annual Holdings Reports: Each Access Person shall submit an Initial Holdings and Annual Holdings Report listing all personal Reportable Securities holdings to their designated Compliance Officer, upon commencement of service and annually thereafter (the Initial Holdings Report and the Annual Holdings Report , respectively). The information on the Initial Holdings Report must be current as of a date not more than 45 days prior to the date the individual becomes an access person. An Initial Holdings Report and certification must be submitted to the designated Compliance Officer no later than 10 days after becoming an Access Person. The Annual Holdings Report information shall be as of December 31 of the prior year. Access Persons shall submit the Annual Holdings Report and Certification to the designated Compliance Officer by January 31 of each year. Access Persons s hall include on their Annual Holdings Report any holdings in Affiliated Open-end Mutual Funds, including those held in the Access Person’s Virtus-Fidelity 401(k) plan.

Every Initial Holdings Report and Annual Holdings Report required pursuant to this section shall contain the following information for Reportable Securities:

(i)

The title and number of shares of equity securities; and/or the maturity date, principal amount and interest rate of debt securities; and, as applicable the exchange ticker symbol or CUSIP number of each Reportable Security in which the Access Person had any direct or indirect beneficial ownership as of the Applicable Date.

(ii)

The name of any broker, dealer or bank with whom the Access Person maintained an account in which securities were held for the direct or indirect benefit of the Access Person as of the Applicable Date.

(iii)

The date the report is submitted by the Access Person.

For Initial Holdings Reports and Annual Holdings Reports a certification by the Access Person that he or she has read and understood the Code of Ethics, has complied and shall continue to comply with the requirements of this Code and the Firm’s Insider Trading Policy and Procedures.

Exceptions to reporting requirements (Quarterly Transactions and Initial and Annual Holdings):

(i)

Any report of Reportable Securities held in accounts over which the Access Person had no direct or indirect influence or control;

(ii)

A Quarterly Transaction Report of Reportable Securities transactions effected pursuant to an automatic investment plan; and

(iii)

A Quarterly Transaction Report if it would duplicate information contained in broker trade confirmations or account statements received no later than 30 days after the end of the applicable calendar quarter.

A Disinterested Trustee of the Fund need not:

(i)

Submit an initial holdings report or an annual holdings report pursuant to Section 6.D. above.

(ii)

Report securities transactions unless the Trustee knew, or, in the ordinary course of fulfilling his or her official duties as a Fund Trustee, should have known, that during the 15-day period immediately before or after the Trustee’s transaction in a Covered Security, the Fund purchased or sold the Covered Security or the Fund or any of its investment advisers or subadvisers considered purchasing or selling the Covered Security.

Any report made under this Section 6 may contain a statement that the report shall not be construed as an admission by the person making such report that he or she has any direct or indirect Beneficial Ownership in the security to which the report relates.

7.	*401(k) Plans and the Requirements of the Code*

Disclosure of Personal Brokerage Accounts: Access Persons are not required to disclose the existence of their Virtus-Fidelity 401(k) plan, but Access Persons must disclose any other 401(k) account if the account can transact in Affiliated Open-end Mutual Funds and/or other Reportable Securities.

Preclearance Rule: Access Persons are not required to preclear transactions in Affiliated Open-end Mutual Funds (e.g., transferring amounts from one fund to another) or contributions in the form of payroll deductions. Access Persons are required to preclear transactions in Reportable Securities that are not exceptions to the Preclearance Rule of Section 5 (e.g., the sale of previous employer’s stock).

Duplicate Trade Confirmations and Personal Brokerage Account Statements: If an Access Person has a 401(k) account from a previous employer that can transact in Affiliated Open-end Mutual Funds and/or other Reportable Securities, the Access Person shall direct her broker to supply, at the same time that they are sent to the Access Person, a copy of the confirmation for each personal Reportable Securities trade and a copy, at least quarterly, of an account statement to her respective Compliance Department for each 401(k) account other than the Virtus-Fidelity 401(k) plan.

Quarterly Transactions Reports: For 401(k) accounts other than the Virtus-Fidelity 401(k) plan, Access Persons are required to submit a Quarterly Transaction Report for transactions in Reportable Securities (e.g., Affiliated Open-end Mutual Funds or a previous employer’s stock).

Initial and Annual Holdings Reports: Access Persons are required to report all holdings in Reportable Securities, including holdings in the Virtus-Fidelity 401(k) plan (e.g., Affiliated Open-end Mutual Funds).

8.	*Administration of Code of Ethics*

Each Fund’s Chief Compliance Officer and its investment advisers and principal underwriters shall furnish to the applicable Fund’s Board of Trustees annually, and such Board will consider, a written report that:

(a)

Summarizes the current procedures under the Code of Ethics;

(b)

Describes any issues arising from the Code of Ethics or procedures since the last report to the Board, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations; and

(c)

Certifies that the Fund, Investment Adviser, or principal underwriter, as applicable, has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

The Fund’s Chief Compliance Officer shall obtain from each investment adviser and the subadviser to the Fund whose Access Persons are governed by its own Code of Ethics, a written report including the information and certification required in (b) and (c) above with respect to that Code.

The Board will consider all of these reports.

These reports will be available to the Chief Compliance Officer of the Funds.

Any Access Person shall immediately report any potential violation of this Code of which he or she becomes aware to the Designated Compliance Officer.

An Access Person need not make reports under this Section 6 with respect to transactions effected for any account over which such person does not have any direct or indirect influence or control.

