As filed with the Securities and Exchange Commission on January 20, 2017

File No. 033-65137

File No. 811-07455

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-1A

REGISTRATION STATEMENT

 

Under the SECURITIES ACT OF 1933

         
    Pre-Effective Amendment No.   ¨
    Post-Effective Amendment No. 92   x

and/or

REGISTRATION STATEMENT

         
   

 

Under the INVESTMENT COMPANY ACT OF 1940

  ¨
    Amendment No. 93   x

(Check appropriate box or boxes)

 

 

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):

 

  ¨ immediately upon filing pursuant to paragraph (b)
  x on January 30, 2017 pursuant to paragraph (b) of Rule 485
  ¨ 60 days after filing pursuant to paragraph (a)(1)
  ¨ on                    or at such later date as the Commission shall order pursuant to paragraph (a)(2)
  ¨ 75 days after filing pursuant to paragraph (a)(2)
  ¨ on _____________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

 

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

 

 

 

TABLE OF CONTENTS
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Prospectus
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TICKER SYMBOL BY CLASS
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FUND
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A
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B
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C
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I
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R6
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T
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Virtus Alternatives Diversifier Fund ​ ​
PDPAX
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PDPCX
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VADIX
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Virtus Bond Fund ​ ​
SAVAX
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SAVBX
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SAVCX
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SAVYX
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VBFRX
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Virtus CA Tax-Exempt Bond Fund ​ ​
CTESX
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CTXEX
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Virtus Emerging Markets Debt Fund ​ ​
VEDAX
​ ​ ​ ​ ​
VEDCX
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VIEDX
​ ​ ​ ​ ​ ​ ​
Virtus Emerging Markets Equity Income Fund ​ ​
VEIAX
​ ​ ​ ​ ​
VEICX
​ ​
VEIIX
​ ​ ​ ​ ​ ​ ​
Virtus Emerging Markets Opportunities Fund ​ ​
HEMZX
​ ​ ​ ​ ​
PICEX
​ ​
HIEMX
​ ​
VREMX
​ ​ ​ ​
Virtus Emerging Markets Small-Cap Fund ​ ​
VAESX
​ ​ ​ ​ ​
VCESX
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VIESX
​ ​ ​ ​ ​ ​ ​
Virtus Equity Trend Fund ​ ​
VAPAX
​ ​ ​ ​ ​
VAPCX
​ ​
VAPIX
​ ​
VRPAX
​ ​ ​ ​
Virtus Essential Resources Fund ​ ​
VERAX
​ ​ ​ ​ ​
VERCX
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VERIX
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Virtus Foreign Opportunities Fund ​ ​
JVIAX
​ ​ ​ ​ ​
JVICX
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JVXIX
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VFOPX
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Virtus Global Equity Trend Fund ​ ​
VGPAX
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VGPCX
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VGPIX
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Virtus Global Infrastructure Fund ​ ​
PGUAX
​ ​ ​ ​ ​
PGUCX
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PGIUX
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Virtus Global Opportunities Fund ​ ​
NWWOX
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WWOBX
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WWOCX
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WWOIX
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Virtus Global Real Estate Securities Fund ​ ​
VGSAX
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VGSCX
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VGISX
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VRGEX
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Virtus Greater European Opportunities Fund ​ ​
VGEAX
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VGECX
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VGEIX
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Virtus Herzfeld Fund ​ ​
VHFAX
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VHFCX
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VHFIX
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Virtus High Yield Fund ​ ​
PHCHX
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PHCCX
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PGHCX
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PHCIX
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VRHYX
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Virtus International Equity Fund ​ ​
VIEAX
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VIECX
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VIIEX
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Virtus International Real Estate Securities Fund ​ ​
PXRAX
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PXRCX
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PXRIX
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Virtus International Small-Cap Fund ​ ​
VISAX
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VCISX
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VIISX
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VRISX
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Virtus International Wealth Masters Fund ​ ​
VIWAX
