As filed with the Securities and Exchange Commission on January 27, 2016

File No. 033-65137

File No. 811-07455

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

and/or

REGISTRATION STATEMENT

Virtus Opportunities 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):

If appropriate, check the following box:

 

 

Prospectus

 

​		​	​	TICKER SYMBOL BY CLASS																​
​	FUND	​	​	A	​	​	B	​	​	C	​	​	I	​	​	R6	​	​	T	​
​	Virtus Alternatives Diversifier Fund	​	​	PDPAX	​	​		​	​	PDPCX	​	​	VADIX	​	​		​	​		​
​	Virtus Bond Fund	​	​	SAVAX	​	​	SAVBX	​	​	SAVCX	​	​	SAVYX	​	​		​	​		​
​	Virtus CA Tax-Exempt Bond Fund	​	​	CTESX	​	​		​	​		​	​	CTXEX	​	​		​	​		​
​	Virtus Dynamic Trend Fund	​	​	EMNAX	​	​	​	​	​	EMNCX	​	​	VIMNX	​	​	VDARX	​	​		​
​	Virtus Emerging Markets Debt Fund	​	​	VEDAX	​	​		​	​	VEDCX	​	​	VIEDX	​	​		​	​		​
​	Virtus Emerging Markets Equity Income Fund	​	​	VEIAX	​	​		​	​	VEICX	​	​	VEIIX	​	​		​	​		​
​	Virtus Emerging Markets Small-Cap Fund	​	​	VAESX	​	​		​	​	VCESX	​	​	VIESX	​	​		​	​		​
​	Virtus Equity Trend Fund	​	​	VAPAX	​	​		​	​	VAPCX	​	​	VAPIX	​	​	VRPAX	​	​		​
​	Virtus Essential Resources Fund	​	​	VERAX	​	​		​	​	VERCX	​	​	VERIX	​	​		​	​		​
​	Virtus Foreign Opportunities Fund	​	​	JVIAX	​	​		​	​	JVICX	​	​	JVXIX	​	​	VFOPX	​	​	​	​
​	Virtus Global Equity Trend Fund	​	​	VGPAX	​	​		​	​	VGPCX	​	​	VGPIX	​	​		​	​		​
​	Virtus Global Infrastructure Fund	​	​	PGUAX	​	​		​	​	PGUCX	​	​	PGIUX	​	​		​	​		​
​	Virtus Global Opportunities Fund	​	​	NWWOX	​	​	WWOBX	​	​	WWOCX	​	​	WWOIX	​	​		​	​		​
​	Virtus Global Real Estate Securities Fund	​	​	VGSAX	​	​		​	​	VGSCX	​	​	VGISX	​	​		​	​		​
​	Virtus Greater European Opportunities Fund	​	​	VGEAX	​	​		​	​	VGECX	​	​	VGEIX	​	​		​	​		​
​	Virtus Herzfeld Fund	​	​	VHFAX	​	​		​	​	VHFCX	​	​	VHFIX	​	​		​	​		​
​	Virtus High Yield Fund	​	​	PHCHX	​	​	PHCCX	​	​	PGHCX	​	​	PHCIX	​	​		​	​		​
​	Virtus International Equity Fund	​	​	VIEAX	​	​		​	​	VIECX	​	​	VIIEX	​	​		​	​		​
​	Virtus International Real Estate Securities Fund	​	​	PXRAX	​	​		​	​	PXRCX	​	​	PXRIX	​	​		​	​		​
​	Virtus International Small-Cap Fund	​	​	VISAX	​	​		​	​	VCISX	​	​	VIISX	​	​	VRISX	​	​		​
​	Virtus International Wealth Masters Fund	​	​	VIWAX	​	​		​	​	VIWCX	​	​	VWIIX	​	​		​	​		​
​	Virtus Low Volatility Equity Fund	​	​	VLVAX	​	​		​	​	VLVCX	​	​	VLVIX	​	​		​	​		​
​	Virtus Multi-Asset Trend Fund	​	​	VAAAX	​	​		​	​	VAACX	​	​	VAISX	​	​		​	​		​
​	Virtus Multi-Sector Intermediate Bond Fund	​	​	NAMFX	​	​	NBMFX	​	​	NCMFX	​	​	VMFIX	​	​	VMFRX	​	​		​
​	Virtus Multi-Sector Short Term Bond Fund	​	​	NARAX	​	​	PBARX	​	​	PSTCX	​	​	PIMSX	​	​		​	​	PMSTX	​
​	Virtus Real Estate Securities Fund	​	​	PHRAX	​	​	PHRBX	​	​	PHRCX	​	​	PHRIX	​	​	VRREX	​	​		​
​	Virtus Sector Trend Fund	​	​	PWBAX	​	​		​	​	PWBCX	​	​	VARIX	​	​		​	​		​
​	Virtus Senior Floating Rate Fund	​	​	PSFRX	​	​		​	​	PFSRX	​	​	PSFIX	​	​		​	​		​
​	Virtus Wealth Masters Fund	​	​	VWMAX	​	​		​	​	VWMCX	​	​	VWMIX	​	​		​	​		​
​		​	​		​	​		​	​		​	​		​	​		​	​		​

 

​	TRUST NAME	​	​	January 28, 2016	​
​	VIRTUS OPPORTUNITIES TRUST	​	​		​
​		​	​		​

 

 

​	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	​
​		​	​		​

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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 a broad-based securities market index and a composite benchmark. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2009:

​

​

12.30%

​

​

Worst Quarter:

​

​

Q4/2008:

​

​

-21.63%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (10/1/09)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-14.99%	​	​	-1.32%	​	​	0.77%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-15.18%	​	​	-1.56%	​	​	0.45	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-8.27%	​	​	-0.93%	​	​	0.63%	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-10.54%	​	​	-0.90%	​	​	0.60%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-9.61%	​	​	0.12%	​	​	—	​	​	2.86%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	7.31%	​	​	13.96%	​
​	Alternatives Diversifier Composite Benchmark (reflects no deduction for fees, expenses or taxes)	​	​	-10.00%	​	​	0.47%	​	​	2.34%	​	​	2.94%	​
​		​	​		​	​		​	​		​	​		​

The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The Alternatives Diversifier Composite consists of Diversified Trends Index (15%) (prior to 3/1/12, the HFRX Equity Market Neutral Index was used (20%)), FTSE EPRA NAREIT Developed Rental Index-net (20%) (prior to 6/1/15, the UBS Global Investors Index was used (20%), MSCI World Infrastructure Sector Capped Index (15%)(prior to 9/1/08, a mix of MSCI US Utilities Index (65%), MSCI World Telecom Services Index (20%) and MSCI World ex US Utilities Index (15%) was used), S&P North American Natural Resources Sector Index (10%), Deutsche Bank Liquid Commodity Index (15%), Deutsche Bank G10 Currency Harvest Index (15%)(prior to 3/1/12, the Deutsche Bank G10 Currency Harvest Index (10%) was used) and Credit Suisse Leveraged Loan Index (10%). The indexes are unmanaged and not available for direct investment.

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 A 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

4 Virtus Alternatives Diversifier Fund

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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. (“VIA”).

The fund’s subadviser is Euclid Advisors LLC (“Euclid”), an affiliate of VIA.

Portfolio Management

>

• David Dickerson,   Managing Director at Euclid, is a manager of the fund. Mr. Dickerson has served as a Portfolio Manager of the fund since 2008.

>

• Carlton Neel,   Senior Managing Director at Euclid, is a manager of the fund. Mr. Neel has served as a Portfolio Manager of the fund since 2008.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus Alternatives Diversifier Fund 5

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Virtus Bond Fund

Investment Objective

The fund has an investment objective of high total return from both current income and capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class B	​	​	Class C	​	​	Class I	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	3.75%	​	​	None	​	​	None	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	5.00% ​ (a)	​	​	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 B	​	​	Class C	​	​	Class I	​
​	Management Fees	​	​	0.45%	​	​	0.45%	​	​	0.45%	​	​	0.45%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.42%	​	​	0.42%	​	​	0.42%	​	​	0.42%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	1.13%	​	​	1.88%	​	​	1.88%	​	​	0.88%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.27)%	​	​	(0.27)%	​	​	(0.27)%	​	​	(0.27)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	0.86%	​	​	1.61%	​	​	1.61%	​	​	0.61%	​
​		​	​		​	​		​	​		​	​		​

(a)

• The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 1% annually to 2% during the fourth and fifth years and to 0% after the fifth year. 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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 0.85% for Class A Shares, 1.60% for Class B Shares, 1.60% for Class C Shares and 0.60% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. 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, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. In the case of Class B Shares, it assumes that your shares are converted to Class A Shares after eight years. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

6 Virtus Bond Fund

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​		​	​	Share Status	​	​	1 Year	​	​	3 Years	​	​	5 Years	​	​	10 Years	​
​	Class A	​	​	Sold or Held	​	​	$459	​	​	$695	​	​	$949	​	​	$1,675	​
​	Class B	​	​	Sold	​	​	$564	​	​	$765	​	​	$991	​	​	$1,983	​
			​	Held	​	​	$164	​	​	$565	​	​	$991	​	​	$1,983	​
​	Class C	​	​	Sold	​	​	$264	​	​	$565	​	​	$991	​	​	$2,179	​
			​	Held	​	​	$164	​	​	$565	​	​	$991	​	​	$2,179	​
​	Class I	​	​	Sold or Held	​	​	$62	​	​	$254	​	​	$461	​	​	$1,059	​
​		​	​		​	​		​	​		​	​		​	​		​

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 64% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

The fund seeks to generate high total return from both current income and capital appreciation by investing primarily in intermediate-term debt securities across 14 fixed income sectors.

The fund seeks to achieve its objective by applying a time-tested approach of active sector rotation, extensive credit research and disciplined risk management designed to capitalize on opportunities across undervalued areas of the fixed income markets.

Under normal circumstances, the fund invests at least 80% of its assets in fixed income debt obligations of various types of issuers, to include some or all of the following:

•

• Securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities, including collateralized mortgage obligations (“CMOs”), real estate mortgage investment conduits (“REMICs”), and other pass-through securities;

•

• Debt securities issued by foreign issuers, including foreign governments and their political subdivisions and issuers located in emerging markets;

•

• Investment-grade securities (primarily of U.S. issuers, secondarily of non-U.S. issuers), which generally are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization; and

•

• High-yield debt instruments, including bank loans (which are generally floating-rate).

At least 65% of the fund’s assets will be invested in investment-grade securities, which are securities rated, at the time of investment, 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 up to 35% of its total assets in securities rated below investment grade at time of purchase. The fund may continue to hold securities whose credit quality falls below investment grade.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

Virtus Bond Fund 7

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>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• 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.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

>

• 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.

>

• Loan Risk.   The risks that, in addition to the risks typically associated with high-yield/high-risk fixed income securities, loans in which the fund invests may be unsecured or not fully collateralized, may be subject to restrictions on resale and/or some loans may trade infrequently on the secondary market. Loans settle on a delayed basis, potentially leading to the sale proceeds of loans not being available to meet redemptions for a substantial period of time after the sale of the loans.

>

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

>

• 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.

>

• Mortgage-Backed and Asset-Backed Securities Risk.   The risk that changes in interest rates will cause both extension and prepayment risks for mortgage-backed and asset-backed securities in which the fund invests, or that an impairment of the value of collateral underlying such securities, will cause the value of the securities to decrease.

>

• U.S. Government Securities Risk.   The risk that 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.

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 a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.

8 Virtus Bond Fund

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Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2009:

​

​

5.51%

​

​

Worst Quarter:

​

​

Q2/2013:

​

​

-3.00%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​
​	Class A	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-3.80%	​	​	2.73%	​	​	4.24%	​
​	Return After Taxes on Distributions	​	​	-4.92%	​	​	1.27%	​	​	2.73%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-2.14%	​	​	1.48%	​	​	2.68%	​
​	Class B	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-4.76%	​	​	2.73%	​	​	3.85%	​
​	Class C	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-0.80%	​	​	2.74%	​	​	3.87%	​
​	Class I	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	0.19%	​	​	3.76%	​	​	4.90%	​
​	Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	0.55%	​	​	3.25%	​	​	4.52%	​
​		​	​		​	​		​	​		​

The Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The index is calculated on a total return basis. The index is unmanaged and not available for direct investment. 

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 A 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. (“VIA”).

The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.

Portfolio Management

>

• David L. Albrycht, CFA,   President and Chief Investment Officer at Newfleet, is a manager of the fund. Mr. Albrycht has served as a Portfolio Manager of the fund since October 2012.

>

• Christopher J. Kelleher, CFA, CPA,   Senior Managing Director and Senior Portfolio Manager at Newfleet, is a manager of the fund. Mr. Kelleher has served as a Portfolio Manager of the fund since October 2012.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

Virtus Bond Fund 9

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•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

NOTE: Class B Shares are no longer available for purchase, except through reinvestment of dividends/capital gain distributions by existing shareholders and exchange of Class B shares of a fund for Class B shares of other Virtus Mutual Funds, as permitted by the existing exchange privileges (as set forth in the fund’s prospectus).

Taxes

The fund’s distributions are taxable to you either as 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.