Each Adviser’s Compliance Officer will review all reports and other information submitted under this Section 6. This review will include such comparisons with trading records of the Fund as are necessary or appropriate to determine whether there have been any violations of the Code.

Each Adviser’s Compliance Officer will maintain a list of all Access Persons who are required to make reports under the Code, and shall inform those Access Persons of their reporting obligations. Each Adviser’s Compliance Officer shall promptly notify any Access Person when any report has not been filed on a timely basis.

Please refer to Schedule B for person(s) to contact for preclearance and to file Annual Holdings and Quarterly Personal Securities Transaction reports.

9.	*Recordkeeping Requirements:*

Each Fund, investment adviser, and principal underwriter to which this Code of Ethics applies, or to which reports are required to be made by Access Persons, must maintain the following records:

A copy of each Code of Ethics for the organization that is in effect, or at any time within the past five years was in effect;

A record of any Code violation or action taken as a result of the violation that occurred, for at least five years after the end of the fiscal year in which the violation occurred;

A copy of each report made by an Access Person as required by this Code, or the information provided in lieu of a report, pursuant to Rule 17j-1 of the Act, for at least five years after the end of the fiscal year in which the report was made;

A record of all persons, currently, or within the past five years, who are or were required to make reports pursuant to this Code, or those persons who are or were responsible for reviewing these reports, must be maintained in an easily accessible place;

A copy of each report provided to the Fund(s) Board of Trustees must be maintained for at least five years after the end of the fiscal year in which it is made, the first two year in an easily accessible place; and

A record of any decision approving the acquisition by investment personnel of IPOs and/or Limited Offerings for at least five years after the end of the fiscal year in which the approval is granted.

10.

Sanctions

Upon discovering a violation of this Code, the Board of Trustees of a Fund may impose such sanctions as it deems appropriate, including inter alia, a letter of censure or suspension or termination of employment, or suspension of personal trading privileges for such period as it may deem appropriate. Provided further, the Adviser’s Compliance Officer shall review and present sanctions levied for non-compliance at each regularly scheduled Board meeting. Please see attached Schedule A of Sanctions that may be levied for violations of this Code.

11.

Exceptions

Each Adviser’s Compliance Officer, in consultation with the Chief Legal Officer, may grant written exceptions to provisions of the Code based on equitable considerations. The exceptions may be granted to individuals or classes of individuals with respect to particular transactions, classes of transactions or all transactions, and may apply to past as well as future transactions, provided, however, that no exception will be granted where the exceptions would result in a violation of Rule 17j-1. To the extent any such exception relates to an Access Person of a Fund, the exception will be reported to a Fund’s Board at its next regularly scheduled meeting. Notwithstanding anything herein to the contrary, the Compliance Officer shall promptly report any and all exceptions to the Chief Compliance Officer of the applicable Fund and the Chief Compliance Officer may provide an independent report to the applicable Board regarding his/her assessment of the merits and potential repercussions of granting any such exceptions.

12.

Other Codes of Ethics

This Code of Ethics does not amend or supersede any other Code(s) of Ethics that may affect the duties and obligations of any person affected hereby.

Schedule A

Chief Compliance Officer of the Funds: Nancy Engberg

Schedule B

Person to contact for preclearance and reporting requirements: Tim Branigan or Nancy Boyer

CERTIFICATION:

By my signature below, I certify that I have received, read, and understood the foregoing policies of the Virtus Funds Code of Ethics, and will comply in all respects with such policies.


Initial Holdings Report	Q Report	Q Report Affiliated MF Transactions	Annual Report	Pre-Clear
All Access Persons	All Access Persons	Investment Personnel	All Access Persons	Advisory Persons
• 1st violation – written warning • 2 ^nd violation within the same year - $50.00 fine payable to the Connecticut Food Bank. • 3 ^rd violation within the same year – suspension of trading privileges for 30 days	• 1st violation – written warning • 2 ^nd violation within the same year - $50.00 fine payable to the Connecticut Food Bank 3 ^rd violation within the same year – suspension of trading privileges for 30 days	• 1st violation - written warning • 2 ^nd violation within the same year - $50.00 fine payable to the Connecticut Food Bank 3 ^rd violation within the same year – suspension of trading privileges for 30 days	• 1st violation - written warning	• 1 ^st violation – written warning • 2 ^nd violation within the same year - $100 fine payable to the Connecticut Food Bank and suspension of trading privileges for 30 days • 3 ^rd violation within the same year – suspension of trading privileges for 90 days

Pre-Clear IPOs & Limited Offerings	Blackout	60-Day Holding Requirement	Market Timing Prohibition and Q Certificate	Open Order Rule
Advisory Personnel	Investment Personnel	Advisory Personnel	Investment Personnel	Investment Personnel
• 1 ^st violation – Reported to Chief Compliance Officer and President of Virtus Investment Partners for determination of appropriate sanctions. • 2 ^nd violation – possible grounds for termination	• 1 ^st violation – disgorgement of profits on the personal trade • 2 ^nd violation - Reported to Chief Compliance Officer and President of Virtus Investment Partners for determination of appropriate sanctions. • 3 ^rd violation - possible grounds for termination	• 1 ^st violation – written warning • 2 ^nd violation - violation within the same year - $50.00 fine payable to the Connecticut Food Bank. • 3 ^rd violation within the same year – suspension of trading privileges for 60 days	• 1 ^st violation - possible grounds for termination at determination of Chief Legal Officer and President of Virtus Investment Partners.	• 1 ^st violation – Reported to Chief Legal Officer and President of Virtus Investment Partners for determination of appropriate sanctions. • 2 ^nd violation – possible grounds for termination

CODE OF ETHICS

Amended and Restated February 15, 2012

1.	Introduction

This Code of Ethics (the “Code”) has been adopted individually by the entities listed in Schedule A, referred to herein (individually) as the “Firm”. This Code is administered by each Firm’s designated Chief Compliance Officer or their delegate as a separate program. Each Firm may attach to this Code an appendix describing any unique provisions the Firm has made to provide additional requirements or modify requirements set forth by this Code.