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VIWCX
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VWIIX
​ ​ ​ ​ ​ ​ ​
Virtus Low Duration Income Fund ​ ​
HIMZX
​ ​ ​ ​ ​
PCMZX
​ ​
HIBIX
​ ​ ​ ​ ​ ​ ​
Virtus Low Volatility Equity Fund ​ ​
VLVAX
​ ​ ​ ​ ​
VLVCX
​ ​
VLVIX
​ ​ ​ ​ ​ ​ ​
Virtus Multi-Asset Trend Fund ​ ​
VAAAX
​ ​ ​ ​ ​
VAACX
​ ​
VAISX
​ ​ ​ ​ ​ ​ ​
Virtus Multi-Sector Intermediate Bond Fund ​ ​
NAMFX
​ ​
NBMFX
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NCMFX
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VMFIX
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VMFRX
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Virtus Multi-Sector Short Term Bond Fund ​ ​
NARAX
​ ​
PBARX
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PSTCX
​ ​
PIMSX
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VMSSX
​ ​
PMSTX
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Virtus Real Estate Securities Fund ​ ​
PHRAX
​ ​
PHRBX
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PHRCX
​ ​
PHRIX
​ ​
VRREX
​ ​ ​ ​
Virtus Sector Trend Fund ​ ​
PWBAX
​ ​ ​ ​ ​
PWBCX
​ ​
VARIX
​ ​ ​ ​ ​ ​ ​
Virtus Senior Floating Rate Fund ​ ​
PSFRX
​ ​ ​ ​ ​
PFSRX
​ ​
PSFIX
​ ​
VRSFX
​ ​ ​ ​
Virtus Tax-Exempt Bond Fund ​ ​
HXBZX
​ ​ ​ ​ ​
PXCZX
​ ​
HXBIX
​ ​ ​ ​ ​ ​ ​
Virtus Wealth Masters Fund ​ ​
VWMAX
​ ​ ​ ​ ​
VWMCX
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VWMIX
​ ​ ​ ​ ​ ​ ​
​ TRUST NAME ​ ​
January 30, 2017​
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​ VIRTUS OPPORTUNITIES TRUST ​ ​ ​ ​
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​ 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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TABLE OF CONTENTS
TABLE OF CONTENTS ​
Virtus Mutual Funds
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Table of Contents
​ FUND SUMMARIES ​ ​ ​ ​
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​ MORE INFORMATION ABOUT INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES ​ ​ ​
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TABLE OF CONTENTS ​
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​ MORE INFORMATION ABOUT RISKS RELATED TO PRINCIPAL INVESTMENT STRATEGIES ​ ​ ​
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Throughout this prospectus, Virtus Equity Trend Fund, Virtus Global Equity Trend Fund, Virtus Multi-Asset Trend Fund and Virtus Sector Trend Fund, are sometimes collectively referred to as the “Trend Funds.”
TABLE OF CONTENTS ​ ​ ​ ​ ​ ​ ​
Virtus Alternatives Diversifier Fund
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
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Shareholder Fees (fees paid directly from your investment)
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Class A
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Class C
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Class I
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Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price)
​ ​ ​ ​ ​ 5.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
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Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value
of your investment)
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Class A
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Class C
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Class I
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​ ​ Management Fees ​ ​ ​ ​ ​ 0.00 % ​ ​ ​ ​ ​ ​ 0.00 % ​ ​ ​ ​ ​ ​ 0.00 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.48 % ​ ​ ​ ​ ​ ​ 0.48 % ​ ​ ​ ​ ​ ​ 0.48 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.92 % ​ ​ ​ ​ ​ ​ 0.92 % ​ ​ ​ ​ ​ ​ 0.92 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.65 % ​ ​ ​ ​ ​ ​ 2.40 % ​ ​ ​ ​ ​ ​ 1.40 % ​ ​ ​
(a)
The deferred sales charge is imposed on Class C Shares redeemed during the first year only.
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(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.
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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:
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Share Status
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1 Year
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3 Years
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5 Years
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10 Years
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​ ​ Class A ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $733 ​ ​ ​ ​ ​ ​ $1,065 ​ ​ ​ ​ ​ ​ $1,420 ​ ​ ​ ​ ​ ​ $2,417 ​ ​ ​
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Class C
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Sold
​ ​ ​ ​ ​ $343 ​ ​ ​ ​ ​ ​ $748 ​ ​ ​ ​ ​ ​ $1,280 ​ ​ ​ ​ ​ ​ $2,736 ​ ​ ​
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Held
​ ​ ​ ​ ​ $243 ​ ​ ​ ​ ​ ​ $748 ​ ​ ​ ​ ​ ​ $1,280 ​ ​ ​ ​ ​ ​ $2,736 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $143 ​ ​ ​ ​ ​ ​ $443 ​ ​ ​ ​ ​ ​ $766 ​ ​ ​ ​ ​ ​ $1,680 ​ ​ ​
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 56% of the average value of its portfolio.
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to achieve its objective by investing its assets in a mix of underlying affiliated and unaffiliated mutual funds and exchange-traded funds (“ETFs”) (collectively, “underlying funds”). The fund emphasizes low correlating asset classes in order to help reduce volatility and increase return potential. Applying an innovative, institutional-level
Virtus Alternatives Diversifier Fund 1 ​