10 Virtus Bond Fund

---

Virtus CA Tax-Exempt Bond Fund

Investment Objective

The fund has investment objectives of obtaining a high level of current income exempt from California state and local income taxes, as well as federal income tax, consistent with the preservation of capital.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	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)	​	​	2.75%	​	​	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	​	​	0.45%	​	​	0.45%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	None	​
​	Other Expenses	​	​	0.48%	​	​	0.48%	​
​	Total Annual Fund Operating Expenses	​	​	1.18%	​	​	0.93%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (a)	​	​	(0.33)%	​	​	(0.33)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (a)	​	​	0.85%	​	​	0.60%	​
​		​	​		​	​		​

(a)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 0.85% for Class A Shares and 0.60% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$359	​	​	$608	​	​	$875	​	​	$1,639	​
​	Class I	​	​	Sold or Held	​	​	$61	​	​	$263	​	​	$482	​	​	$1,113	​
​		​	​		​	​		​	​		​	​		​	​		​

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 24% of the average value of its portfolio.

Virtus CA Tax-Exempt Bond Fund   11

---

Investments, Risks and Performance

Principal Investment Strategies

The fund seeks current income free from federal and state income taxes by investing in municipal bonds issued in the state of California. The management team focuses on high quality California tax-exempt municipal bonds, gauging the value of a security by issue type, credit quality, and bond structure; however, the fund may invest up to 20% of its net assets in below investment grade tax-exempt municipal bonds. Below investment grade tax-exempt municipal bonds are considered high-yield/high-risk fixed income securities.

Under normal circumstances, as a matter of fundamental policy, the fund invests at least 80% of its assets in bonds, the income from which is exempt from California state income tax and federal income tax, and may invest 100% of its assets in such securities. The portion of the fund’s assets not invested in tax-exempt securities may be invested in taxable fixed income securities. Income from these investments may be subject to federal, state and local taxes.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• High-Yield/High-Risk Fixed Income Securities (Junk Bonds) Risk.   The risk that 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.

>

• 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.

>

• 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.

>

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

>

• Tax-Exempt Securities   The risk that tax-exempt securities may not provide a higher after-tax return than taxable securities, or that the tax-exempt status of such securities may be lost or limited.

>

• Unrated Fixed Income Securities Risk.   The risk that the subadviser will be unable to accurately assess the quality of an unrated fixed income security, so that the fund invests in a security with greater risk than intended, or that the liquidity of unrated fixed income securities in which the fund invests will be hindered, making it difficult for the fund to sell them.

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 a broad-based securities market index and a more

12 Virtus CA Tax-Exempt Bond Fund

---

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 A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q3/2009:

​

​

8.13%

​

​

Worst Quarter:

​

​

Q4/2010:

​

​

-4.63%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (9/29/06)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes0.54	​	​	0.54%	​	​	5.35%	​	​	4.12%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-0.01%	​	​	4.93%	​	​	3.89%	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	2.07%	​	​	4.97%	​	​	4.01%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	3.73%	​	​	6.19%	​	​	—	​	​	4.66%	​
​	Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	0.55%	​	​	3.25%	​	​	4.52%	​	​	4.54%	​
​	Barclays California Municipal Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	3.51%	​	​	6.31%	​	​	4.98%	​	​	4.96%	​
​		​	​		​	​		​	​		​	​		​

The Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The Barclays California Municipal Bond Index measures long term investment grade, tax-exempt and fixed rate bonds issued in California. The indexes are calculated on a total return basis. The indexes are unmanaged and not available for direct investment.  

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 A 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. (“VIA”).

The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.

Virtus CA Tax-Exempt Bond Fund   13

---

Portfolio Management

>

• Timothy M. Heaney, CFA,   Senior Portfolio Manager—Municipal Securities at Newfleet, is the manager of the fund. Mr. Heaney has served as the Portfolio Manager of the fund since 1997 and co-managed the fund from 1996 to 1997.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

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

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.

14 Virtus CA Tax-Exempt Bond Fund

---

Virtus Dynamic Trend Fund

Investment Objective

The fund has an investment objective of long-term capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class C	​	​	Class I	​	​	Class R6	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	5.75%	​	​	None	​	​	None ​ (c)	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	1.00% ​ (a)	​	​	None	​	​	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	​	​	Class R6	​
​	Management Fees ​ (b)	​	​	0.36%	​	​	0.36%	​	​	0.36%	​	​	0.36%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​	​	None	​
​	Other Expenses	​	​		​	​		​	​		​	​	​	​
​	Dividends on Short Sales and Interest Expense	​	​	0.52%	​	​	0.52%	​	​	0.52%	​	​	0.52%	​
​	Remainder of Other Expenses	​	​	0.29%	​	​	0.29%	​	​	0.29%	​	​	0.21%	​
​	Total Other Expenses	​	​	0.81%	​	​	0.81%	​	​	0.81%	​	​	0.73%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (c)	​	​	1.43%	​	​	2.18%	​	​	1.18%	​	​	1.10%	​
​		​	​		​	​		​	​		​	​		​

(a)

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

(b)

• Management Fees are lower than the contractual base fee rate due to effect of the performance fee adjustment. Performance fee adjustments may increase or decrease the management fee by up to +/- 1.00% of the average net assets of the fund during a rolling 36-month period.

(c)

• The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses 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

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 and then redeem all of your shares at the end of those periods. 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	​	​	$712	​	​	$1,001	​	​	$1,312	​	​	$2,190	​
​	Class C	​	​	Sold	​	​	$321	​	​	$682	​	​	$1,169	​	​	$2,513	​
			​	Held	​	​	$221	​	​	$682	​	​	$1,169	​	​	$2,513	​
​	Class I	​	​	Sold or Held	​	​	$120	​	​	$375	​	​	$649	​	​	$1,432	​
​	Class R6	​	​	Sold or held	​	​	$112	​	​	$350	​	​	$606	​	​	$1,340	​
​		​	​		​	​		​	​		​	​		​	​		​

Virtus Dynamic Trend Fund 15

---

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 687% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

The fund utilizes a rules based investment process and may invest in securities representing the approximately 130 sub-sectors of the primary sectors of the S&P 500 ​ ® Index and/or cash equivalents (high-quality short-term securities). Allocations to each sub-sector are based on quantitative models.

The fund has the flexibility to invest in any combination of the sub-sectors and high-quality short-term securities, or 100% in high-quality short-term securities. A relative strength momentum model is utilized to rank each sub-sector of the equity market. The fund will allocate to those top sub-sectors that the model determines are more likely to outperform the broad market. A market risk indicator model is also used to determine whether the market is in a lower or higher level of risk based on price trends in the overall market. When the market is determined to be in a higher level of risk, a defensive cash equivalent position may be built by allocating from those sub-sectors of the market that are not exhibiting absolute positive momentum, up to 100% of fund assets. During periods when the model indicates that the market is in a higher level of risk, an exchange-traded fund (“ETF”) representing the S&P 500 ​ ® Index may be sold short in an amount equal to the total cash allocation up to a limit of 25% of net assets.

The adviser is responsible for final model specification, portfolio construction, model monitoring, and governance. The subadviser, Euclid Advisors, LLC monitors the fund’s allocations to the underlying securities and is responsible for rebalancing assets to maintain target allocations among the underlying sub-sectors, while taking into account any other factors the subadviser may deem relevant, such as cash flow and/or timing considerations.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• 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.

>

• Portfolio Turnover Risk.   The risk that the fund’s principal investment strategies will result in a consistently high portfolio turnover rate. See the Portfolio Turnover section above for more information about the impact that portfolio turnover can have on your investment.

>

• Quantitative Model Risk.   The risk that investments selected using quantitative models may perform differently from the market as a whole or from their expected performance. There can be no assurance that use of a quantitative model will enable the fund to achieve positive returns or outperform the market.

>

• Sector Focused Investing Risk.   The risk that events negatively affecting a particular industry or market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent that the fund invests a significant portion of its portfolio in ETFs representing one or

16 Virtus Dynamic Trend Fund

---

more of the primary sectors of the S&P 500 ​ ® Index (such as consumer discretionary, energy, healthcare) or in an ETF representing U.S. Treasuries, the fund is more vulnerable to conditions that negatively affect such sectors as compared to a fund that is not significantly invested in such sectors.

>

• Short Sales Risk.   The risk that a fund may experience a loss if the price of a borrowed security increases between the date of a short sale and the date on which the fund replaces the security.

>

• U.S. Government Securities Risk.   The risk that 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.

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 a broad-based securities market index and a more narrowly-based benchmark. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q1/2013:

​

​

13.50%

​

​

Worst Quarter:

​

​

Q3/2011:

​

​

-6.00%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (10/1/09)	​	​	Class R6 Since Inception (11/12/14)	​
​	Class A	​	​		​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-11.93%	​	​	1.83%	​	​	0.31%	​	​	—	​	​	—	​
​	Return After Taxes on Distributions	​	​	-11.93%	​	​	1.10%	​	​	-0.17%	​	​	—	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-6.75%	​	​	1.46%	​	​	0.28%	​	​	—	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​	​	​	​
​	Return Before Taxes	​	​	-7.34%	​	​	2.28%	​	​	0.15%	​	​	—	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-6.37	​	​	3.34%	​	​	—	​	​	2.79%	​	​	—	​
​	Class R6	​	​		​	​		​	​		​	​		​	​		​
​	Returns Before Taxes	​	​	-6.28	​	​	—	​	​	—	​	​	—	​	​	-6.65%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	7.31%	​	​	13.96%	​	​	2.37%	​
​	HFRX Equity Hedge Index (reflects no deduction of fees, expenses or taxes)	​	​	-2.33%	​	​	-1.36%	​	​	-0.34%	​	​	0.63%	​	​	-1.45%	​
​		​	​		​	​		​	​		​	​		​	​		​

Virtus Dynamic Trend Fund 17

---

The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The index is unmanaged and not available for direct investment. The HFRX Equity Hedge Index measures performance of long and short strategies that invest primarily in equity securities and derivatives of equity securities. The index is unmanaged and not available for direct investment.

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 A 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. (“VIA”).

The fund’s subadviser is Euclid Advisors LLC (“Euclid”), an affiliate of VIA.

Portfolio Management

>

• Warun Kumar,   Senior Managing Director and Portfolio Manager at VIA, is a manager of the fund. Mr. Kumar has served as a Portfolio Manager of the fund since May 2015.

>

• Amy Robinson,   Managing Director at Euclid, is a manager of the fund. Ms. Robinson has served as a Portfolio Manager of the fund since February 2012.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

For Class R6 Shares, there is no minimum initial investment and there is no minimum for additional purchases. R6 Shares are available only to certain employer-sponsored retirement plans, including Section 401(k), 403(b) and 457, profit-sharing, money purchase pension and defined benefit plans and non-qualified deferred compensation plans, in each case provided that plan level or omnibus accounts are held on the books of the fund.

In general, you may 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 either as 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.

18 Virtus Dynamic Trend Fund

---

No compensation, administrative payments, sub-transfer agency payments or service payments are paid to brokers or other entities from fund assets or the Distributor’s or an affiliate’s resources on sales of or investments in Class R6 Shares. Class R6 Shares do not carry sales commissions or pay Rule 12b-1 fees, or make payments to brokers or other entities to assist in, or in connection with, the sale of the fund’s shares.

Ask your financial advisor or visit your financial intermediary’s Web site for more information.

Virtus Dynamic Trend Fund 19

---

Virtus Emerging Markets Debt Fund

Investment Objective

The fund has an investment objective of total return from current income and capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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)	​	​	3.75%	​	​	None	​	​	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	​	​	0.75%	​	​	0.75%	​	​	0.75%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.48%	​	​	0.48%	​	​	0.48%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	1.49%	​	​	2.24%	​	​	1.24%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.13)%	​	​	(0.13)%	​	​	(0.13)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ ​ (c)	​	​	1.36%	​	​	2.11%	​	​	1.11%	​
​		​	​		​	​		​	​		​

(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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.35% for Class A Shares, 2.10% for Class C Shares and 1.10% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$508	​	​	$816	​	​	$1,146	​	​	$2,077	​
​	Class C	​	​	Sold	​	​	$314	​	​	$688	​	​	$1,188	​	​	$2,565	​
			​	Held	​	​	$214	​	​	$688	​	​	$1,188	​	​	$2,565	​
​	Class I	​	​	Sold or Held	​	​	$113	​	​	$381	​	​	$668	​	​	$1,489	​
​		​	​		​	​		​	​		​	​		​	​		​

20 Virtus Emerging Markets Debt Fund

---

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 47% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

Under normal circumstances, the Fund invests at least 80% of its assets in fixed income (debt) securities issued by governments, government-related entities and corporations located in emerging market countries. The fund may invest without limit in high yield debt securities and related investments rated below investment grade (that is, securities not rated Baa/BBB or above by at least one nationally recognized statistical rating organization (“NRSRO”), or, if unrated, determined to be of comparable credit quality by the subadviser). Below investment grade securities are commonly referred to as “junk bonds.” These investments include, but are not limited to, instruments designed to restructure outstanding emerging market debt such as participations in loans between governments and financial institutions. The fund manages duration utilizing a duration neutral strategy. Under normal circumstances, the average duration of the fund’s portfolio will vary within 3 years (plus or minus) of the duration of its benchmark, the JP Morgan Emerging Markets Bond Index (EMBI) Global Diversified. As of September 30, 2015, the modified adjusted duration of the JP Morgan EMBI Global Diversified was 6.69 years.

The fund intends to invest in at least three emerging market countries, which are countries that, at the time of investment, are represented in the JP Morgan Emerging Markets Bond Index Global Diversified or categorized by the World Bank in its annual categorization as middle- or low-income. 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

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• 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.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• 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.

Virtus Emerging Markets Debt Fund 21

---

>

• 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.

>

• Liquidity Risk.   The risk that certain securities may be difficult or impossible to sell at the time and price beneficial to the fund.