2.	Standard of Business Conduct

Statement of Ethical Principles

The Firm holds its Supervised Persons to a high standard of integrity and business practices. In serving their respective shareholders and clients, the Firm strives to avoid conflicts of interest or the appearance of conflicts of interest related to the personal trading activities of its Supervised Persons and the securities transactions in any managed account.

The Firm acknowledges its confidence in the integrity and good faith of all of its Supervised Persons. The Firm recognizes that the knowledge of present or future portfolio transactions or the power to influence portfolio transactions, if held by such individuals, could place them in a position where their personal interests might conflict with those of the managed account, if they were to trade in securities eligible for investment by the managed account.

In view of the foregoing and of the provisions of Sections 204-2 and 204A-1 under the Investment Advisers Act of 1940 (Advisers Act), as amended, and Rule 17j-1 of the Investment Company Act, as amended, the Firm has adopted this Code to specify and prohibit certain types of transactions deemed to create conflicts of interest or the potential for or appearance of such a conflict, and to establish reporting requirements and enforcement procedures. Because the Firm cannot foresee all possible situations, the Firm ultimately relies upon the integrity and judgment of its personnel, in addition to requirements set forth by this Code. This Code presents a framework against which all Supervised Persons should seek to measure their conduct. When Supervised Persons covered by this Code engage in personal securities transactions, they must adhere to the following general principles and the Code’s specific provisions:

At all times, the interests of the Firm and its Clients must be paramount;

Personal transactions must be conducted consistent with this Code in a manner that avoids any actual or potential conflict of interest;

No inappropriate advantage should be taken of any position of trust and responsibility;

Information about the identity of security holdings and financial circumstances of Clients is confidential;

Ensure that the investment management and overall business of the Firm complies with the policies of the Firm, Virtus Investment Partners (Virtus) and applicable U.S. federal and state securities laws and regulations; and

Supervised Persons are required to adhere to the standards of business conduct in the Virtus Code of Conduct.

Unlawful Actions

It is unlawful for any Supervised Person, in connection with the purchase or sale, directly or indirectly, by them of a security held or to be held by any Client account to:

Employ any device, scheme or artifice to defraud any Client;

Make any untrue statement of a material fact to any Client or omit to state a material fact necessary in order to make the statements made to any Client, in light of the circumstances under which they are made, not misleading;

Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on any Client; or to engage in any manipulative practice with respect to any Client; and

Divulge or act upon any material, non-public information, as is defined under relevant securities laws.

3.	Definitions

A. “Access Person” means all directors, officers, general partners, partners of the Firm and Advisory Persons of Firm’s Advisers (or other persons occupying a similar status or performing similar functions). In addition, Access Person means all Supervised Persons, who:

Are involved in making securities recommendations to Clients; or

Have access to nonpublic information regarding the following:

(a)

Any Clients’ purchase or sale of securities, or recommendation to purchase or sell such securities; or

(b)

Information regarding the portfolio holdings of any fund the Firm or its control affiliates manage.

“Advisers Act” means the Investment Advisers Act of 1940, as amended.

“Advisory Person” means (i) any Access Person of the Firm or of any company in a control relationship to the Firm, who, in connection with their regular functions or duties, makes, participates in or obtains information regarding the purchase or sale of a security by the Firm for a Client, or whose functions relate to the making of any recommendations with respect to such purchases or sales; and (ii) any natural person in a control relationship to the Firm who obtains information concerning recommendations made to the Client with regard to the purchase or sale of a security.

“Affiliated Officer” means (i) any corporate officer or director of the Firm who is not a resident at the Firm’s business location; and (ii) is subject to the provisions of an affiliate’s code of ethics for personal trading.

“Affiliated Open-End Mutual Fund” means any open-end mutual fund to which the Firm or its control affiliate(s) serve as the investment adviser or principal underwriter. Currently, this means all open-end (non-exchange traded) Virtus Mutual Funds. See also the definition of “Unaffiliated Open-End Mutual Fund” in section W. below.

“Being considered for Purchase or Sale” means when a security for which a recommendation to purchase or sell has been made and communicated; and with respect to the Advisory Person making the recommendation, when such person seriously considers making such a recommendation.

“Beneficial Ownership” shall be interpreted in the same manner as it would be under Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (the Exchange Act) in determining whether a person is the beneficial owner of a security for purposes of Section 16 of the Exchange Act and the rules and regulations there under. It includes ownership by any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in a security. For purposes hereof,

“Pecuniary Interest” means the opportunity, directly or indirectly, to profit or share in any profit derived from a transaction in the security.