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approach to investing, the fund invests in a diversified portfolio of alternative asset classes including managed futures, global real estate, global infrastructure, natural resources, commodities, currencies, and floating rate securities. Among the underlying funds in which the fund invests are equity funds that invest principally in equity securities of issuers of any capitalization, including those of foreign issuers, including emerging markets issuers. Under normal circumstances, the fund will generally invest in affiliated mutual funds where available to represent the desired asset classes, and unaffiliated mutual funds and/or ETFs to represent the desired asset classes for which affiliated mutual funds are unavailable or deemed not to be appropriate for the fund. The fund is non-diversified under federal securities laws.
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:
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Affiliated Fund Risk.  The risk that the adviser’s authority to select and substitute underlying funds from a variety of affiliated and unaffiliated mutual funds may create a conflict of interest.
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Allocation Risk.  The risk that the fund’s exposure to equities and fixed income securities, or to different asset classes, may vary from the intended allocation or may not be optimal for market conditions at a given time.
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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.
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The principal risks attributable to the underlying funds in which the fund invests are:
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Income Risk.  The risk that income received from the fund will vary widely over the short- and/or long-term and/or be less than anticipated if the proceeds from maturing securities in the fund are reinvested in lower-yielding securities.
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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.
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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.
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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.
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Leverage Risk.  The risk that leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair the fund's liquidity, cause it to liquidate positions at an unfavorable time, increase its volatility or otherwise cause it not to achieve its intended result.
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Liquidity Risk.  The risk that certain securities may be difficult or impossible to sell at the time and price beneficial to the fund.
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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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
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Master Limited Partnership Risk.  The risk that the fund’s investments in MLP units will be negatively impacted by tax law changes, changes in interest rates, the failure of the MLP's parent or sponsor to make payments as expected, regulatory developments or other factors affecting the MLP’s underlying assets, which are typically in the natural resources and energy sectors.
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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.
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Preferred Stock Risk.  The risk that a preferred stock will decline in price, fail to pay dividends when expected, or be illiquid.
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Short Sales Risk.  The risk that the fund will 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.
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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.
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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.
Virtus Alternatives Diversifier Fund 3 ​
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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.
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Best Quarter:
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Q2/2009:
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12.30%
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Worst Quarter:
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Q4/2008:
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-21.63%
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Average Annual Total Returns (for the periods ended 12/31/16; includes returns of a predecessor fund)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
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1 Year
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5 Years
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10 Years
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Class I
Since
Inception
(10/1/09)
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​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
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Return Before Taxes
​ ​ ​ ​ ​ 3.97 % ​ ​ ​ ​ ​ ​ 1.16 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
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Return After Taxes on Distributions
​ ​ ​ ​ ​ 3.80 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ 0.21 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
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Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 2.43 % ​ ​ ​ ​ ​ ​ 0.93 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
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Return Before Taxes
​ ​ ​ ​ ​ 9.53 % ​ ​ ​ ​ ​ ​ 1.59 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