>

• Loan Risk.   The risks that, in addition to the risks typically associated with high-yield/high-risk fixed income securities, loans in which the fund invests may be unsecured or not fully collateralized, may be subject to restrictions on resale and/or some loans may trade infrequently on the secondary market. Loans settle on a delayed basis, potentially leading to the sale proceeds of loans not being available to meet redemptions for a substantial period of time after the sale of the loans.

>

• 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.

>

• Unrated Fixed Income Securities Risk.   The risk that the subadviser will be unable to accurately assess the quality of an unrated fixed income security, so that the fund invests in a security with greater risk than intended, or that the liquidity of unrated fixed income securities in which the fund invests will be hindered, making it difficult for the fund to sell them.

>

• U.S. Government Securities Risk.   The risk that 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.

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 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 A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2014:

​

​

5.25%

​

​

Worst Quarter:

​

​

Q2/2013:

​

​

-6.34%

​

​

​

​

​

​

​

​

​

​

​

​

​

22 Virtus Emerging Markets Debt Fund

---

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	Since Inception (9/5/12)	​
​	Class A	​	​		​	​		​
​	Return Before Taxes	​	​	-6.21%	​	​	-1.43%	​
​	Return After Taxes on Distributions	​	​	-7.68%	​	​	-3.23%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-3.49%	​	​	-1.83%	​
​	Class C	​	​		​	​		​
​	Return Before Taxes	​	​	-3.29%	​	​	-1.05%	​
​	Class I	​	​		​	​		​
​	Return Before Taxes	​	​	-2.31%	​	​	-0.07%	​
​	Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	0.55%	​	​	1.43%	​
​	JP Morgan Emerging Markets Bond Global Diversified Index (reflects no deduction for fees, expenses or taxes)	​	​	1.18%	​	​	2.08%	​
​		​	​		​	​		​

The Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The EMBI Global Diversified Index is a uniquely-weighted version of the J.P. Morgan EMBI Global Index. The index limits the weights of those countries with larger debt stock by only including specified portions of these countries’ eligible current face amounts of debt outstanding. The countries covered in the EMBI Global Diversified Index are identical to those covered by the EMBI Global Index. The EMBI Global Index tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities: Brady bonds, loans, Eurobonds. The indexes are unmanaged and not available for direct investment.  

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 A 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. (“VIA”).

The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.

Portfolio Management

>

• David L. Albrycht, CFA,   President and Chief Investment Officer at Newfleet. Mr. Albrycht has served as a Portfolio Manager of the fund since inception in September 2012.

>

• Stephen H. Hooker, CFA,   Managing Director of Foreign Research at Newfleet. Mr. Hooker has served as a Portfolio Manager of the fund since inception in September 2012.

>

• Daniel P. Senecal, CFA,   Managing Director of Credit Research at Newfleet. Mr. Senecal has served as a Portfolio Manager of the fund since inception in September 2012.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Virtus Emerging Markets Debt Fund 23

---

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

24 Virtus Emerging Markets Debt Fund

---

Virtus Emerging Markets Equity Income Fund

Investment Objective

The fund has investment objectives of capital appreciation and income.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	1.05%	​	​	1.05%	​	​	1.05%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.46%	​	​	0.46%	​	​	0.46%	​
​	Acquired Fund Fees and Expenses	​	​	0.02%	​	​	0.02%	​	​	0.02%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	1.78%	​	​	2.53%	​	​	1.53%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.01%)	​	​	(0.01%)	​	​	(0.01%)	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	1.77%	​	​	2.52%	​	​	1.52%	​
​		​	​		​	​		​	​		​

(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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.75% for Class A Shares, 2.50% for Class C Shares and 1.50% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$745	​	​	$1,102	​	​	$1,483	​	​	$2,548	​
​	Class C	​	​	Sold	​	​	$355	​	​	$787	​	​	$1,345	​	​	$2,865	​
			​	Held	​	​	$255	​	​	$787	​	​	$1,345	​	​	$2,865	​
​	Class I	​	​	Sold or Held	​	​	$155	​	​	$482	​	​	$833	​	​	$1,823	​
​		​	​		​	​		​	​		​	​		​	​		​

Virtus Emerging Markets Equity Income Fund 25

---

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 72% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

This fund offers investors exposure to emerging markets. The securities chosen for inclusion in the fund are those that, in the opinion of the subadviser, are high quality companies that pay above average dividends, have above average dividend growth potential, strong balance sheets and cash flow, and adhere to better corporate governance. Companies selected must have the financial strength to maintain and grow their dividend payout commitments. The subadviser's investment process is focused on identifying companies that have chosen to generate high levels of cash flow and to pay a high proportion of it to their shareholders. It is the belief of the subadviser that those companies offer the best opportunity for capital appreciation as well as superior income generation.

Under normal circumstances, the fund invests at least 80% of its assets in equity securities of issuers located in emerging markets countries; such issuers may be of any capitalization. The equity securities in which the fund invests include common stocks, preferred stocks and American Depositary Receipts (ADRs), Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs). 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 intends to diversify its investments among countries and normally to have represented in the portfolio business activities of a number of different countries. 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

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. In addition, you will also be subject to the risks associated with the principal investment strategies of any ETFs in which the fund invests. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• Depositary Receipts Risk.   The risk that investments in foreign companies through depositary receipts will expose the fund to the same risks as direct investment in securities of foreign issuers.

>

• 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 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Exchange-Traded Funds (ETFs) Risk.   The risk that the value of an ETF will be more volatile than the underlying portfolio of securities the ETF is designed to track, or that the costs to the fund of owning shares of the ETF will exceed those the fund would incur by investing in such securities directly.

26 Virtus Emerging Markets Equity Income Fund

---

>

• Exchange-Traded Notes (ETNs) Risk.   The risk that the value of an ETN will be more volatile than securities making up the index the ETN is designed to track, or that the costs to the fund of owning shares of the ETN will exceed those the fund would incur by investing in the underlying securities directly.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• 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.

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 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. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2014:

​

​

6.20%

​

​

Worst Quarter:

​

​

Q3/2015:

​

​

-16.83%

​

​

​

​

​

​

​

​

​

​

​

​

​

Virtus Emerging Markets Equity Income Fund 27

---

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	Since Inception (9/5/12)	​
​	Class A	​	​		​	​		​
​	Return Before Taxes	​	​	-23.19%	​	​	-6.09%	​
​	Return After Taxes on Distributions	​	​	-22.84%	​	​	-6.09%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-11.71%	​	​	-3.85%	​
​	Class C	​	​		​	​		​
​	Return Before Taxes	​	​	-19.08%	​	​	-5.09%	​
​	Class I	​	​		​	​		​
​	Return Before Taxes	​	​	-18.20%	​	​	-4.13%	​
​	MSCI Emerging Markets Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-14.92%	​	​	-2.65%	​
​		​	​		​	​		​

The MSCI Emerging Markets Index (net) is a free float-adjusted market capitalization-weighted index designed to measure equity market performance in the global emerging markets. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged and not available for direct investment.  

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 A 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 Kleinwort Benson Investors International, Ltd. (“KBII”).

Portfolio Management

>

• James Collery,   Senior Portfolio Manager—Global Equity Strategies at KBII. Mr. Collery has served as a Portfolio Manager of the fund since inception in September 2012.

>

• David Hogarty,   Head of Strategy Development—Global Equity Strategies at KBII. Mr. Hogarty has served as a Portfolio Manager of the fund since inception in September 2012.

>

• John Looby,   Senior Portfolio Manager—Global Equity Strategies at KBII. Mr. Looby has served as a Portfolio Manager of the fund since October 2014.

>

• Ian Madden,   Senior Portfolio Manager—Global Equity Strategies at KBII. Mr. Madden has served as a Portfolio Manager of the fund since inception in September 2012.

>

• Gareth Maher,   Head of Portfolio Management—Global Equity Strategies at KBII. Mr. Maher has served as a Portfolio Manager of the fund since inception in September 2012.

>

• Massimiliano Tondi, CFA,   Senior Portfolio Manager—Global Equity Strategies at KBII. Mr. Tondi has served as a Portfolio Manager of the fund since October 2014.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

28 Virtus Emerging Markets Equity Income Fund

---

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus Emerging Markets Equity Income Fund 29

---

Virtus Emerging Markets Small-Cap Fund

Investment Objective

The fund has an investment objective of capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	1.20%	​	​	1.20%	​	​	1.20%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	2.17%	​	​	2.17%	​	​	2.17%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	3.63%	​	​	4.38%	​	​	3.38%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(1.77)%	​	​	(1.77)%	​	​	(1.77)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	1.86%	​	​	2.61%	​	​	1.61%	​
​		​	​		​	​		​	​		​

(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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.85% for Class A Shares, 2.60% for Class C Shares and 1.60% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$753	​	​	$1,468	​	​	$2,204	​	​	$4,132	​
​	Class C	​	​	Sold	​	​	$364	​	​	$1,167	​	​	$2,080	​	​	$4,415	​
			​	Held	​	​	$264	​	​	$1,167	​	​	$2,080	​	​	$4,415	​
​	Class I	​	​	Sold or Held	​	​	$164	​	​	$874	​	​	$1,607	​	​	$3,548	​
​		​	​		​	​		​	​		​	​		​	​		​

30 Virtus Emerging Markets Small-Cap Fund

---

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 35% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

The fund pursues capital appreciation in emerging markets small-cap equities. The fund invests in a select group of small-cap companies believed by the subadviser to be undervalued relative to their future market growth potential. The investment strategy emphasizes companies that the subadviser believes to have a sustainable competitive advantage, strong management and low financial risk and to be able to grow over market cycles.

Under normal circumstances, the fund invests at least 80% of its assets in equity or equity-linked securities of small capitalization companies located in emerging markets countries. The fund’s subadviser considers small-capitalization companies to be those companies that, at the time of initial purchase, have market capitalizations of less than $5 billion. 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 intends to diversify its investments among countries and normally to have represented in the portfolio business activities of a number of different countries. 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 or profit 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. Equity securities in which the fund invests include common stocks, preferred stocks and American Depositary Receipts (ADRs). The subadviser does not use allocation models to restrict the fund's investments to certain regions, countries or industries. Generally, the fund invests in approximately 30-60 securities at any given time.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• Depositary Receipts Risk.   The risk that investments in foreign companies through depositary receipts will expose the fund to the same risks as direct investment in securities of foreign issuers.

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

Virtus Emerging Markets Small-Cap Fund 31

---

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Limited Number of Investments Risk.   The risk that the fund’s portfolio will be more susceptible to factors adversely affecting issuers of securities in the fund’s portfolio than would a fund holding a greater number of securities.

>

• 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.

>

• Small Market Capitalization Companies Risk.   The risk that the fund’s investments in small market capitalization companies may be less liquid and more vulnerable to adverse business or economic developments, which may increase the volatility and risk of loss to the fund, as compared with investments in larger, more established companies.

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 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 A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2014:

​

​

6.75%

​

​

Worst Quarter:

​

​

Q3/2015:

​

​

-18.06%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	Since Inception (12/17/13)	​
​	Class A	​	​		​	​		​
​	Return Before Taxes	​	​	-21.96%	​	​	-11.45%	​
​	Return After Taxes on Distributions	​	​	-21.69%	​	​	-11.75%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-11.52%	​	​	-8.27%	​
​	Class C	​	​		​	​		​
​	Return Before Taxes	​	​	-17.72%	​	​	-9.48%	​
​	Class I	​	​		​	​		​
​	Return Before Taxes	​	​	-16.93%	​	​	-8.59%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	9.23%	​
​	MSCI Emerging Markets Small Cap Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-6.85%	​	​	-2.11%	​
​		​	​		​	​		​

32 Virtus Emerging Markets Small-Cap Fund

---

The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. The MSCI Emerging Markets Small Cap Index (net) is a free float-adjusted market capitalization-weighted index designed to measure small cap equity market performance in the global emerging markets. The index is calculated on a total return basis with net dividends reinvested. The indexes are unmanaged and not available for direct investment.  

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 A 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. (“VIA”).

The fund’s subadviser is Kayne Anderson Rudnick Investment Management, LLC (“Kayne”), an affiliate of VIA.

Portfolio Management

>

• James Fletcher, CFA,   Research Analyst at Kayne. Mr. Fletcher has served as a Portfolio Manager of the fund since inception in December 2013.

>

• Craig Thrasher, CFA,   Research Analyst at Kayne. Mr. Thrasher has served as a Portfolio Manager of the fund since inception in December 2013.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus Emerging Markets Small-Cap Fund 33

---

Virtus Equity Trend Fund

Investment Objective

The fund has an investment objective of long-term capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class C	​	​	Class I	​	​	Class R6	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	5.75%	​	​	None	​	​	None	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	1.00% ​ (a)	​	​	None	​	​	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	​	​	Class R6	​
​	Management Fees ​ (b)	​	​	1.00%	​	​	1.00%	​	​	1.00%	​	​	1.00%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​	​	None	​
​	Other Expenses	​	​	0.28%	​	​	0.28%	​	​	0.28%	​	​	0.21%	​
​	Acquired Fund Fees and Expenses	​	​	0.02%	​	​	0.02%	​	​	0.02%	​	​	0.02%	​
​	Total Annual Fund Operating Expenses ​ (c)	​	​	1.55%	​	​	2.30%	​	​	1.30%	​	​	1.23%	​
​		​	​		​	​		​	​		​	​		​

(a)

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

(b)

• Restated to reflect current management fee.