“Indirect Pecuniary Interest” includes, but is not limited to:

(a)

Securities held by Immediate Family Members sharing the same household;

(b)

A general partner’s proportionate interest in portfolio securities held by a general or limited partnership;

(c)

A person’s right to dividends that is separated or separable from the underlying securities (otherwise, a right to dividends alone will not constitute a pecuniary interest in securities);

(d)

A person’s interest in securities held by a trust;

(e)

A person’s right to acquire securities through the exercise or conversion of any derivative security, whether or not presently exercisable; and

(f)

A performance-related fee, other than an asset based fee, received by any broker, dealer, bank, insurance company, investment company, investment manager, trustee, or person or entity performing a similar function, with certain exceptions (see Rule 16a-1(a)(2)of the Exchange Act).

An Access Person is presumed to have Beneficial Ownership in, and so an obligation to report, the securities held by his or her Immediate Family Members. Access Persons should note that the Firm’s policies and procedures with respect to personal securities transactions also apply to transactions by a spouse, domestic partner, child or other Immediate Family Member residing in the same household. See definition of “Immediate Family Member” in section M. below.

“Chief Compliance Officer” or “CCO” refers to the person appointed by the Firm pursuant to the provisions of Section 206(4)-7 of the Advisers Act.

“Client” means each and every investment company, or series thereof, or other account managed by the Firm.

“Control” shall have the same meaning as that in Section 2(a) (9) of the Investment Company Act.

“Covered Associate” is a term used in the Firm’s Pay to Play Policy and Procedures and is incorporated by reference.

“Firm” means each of the entities listed in Schedule A who have each adopted this Code and administer it under their respective individual compliance programs managed by their designated Chief Compliance Officer or his/her delegate.

“Immediate Family Member” shall have the following meaning: With respect to personal securities reporting requirements, terms such as “Employee”, “Personal Brokerage Account”, “Supervised Person” and “Access Person” are defined to include any Supervised Person’s or Access Person’s spouse or domestic partner who share their household and any relative by blood, adoption or marriage living in the Supervised or Access Person’s household. This definition includes children (including financially dependent children away at school), stepchildren, grandchildren, parents, stepparents, grandparents, siblings and parents-children-or siblings-in-law.

“Initial Public Offering” or “IPO” means an offering of securities registered under the Securities Act of 1933 as amended, the issuer of which, immediately before the registration, was not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act.

“ Investment Company Act” means the Investment Company Act of 1940, as amended.

“Managed Fund or Portfolio” shall mean those Clients, individually and collectively, for whom the Portfolio Manager makes buy and sell decisions.

“Personal Brokerage Account” refers to any account (including, without limitation, a custody account, safekeeping account and an account maintained by an entity that may act in a brokerage or a principal capacity) in which securities may be traded or custodied, and in which an Access Person has any Beneficial Ownership, and any such account of an Immediate Family Member. The meaning of “Personal Brokerage Account” includes accounts in which an Access Person may hold or acquire Reportable Securities, even though the account currently holds only non-Reportable Securities (such as unaffiliated open-end mutual funds). To the extent that the Virtus 401(k) plan and potentially 401(k) plans of an Access Person’s prior employer(s) or 401(k) plans of Immediate Family Members have the capacity to invest in Affiliated Open-end Mutual Funds and/or other Reportable Securities, such accounts are considered “Personal Brokerage Accounts”. Furthermore, Individual Retirement Accounts (i.e.: “IRAs”) that are constructed within a brokerage account capable of transacting in Reportable Securities are also considered “Personal Brokerage Accounts”.

The meaning of “Personal Brokerage Account” does not include the following: open-end mutual funds held directly with the sponsor in an account

that is not capable of transacting in Reportable Securities; 401(k) accounts that may only hold non-affiliated open-end mutual funds; other accounts that cannot transact in Reportable Securities as determined by the Compliance Department; and direct purchase accounts such as “DRIP” plans.

“Fund Portfolio Manager” or “Portfolio Manager” is an Advisory Person (or one of the Advisory Persons) entrusted with the day-to-day management of the Fund’s portfolio.

“Private Placement” or “Limited Offering” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) thereof, or pursuant to Rule 504, Rule 505 or Rule 506 there under.

“Purchase or sale of a Reportable Security” includes, among other things, the writing of an option to purchase or sell a security, or the purchase or sale of a security, that is exchangeable for or convertible into, a security that is held or to be acquired for a Client.

“Reportable Security” shall have the meaning set forth in Section 2(a)(36) of the Investment Company Act, and Rule 204A-1 of the Advisers Act as amended, and includes common stocks, preferred stocks, stock options (put, call and straddle), debt securities, privilege on any security or on any group or index of securities (including any interest therein or based on the value thereof) and derivative instruments, ETFs, UIT ETFs, closed-end funds, other well-known stock indices vehicles, such as the Standard & Poor’s 500 Composite Stock Indices (such as but not limited to SPDR S&P 500, SPDR S&P MidCap 400, “iShares”, etc.); affiliated open-end mutual funds and municipal securities.

The meaning of “Reportable Security” shall not include transactions and holdings in direct obligations of the Government of the United States; money market instruments; bankers’ acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high quality short-term debt instruments; shares of money market funds; transactions and holdings in shares of non-affiliated open-end mutual funds; and transactions in units of a unit investment trust if the unit investment trust is invested exclusively in unaffiliated open-end mutual funds. Note: This exception extends only to open end funds registered in the U.S.; therefore, transactions and holdings in offshore funds ARE reportable .

“Supervised Person” means any director, officer, and partner of the Firm (or other person occupying a similar status or performing similar functions); an employee of the Firm; and any other person who provides advice on behalf of the Firm and is subject to the Firm’s supervision and control. To affect such policies as required by this Code, the Firm’s CCO shall further classify certain Supervised Persons as an “Access Person”, or “Advisory Person”.