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Return Before Taxes
​ ​ ​ ​ ​ 10.62 % ​ ​ ​ ​ ​ ​ 2.63 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 3.89 % ​ ​ ​
​ ​ Alternatives Diversifier Composite Benchmark (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 10.04 % ​ ​ ​ ​ ​ ​ 2.38 % ​ ​ ​ ​ ​ ​ 1.68 % ​ ​ ​ ​ ​ ​ 3.89 % ​ ​ ​
​ ​ S&P 500 ® Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 14.66 % ​ ​ ​ ​ ​ ​ 6.95 % ​ ​ ​ ​ ​ ​ 13.68 % ​ ​ ​
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 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.
4 Virtus Alternatives Diversifier Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
Portfolio Management
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Warun Kumar,  Senior Managing Director and Portfolio Manager at VIA, is manager of the fund. Mr. Kumar has served as a Portfolio Manager of the fund since September 2016.
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Purchase and Sale of Fund Shares
Minimum initial investments applicable to Class A and Class C Shares:
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$2,500, generally
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$100 for Individual Retirement Accounts (IRAs), systematic purchase or exchange accounts
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No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans
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Minimum additional investments applicable to Class A and Class C Shares:
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$100, generally
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No minimum for defined contribution plans, asset-based fee programs, profit-sharing plans or employee benefit plans.
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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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
​ ​
Shareholder Fees (fees paid directly from your investment)
​ ​ ​
Class A
​ ​ ​
Class B
​ ​ ​
Class C
​ ​ ​
Class I
​ ​ ​
Class R6
​ ​
​ ​ Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price) ​ ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 5.00 % (a) ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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
​ ​ ​
Class R6
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ ​ 0.40 % (b) ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (c) ​ ​ ​ ​ ​ 1.18 % ​ ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ ​ 0.93 % ​ ​ ​ ​ ​ ​ 0.87 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (d) ​ ​ ​ ​ ​ (0.31) % ​ ​ ​ ​ ​ ​ (0.31) % ​ ​ ​ ​ ​ ​ (0.31) % ​ ​ ​ ​ ​ ​ (0.31) % ​ ​ ​ ​ ​ ​ (0.31) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (c)(d) ​ ​ ​ ​ ​ 0.87 % ​ ​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ ​ 0.62 % ​ ​ ​ ​ ​ ​ 0.56 % ​ ​ ​
(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)
Estimated for current fiscal year, as annualized.
​
(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.
​
(d)
The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 0.60% for Class I Shares and 0.54% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $460 ​ ​ ​ ​ ​ ​ $706 ​ ​ ​ ​ ​ ​ $971 ​ ​ ​ ​ ​ ​ $1,727 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $565 ​ ​ ​ ​ ​ ​ $776 ​ ​ ​ ​ ​ ​ $1,013 ​ ​ ​ ​ ​ ​ $2,033 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $165 ​ ​ ​ ​ ​ ​ $576 ​ ​ ​ ​ ​ ​ $1,013 ​ ​ ​ ​ ​ ​ $2,033 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $265 ​ ​ ​ ​ ​ ​ $576 ​ ​ ​ ​ ​ ​ $1,013 ​ ​ ​ ​ ​ ​ $2,229 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $165 ​ ​ ​ ​ ​ ​ $576 ​ ​ ​ ​ ​ ​ $1,013 ​ ​ ​ ​ ​ ​ $2,229 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $63 ​ ​ ​ ​ ​ ​ $265 ​ ​ ​ ​ ​ ​ $484 ​ ​ ​ ​ ​ ​ $1,115 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $57 ​ ​ ​ ​ ​ ​ $247 ​ ​ ​ ​ ​ ​ $452 ​ ​ ​ ​ ​ ​ $1,044 ​ ​ ​
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;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), 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
Virtus Bond Fund 7 ​
TABLE OF CONTENTS ​
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.
​
>
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 issuers 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: A1FEIJC2A27TCSA6A1PRUJLUT2L9.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
5.54%
​ ​
Worst Quarter:
​ ​
Q2/2013:
​ ​
-2.90%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
5 Years
​ ​ ​
10 Years
​ ​ ​
Class R6
Since
Inception
(11/3/16)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.80 % ​ ​ ​ ​ ​ ​ 3.59 % ​ ​ ​ ​ ​ ​ 4.92 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 3.37 % ​ ​ ​ ​ ​ ​ 2.08 % ​ ​ ​ ​ ​ ​ 3.35 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 2.71 % ​ ​ ​ ​ ​ ​ 2.09 % ​ ​ ​ ​ ​ ​ 3.18 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 2.51 % ​ ​ ​ ​ ​ ​ 4.25 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.22 % ​ ​ ​ ​ ​ ​ 2.54 % ​ ​ ​ ​ ​ ​ 3.87 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 3.66 % ​ ​ ​ ​ ​ ​ 2.53 % ​ ​ ​ ​ ​ ​ 3.88 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 1.46 % ​ ​ ​
​ ​ Bloomberg Barclays U.S. Aggregate Bond Index (reflects no deduction for
fees, expenses or taxes) 		​ ​ ​ ​ ​ 2.65 % ​ ​ ​ ​ ​ ​ 2.23 % ​ ​ ​ ​ ​ ​ 4.35 % ​ ​ ​ ​ ​ ​ -2.27 % ​ ​ ​
The Bloomberg 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.
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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:
•
$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, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
10 Virtus Bond Fund