(c)

• The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses 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

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 and then redeem all of your shares at the end of those periods. 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	​	​	$724	​	​	$1,036	​	​	$1,371	​	​	$2,314	​
​	Class C	​	​	Sold	​	​	$333	​	​	$718	​	​	$1,230	​	​	$2,636	​
			​	Held	​	​	$233	​	​	$718	​	​	$1,230	​	​	$2,636	​
​	Class I	​	​	Sold or Held	​	​	$132	​	​	$412	​	​	$713	​	​	$1,568	​
​	Class R6	​	​	Sold or Held	​	​	$125	​	​	$390	​	​	$676	​	​	$1,489	​
​		​	​		​	​		​	​		​	​		​	​		​

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 674% of the average value of its portfolio.

34   Virtus Equity Trend Fund

---

Investments, Risks and Performance

Principal Investment Strategies

The fund utilizes a rules based investment process and may invest in securities representing the approximately 130 sub-sectors of the primary sectors of the S&P 500 ​ ® Index and/or cash equivalents (high-quality short-term securities). Allocations to each sub-sector are based on quantitative models.   

The fund has the flexibility to invest in any combination of the sub-sectors and high-quality short-term securities, or 100% in high-quality short-term securities. A relative strength momentum model is utilized to rank each sub-sector of the equity market. The fund will allocate to those sub-sectors that the model determines are more likely to outperform the broad market. A market risk indicator model is also used to determine whether the market is in a lower or higher level of risk based on price trends in the overall market. When the market is determined to be in a higher level of risk, a defensive cash equivalent position may be built by allocating from those sub-sectors of the market that are not exhibiting absolute positive momentum, up to 100% of fund assets.

The adviser is responsible for final model specification, portfolio construction, model monitoring, and governance. The subadviser, Euclid Advisors, LLC monitors the fund’s allocations to the underlying securities and is responsible for rebalancing assets to maintain target allocations among the underlying sub-sectors, while taking into account any other factors the subadviser may deem relevant, such as cash flow and/or timing considerations.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• 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.

>

• Portfolio Turnover Risk.   The risk that the fund’s principal investment strategies will result in a consistently high portfolio turnover rate. See the Portfolio Turnover section above for more information about the impact that portfolio turnover can have on your investment.

>

• Quantitative Model Risk.   The risk that investments selected using quantitative models may perform differently from the market as a whole or from their expected performance. There can be no assurance that use of a quantitative model will enable the fund to achieve positive returns or outperform the market.

>

• Sector Focused Investing Risk.   The risk that events negatively affecting a particular industry or market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent that the fund invests a significant portion of its portfolio in ETFs representing one or more of the primary sectors of the S&P 500 ​ ® Index (such as consumer discretionary, energy, healthcare) or in an ETF representing U.S. Treasuries, the fund is more vulnerable to conditions that negatively affect such sectors as compared to a fund that is not significantly invested in such sectors.

>

• U.S. Government Securities Risk.   The risk that 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.

Virtus Equity Trend Fund   35

---

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 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. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q1/2013:

​

​

10.75%

​

​

Worst Quarter:

​

​

Q3/2011:

​

​

-9.45%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	Class A, Class C and Class I Since Inception (7/1/10)	​	​	Class R6 Since Inception (11/12/14)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-14.00%	​	​	4.44%	​	​	7.97%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-14.00%	​	​	3.04%	​	​	6.64%	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-7.92%	​	​	3.37%	​	​	6.24%	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-9.43%	​	​	4.88%	​	​	8.32%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	8.51%	​	​	5.93%	​	​	9.40%	​	​	—	​
​	Class R6	​	​		​	​		​	​		​	​		​
​	Returns Before Taxes	​	​	-8.43%	​	​	—	​	​	—	​	​	-8.94%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	15.73%	​	​	2.37%	​
​		​	​		​	​		​	​		​	​		​

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. The index is unmanaged and not available for direct investment.

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 A 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.

36   Virtus Equity Trend Fund

---

Management

The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).

The fund’s subadviser is Euclid Advisors LLC (“Euclid”), an affiliate of VIA.

Portfolio Management

>

• Warun Kumar,   Senior Managing Director and Portfolio Manager at VIA, is a manager of the fund. Mr. Kumar has served as a Portfolio Manager of the fund since May 2015.

>

• Amy Robinson,   Managing Director at Euclid, is a manager of the fund. Ms. Robinson has served as a Portfolio Manager of the fund since inception in July 2010.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

For Class R6 Shares, there is no minimum initial investment and there is no minimum for additional purchases. R6 Shares are available only to certain employer-sponsored retirement plans, including Section 401(k), 403(b) and 457, profit-sharing, money purchase pension and defined benefit plans and non-qualified deferred compensation plans, in each case provided that plan level or omnibus accounts are held on the books of the fund.

In general, you may 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 either as 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.

No compensation, administrative payments, sub-transfer agency payments or service payments are paid to brokers or other entities from fund assets or the Distributor’s or an affiliate’s resources on sales of or investments in Class R6 Shares. Class R6 Shares do not carry sales commissions or pay Rule 12b-1 fees, or make payments to brokers or other entities to assist in, or in connection with, the sale of the fund’s shares.

Ask your financial advisor or visit your financial intermediary’s Web site for more information.

Virtus Equity Trend Fund 37

---

Virtus Essential Resources Fund

Investment Objective

The fund has an investment objective of capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	1.10%	​	​	1.10%	​	​	1.10%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	4.91%	​	​	4.91%	​	​	4.91%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	6.27%	​	​	7.02%	​	​	6.02%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(4.61)%	​	​	(4.61)%	​	​	(4.61)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	1.66%	​	​	2.41%	​	​	1.41%	​
​		​	​		​	​		​	​		​

(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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.65% for Class A Shares, 2.40% for Class C Shares and 1.40% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$734	​	​	$1,940	​	​	$3,115	​	​	$5,926	​
​	Class C	​	​	Sold	​	​	$344	​	​	$1,656	​	​	$3,011	​	​	$6,116	​
			​	Held	​	​	$244	​	​	$1,656	​	​	$3,011	​	​	$6,116	​
​	Class I	​	​	Sold or Held	​	​	$144	​	​	$1,378	​	​	$2,588	​	​	$5,505	​
​		​	​		​	​		​	​		​	​		​	​		​

38 Virtus Essential Resources Fund

---

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 48% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

Long-term investment return opportunities are being driven by the need to provide solutions to meet the world's growing need for water, food and energy. The fund focuses on capital appreciation by identifying companies providing solutions to the supply/demand imbalances in each of these themes (water, food, energy) and constructing a portfolio across specific areas of the global natural resource spectrum. Under normal circumstances, the fund will invest at least 80% of its assets in “essential resources” securities. As of the date of this prospectus, the subadviser considers “essential resources” securities to be securities of companies with business operations in or related to activities in one or more of the themes of water, energy solutions and agribusiness, as more fully described below.

The investment strategy begins with the identification of a universe of 140 to 270 stocks for each of the three themes. Each theme is broken down into different sectors. Water: water infrastructure, water technology, water and water waste utilities; Energy Solutions: renewable energy, utilities, energy efficiency; Agribusiness: infrastructure and processing, farmers and producers, raw materials and/or resources (i.e. seeds, fertilizers). Stock selection and sector allocation is an interactive process employing bottom-up fundamental analysis while taking into account top-down influences on individual companies and sectors.

In evaluating stocks, the subadviser applies a rigorous fundamental analysis such as the evaluation of the financials and management quality of a company, analysis of the demand/supply gap and barriers to entry within the continuum of discovery, gathering, production, transportation or consumption of resources or products where the company operates, and analysis of the impact of regulation on a company's operations. Final stock and sector weights are determined based on the bottom up views on the stocks' fundamentals along with top down views of factors impacting the sector.

The assets of the fund will be tactically allocated across the three themes, and the weight assigned to each theme will be determined by the subadviser's medium-term view of the relative return potential of one theme versus the others.

The fund may invest in equity securities of issuers of any capitalization located throughout the world, including countries considered to be developed and in emerging markets.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• Currency Rate Risk.   The risk that fluctuations in the exchange rates between the U.S. dollar and foreign currencies may negatively affect the value of the fund’s shares.

>

• Emerging Market 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 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 a particular style or in small or medium-sized companies may enhance that risk.

Virtus Essential Resources Fund 39

---

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

>

• Natural Resources   The risk that the fund’s investments in natural resources industries will be significantly affected by events relating to international political and economic developments, energy conservation, the success of exploration projects, commodity prices, taxes and other governmental regulations.

>

• New Fund Risk.   The risk that the fund may not grow to an economically viable size, in which case the fund may cease operations and investors may be required to liquidate or transfer their investments at an inopportune time.

>

• Small and Medium Market Capitalization Risk.   The risk that the fund's investments in small and medium market capitalization companies will increase the volatility and risk of loss to the fund, as compared with investments in larger, more established companies.

Performance Information

The fund has not had a full calendar year of operations; therefore, performance information is not shown here.

Updated performance information is available at virtus.com or by calling 800-243-1574.

Management

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

The fund’s subadviser is Kleinwort Benson Investors International, Ltd. (“KBII”).

Portfolio Management

>

• Andros Florides,   Portfolio Manager at KBII. Mr. Florides has served as a Portfolio Manager of the fund since inception March 2015.

>

• Colm O'Connor,   Portfolio Manager at KBII. Mr. O'Connor has served as a Portfolio Manager of the fund since inception in March 2015.

>

• Noel O'Halloran,   Chief Investment Officer and Portfolio Manager at KBII. Mr. O'Halloran has served as a Portfolio Manager of the fund since inception in March 2015.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

40   Virtus Essential Resources Fund

---

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus Essential Resources Fund 41

---

Virtus Foreign Opportunities Fund

Investment Objective

The fund has an investment objective of long-term capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class C	​	​	Class I	​	​	Class R6	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	5.75%	​	​	None	​	​	None	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	1.00% ​ (a)	​	​	None	​	​	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	​	​	Class R6	​
​	Management Fees	​	​	0.85%	​	​	0.85%	​	​	0.85%	​	​	0.85%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​	​	None	​
​	Other Expenses	​	​	0.31%	​	​	0.31%	​	​	0.31%	​	​	0.20%	​
​	Total Annual Fund Operating Expenses	​	​	1.41%	​	​	2.16%	​	​	1.16%	​	​	1.05%	​
​		​	​		​	​		​	​		​	​		​

(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 and then redeem all of your shares at the end of those periods. 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	​	​	$710	​	​	$996	​	​	$1,302	​	​	$2,169	​
​	Class C	​	​	Sold	​	​	$319	​	​	$676	​	​	$1,159	​	​	$2,493	​
			​	Held	​	​	$219	​	​	$676	​	​	$1,159	​	​	$2,493	​
​	Class I	​	​	Sold or Held	​	​	$118	​	​	$368	​	​	$638	​	​	$1,409	​
​	Class R6	​	​	Sold or Held	​	​	$107	​	​	$334	​	​	$579	​	​	$1,283	​
​		​	​		​	​		​	​		​	​		​	​		​

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 32% of the average value of its portfolio.

42   Virtus Foreign Opportunities Fund

---

Investments, Risks and Performance

Principal Investment Strategies

This fund seeks to provide investors with access to high-quality international 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, at least 80% of the fund’s assets are invested in equity securities or equity-linked instruments of issuers located outside the United States, including issuers in emerging markets countries. The fund intends to diversify its investments among countries and normally to have represented in the portfolio business activities of a number of different countries.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

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 a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.

Virtus Foreign Opportunities Fund 43

---

Calendar year total returns for Class A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2009:

​

​

18.64%

​

​

Worst Quarter:

​

​

Q3/2008:

​

​

-19.26%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (5/15/06)	​	​	Class R6 Since Inception (11/12/14)	​
​	Class A	​	​		​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-2.82%	​	​	4.73%	​	​	4.49%	​	​	—	​	​	—	​
​	Return After Taxes on Distributions	​	​	-2.90%	​	​	4.68%	​	​	4.39%	​	​	—	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-1.30%	​	​	3.85%	​	​	3.77%	​	​	—	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	2.33%	​	​	5.18%	​	​	4.31%	​	​	—	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	3.38%	​	​	6.24%	​	​	—	​	​	4.27%	​	​	—	​
​	Class R6	​	​		​	​		​	​		​	​		​	​		​
​	Returns Before Taxes	​	​	3.53%	​	​	—	​	​	—	​	​	—	​	​	0.86%	​
​	Morgan Stanley Capital International EAFE ​ ® Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-0.81%	​	​	3.60%	​	​	3.03%	​	​	1.66%	​	​	-2.24%	​
​		​	​		​	​		​	​		​	​		​	​		​

The MSCI EAFE ​ ® Index (net) is a free float-adjusted market capitalization-weighted index that measures developed foreign market equity performance, excluding the U.S. and Canada. The MSCI EAFE ​ ® Index (net) is calculated on a total return basis with net dividends reinvested. The index is unmanaged and not available for direct investment.

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 A 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 Vontobel Asset Management, Inc. (“Vontobel”).

Portfolio Management

>

• Rajiv Jain,   a Managing Director of Vontobel, is the manager of the fund. Mr. Jain has served as a Portfolio Manager of the fund (or its predecessor) since February 2002.

44   Virtus Foreign Opportunities Fund

---

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

For Class R6 Shares, there is no minimum initial investment and there is no minimum for additional purchases. R6 Shares are available only to certain employer-sponsored retirement plans, including Section 401(k), 403(b) and 457, profit-sharing, money purchase pension and defined benefit plans and non-qualified deferred compensation plans, in each case provided that plan level or omnibus accounts are held on the books of the fund.