“Unaffiliated Open-End Mutual Fund” means any open-end mutual fund not falling within the definition of “Affiliated Open-End Mutual Fund” defined in section E. above, i.e., any open-end mutual fund to which the Firm or its control affiliate(s) do not serve as the investment adviser or principal underwriter for the fund. Currently, this means all open-end (non-exchange traded) mutual funds except for the Virtus Mutual Funds.

4.	Disclosure of Personal Brokerage Accounts ¹

All Access Persons must disclose their Personal Brokerage Accounts to their respective Compliance Department. Each Access Person’s responsibility is to notify their respective Compliance Department of all Personal Brokerage Accounts and to direct the broker to provide their Compliance Department with brokerage transaction confirmations and account statements (and verify that it has been done). Access Persons cannot assume that the broker-dealer will automatically arrange for this information to be set up and forwarded correctly. Access Persons do not need to disclose the existence of their Virtus-Fidelity 401(k) account, however any other Virtus Fidelity account holding securities, options or restricted stock of Virtus must be disclosed. 401(k) plans of an Access Person’s prior employer(s) or 401(k) plans of Immediate Family Members must be disclosed if such accounts have the capacity to invest in Affiliated Open-end Mutual Funds and/or other Reportable Securities.

5.	Prohibited Activities for Access Persons

Initial Public Offering (“IPO”) Rule: No Access Person may directly or indirectly acquire beneficial ownership in any securities in an IPO, without the prior written approval of the CCO. This also applies to IPO’s offered through the internet. No FINRA registered person or Portfolio Manager may participate in an IPO pursuant to FINRA Rule 5130.

Private Placement / Limited Offering Rule: No Access Person may directly or indirectly acquire beneficial ownership in any securities in a Private Placement or Limited Offering without the prior written approval of the CCO. The approved purchase should be disclosed to the Client if they are considering that issuer’s securities for purchase or sale.

Preclearance Rule: No Access Person may directly or indirectly acquire or dispose of beneficial ownership in a Reportable Security unless the transaction has been pre-cleared by the Compliance Department. Preclearance is valid through the next business day at the close of the U.S. market following the

¹	Certain Supervised Persons are subject to the requirements of Section 4. Please see the Appendix following this Code.

approval. An order not executed within that time must be re-submitted for preclearance approval. Access Persons must wait for approval before placing the order with their broker.

Exceptions: The following Reportable Securities transactions do not require preclearance:

Purchases or sales of up to and including 500 shares per month of Reportable Securities in any issuer ranked in the S&P 500 at the time of the transaction. An S&P 500 holding list is updated quarterly and available on the Virtus intranet website. A copy is also available for review in your Firm’s Compliance Department. The Compliance Department monitors de minimis trading for patterns of abuse. If a pattern of abuse is determined to have occurred, the Compliance Department reserves the right to suspend or cancel the ability of an Access Person to conduct de minimis transactions.

Transactions in Affiliated Open-End Mutual Funds.

Purchase orders of Reportable Securities sent directly to the issuer via mail (other than in connection with a Private Placement or Limited Offering) or sales of such securities that are redeemed directly by the issuer via mail.

Purchases or sales of Reportable Securities effected in any account over which the Access Person has no direct or indirect influence or control in the reasonable estimation of the Firm’s CCO. This exemption will apply to Personal Brokerage Accounts for which a third party, such as a broker or financial advisor, makes all investment decisions on behalf of the Access Person and the Access Person does not discuss any specific transactions for the account with the third-party manager.

Purchases or sales of Reportable Securities (i) not eligible for purchase or sale by the Client; or (ii) specified from time to time by the Firm’s Directors, subject to rules the Firm’s Directors shall specify.

Purchases of shares of Reportable Securities necessary to establish an automatic investment or dividend reinvestment plan, as well as any subsequent purchases and sales pursuant to any such automatic investment or dividend reinvestment plan.

Purchases of Reportable Securities effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent the rights were acquired from the issuer, and sales of such rights so acquired.

Purchases or sales of Reportable Securities issued under an employee stock purchase or incentive program unless otherwise restricted.

Non-volitional transactions (such as stock splits, dividends, corporate actions, etc.).

Note: The foregoing are exceptions to the Preclearance Rule only; other provisions of this Code may apply.

The Firm’s CCO or other designated compliance personnel may deny approval of any transaction requiring preclearance under this Pre-clearance Rule, even if nominally permitted under the Code, if believed that denial is necessary for the protection of the Client or the Firm.

Open Order Rule: No Access Person may directly or indirectly acquire or dispose of the Beneficial Ownership in any Reportable Security that requires preclearance (i.e., is not exempt from preclearance) when a Client has a pending buy or sell for that security of the same type until the Client’s order is executed or withdrawn.

Blackout Rule: Portfolio Managers and Advisory Persons may not directly or indirectly acquire or dispose of Beneficial Ownership in a Reportable Security within seven calendar days before and after the portfolio(s) associated with the Portfolio Manager’s and Advisory Person’s assigned duties trades in that security. The seven-day period is exclusive of the execution date. The Blackout Rule applies to transactions in securities that are required to be precleared.

Holding Period Rule: Access Persons must hold all Reportable Securities for no less than sixty (60) days, whether or not the purchase was an exempt transaction under any other provision of Section 5. Generally, a first-in first-out (“FIFO”) accounting methodology will be applied for determining compliance with this holding rule.