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 0.51 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.21 % ​ ​ ​ ​ ​ ​ 0.96 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (a) ​ ​ ​ ​ ​ (0.36) % ​ ​ ​ ​ ​ ​ (0.36) % ​ ​ ​
​ ​ 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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 0.85% for Class A Shares and 0.60% for Class I Shares through January 31, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $614 ​ ​ ​ ​ ​ ​ $888 ​ ​ ​ ​ ​ ​ $1,670 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $61 ​ ​ ​ ​ ​ ​ $270 ​ ​ ​ ​ ​ ​ $496 ​ ​ ​ ​ ​ ​ $1,145 ​ ​ ​
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 21% of the average value of its portfolio.
Virtus CA Tax-Exempt Bond Fund 11 ​
TABLE OF CONTENTS ​ ​ ​ ​
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.
​
>
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.
​
>
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 issuers 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.
12 Virtus CA Tax-Exempt Bond Fund
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The bar chart shows changes in the fund’s performance from year to year over a 10-year period. The table shows how the fund’s average annual returns compare to those of a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.
Calendar year total returns for Class I Shares (includes returns of a predecessor fund)
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: AC4AF8B0IL7PUNCBVF173I2FNGNG.JPG]
​ ​
Best Quarter:
​ ​
Q3/2009:
​ ​
8.20%
​ ​
Worst Quarter:
​ ​
Q4/2010:
​ ​
-4.58%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.17 % ​ ​ ​ ​ ​ ​ 3.96 % ​ ​ ​ ​ ​ ​ 4.24 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 3.23 % ​ ​ ​ ​ ​ ​ 3.86 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ ​ 3.90 % ​ ​ ​ ​ ​ ​ 4.16 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -2.74 % ​ ​ ​ ​ ​ ​ 3.15 % ​ ​ ​ ​ ​ ​ 3.70 % ​ ​ ​
​ ​ Bloomberg Barclays California Municipal Bond Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ -0.14 % ​ ​ ​ ​ ​ ​ 3.85 % ​ ​ ​ ​ ​ ​ 4.44 % ​ ​ ​
The Bloomberg Barclays California Municipal Bond Index measures long term investment grade, tax-exempt and fixed rate bonds issued in California. The Bloomberg Barclays California Municipal Bond 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Newfleet Asset Management, LLC (“Newfleet”), an affiliate of VIA.
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:
Virtus CA Tax-Exempt Bond Fund 13 ​
TABLE OF CONTENTS ​ ​
•
$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
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.53 % ​ ​ ​ ​ ​ ​ 0.53 % ​ ​ ​ ​ ​ ​ 0.53 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.54 % ​ ​ ​ ​ ​ ​ 2.29 % ​ ​ ​ ​ ​ ​ 1.29 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.18) % ​ ​ ​ ​ ​ ​ (0.18) % ​ ​ ​ ​ ​ ​ (0.18) % ​ ​ ​
​ ​
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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $826 ​ ​ ​ ​ ​ ​ $1,167 ​ ​ ​ ​ ​ ​ $2,126 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $314 ​ ​ ​ ​ ​ ​ $698 ​ ​ ​ ​ ​ ​ $1,209 ​ ​ ​ ​ ​ ​ $2,612 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $214 ​ ​ ​ ​ ​ ​ $698 ​ ​ ​ ​ ​ ​ $1,209 ​ ​ ​ ​ ​ ​ $2,612 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $113 ​ ​ ​ ​ ​ ​ $391 ​ ​ ​ ​ ​ ​ $690 ​ ​ ​ ​ ​ ​ $1,541 ​ ​ ​
Virtus Emerging Markets Debt Fund 15 ​
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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 49% 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, 2016, the modified adjusted duration of the JP Morgan EMBI Global Diversified was 6.92 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.
​
>
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.
​
​
16 Virtus Emerging Markets Debt Fund
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>
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 issuers 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. Updated performance information is available at virtus.com or by calling 800-243-1574.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: D1TMHTB0D904TP8K5R5PB3NCUK58.JPG]
​ ​
Best Quarter:
​ ​
Q2/2016:
​ ​
5.97%
​ ​
Worst Quarter:
​ ​
Q2/2013:
​ ​
-6.29%
​ ​
Virtus Emerging Markets Debt Fund 17 ​
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Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(9/5/12)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 11.07 % ​ ​ ​ ​ ​ ​ 2.41 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 8.80 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 6.24 % ​ ​ ​ ​ ​ ​ 0.93 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 6.62 % ​ ​ ​ ​ ​ ​ 1.27 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 9.97 % ​ ​ ​ ​ ​ ​ 1.40 % ​ ​ ​
​ ​ JP Morgan Emerging Markets Bond Global Diversified Index (reflects no deduction for fees, expenses
or taxes) 		​ ​ ​ ​ ​ 10.15 % ​ ​ ​ ​ ​ ​ 3.90 % ​ ​ ​
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 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“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
​
Minimum additional investments applicable to Class A and Class C Shares:
•
$100, generally
​
​
18 Virtus Emerging Markets Debt Fund
TABLE OF CONTENTS ​ ​
•
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Emerging Markets Debt Fund 19 ​
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.86 % ​ ​ ​ ​ ​ ​ 0.86 % ​ ​ ​ ​ ​ ​ 0.86 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 2.16 % ​ ​ ​ ​ ​ ​ 2.91 % ​ ​ ​ ​ ​ ​ 1.91 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.56 %) ​ ​ ​ ​ ​ ​ (0.56 %) ​ ​ ​ ​ ​ ​ (0.56 %) ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $728 ​ ​ ​ ​ ​ ​ $1,161 ​ ​ ​ ​ ​ ​ $1,619 ​ ​ ​ ​ ​ ​ $2,883 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $338 ​ ​ ​ ​ ​ ​ $848 ​ ​ ​ ​ ​ ​ $1,484 ​ ​ ​ ​ ​ ​ $3,193 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $238 ​ ​ ​ ​ ​ ​ $848 ​ ​ ​ ​ ​ ​ $1,484 ​ ​ ​ ​ ​ ​ $3,193 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $137 ​ ​ ​ ​ ​ ​ $546 ​ ​ ​ ​ ​ ​ $980 ​ ​ ​ ​ ​ ​ $2,187 ​ ​ ​