In general, you may 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 either as 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.

No compensation, administrative payments, sub-transfer agency payments or service payments are paid to brokers or other entities from fund assets or the Distributor’s or an affiliate’s resources on sales of or investments in Class R6 Shares. Class R6 Shares do not carry sales commissions or pay Rule 12b-1 fees, or make payments to brokers or other entities to assist in, or in connection with, the sale of the fund’s shares.

Ask your financial advisor or visit your financial intermediary’s Web site for more information.

Virtus Foreign Opportunities Fund 45

---

Virtus Global Equity Trend Fund

Investment Objective

The fund has an investment objective of capital appreciation. In pursuing this objective, the fund maintains an emphasis on preservation of capital.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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 ​ (b)	​	​	1.00%	​	​	1.00%	​	​	1.00%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.35%	​	​	0.35%	​	​	0.35%	​
​	Acquired Fund Fees and Expenses	​	​	0.18%	​	​	0.18%	​	​	0.18%	​
​	Total Annual Fund Operating Expenses ​ (c)	​	​	1.78%	​	​	2.53%	​	​	1.53%	​
​		​	​		​	​		​	​		​

(a)

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

(b)

• Restated to reflect current management fee.

(c)

• The Total Annual Fund Operating Expenses do not correlate to the ratio of expenses 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

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$745	​	​	$1,103	​	​	$1,484	​	​	$2,549	​
​	Class C	​	​	Sold	​	​	$356	​	​	$788	​	​	$1,345	​	​	$2,866	​
			​	Held	​	​	$256	​	​	$788	​	​	$1,345	​	​	$2,866	​
​	Class I	​	​	Sold or Held	​	​	$156	​	​	$483	​	​	$834	​	​	$1,824	​
​		​	​		​	​		​	​		​	​		​	​		​

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 614% of the average value of its portfolio.

46   Virtus Global Equity Trend Fund

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Investments, Risks and Performance

Principal Investment Strategies

The fund utilizes a rules based investment process and may invest in securities representing the approximately 130 sub-sectors of the primary sectors of the S&P 500 ​ ® Index, international equities, and/or cash equivalents (high-quality short-term securities). Allocations to each are based on quantitative models.

The fund has the flexibility to invest in any combination of the sub-sectors, international equities, and high-quality short-term securities, or 100% in high-quality short-term securities. A relative strength momentum model is utilized to rank each sub-sector and international equity component. The fund will allocate to those sub-sectors and international equities that the model determines are more likely to outperform the broad market. A market risk indicator model is also used to determine whether the market is in a lower or higher level of risk based on price trends in the overall market. When the market is determined to be in a higher level of risk, a defensive cash equivalent position may be built by allocating from those sub-sectors and international equities of the market that are not exhibiting absolute positive momentum, up to 100% of fund assets. The fund may invest in a basket of securities or ETFs to represent its positions.

Under normal circumstances, the fund intends to allocate 40% of its assets to ETFs and/or securities representative of non-U.S. markets. Through its investment in these ETFs and/or securities, the fund’s exposure to non-U.S. markets will be diversified among countries and will have represented the business activities of a number of different countries.

The adviser is responsible for final model specification, portfolio construction, model monitoring, and governance. The subadviser, Euclid Advisors, LLC monitors the fund’s allocations to the underlying securities and is responsible for rebalancing assets to maintain target allocations among the underlying sub-sectors, while taking into account any other factors the subadviser may deem relevant, such as cash flow and/or timing considerations.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. In addition, you will also be subject to the risks associated with the principal investment strategies of any ETFs in which the fund invests. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Exchange-Traded Funds (ETFs) Risk.   The risk that the value of an ETF will be more volatile than the underlying portfolio of securities the ETF is designed to track, or that the costs to the fund of owning shares of the ETF will exceed those the fund would incur by investing in such securities directly.

>

• Fund of Funds Risk.   The risk that the fund’s performance will be adversely affected by the assets owned by the other mutual funds in which it invests, and that the layering of expenses associated with the fund’s investment in such other funds will cost shareholders more than direct investments would have cost.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

Virtus Global Equity Trend Fund 47

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>

• Portfolio Turnover Risk.   The risk that the fund’s principal investment strategies will result in a consistently high portfolio turnover rate. See the Portfolio Turnover section above for more information about the impact that portfolio turnover can have on your investment.

>

• Quantitative Model Risk.   The risk that investments selected using quantitative models may perform differently from the market as a whole or from their expected performance. There can be no assurance that use of a quantitative model will enable the fund to achieve positive returns or outperform the market.

>

• Sector Focused Investing Risk.   The risk that events negatively affecting a particular industry or market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent that the fund invests a significant portion of its portfolio in ETFs representing one or more of the primary sectors of the S&P 500 ​ ® Index (such as consumer discretionary, energy, healthcare) or in an ETF representing U.S. Treasuries, the fund is more vulnerable to conditions that negatively affect such sectors as compared to a fund that is not significantly invested in such sectors.

>

• U.S. Government Securities Risk.   The risk that 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.

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 the life of the fund. The table shows how the fund’s average annual returns compare to those of two broad-based securities market indexes. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q4/2013:

​

​

7.21%

​

​

Worst Quarter:

​

​

Q3/2015:

​

​

-5.61%

​

​

​

​

​

​

​

​

​

​

​

​

​

48 Virtus Global Equity Trend Fund

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Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	Since Inception (3/15/11)	​
​	Class A	​	​		​	​		​
​	Return Before Taxes	​	​	-13.35%	​	​	1.33%	​
​	Return After Taxes on Distributions	​	​	-13.35%	​	​	0.68%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-7.55%	​	​	1.10%	​
​	Class C	​	​		​	​		​
​	Return Before Taxes	​	​	-8.73%	​	​	1.84%	​
​	Class I	​	​		​	​		​
​	Return Before Taxes	​	​	-7.86%	​	​	2.83%	​
​	MSCI All Country World Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-2.36%	​	​	6.56%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.58%	​
​		​	​		​	​		​

The MSCI AC World Index (net) is a free float-adjusted market capitalization-weighted index that measures equity performance of developed and emerging global markets. The index is calculated on a total return basis with net dividends reinvested. The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total return basis with dividends reinvested. The indexes are unmanaged and not available for direct investment.  

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 A 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. (“VIA”).

The fund’s subadviser is Euclid Advisors LLC (“Euclid”), an affiliate of VIA.

Portfolio Management

>

• Warun Kumar,   Senior Managing Director and Portfolio Manager at VIA, is a manager of the fund. Mr. Kumar has served as a Portfolio Manager of the fund since May 2015.

>

• Amy Robinson,   Managing Director at Euclid, is a manager of the fund. Ms. Robinson has served as a Portfolio Manager of the fund since inception in March 2011.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

Virtus Global Equity Trend Fund 49

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In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

50   Virtus Global Equity Trend Fund

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Virtus Global Infrastructure Fund

Investment Objective

The fund has investment objectives of both capital appreciation and current income.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	0.65%	​	​	0.65%	​	​	0.65%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.32%	​	​	0.32%	​	​	0.32%	​
​	Total Annual Fund Operating Expenses	​	​	1.22%	​	​	1.97%	​	​	0.97%	​
​		​	​		​	​		​	​		​

(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 and then redeem all of your shares at the end of those periods. 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	​	​	$692	​	​	$940	​	​	$1,207	​	​	$1,967	​
​	Class C	​	​	Sold	​	​	$300	​	​	$618	​	​	$1,062	​	​	$2,296	​
			​	Held	​	​	$200	​	​	$618	​	​	$1,062	​	​	$2,296	​
​	Class I	​	​	Sold or Held	​	​	$99	​	​	$309	​	​	$536	​	​	$1,190	​
​		​	​		​	​		​	​		​	​		​	​		​

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 27% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

The fund invests globally in infrastructure companies involved in the energy, utility, transportation, and communications industries. Infrastructure companies are believed by the subadviser to exhibit attractive risk/return characteristics, offer moderate-to-high income and moderate growth, and be defensive in nature.

Under normal market conditions, the fund invests at least 80% of its assets in dividend paying equity securities of infrastructure companies that are located in three or more countries, one of which will be the United States. Under normal market conditions, the fund will invest at least 25% of its assets in securities of U.S. issuers. Although the fund

Virtus Global Infrastructure Fund   51

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concentrates its investments in infrastructure companies, it may invest up to 20% of its assets in securities of issuers that are not infrastructure companies, including stocks, debt obligations, money market securities and money market mutual funds, as well as certain derivative instruments. To the extent the fund purchases non-infrastructure stocks, they may be of issuers of any capitalization. When investing in debt obligations, the fund will invest primarily in investment grade debt obligations, although it may invest in high-yield, high-risk fixed income securities (junk bonds).

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• Derivatives Risk.   The risk that the fund will incur a loss greater than the fund’s investment in, or will experience greater share price volatility as a result of investing in, a derivative contract. Derivatives may include, among other things, futures, options, forwards and swap agreements and may be used in order to hedge portfolio risks, create leverage, or to attempt to increase yield.

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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 and/or be less than anticipated if the proceeds from maturing securities in the fund are reinvested in lower-yielding securities.

>

• Industry/Sector Concentration Risk.   The risk that events negatively affecting infrastructure companies will cause the value of the fund’s shares to decrease, perhaps significantly. Since the fund concentrates its assets in infrastructure companies, the fund is more vulnerable to conditions that negatively affect infrastructure companies as compared to a fund that does not concentrate holdings in such companies.

>

• Infrastructure-Related Investment Risk.   The risk that the value of the fund’s shares will decrease as a result of conditions, such as general or local economic conditions and political developments, changes in regulations, environmental problems, casualty losses, and changes in interest rates, negatively affecting the infrastructure companies in which the fund invests.

>

• 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.

>

• Preferred Stock Risk.   The risk that a preferred stock will decline in price, fail to pay dividends when expected, or be illiquid.

52   Virtus Global Infrastructure Fund

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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 a broad-based securities market index and with a composite 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 A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q3/2010:

​

​

16.39%

​

​

Worst Quarter:

​

​

Q3/2008:

​

​

-16.55%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (6/6/08)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-15.43%	​	​	5.69%	​	​	5.94%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-17.32%	​	​	4.81%	​	​	5.34%	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-7.18%	​	​	4.69%	​	​	5.12%	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-11.00%	​	​	6.16%	​	​	5.78%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-10.04%	​	​	7.23%	​	​	—	​	​	3.53%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	7.31%	​	​	7.84%	​
​	Global Infrastructure Linked Benchmark (reflects no deduction for fees, expenses or taxes)	​	​	-12.34%	​	​	5.39%	​	​	5.31%	​	​	1.80%	​
​		​	​		​	​		​	​		​	​		​

The S&P 500 ​ ® Index is a free-float adjusted market capitalization-weighted index of 500 of the largest U.S. companies. The S&P 500 ​ ® Index is calculated on a total return basis with dividends reinvested. The Global Infrastructure Linked Benchmark consists of the MSCI World Infrastructure Sector Capped Index, a market capitalization weighted index that measures performance of global infrastructure companies by capturing broad and diversified opportunities across telecommunication, utilities, energy, transportation and social infrastructure sectors. The telecommunication infrastructure and utilities sector each represent one-third of the index weight, while energy, transportation and social infrastructure sectors have a combined weight of the remaining one-third of the index. The Index is calculated on a total return basis with net dividends reinvested. Performance of the Global Infrastructure Linked Benchmark prior to September 1, 2008 represents an allocation consisting of 65% MSCI USA/Utilities Index, 20% MSCI World Telecom Services Index, and 15% MSCI World ex USA/Utilities Index. The indexes are unmanaged and not available for direct investment.

Virtus Global Infrastructure Fund   53

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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 A 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. (“VIA”).

The fund’s subadviser is Duff & Phelps Investment Management Co. (“Duff & Phelps”), an affiliate of VIA.

Portfolio Management

>

• Connie M. Luecke, CFA,   a Senior Managing Director of Duff & Phelps, is a manager of the fund. Ms. Luecke has served as a Portfolio Manager of the fund since inception in 2004.

>

• Randle L. Smith, CFA,   a Senior Managing Director of Duff & Phelps, is a manager of the fund. Mr. Smith has served as a Portfolio Manager of the fund since inception in 2004.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

54 Virtus Global Infrastructure Fund

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Virtus Global Opportunities Fund

Investment Objective

The fund has an investment objective of capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class B	​	​	Class C	​	​	Class I	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	5.75%	​	​	None	​	​	None	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	5.00% ​ (a)	​	​	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 B	​	​	Class C	​	​	Class I	​
​	Management Fees	​	​	0.85%	​	​	0.85%	​	​	0.85%	​	​	0.85%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.35%	​	​	0.35%	​	​	0.35%	​	​	0.35%	​
​	Total Annual Fund Operating Expenses	​	​	1.45%	​	​	2.20%	​	​	2.20%	​	​	1.20%	​
​		​	​		​	​		​	​		​	​		​

(a)

• The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 1% annually to 2% during the fourth and fifth years and to 0% after the fifth year. 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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. In the case of Class B Shares, it assumes that your shares are converted to Class A Shares after eight years. 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	​	​	$714	​	​	$1,007	​	​	$1,322	​	​	$2,210	​
​	Class B	​	​	Sold	​	​	$623	​	​	$888	​	​	$1,180	​	​	$2,344	​
			​	Held	​	​	$223	​	​	$688	​	​	$1,180	​	​	$2,344	​
​	Class C	​	​	Sold	​	​	$323	​	​	$688	​	​	$1,180	​	​	$2,534	​
			​	Held	​	​	$223	​	​	$688	​	​	$1,180	​	​	$2,534	​
​	Class I	​	​	Sold or Held	​	​	$122	​	​	$381	​	​	$660	​	​	$1,455	​
​		​	​		​	​		​	​		​	​		​	​		​

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 40% of the average value of its portfolio.