Gifts and Entertainment: Supervised Persons designated by the Firm’s CCO may not give or receive gifts or payments that may be construed to have an influence on business transactions conducted by the Firm. Gifts to or from Consultants or Clients must not exceed $100 per person per year. Gifts include any items of value, including sports paraphernalia or equipment, wine or food baskets, gift certificates for shopping or to a restaurant or spa. Tickets to events are considered gifts if the associate does not attend the event. The $100 limit that applies to gifts does not apply to entertainment. Nonetheless, entertainment must be neither so frequent nor so extensive as to raise any question of impropriety. The CCO or other designated personnel will

maintain records of all gifts and payments of $100 or more per person and all entertainment. ALL gifts and entertainment received or given must be reported to the Compliance Department. Supervised Persons designated by the Firm’s CCO are required to submit a log quarterly.

Serving on Boards of Directors: No Advisory Person shall serve on the board of directors of a publicly traded company without prior authorization from Virtus Investment Partners Inc. Counsel or the Firm’s CCO. If authorized, the Advisory Person shall have no role in making investment decisions with respect to the publicly traded company.

Excessive Trading Rule: No Portfolio Manager shall engage in excessive trading or market timing activities with respect to any mutual fund regardless of whether or not the mutual fund is managed by that Firm/Sub-advisor or any affiliated adviser/sub-advisor. Market timing is defined as a purchase and redemption, regardless of size, in and out of the same mutual fund within any sixty (60) day period. The foregoing restrictions shall not apply to Portfolio Managers investing in mutual funds through asset allocation programs, automatic reinvestment programs, and any other non-volitional investment vehicles.

Material, Non-public Information: No Supervised Person shall divulge or act upon any material, non-public information as defined under relevant securities laws. For more information, refer to the Firm’s Insider Trading Policy and Procedures.

Pay to Play Rule: The SEC has adopted Rule 206(4)-5 of the Advisers Act (the Rule or Pay to Play Rule) as a means to curtail the ability of investment advisers to use political contributions to influence state and municipal government officials responsible for hiring the investment advisers, otherwise known as pay for play practices. Under the Rule, political contributions made by advisers or their personnel or affiliates may result in serious limitations on the advisers’ ability to receive compensation for the management of certain public funds. It does not prohibit political contributions but does prohibit the adviser from receiving compensation from that government plan. The Rule does not preempt state or local pay to play laws. The Firm and its Covered Associates, as defined in the Firm’s Pay to Play policy (“policy”), are prohibited from doing anything indirectly which, if done directly, would violate the Rule. This could include contributions made by Immediate Family Members even though they are not considered Covered Associates.

Effective with this Code, if a Covered Associate, as defined in the policy, is entitled to vote for a government official, they may only contribute $350 or less to that official per election. If they are not entitled to vote for a

government official, they may only contribute $150 or less to that official per election. They are also required to report to Compliance all contributions made on a quarterly basis. Please refer to the Firm’s Pay to Play separate policy.

6.	Reporting & Compliance Procedures ²

Duplicate Trade Confirmations and Personal Brokerage Account Statements: All Access Persons shall direct their brokers to supply, at the same time that they are sent to the Access Person, a copy of the confirmation for each personal Reportable Securities trade in a Personal Brokerage Account and a copy, at least quarterly, of an account statement for each Personal Brokerage Account to their respective Compliance Department (an electronic feed from the broker will satisfy these requirements). Access to duplicate confirmations and account statements will be restricted to those persons assigned to perform review functions, and all materials will be kept confidential except as required by law.

Quarterly Transactions Reports: Access Persons shall report to the Firm the information (specified further below) with respect to transactions in any Reportable Security in which the Access Person has, or by reason of that transaction acquires, any direct or indirect Beneficial Ownership in the Reportable Security.

Every Quarterly Transaction Report shall be made no later than 15 days after the end of the calendar quarter and shall include all transactions in Reportable Securities effected during the calendar quarter being reported on. Quarterly Transaction Reports shall contain the following information:

(i)

The date of the transaction in the Reportable Security, the title and number of shares of equity securities; or, the maturity date, principal amount and interest rate of debt securities, of each Reportable Security involved; and as applicable, the exchange ticker symbol or cusip number;

(ii)

The type of transaction (i.e., purchase, sale, or any other type of acquisition or disposition);

²	Certain Supervised Persons are subject to the requirements of Sections 6A, 6B and 6C. Please see the Appendix following this Code.

(iii)

The price of the Reportable Security at which the transaction was effected;

(iv)

The name of the broker, dealer or bank with or through whom the transaction was effected; and

(v)

The date the report is submitted.

To the extent that the Access Person certified that the Compliance Department is receiving duplicate statements of Personal Brokerage Accounts, the above disclosures are considered to have been made for transactions in Reportable Securities occurring in those Personal Brokerage Accounts.

Initial and Annual Holdings Reports: Each Access Person shall submit an Initial Holdings and Annual Holdings Report listing all personal Reportable Securities holdings to their Firm’s Compliance Department upon the commencement of service and annually thereafter (the Initial Holdings Report and the Annual Holdings Report , respectively). The information on the Initial Holdings Report must be current as of a date not more than 45 days prior to the date the individual becomes an Access Person. An Initial Holdings Report and certification must be submitted to their Firm’s Compliance Departments no later than 10 days after becoming an Access Person. The Annual Holdings Report holdings information shall be as of December 31 of the prior year. Access Persons shall submit the Annual Holdings Report and certification to their Firm’s Compliance Department by January 31 of each year. Access Persons shall include on their Annual Holdings Report any holdings in Affiliated Open-end Mutual Funds including those held in the Access Person’s Virtus-Fidelity 401(k) plan.