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 74% of the average value of its portfolio.
20 Virtus Emerging Markets Equity Income Fund
TABLE OF CONTENTS ​ ​ ​
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 investments 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.
​
>
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.
​
​
Virtus Emerging Markets Equity Income Fund 21 ​
TABLE OF CONTENTS ​
>
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 issuers 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: A22L4M07VUT0S3MO7RFP0NUOBQ2U.JPG]
​ ​
Best Quarter:
​ ​
Q3/2016:
​ ​
7.36%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-16.82%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(9/5/12)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 11.73 % ​ ​ ​ ​ ​ ​ -0.67 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 12.06 % ​ ​ ​ ​ ​ ​ -0.65 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 8.00 % ​ ​ ​ ​ ​ ​ -0.18 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 5.08 % ​ ​ ​ ​ ​ ​ -2.28 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 10.60 % ​ ​ ​ ​ ​ ​ -1.67 % ​ ​ ​
​ ​ MSCI Emerging Markets Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.19 % ​ ​ ​ ​ ​ ​ 0.39 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
22 Virtus Emerging Markets Equity Income Fund
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Management
The fund’s investment adviser is Virtus Investment Advisers, Inc.
The fund’s subadviser is KBI Global Investors (North America) Ltd. (“KBIGI (North America)”).
Portfolio Management
>
James Collery,  Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). 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 KBIGI (North America). 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 KBIGI (North America). Mr. Looby has served as a Portfolio Manager of the fund since October 2014.
​
>
Ian Madden,  Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). 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 KBIGI (North America). 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 KBIGI (North America). 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
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Emerging Markets Equity Income Fund 23 ​
TABLE OF CONTENTS ​ ​ ​ ​ ​
Virtus Emerging Markets Opportunities Fund
​
Investment Objective
The fund has an investment objective of capital appreciation.
Fees and Expenses
The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Virtus Mutual Funds. More information about these and other discounts, as well as eligibility requirements for each share class, is available from your financial advisor and under “Sales Charges” on page 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 ​ ​ ​ ​ ​ 0.96 % ​ ​ ​ ​ ​ ​ 0.96 % ​ ​ ​ ​ ​ ​ 0.96 % ​ ​ ​ ​ ​ ​ 0.96 % ​ ​ ​
​ ​ Distribution and Service (12b-1) Fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.24 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.58 % ​ ​ ​ ​ ​ ​ 2.33 % ​ ​ ​ ​ ​ ​ 1.33 % ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​
(a)
The deferred sales charge is imposed on Class C Shares redeemed during the first year only.
​
Example
This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated. It shows your costs if you sold your shares at the end of the period or continued to hold them. The example also assumes that your investment has a 5% return each year and that the fund’s operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
​ ​ ​ ​ ​ ​
Share Status
​ ​ ​
1 Year
​ ​ ​
3 Years
​ ​ ​
5 Years
​ ​ ​
10 Years
​ ​
​ ​ Class A ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $726 ​ ​ ​ ​ ​ ​ $1,045 ​ ​ ​ ​ ​ ​ $1,386 ​ ​ ​ ​ ​ ​ $2,345 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $336 ​ ​ ​ ​ ​ ​ $727 ​ ​ ​ ​ ​ ​ $1,245 ​ ​ ​ ​ ​ ​ $2,666 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $236 ​ ​ ​ ​ ​ ​ $727 ​ ​ ​ ​ ​ ​ $1,245 ​ ​ ​ ​ ​ ​ $2,666 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $135 ​ ​ ​ ​ ​ ​ $421 ​ ​ ​ ​ ​ ​ $729 ​ ​ ​ ​ ​ ​ $1,601 ​ ​ ​
​ ​ Class R6 ​ ​ ​
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 period, the fund’s portfolio turnover rate was 25% of the average value of its portfolio.
24 Virtus Emerging Markets Opportunities Fund
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Investments, Risks and Performance
Principal Investment Strategies
This fund offers investors exposure to emerging economies through well-established companies. The securities selected for inclusion in the fund are those that in the opinion of the subadviser are well-managed businesses with consistent operating histories and financial performance that have favorable long-term economic prospects and, in most cases, generate free cash flow. Over full market cycles, the investment style is designed with the objective of capturing part of the up market cycles and may offer protection in down market cycles.