Virtus Global Opportunities Fund   55

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Investments, Risks and Performance

Principal Investment Strategies

This fund seeks to provide investors with exposure to high-quality global companies. The securities selected for inclusion in the fund are those believed by the subadviser to be 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 in equity securities or equity-linked instruments of issuers located throughout the world, including issuers in emerging markets countries and issuers in the United States. The fund intends to diversify its investments among countries and normally to have represented in the portfolio business activities of a number of different countries.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Growth Stocks Risk.   The risk that the fund’s investments in growth stocks will be more volatile than investments in other types of stocks, or will perform differently from the market as a whole and from other types of stocks.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

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 a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.

56 Virtus Global Opportunities Fund

---

Calendar year total returns for Class A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2009:

​

​

14.31%

​

​

Worst Quarter:

​

​

Q4/2008:

​

​

-20.92%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (8/8/12)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-1.47%	​	​	8.85%	​	​	4.52%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-1.53%	​	​	8.80%	​	​	4.36%	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-0.79%	​	​	7.04%	​	​	3.75%	​	​	—	​
​	Class B	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	0.31%	​	​	9.33%	​	​	4.37%	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	3.68%	​	​	9.34%	​	​	4.36%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	4.80%	​	​	—	​	​	—	​	​	10.57%	​
​	MSCI All Country World Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-2.36%	​	​	6.09%	​	​	4.75%	​	​	8.67%	​
​		​	​		​	​		​	​		​	​		​

The MSCI ACWI (net) is a free float-adjusted market capitalization-weighted index that measures equity performance of developed and emerging markets. The MSCI ACWI (net) is calculated on a total return basis with net dividends reinvested. The index is unmanaged and not available for direct investment.

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 A 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 Vontobel Asset Management, Inc. (“Vontobel”).

Virtus Global Opportunities Fund   57

---

Portfolio Management

>

• Matthew Benkendorf,   a Managing Director at Vontobel, is a manager of the fund. Mr. Benkendorf has served as Deputy Portfolio Manager of the fund since January 2015 and previously served as Co-Portfolio Manager (2009 through 2014).

>

• Rajiv Jain,   a Managing Director of Vontobel, is a manager of the fund. Mr. Jain has served as Lead Portfolio Manager of the fund since January 2015 and previously served as Co-Portfolio Manager (2009 through 2014).

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

NOTE: Class B Shares are no longer available for purchase, except through reinvestment of dividends/capital gain distributions by existing shareholders and exchange of Class B shares of a fund for Class B shares of other Virtus Mutual Funds, as permitted by the existing exchange privileges (as set forth in the fund’s prospectus).

Taxes

The fund’s distributions are taxable to you either as 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.

58 Virtus Global Opportunities Fund

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Virtus Global Real Estate Securities Fund

Investment Objective

The fund has a primary investment objective of long-term capital appreciation with a secondary investment objective of income.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	0.85%	​	​	0.85%	​	​	0.85%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.40%	​	​	0.40%	​	​	0.40%	​
​	Total Annual Fund Operating Expenses	​	​	1.50%	​	​	2.25%	​	​	1.25%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (b)	​	​	(0.10)%	​	​	(0.10)%	​	​	(0.10)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b)	​	​	1.40%	​	​	2.15%	​	​	1.15%	​
​		​	​		​	​		​	​		​

(a)

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

(b)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.40% for Class A Shares, 2.15% for Class C Shares and 1.15% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$709	​	​	$1,013	​	​	$1,337	​	​	$2,255	​
​	Class C	​	​	Sold	​	​	$318	​	​	$694	​	​	$1,196	​	​	$2,577	​
			​	Held	​	​	$218	​	​	$694	​	​	$1,196	​	​	$2,577	​
​	Class I	​	​	Sold or Held	​	​	$117	​	​	$387	​	​	$677	​	​	$1,502	​
​		​	​		​	​		​	​		​	​		​	​		​

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 27% of the average value of its portfolio.

Virtus Global Real Estate Securities Fund   59

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Investments, Risks and Performance

Principal Investment Strategies

The fund provides global exposure to the real estate securities market, focusing exclusively on companies with a rental business profile. Rental companies derive 70% or more of total revenue from rental income and are most similar in business profile to U.S. real estate investment trusts (“REITs”).

Under normal circumstances, the fund invests at least 80% of its assets in equity securities issued by U.S. and non-U.S companies of any capitalization that are principally engaged in the real estate industry, including common stock, preferred stock and other equity securities issued by real estate companies, such as REITs and similar REIT-like entities. The fund, under normal market conditions, will hold at least 40% of its assets in non-U.S. issuers, unless market conditions outside of the U.S. are deemed less favorable by the portfolio manager, in which case the fund would invest at least 30% of its assets in securities of non-U.S. issuers. Additionally, the fund normally invests in real estate-related securities of issuers in developed countries; however it may invest up to 20% of its assets in issuers incorporated in emerging market countries. The fund concentrates its assets in the real estate industry.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 Real Estate Investment Trust (REIT) Securities Risk.   The risk that, in addition to the risks associated with investing in the real estate industry, the value of the fund’s shares will be negatively affected by factors specific to investing through a pooled vehicle, such as through poor management of the REIT or REIT-like entity, concentration risk, or other risks typically associated with investing in small or medium market capitalization companies.

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• Industry/Sector Concentration Risk.   The risk that events negatively affecting real estate securities will cause the value of the fund’s shares to decrease, perhaps significantly. Since the fund concentrates its assets in real estate related securities, the fund is more vulnerable to conditions that negatively affect real estate related securities as compared to a fund that does not concentrate holdings in such securities.

>

• 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.

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.

60 Virtus Global Real Estate Securities Fund

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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 A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q3/2010:

​

​

17.74%

​

​

Worst Quarter:

​

​

Q3/2011:

​

​

-16.99%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Year	​	​	Since Inception (3/2/09)	​
​	Class A	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-4.16%	​	​	8.05%	​	​	20.14%	​
​	Return After Taxes on Distributions	​	​	-4.98%	​	​	7.18%	​	​	18.35%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-2.04%	​	​	6.06%	​	​	16.07%	​
​	Class C	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	0.92%	​	​	8.53%	​	​	20.29%	​
​	Class I	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	1.93%	​	​	9.62%	​	​	21.50%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	19.46%	​
​	FTSE EPRA/NAREIT Developed Rental Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	0.98%	​	​	8.73%	​	​	21.07%	​
​		​	​		​	​		​	​		​

The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The S&P 500 ​ ® Index is calculated on a total return basis with dividends reinvested. The FTSE EPRA/NAREIT Developed Rental Index is a free-float market capitalization index measuring global real estate securities, which meet minimum size, liquidity and investment focus criteria. The index is a sub-set of the FTSE EPRA/NAREIT Investment Focus Index Series, which separates the existing constituents into both Rental and Non-Rental Indices. A company is classified as Rental if the rental revenue from properties is greater than or equal to 70% of total revenue. The classification is based on revenue sources as disclosed in the latest published financial statement. The FTSE EPRA/NAREIT Index (net) is calculated on a total-return basis with net dividends reinvested. The indexes are unmanaged and not available for direct investment. 

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 A 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.

Virtus Global Real Estate Securities Fund   61

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Management

The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).

The fund’s subadviser is Duff & Phelps Investment Management Co. (“Duff & Phelps”), an affiliate of VIA.

Portfolio Management

>

• Geoffrey P. Dybas, CFA,   Senior Managing Director, Global Real Estate Securities team head and Senior Portfolio Manager at Duff & Phelps, is a manager of the fund. Mr. Dybas has served as a Portfolio Manager of the fund since inception in March 2009.

>

• Frank J. Haggerty, Jr., CFA,   Senior Managing Director, Portfolio Manager and Senior Real Estate Securities Analyst at Duff & Phelps, is a manager of the fund. Mr. Haggerty has served as a Portfolio Manager of the fund since inception in March 2009.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

62 Virtus Global Real Estate Securities Fund

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Virtus Greater European Opportunities Fund

Investment Objective

The fund has an investment objective of long-term capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	0.85%	​	​	0.85%	​	​	0.85%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.79%	​	​	0.79%	​	​	0.79%	​
​	Total Annual Fund Operating Expenses	​	​	1.89%	​	​	2.64%	​	​	1.64%	​
​	Less: Expense Reimbursement ​ (b)	​	​	(0.44)%	​	​	(0.44)%	​	​	(0.44)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ ​ (b)	​	​	1.45%	​	​	2.20%	​	​	1.20%	​
​		​	​		​	​		​	​		​

(a)

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

(b)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.45% for Class A Shares, 2.20% for Class C Shares and 1.20% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$714	​	​	$1,095	​	​	$1,499	​	​	$2,626	​
​	Class C	​	​	Sold	​	​	$323	​	​	$779	​	​	$1,361	​	​	$2,941	​
			​	Held	​	​	$223	​	​	$779	​	​	$1,361	​	​	$2,941	​
​	Class I	​	​	Sold or Held	​	​	$122	​	​	$474	​	​	$850	​	​	$1,907	​
​		​	​		​	​		​	​		​	​		​	​		​

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 35% of the average value of its portfolio.

Virtus Greater European Opportunities Fund   63

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Investments, Risks and Performance

Principal Investment Strategies

This fund seeks to offer investors exposure to European market economies through well-established companies. The securities selected for inclusion in the fund are believed by the subadviser to be 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, at least 80% of the fund’s assets are invested in equity securities or equity-linked instruments of issuers located in Europe, including issuers in emerging markets countries. Equity-linked securities are hybrid debt securities whose return is connected to an underlying equity, usually a stock. The fund intends to diversify its investments among countries and normally to have represented in the portfolio business activities of a number of different countries. In determining the “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

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• 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.

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.

64 Virtus Greater European Opportunities Fund

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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. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q1/2012:

​

​

11.53%

​

​

Worst Quarter:

​

​

Q3/2011:

​

​

-13.30%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Year	​	​	Since Inception (4/21/09)	​
​	Class A	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	0.65%	​	​	6.48%	​	​	10.97%	​
​	Return After Taxes on Distributions	​	​	0.60%	​	​	6.10%	​	​	10.31%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	0.58%	​	​	5.30%	​	​	9.14%	​
​	Class C	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	5.92%	​	​	6.95%	​	​	11.13%	​
​	Class I	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	7.03%	​	​	8.02%	​	​	12.23%	​
​	MSCI Europe Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-2.84%	​	​	3.88%	​	​	10.04%	​
​		​	​		​	​		​	​		​

The MSCI Europe Index (net) is a free float-adjusted market capitalization weighted index that measures equity market performance of the developed markets in Europe. The MSCI Europe Index (net) is calculated on a total-return basis with net dividends reinvested. The index is unmanaged and not available for direct investment. 

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 A 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 Vontobel Asset Management, Inc. (“Vontobel”).

Portfolio Management

>

• Rajiv Jain,   a Managing Director at Vontobel, is a manager of the fund. Mr. Jain has served as Lead Portfolio Manager of the fund since January 2015 and previously served as Co-Portfolio Manager (March 2013 through 2014).

Virtus Greater European Opportunities Fund 65

---

>

• Daniel Kranson, CFA,   a Portfolio Manager at Vontobel, is a manager of the fund. Mr. Kranson has served as Deputy Portfolio Manager of the fund since January 2015 and previously served as Co-Portfolio Manager (March 2013 through 2014).

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

66 Virtus Greater European Opportunities Fund

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Virtus Herzfeld Fund

Investment Objective

The fund has investment objectives of capital appreciation and current income.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	1.00%	​	​	1.00%	​	​	1.00%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.48%	​	​	0.48%	​	​	0.48%	​
​	Acquired Fund Fees and Expenses	​	​	1.18%	​	​	1.18%	​	​	1.18%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	2.91%	​	​	3.66%	​	​	2.66%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.13)%	​	​	(0.13)%	​	​	(0.13)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b)(c)	​	​	2.78%	​	​	3.53%	​	​	2.53%	​
​		​	​		​	​		​	​		​

(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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.60% for Class A Shares, 2.35% for Class C Shares and 1.35% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$840	​	​	$1,412	​	​	$2,009	​	​	$3,613	​
​	Class C	​	​	Sold	​	​	$456	​	​	$1,108	​	​	$1,881	​	​	$3,907	​
			​	Held	​	​	$356	​	​	$1,108	​	​	$1,881	​	​	$3,907	​
​	Class I	​	​	Sold or Held	​	​	$256	​	​	$814	​	​	$1,398	​	​	$2,983	​
​		​	​		​	​		​	​		​	​		​	​		​

Virtus Herzfeld Fund 67

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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 57% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

Under normal circumstances, the fund invests in closed-end investment companies that primarily invest in equity and income-producing securities. The investment methodology utilizes a number of factors and consists of both a quantitative and qualitative approach to identify opportunities across the entire universe of closed-end funds. The overall investment philosophy is predicated on recognizing the recurring valuation patterns found in the closed-end fund industry and capitalizing on opportunities in a systematic manner. The strategy seeks to exploit the discount and premium spreads associated with closed-end funds. The fund may also allocate assets to other investment company structures, including exchange-traded funds (“ETFs”), equity securities, including common and preferred stocks, cash, and/or short term cash equivalents.