Every Initial Holdings Report and Annual Holdings Report required pursuant to this section shall contain the following information for Reportable Securities:

(i)

The title, type and number of shares of equity securities; and/or the maturity date, principal amount and interest rate of debt securities; and as applicable the exchange ticker symbol or CUSIP number, number of shares, and principal amount of each Reportable Security in which the Access Person has any direct or indirect Beneficial Ownership;

(ii)

The name of any broker, dealer or bank with which the Access Person maintains an account in which any securities are held for the Access Person’s direct or indirect Beneficial Ownership;

(iii)

The date the Access Person submits the report; and

(iv)

For Initial Holdings Reports and Annual Holdings Reports, a certification by the Supervised Person that he or she has read, understood, has complied, and shall continue to comply with the requirements of this Code and the Firm’s Insider Trading Policy and Procedures.

Exceptions to reporting requirements (Quarterly Transactions and Initial and Annual Holdings):

(i)

Any report of Reportable Securities held in accounts over which the Access Person had no direct or indirect influence or control;

(ii)

A Quarterly Transaction Report of Reportable Securities transactions effected pursuant to an automatic investment plan; and

(iii)

Any report made under this Section 6 may contain a statement that the report shall not be construed as an admission by the person making such reports that he or she has any direct or indirect Beneficial Ownership in the security to which the report relates.

The Firm’s CCO shall submit an annual report to the Fund Board of Directors/Trustee for any fund advised or sub-advised by the Firm that summarizes the current Code procedures, identifies any violations requiring significant remedial action, and recommends appropriate changes to the Code, if any.

Any Supervised Person must promptly report possible violations of the Code to the Firm’s CCO or other designee (including but not limited to potential conflicts of interest) when they suspect, in good faith, that a violation may have occurred or is reasonably likely to occur. If a matter implicates the Firm’s CCO or other designee, notice of a violation should be reported to the Virtus Investment Partners Inc. CCO. Failure to do so is in itself a violation of this Code. No retaliation or retribution of any kind will be taken against any Supervised Person who, in good faith, reports a suspected violation of this Code. To the extent possible under the circumstances, all information will be kept confidential.

The Firm’s Compliance Department will review all reports and other information submitted under Section 6. This review will include comparisons with trading records of Client accounts as are necessary or appropriate in determining whether there have been any violations of the Code.

The Firm’s Compliance Personnel will maintain a list of all Supervised Persons, Access Persons, Advisory Persons, and Portfolio Managers who are required to make reports under the Code, and shall inform such individuals of their reporting obligations and if any requirement of this Code has not been complied with.

The Firm shall provide a copy of the Code and any amendments to all Supervised Persons and obtain their written acknowledgement of receipt.

7.	401(k) Plans and the Requirements of the Code ³

Duplicate Trade Confirmations and Personal Brokerage Account Statements: If an Access Person has a 401(k) account from a previous employer that can transact in Affiliated Open-end Mutual Funds and/or other Reportable Securities, the Access Person shall direct her broker to supply, at the same time that they are sent to the Access Person, a copy of the confirmation for each personal Reportable Securities trade and a copy, at least quarterly, of an account statement to the Access Person’s Compliance Department for each 401(k) account other than the Virtus-Fidelity 401(k) plan.

Quarterly Transactions Reports: If the Compliance Department is not receiving copies of broker trade confirmations or account statements, Access Persons are required to submit a Quarterly Transaction Report for transactions in Reportable Securities (e.g., Affiliated Open-end Mutual Funds or a previous employer’s stock) for 401(k) accounts other than the Virtus-Fidelity 401(k) plan.

³	Certain Supervised Persons are subject to the requirements of Sections 7A and 7C – 7E. Please see the Appendix following this Code.

8.	Recordkeeping Requirements

The Firm will maintain in an easily accessible place, the following records:

A copy of any Code for the organization that is in effect, or at any time within the past five (5) calendar years was in effect;

A record of any Code violation or action taken as a result of the violation that occurred during the current year and the past five (5) calendar years;

A record of all written acknowledgments as required by Rule 204A-1 of the Advisers Act for each Supervised Person who is currently, or within the past five (5) calendar years was, a Supervised Person;

A copy of each report made by an Access Person during the current year and the past five (5) calendar years as required by Rule 17j-1 of the Investment Company Act and/or Rule 204A-1 of the Advisers Act and Sections 6B and 6C of this Code, including any information provided in lieu of the reports under Section 6B and 6C above;

A list of all persons, currently or within the past five (5) calendar years who are or were required to make reports pursuant to Rule 17j-1 of the Investment Company Act and/or Rule 204A-1 of the Advisers Act and Sections 6B and 6C above, or who were responsible for reviewing those reports, together with an appropriate description of their title or employment;

A copy of each report made by the Firm’s CCO pursuant to Section 6E above during the current year and the past five (5) calendar years;

A record of any decision made during the current year and the past five (5) calendar years by the Firm’s CCO, and the reasons supporting each decision, to grant prior approval pursuant to Sections 5A and 5B above for acquisition by an Access Person of securities in an IPO or a Private Placement transaction;

The Virtus Investment Partners Inc. Corporate Compliance Department (or at its direction, another Firm CCO) is responsible for administration of all aspects of this Code with respect to those individuals designated as Affiliated Officers by providing written affirmation that the provisions of this Code were upheld and that these Affiliated Officers were or were not in compliance with the Code and/or providing any required records to the applicable Firm (or other affiliate) CCO.