Under normal circumstances, the fund invests at least 80% of its assets in equity securities or equity-linked instruments of issuers located in emerging markets countries; such issuers may be of any capitalization. Equity-linked instruments are instruments issued by financial institutions or special purpose entities located in foreign countries to provide the synthetic economic performance of a referenced equity security; these securities are valued at market value for purposes of the fund’s requirement to invest 80% of its assets in emerging markets countries. Emerging markets countries generally include every nation in the world except the U.S., Canada, Japan, Australia, New Zealand and most nations located in Western Europe. In determining “location” of an issuer, the subadviser primarily relies on the country where the issuer is incorporated. However, the country of risk is ultimately determined based on analysis of the following criteria: actual building address (domicile), primary exchange on which the security is traded and country in which the greatest percentage of company revenue is generated. This evaluation is conducted so as to determine that the issuer’s assets are exposed to the economic fortunes and risks of the designated country.
Principal Risks
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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
​
​
Virtus Emerging Markets Opportunities Fund 25 ​
TABLE OF CONTENTS ​
Performance Information
The Virtus Emerging Markets Opportunities Fund, a series of Virtus Opportunities Trust (“Successor Fund”), is the successor of the Virtus Emerging Markets Opportunities Fund, a series of Virtus Insight Trust (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on September 23, 2016. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Virtus Emerging Markets Opportunities Fund’s commencement date.
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.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges applicable to other share classes and would be lower if they did.
[MISSING IMAGE: EFSLB91MME5PL1IBBUNF5BQFTU0V.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
26.74%
​ ​
Worst Quarter:
​ ​
Q3/2008:
​ ​
-21.96%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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 R6
Since
Inception
(11/12/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 1.46 % ​ ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ ​ 4.21 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.49 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 3.04 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.05 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 3.54 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -4.65 % ​ ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ ​ 3.34 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.89 % ​ ​ ​ ​ ​ ​ 3.17 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 1.59 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ -5.44 % ​ ​ ​
​ ​ MSCI Emerging Markets Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.19 % ​ ​ ​ ​ ​ ​ 1.28 % ​ ​ ​ ​ ​ ​ 1.84 % ​ ​ ​ ​ ​ ​ -4.30 % ​ ​ ​
The MSCI Emerging Markets Index (net) is a free float-adjusted market capitalization-weighted index that measures developed 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 I Shares; after-tax returns for other
26 Virtus Emerging Markets Opportunities Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
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
>
Brian Bandsma,  a Director and Portfolio Manager at Vontobel, is Deputy Portfolio Manager of the fund. Mr. Bandsma has served as Deputy Portfolio Manager of the fund since June 2016.
​
>
Matthew Benkendorf,  Chief Investment Officer and Managing Director at Vontobel, is Lead Portfolio Manager of the fund. Mr. Benkendorf has served as Lead Portfolio Manager of the fund since March 2016.
​
>
Jin Zhang, CFA,  a Director and Portfolio Manager at Vontobel, is Deputy Portfolio Manager of the fund. Mr. Zhang has served as Deputy Portfolio Manager of the fund since June 2016.
​
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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
Virtus Emerging Markets Opportunities Fund 27 ​
TABLE OF CONTENTS
Ask your financial advisor or visit your financial intermediary’s Web site for more information.
28 Virtus Emerging Markets Opportunities Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 2.31 % ​ ​ ​ ​ ​ ​ 2.31 % ​ ​ ​ ​ ​ ​ 2.31 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 3.76 % ​ ​ ​ ​ ​ ​ 4.51 % ​ ​ ​ ​ ​ ​ 3.51 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (1.91) % ​ ​ ​ ​ ​ ​ (1.91) % ​ ​ ​ ​ ​ ​ (1.91) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $752 ​ ​ ​ ​ ​ ​ $1,492 ​ ​ ​ ​ ​ ​ $2,251 ​ ​ ​ ​ ​ ​ $4,231 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $363 ​ ​ ​ ​ ​ ​ $1,191 ​ ​ ​ ​ ​ ​ $2,129 ​ ​ ​ ​ ​ ​ $4,512 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $263 ​ ​ ​ ​ ​ ​ $1,191 ​ ​ ​ ​ ​ ​ $2,129 ​ ​ ​ ​ ​ ​ $4,512 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $163 ​ ​ ​ ​ ​ ​ $899 ​ ​ ​ ​ ​ ​ $1,658 ​ ​ ​ ​ ​ ​ $3,657 ​ ​ ​
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 34% of the average value of its portfolio.
Virtus Emerging Markets Small-Cap Fund 29 ​
TABLE OF CONTENTS ​ ​ ​
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 investments 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.
​
>
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.
​
​
30 Virtus Emerging Markets Small-Cap Fund
TABLE OF CONTENTS ​
>
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 issuers 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. Updated performance information is available at virtus.com or by calling 800-243-1574.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: AVVKBI2CRJSP6660EH783KEBUHF1.JPG]
​ ​
Best Quarter:
​ ​
Q3/2016:
​ ​
8.38%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-17.92%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(12/17/13)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 16.14 % ​ ​ ​ ​ ​ ​ -0.93 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 16.25 % ​ ​ ​ ​ ​ ​ -1.17 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 10.24 % ​ ​ ​ ​ ​ ​ -0.35 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 9.25 % ​ ​ ​ ​ ​ ​ -3.09 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 15.02 % ​ ​ ​ ​ ​ ​ -1.89 % ​ ​ ​