The fund primarily invests in closed-end funds whose principal investments strategies include one or more of the following:

Domestic Funds

•

• Municipal Bond, Build America Bond, Government Bond, Corporate Bond, High Yield Bond

•

• Equity—Sector Specific (such as Utilities, Real Estate, MLPs), Equity—Covered Call, Equity—General, Equity— Growth & Income, Equity—Dividend, Equity—Tax-Advantaged, Equity—Preferreds, Equity—Convertible Bond

•

• Loan Participation

•

• Mortgage-Backed

•

• Multi-Strategy

Non-U.S. Funds

•

• Foreign Equity—Country Specific, Foreign Equity—Geographic Region, Global Equity—General, Global Equity—Growth & Income, Global Equity—Dividend

•

• Global Fixed Income

•

• Global Multi-Strategy

The closed-end funds that invest in equity securities may or may not use a growth or value strategy and may include funds investing in securities of issuers of any market capitalization. Closed-end funds that invest in non-U.S issuers may include issuers in emerging markets. Closed-end funds that invest in fixed income securities may invest in securities of any credit quality, including below investment grade (so-called “junk bonds”).

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. In addition, you will also be subject to the risks associated with the principal investment strategies of any ETFs in which the fund invests. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• Fund of Funds Risk.   The risk that the fund’s performance will be adversely affected by the assets owned by the other mutual funds in which it invests, and that the layering of expenses associated with the fund’s investment in such other funds will cost shareholders more than direct investments would have cost.

68 Virtus Herzfeld Fund

---

>

• Closed-End Funds Risk.   The risk that closed-end funds in which the fund invests will expose the fund to negative performance and additional expenses associated with investment in such funds, and increased volatility. Closed-end funds frequently trade at a discount from their net asset value, which may affect whether the fund will realize gain or loss upon its sale of the closed-end funds’ shares. Closed-end funds may employ leverage, which also subjects the closed-end fund to increased risks such as increased volatility.

The principal risks attributable to the underlying investment companies in which the fund invests are:

>

• Commodity and Commodity-linked Instruments Risk.   The risk that investments in commodities or commodity-linked notes will subject the fund’s portfolio to greater volatility than investments in traditional securities, or that commodity-linked instruments will experience returns different from the commodities they attempt to track.

>

• Convertible Securities Risk.   The risk that a convertible security held by the fund will be called for redemption at a time and/or price unfavorable to the fund.

>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• Derivatives Risk.   The risk that the fund will incur a loss greater than the fund’s investment in, or will experience greater share price volatility as a result of investing in, a derivative contract. Derivatives may include, among other things, futures, options, forwards and swap agreements and may be used in order to hedge portfolio risks, create leverage, or to attempt to increase yield.

>

• 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 Real Estate Investment Trust (REIT) Securities Risk.   The risk that, in addition to the risks associated with investing in the real estate industry, the value of the fund’s shares will be negatively affected by factors specific to investing through a pooled vehicle, such as through poor management of the REIT or REIT-like entity, concentration risk, or other risks typically associated with investing in small or medium market capitalization companies.

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Exchange-Traded Funds (ETFs) Risk.   The risk that the value of an ETF will be more volatile than the underlying portfolio of securities the ETF is designed to track, or that the costs to the fund of owning shares of the ETF will exceed those the fund would incur by investing in such securities directly.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• Growth Stocks Risk.   The risk that the fund’s investments in growth stocks will be more volatile than investments in other types of stocks, or will perform differently from the market as a whole and from other types of stocks.

>

• 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.

Virtus Herzfeld Fund 69

---

>

• Income Risk.   The risk that income received from the fund will vary widely over the short- and long-term and/or be less than anticipated if the proceeds from maturing securities in the fund are reinvested in lower-yielding securities.

>

• Industry/Sector Concentration Risk.   The risk that events negatively affecting an industry or market sector in which a fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent that the fund invests a significant portion of its portfolio in one or more industries (such as communications, consumer cyclicals and consumer non-cyclicals) or sectors, the fund is more vulnerable to conditions that negatively affect such industries or sectors as compared to a fund that is not significantly invested in such industries or sector.

>

• Infrastructure-Related Investment Risk.   The risk that the value of the fund’s shares will decrease as a result of conditions, such as general or local economic conditions and political developments, changes in regulations, environmental problems, casualty losses, and changes in interest rates, negatively affecting the infrastructure companies in which the fund invests.

>

• 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.

>

• Limited Number of Investments Risk.   The risk that the fund’s portfolio will be more susceptible to factors adversely affecting issuers of securities in the fund’s portfolio than would a fund holding a greater number of securities.

>

• Liquidity Risk.   The risk that certain securities may be difficult or impossible to sell at the time and price beneficial to the fund.

>

• Loan Risk.   The risks that, in addition to the risks typically associated with high-yield/high-risk fixed income securities, loans in which the fund invests may be unsecured or not fully collateralized, may be subject to restrictions on resale and/or some loans may trade infrequently on the secondary market. Loans settle on a delayed basis, potentially leading to the sale proceeds of loans not being available to meet redemptions for a substantial period of time after the sale of the loans.

>

• 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.

>

• Master Limited Partnership (MLP) Risk.   The risk that the fund’s investments in MLP units will be negatively impacted by tax law changes, regulatory developments or other factors affecting the MLP’s underlying assets.

>

• Mortgage-Backed and Asset-Backed Securities Risk.   The risk that changes in interest rates will cause both extension and prepayment risks for mortgage-backed and asset-backed securities in which the fund invests, or that an impairment of the value of collateral underlying such securities, will cause the value of the securities to decrease.

>

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

>

• Non-Diversification Risk.   The risk that the fund will be more susceptible to factors negatively impacting the securities in its portfolio to the extent that the fund invests more of its assets in the securities of fewer issuers than would a diversified fund.

>

• Preferred Stock Risk.   The risk that a preferred stock will decline in price, fail to pay dividends when expected, or be illiquid.

>

• Sector Focused Investing Risk.   The risk that events negatively affecting a particular industry or market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• Short Sales Risk.   The risk that a fund may experience a loss if the price of a borrowed security increases between the date of a short sale and the date on which the fund replaces the security.

>

• Tax-Exempt Securities   The risk that tax-exempt securities may not provide a higher after-tax return than taxable securities, or that the tax-exempt status of such securities may be lost or limited.

70 Virtus Herzfeld Fund

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>

• Unrated Fixed Income Securities Risk.   The risk that the subadviser will be unable to accurately assess the quality of an unrated fixed income security, so that the fund invests in a security with greater risk than intended, or that the liquidity of unrated fixed income securities in which the fund invests will be hindered, making it difficult for the fund to sell them.

>

• U.S. Government Securities Risk.   The risk that 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.

>

• 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 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 the life of the fund. 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 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 A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2014:

​

​

5.95%

​

​

Worst Quarter:

​

​

Q3/2015:

​

​

-8.85%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	Since Inception (9/5/12)	​
​	Class A	​	​		​	​		​
​	Return Before Taxes	​	​	-9.16%	​	​	3.16%	​
​	Return After Taxes on Distributions	​	​	-10.46%	​	​	1.61%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-4.86%	​	​	1.95%	​
​	Class C	​	​		​	​		​
​	Return Before Taxes	​	​	-4.32%	​	​	4.24%	​
​	Class I	​	​		​	​		​
​	Return Before Taxes	​	​	-3.36%	​	​	5.28%	​
​	MSCI All Country World Index (net) (reflects no deduction of fees, expenses or taxes)	​	​	-2.36%	​	​	9.01%	​
​	Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	0.55%	​	​	1.43%	​
​	Herzfeld Composite Benchmark (reflects no deduction for fees, expenses or taxes)	​	​	-0.98%	​	​	6.06%	​
​		​	​		​	​		​

The MSCI AC World Index (net) is a free float-adjusted market capitalization-weighted index that measures equity performance of developed and emerging markets. The index is calculated on a total return basis with net dividends

Virtus Herzfeld Fund 71

---

reinvested. The Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The index is calculated on a total return basis. The Herzfeld Composite Benchmark consists of 60% MSCI AC World Index (net) and 40% Barclays U.S. Aggregate Bond Index. The indexes are unmanaged and not available for direct investment.

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 A 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. (“VIA”).

The fund’s subadviser is Thomas J. Herzfeld Advisors, Inc. (“Herzfeld”).

Portfolio Management

>

• Erik M. Herzfeld,   Co-President at Herzfeld. Mr. Herzfeld has served as a Portfolio Manager of the fund since inception in September 2012.

>

• Thomas J. Herzfeld,   Chairman and Co-President of Herzfeld. Mr. Herzfeld has served as a Portfolio Manager of the fund since inception in September 2012.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

72 Virtus Herzfeld Fund

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Virtus High Yield Fund

Investment Objective

The fund has a primary investment objective of high current income and a secondary objective of capital growth.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 of the fund’s statement of additional information.

 

​	Shareholder Fees (fees paid directly from your investment)	​	​	Class A	​	​	Class B	​	​	Class C	​	​	Class I	​
​	Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)	​	​	3.75%	​	​	None	​	​	None	​	​	None	​
​	Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds)	​	​	None	​	​	5.00% ​ (a)	​	​	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 B	​	​	Class C	​	​	Class I	​
​	Management Fees	​	​	0.65%	​	​	0.65%	​	​	0.65%	​	​	0.65%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.42%	​	​	0.42%	​	​	0.42%	​	​	0.42%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	1.33%	​	​	2.08%	​	​	2.08%	​	​	1.08%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.17)%	​	​	(0.17)%	​	​	(0.17)%	​	​	(0.17)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	1.16%	​	​	1.91%	​	​	1.91%	​	​	0.91%	​
​		​	​		​	​		​	​		​	​		​

(a)

• The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 1% annually to 2% during the fourth and fifth years and to 0% after the fifth year. 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 expenses 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.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.15% for Class A Shares, 1.90% for Class B Shares, 1.90% for Class C Shares and 0.90% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. 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, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. In the case of Class B Shares, it assumes that your shares are converted to Class A Shares after eight years. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

Virtus High Yield Fund 73

---

 

​		​	​	Share Status	​	​	1 Year	​	​	3 Years	​	​	5 Years	​	​	10 Years	​
​	Class A	​	​	Sold or Held	​	​	$489	​	​	$764	​	​	$1,061	​	​	$1,902	​
​	Class B	​	​	Sold	​	​	$594	​	​	$835	​	​	$1,103	​	​	$2,205	​
			​	Held	​	​	$194	​	​	$635	​	​	$1,103	​	​	$2,205	​
​	Class C	​	​	Sold	​	​	$294	​	​	$635	​	​	$1,103	​	​	$2,397	​
			​	Held	​	​	$194	​	​	$635	​	​	$1,103	​	​	$2,397	​
​	Class I	​	​	Sold or Held	​	​	$93	​	​	$327	​	​	$579	​	​	$1,302	​
​		​	​		​	​		​	​		​	​		​	​		​

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 94% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

The fund is appropriate for investors seeking diversification and the potential rewards associated with investing in high-yield fixed income securities. High-yield fixed income securities are those that are rated below investment grade. The subadviser uses an investment process that focuses on adding value through issue selection, sector/industry selection and opportunistic trading. The fund will generally overweight those sectors and industries where the subadviser identifies well-valued companies whose business profiles are viewed to be improving. The subadviser attempts to maintain the duration of the fund at a level similar to that of its style benchmark, the Barclay’s U.S. High Yield 2% Issuer Capped Index. Under normal circumstances, the fund invests at least 80% of its assets in high yield fixed income securities.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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. Debt securities rated below investment-grade are especially susceptible to this risk.

>

• 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.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• 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.

>

• Industry/Sector Concentration Risk.   The risk that events negatively affecting an industry or market sector in which a fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly. To the extent that the fund invests a significant portion of its portfolio in one or more industries (such as communications, consumer cyclicals and consumer non-cyclicals) or sectors, the fund is more

74 Virtus High Yield Fund

---

vulnerable to conditions that negatively affect such industries or sectors as compared to a fund that is not significantly invested in such industries or sector.

>

• 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.

>

• 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.

>

• Mortgage-Backed and Asset-Backed Securities Risk.   The risk that changes in interest rates will cause both extension and prepayment risks for mortgage-backed and asset-backed securities in which the fund invests, or that an impairment of the value of collateral underlying such securities, will cause the value of the securities to decrease.

>

• U.S. Government 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.

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 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 A Shares (includes returns of a predecessor fund)

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q2/2009:

​

​

11.27%

​

​

Worst Quarter:

​

​

Q4/2008:

​

​

-14.67%

​

​

​

​

​

​

​

​

​

​

​

​

​

Virtus High Yield Fund 75

---

Average Annual Total Returns (for the periods ended 12/31/15; includes returns of a predecessor fund)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	10 Years	​	​	Class I Since Inception (8/8/12)	​
​	Class A	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-6.39%	​	​	4.00%	​	​	4.21%	​	​	—	​
​	Return After Taxes on Distributions	​	​	-8.54%	​	​	1.53%	​	​	1.61%	​	​	—	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-3.57%	​	​	2.06%	​	​	2.17%	​	​	—	​
​	Class B	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-7.23%	​	​	4.01%	​	​	3.82%	​	​	—	​
​	Class C	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-3.76%	​	​	4.02%	​	​	3.81%	​	​	—	​
​	Class I	​	​		​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-2.50%	​	​	—	​	​	—	​	​	3.54%	​
​	Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	0.55%	​	​	3.25%	​	​	4.52%	​	​	1.54%	​
​	Barclays U.S. High-Yield 2% Issuer Capped Bond Index (reflects no deduction for fees, expenses or taxes)	​	​	-4.43%	​	​	5.03%	​	​	6.95%	​	​	3.04%	​
​		​	​		​	​		​	​		​	​		​

The Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The Barclays U.S. High-Yield 2% Issuer Capped Bond Index is a market capitalization-weighted index that measures fixed rate non-investment grade debt securities of U.S. and non-U.S. corporations. No single issuer accounts for more than 2% of market cap. The indexes are calculated on a total return basis. The indexes are unmanaged and not available for direct investment. 