As required by enhanced recordkeeping requirement under Rule 204-2 of the Adviser Act, records related to contributions made by the Firm and its Covered Associates to officials and candidates and of payments to state or local political parties or PACS including the following:

A list of Covered Associates (including names, titles, business and residence addresses) currently or within the past five (5) calendar years. This five-year recordkeeping requirement would not apply to periods prior to March 14, 2011; and

A list of government entities to which the Firm has provided advisory services in the past five (5) calendar years. This five-year recordkeeping requirement would not apply to periods prior to September 13, 2010.

Sanctions

Upon discovering a violation of this Code, the Parent of the Firm or if applicable the Funds Board of Directors, besides any remedial action already taken by the respective adviser or related entity, may impose sanctions as it deems appropriate (see under separate cover the currently imposed sanctions), including, among other things, a letter of censure or suspension or termination of employment, or suspension of personal trading privileges for such period as it may deem appropriate.

Any profits realized by a Portfolio Manager or Advisory Person on a personal trade in violation of Section 5E (Blackout Rule) must be disgorged. In addition, the Firm’s CCO may direct any Supervised Person to disgorge any profit realized (or loss avoided) on a personal trade in violation of this Code.

10.	Exceptions

The Firm’s CCO may grant written exceptions to provisions of the Code based on equitable considerations. The exceptions may be granted to individuals or classes of individuals with respect to particular transactions, classes of transactions or all transactions, and may apply to past as well as future transactions. However, no exception will be granted when it would result in a violation of Section 204-2 of the Advisers Act. Exceptions granted are reported to the Directors of the Firm, as well as the Boards of any managed Fund.

Appendix

Additional requirements for Euclid Advisors LLC, Newfleet Asset Management, LLC - Hartford, Newfleet Asset Management, LLC - San Francisco, Virtus Alternative Investment Advisers, Inc., Virtus Investment Advisers, Inc., VP Distributors, LLC and Zweig Advisers LLC are as follows:

All Supervised Persons of the above Firms are subject to the same requirements as Access Persons as indicated in Section 4. “Disclosure of Personal Brokerage Accounts”, Section 6. “Reporting & Compliance Requirements” (Sections: 6A, 6B, and 6C) and Section 7. “401(k) Accounts and the Requirements of the Code” (Sections: 7A and 7C – 7E). Specifically the term “Access Person(s)” as used in those sections is hereby replaced with the term “Access Person(s) and Supervised Person(s)”.

Additional requirements for Kayne Anderson Rudnick Investment Management, LLC (“KAR”) are as follows:

All KAR employees are considered Access Persons. KAR employees are permitted to buy or sell exchange traded funds (“ETFs”) without receiving pre-clearance from Compliance. However, all ETF transactions should be included on the quarterly personal trade certifications.

KAR employees follow the policy on gifts and entertainment discussed below. However, any KAR employee who is registered with VP Distributors, LLC will follow the gift and entertainment policy in Section 5 (g) of this Code of Ethics.

A conflict of interest occurs when the personal interests of employees interfere or could potentially interfere with their responsibilities to the firm and its clients. Supervised Persons should not accept inappropriate gifts, favors, entertainment, special accommodations, or other things of material value that could influence their decision-making or make them feel beholden to a person or firm. Supervised Persons should not offer gifts, favors, entertainment, or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to the firm or the supervised person.

•

Gifts . No Supervised Person may receive any gift, services, or other things of more than a $175.00 value per year from any person or entity that does business with or on behalf of KAR, without pre-approval by the Chief Compliance Officer or Chief Operating Officer. No Supervised Person may give or offer any gift of more than a $175.00 value per year to existing clients, prospective clients, or any entity that does business with or on behalf of the adviser without pre-approval by the Chief Compliance Officer or the Chief Operating Officer. Compliance will maintain a Gift Log of all gifts over $175 given or received from by any KAR employees, which are not broker/dealer related. The Gift Log will include: employee name, type of gift, dollar amount of gift, and sender of the gift. In

addition, Compliance will maintain a Gift Log of all gifts over $100 given or received by any broker/dealer. The broker/dealer Gift Log will include: employee name, type of gift, dollar amount of gift, and broker who sent the gift.

•

Cash . No Supervised Person may give or accept cash gifts or cash equivalents to or from a client, prospective client, or any entity that does business with or on behalf of KAR without approval from the Chief Compliance Officer.

•

Entertainment . No Supervised Person may provide or accept extravagant or excessive entertainment to or from a client, prospective client, or any person or entity that does or seeks to do business with or on behalf of KAR. Supervised Persons may provide or accept a business entertainment event, such as dinner or a sporting event.

Schedule A

On February 15, 2012, the following entities adopted this Code of Ethics:

Euclid Advisors LLC

Duff & Phelps Investment Management Co.

Kayne Anderson Rudnick Investment Management, LLC

Newfleet Asset Management, LLC- Hartford

Newfleet Asset Management, LLC - San Francisco

Virtus Alternative Investment Advisers, Inc.

Virtus Investment Advisers, Inc.

VP Distributors, LLC

Zweig Advisers LLC