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 A 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. (“VIA”).

The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.

Portfolio Management

>

• David L. Albrycht, CFA,   President and Chief Investment Officer at Newfleet, is a manager of the fund. Mr. Albrycht has served as a Portfolio Manager of the fund since December 2011.

>

• Kyle A. Jennings, CFA,   Senior Managing Director at Newfleet, is a manager of the fund. Mr. Jennings has served as a Portfolio Manager of the fund since December 2011.

>

• Francesco Ossino,   Senior Managing Director and Sector Head of the Bank Loan asset class at Newfleet, is a manager of the fund. Mr. Ossino has served as a Portfolio Manager of the fund since August 2012.

>

• Jonathan R. Stanley, CFA,   Managing Director of Fixed Income Research at Newfleet, is a manager of the fund. Mr. Stanley has served as a Portfolio Manager of the fund since August 2012.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

76 Virtus High Yield Fund

---

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

NOTE: Class B Shares are no longer available for purchase, except through reinvestment of dividends/capital gain distributions by existing shareholders and exchange of Class B shares of a fund for Class B shares of other Virtus Mutual Funds, as permitted by the existing exchange privileges (as set forth in the fund’s prospectus).

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus High Yield Fund 77

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Virtus International Equity Fund

Investment Objective

The fund has an investment objective of long-term capital appreciation.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	0.85%	​	​	0.85%	​	​	0.85%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	1.17%	​	​	1.17%	​	​	1.17%	​
​	Acquired Fund Fees and Expenses	​	​	0.01%	​	​	0.01%	​	​	0.01%	​
​	Total Annual Fund Operating Expenses ​ (b)	​	​	2.28%	​	​	3.03%	​	​	2.03%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (c)	​	​	(0.77)%	​	​	(0.77)%	​	​	(0.77)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b) ​ (c)	​	​	1.51%	​	​	2.26%	​	​	1.26%	​
​		​	​		​	​		​	​		​

(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 expenses to average net assets appearing in the Financial Highlights tables, which tables reflect only the operating expenses of the series and do not include acquired fund fees and expenses.

(c)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.50% for Class A Shares, 2.25% for Class C Shares and 1.25% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$720	​	​	$1,177	​	​	$1,659	​	​	$2,984	​
​	Class C	​	​	Sold	​	​	$329	​	​	$864	​	​	$1,524	​	​	$3,292	​
			​	Held	​	​	$229	​	​	$864	​	​	$1,524	​	​	$3,292	​
​	Class I	​	​	Sold or Held	​	​	$128	​	​	$562	​	​	$1,022	​	​	$2,297	​
​		​	​		​	​		​	​		​	​		​	​		​

78 Virtus International Equity Fund

---

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 94% of the average value of its portfolio.

Investments, Risks and Performance

Principal Investment Strategies

Under normal circumstances, the fund invests at least 80% of its assets in equity securities of issuers located outside of the United States. The fund invests primarily in developed countries, but may also invest in issuers located in emerging market countries. The subadviser seeks to diversify its portfolio from a variety of sectors and countries, and typically invests in the securities of medium to large capitalization companies, but is not limited to investing in the securities of companies of any particular size. The fund may use derivatives to hedge against foreign currency exchange rates.

The fund seeks to provide investors with access to high-quality international businesses selling at attractive valuations. Ideally these companies are not only growing their earnings but are also creating economic value by maintaining or growing their return on invested capital. The subadviser’s process is driven by bottom-up fundamental research and informed by top-down macro views. In evaluating securities for inclusion in the fund, the subadviser applies a cash flow based approach to valuation, as well as additional fundamental research to assess the economic value added, financial strength, franchise quality, and management alignment of individual companies. Top-down macro research is utilized to assess the market environment, and to assist with regional, country, and sector allocations. As part of the macro process, the sub-adviser takes into account, among other things; monetary policy, political factors, economic growth, and valuation.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• Depositary Receipts Risk.   The risk that investments in foreign companies through depositary receipts will expose the fund to the same risks as direct investment in securities of foreign issuers.

>

• Derivatives Risk.   The risk that the fund will incur a loss greater than the fund’s investment in, or will experience greater share price volatility as a result of investing in, a derivative contract. Derivatives may include, among other things, futures, options, forwards and swap agreements and may be used in order to hedge portfolio risks, create leverage, or to attempt to increase yield.

>

• 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 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

Virtus International Equity Fund 79

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>

• 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.

>

• 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 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 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. Updated performance information is available at virtus.com or by calling 800-243-1574.

Calendar year total returns for Class A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q1/2012:

​

​

7.52%

​

​

Worst Quarter:

​

​

Q3/2011:

​

​

-13.59%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	Since Inception (9/16/10)	​
​	Class A	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-6.91%	​	​	3.08%	​	​	4.12%	​
​	Return After Taxes on Distributions	​	​	-6.74%	​	​	1.92%	​	​	3.01%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-3.61%	​	​	2.39%	​	​	3.21%	​
​	Class C	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-1.98%	​	​	3.44%	​	​	4.43%	​
​	Class I	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-1.01%	​	​	4.46%	​	​	5.47%	​
​	MSCI EAFE ​ ® Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-0.81%	​	​	3.60%	​	​	5.15%	​
​		​	​		​	​		​	​		​

The MSCI EAFE ​ ® Index (net) is a free float-adjusted market capitalization-weighted index that measures developed foreign market equity performance, excluding the U.S. and Canada. The MSCI EAFE ​ ® Index (net) is calculated on a total return basis with net dividends reinvested. The index is unmanaged and not available for direct investment. 

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 A 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.

80   Virtus International Equity Fund

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Management

The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).

The fund’s subadviser is Euclid Advisors LLC, an affiliate of VIA.

Portfolio Management

>

• Frederick A. Brimberg,   Senior Managing Director and Senior Portfolio Manager at Euclid, is the manager of the fund. Mr. Brimberg has served as the Portfolio Manager of the fund since May 2013.

Purchase and Sale of Fund Shares

Minimum initial investments applicable to Class A and Class C Shares:

•

• $2,500, generally

•

• $100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans

Minimum additional investments applicable to Class A and Class C Shares:

•

• $100, generally

•

• No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.

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

In general, you may 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, broker-dealer or other financial intermediary.

Taxes

The fund’s distributions are taxable to you either as 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.

Virtus International Equity Fund 81

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Virtus International Real Estate Securities Fund

Investment Objective

The fund has a primary investment objective of long-term capital appreciation with a secondary investment objective of income.

Fees and Expenses

The tables below illustrate the 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 is available from your financial advisor and under “Sales Charges” on page 201 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 105 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	​	​	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	​	​	1.00%	​	​	1.00%	​	​	1.00%	​
​	Distribution and Shareholder Servicing (12b-1) fees	​	​	0.25%	​	​	1.00%	​	​	None	​
​	Other Expenses	​	​	0.53%	​	​	0.53%	​	​	0.53%	​
​	Total Annual Fund Operating Expenses	​	​	1.78%	​	​	2.53%	​	​	1.53%	​
​	Less: Fee Waiver and/or Expense Reimbursement ​ (b)	​	​	(0.28)%	​	​	(0.28)%	​	​	(0.28)%	​
​	Total Annual Fund Operating Expenses After Expense Reimbursement ​ (b)	​	​	1.50%	​	​	2.25%	​	​	1.25%	​
​		​	​		​	​		​	​		​

(a)

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

(b)

• The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding dividend and interest expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses) so that such expenses do not exceed 1.50% for Class A Shares, 2.25% for Class C Shares and 1.25.% for Class I Shares through January 31, 2017. Following the contractual period, the adviser may discontinue these expense reimbursement arrangements at any time. Under certain conditions, the adviser may recapture operating expenses reimbursed under these arrangements for a period of three years following the fiscal year in which such reimbursement occurred.

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 and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year, that the fund’s operating expenses remain the same and that the expense reimbursement agreement remains in place for the contractual period. 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	​	​	$719	​	​	$1,077	​	​	$1,459	​	​	$2,527	​
​	Class C	​	​	Sold	​	​	$328	​	​	$761	​	​	$1,320	​	​	$2,845	​
			​	Held	​	​	$228	​	​	$761	​	​	$1,320	​	​	$2,845	​
​	Class I	​	​	Sold or Held	​	​	$127	​	​	$456	​	​	$808	​	​	$1,800	​
​		​	​		​	​		​	​		​	​		​	​		​

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 27% of the average value of its portfolio.

82   Virtus International Real Estate Securities Fund

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Investments, Risks and Performance

Principal Investment Strategies

The fund provides international exposure to the real estate securities market, focusing exclusively on companies with a rental business profile. Rental companies derive 70% or more of total revenue from rental income and are most similar in business profile to U.S. real estate investment trusts (“REITs”).

Under normal circumstances, the fund invests at least 80% of its assets in equity securities issued by non-U.S companies of any capitalization that are principally engaged in the real estate industry, including common stock, preferred stock and other equity securities issued by real estate companies, such as REITs and similar REIT-like entities. The fund may, at times, invest up to 20% of its assets in U.S. REIT securities. Additionally, the fund normally invests in real estate related securities of issuers in developed countries, however it may invest up to 20% of its assets in issuers incorporated in emerging market countries. The fund concentrates its assets in the real estate industry.

Principal Risks

The fund may not achieve its objective(s), 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 subadviser expects. As a result, the value of your shares may decrease. Purchase and redemption activities by fund shareholders may impact the management of the fund and its ability to achieve its investment objective(s). The redemption by one or more large shareholders or groups of shareholders of their holdings in the fund could have an adverse impact on the remaining shareholders in the fund including by accelerating the realization of capital gains and increasing the fund's transaction costs. The principal risks of investing in the fund are:

>

• 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 Real Estate Investment Trust (REIT) Securities Risk.   The risk that, in addition to the risks associated with investing in the real estate industry, the value of the fund’s shares will be negatively affected by factors specific to investing through a pooled vehicle, such as through poor management of the REIT or REIT-like entity, concentration risk, or other risks typically associated with investing in small or medium market capitalization companies.

>

• 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 a particular style or in small or medium-sized companies may enhance that risk.

>

• Foreign Investing Risk.   The risk that the prices of foreign securities in the fund’s portfolio will be more volatile than those of domestic securities, or will be negatively affected by currency fluctuations, less regulated or liquid securities markets, or economic, political or other developments.

>

• Geographic Concentration Risk.   The risk that events negatively affecting the geographic location where the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.

>

• Industry/Sector Concentration Risk.   The risk that events negatively affecting real estate securities will cause the value of the fund’s shares to decrease, perhaps significantly. Since the fund concentrates its assets in real estate related securities, the fund is more vulnerable to conditions that negatively affect real estate related securities as compared to a fund that does not concentrate holdings in such securities.

>

• 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.

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.

Virtus International Real Estate Securities Fund 83

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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 A Shares

Returns do not reflect sales charges and would be lower if they did.

 

 

​

Best Quarter:

​

​

Q3/2009:

​

​

31.59%

​

​

Worst Quarter:

​

​

Q4/2008:

​

​

-30.74%

​

​

​

​

​

​

​

​

​

​

​

​

​

Average Annual Total Returns (for the periods ended 12/31/15)

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

 

​		​	​	1 Year	​	​	5 Years	​	​	Since Inception (10/1/07)	​
​	Class A	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-5.65%	​	​	4.90%	​	​	-0.08%	​
​	Return After Taxes on Distributions	​	​	-5.71%	​	​	3.94%	​	​	-1.41%	​
​	Return After Taxes on Distributions and Sale of Fund Shares	​	​	-2.85%	​	​	3.74%	​	​	-0.32%	​
​	Class C	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	-0.65%	​	​	5.37%	​	​	-0.12%	​
​	Class I	​	​		​	​		​	​		​
​	Return Before Taxes	​	​	0.35%	​	​	6.45%	​	​	0.90%	​
​	S&P 500 ​ ® Index (reflects no deduction for fees, expenses or taxes)	​	​	1.38%	​	​	12.57%	​	​	5.70%	​
​	FTSE EPRA/NAREIT Developed Rental ex-U.S. Index (net) (reflects no deduction for fees, expenses or taxes)	​	​	-0.76%	​	​	6.02%	​	​	-0.39%	​
​		​	​		​	​		​	​		​

The S&P 500 ​ ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The S&P 500 ​ ® Index is calculated on a total return basis with dividends reinvested. The FTSE EPRA/NAREIT Developed Rental ex-U.S. Index is a free-float market capitalization-weighted index measuring international real estate securities, which meet minimum size, liquidity and investment focus criteria. The FTSE EPRA/NAREIT Developed Rental ex-U.S. Index (net) is calculated on a total return basis with net dividends reinvested. The index is a sub-set of the FTSE EPRA/NAREIT Investment Focus Index Series, which separates the existing constituents into both Rental and Non-Rental Indices. A company is classified as Rental if the rental revenue from properties is greater than or equal to 70% of total revenue. The classification is based on revenue sources as disclosed in the latest published financial statement. The indexes are unmanaged and not available for direct investment. 

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 A 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.

84   Virtus International Real Estate Securities Fund

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