​ ​ MSCI Emerging Markets Small Cap Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 2.28 % ​ ​ ​ ​ ​ ​ -0.69 % ​ ​ ​
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 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by
Virtus Emerging Markets Small-Cap Fund 31 ​
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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 Kayne Anderson Rudnick Investment Management, LLC (“Kayne”), an affiliate of VIA.
Portfolio Management
>
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
32 Virtus Emerging Markets Small-Cap Fund
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.24 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.61 % ​ ​ ​ ​ ​ ​ 2.36 % ​ ​ ​ ​ ​ ​ 1.36 % ​ ​ ​ ​ ​ ​ 1.27 % ​ ​ ​
(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.
​
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 arrangement 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
​ ​ ​ ​ ​ $729 ​ ​ ​ ​ ​ ​ $1,054 ​ ​ ​ ​ ​ ​ $1,401 ​ ​ ​ ​ ​ ​ $2,376 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $339 ​ ​ ​ ​ ​ ​ $736 ​ ​ ​ ​ ​ ​ $1,260 ​ ​ ​ ​ ​ ​ $2,696 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $239 ​ ​ ​ ​ ​ ​ $736 ​ ​ ​ ​ ​ ​ $1,260 ​ ​ ​ ​ ​ ​ $2,696 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $138 ​ ​ ​ ​ ​ ​ $431 ​ ​ ​ ​ ​ ​ $745 ​ ​ ​ ​ ​ ​ $1,635 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $129 ​ ​ ​ ​ ​ ​ $403 ​ ​ ​ ​ ​ ​ $697 ​ ​ ​ ​ ​ ​ $1,534 ​ ​ ​
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 229% of the average value of its portfolio.
Virtus Equity Trend Fund 33 ​
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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 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 the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
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 issuers 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.
​
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.
34 Virtus Equity Trend 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: R91P07528CF5E0B2FN4KPJMM99BK.JPG]
​ ​
Best Quarter:
​ ​
Q1/2013:
​ ​
10.82%
​ ​
Worst Quarter:
​ ​
Q3/2011:
​ ​
-9.37%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
5 Years
​ ​ ​
Since
Inception
(7/1/10)
​ ​ ​
Class R6
Since
Inception
(11/12/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.73 % ​ ​ ​ ​ ​ ​ 5.78 % ​ ​ ​ ​ ​ ​ 7.78 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -0.73 % ​ ​ ​ ​ ​ ​ 4.35 % ​ ​ ​ ​ ​ ​ 6.62 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -0.41 % ​ ​ ​ ​ ​ ​ 4.44 % ​ ​ ​ ​ ​ ​ 6.14 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -6.59 % ​ ​ ​ ​ ​ ​ 4.29 % ​ ​ ​ ​ ​ ​ 6.56 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.50 % ​ ​ ​ ​ ​ ​ 4.77 % ​ ​ ​ ​ ​ ​ 6.75 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Returns Before Taxes
​ ​ ​ ​ ​ -0.57 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ -5.11 % ​ ​ ​
​ ​ S&P 500 ® Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 14.66 % ​ ​ ​ ​ ​ ​ 15.15 % ​ ​ ​ ​ ​ ​ 6.76 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
Portfolio Management
>
Michael Davis,  a Managing Director at VIA, is a manager of the fund. Mr. Davis has served as a Portfolio Manager of the fund since September 2016.
​
​
Virtus Equity Trend Fund 35 ​
TABLE OF CONTENTS ​ ​ ​
>
Brendan R. Finneran,  Managing Director and Equity Trader at VIA, is a manager of the fund. Mr. Finneran has served as a Portfolio Manager of the fund since September 2016.
​
>
Robert F. Hofeman, Jr.,  Managing Director and Equity Trader at VIA,is a manager of the fund. Mr. Hofeman has served as a Portfolio Manager of the fund since September 2016.
​
>
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.
​
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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
36 Virtus Equity Trend Fund
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 2.94 % ​ ​ ​ ​ ​ ​ 2.94 % ​ ​ ​ ​ ​ ​ 2.94 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 4.29 % ​ ​ ​ ​ ​ ​ 5.04 % ​ ​ ​ ​ ​ ​ 4.04 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (2.64) % ​ ​ ​ ​ ​ ​ (2.64) % ​ ​ ​ ​ ​ ​ (2.64) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 1.65 % ​ ​ ​ ​ ​ ​ 2.40 % ​ ​ ​ ​ ​ ​ 1.40 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $733 ​ ​ ​ ​ ​ ​ $1,575 ​ ​ ​ ​ ​ ​ $2,429 ​ ​ ​ ​ ​ ​ $4,616 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $343 ​ ​ ​ ​ ​ ​ $1,277 ​ ​ ​ ​ ​ ​ $2,310 ​ ​ ​ ​ ​ ​ $4,889 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $243 ​ ​ ​ ​ ​ ​ $1,277 ​ ​ ​ ​ ​ ​ $2,310 ​ ​ ​ ​ ​ ​ $4,889 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $143 ​ ​ ​ ​ ​ ​ $988 ​ ​ ​ ​ ​ ​ $1,849 ​ ​ ​ ​ ​ ​ $4,076 ​ ​ ​
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 88% of the average value of its portfolio.
Virtus Essential Resources Fund 37 ​
TABLE OF CONTENTS ​ ​ ​
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 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.
​
>
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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
​
​
38 Virtus Essential Resources Fund
TABLE OF CONTENTS ​
>
Natural Resources Risk  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.
​
>
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 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: VVIHAHV9KI2HTRT31A4HR9II5P02.JPG]
​ ​
Best Quarter:
​ ​
Q3/2016:
​ ​
5.85%
​ ​
Worst Quarter:
​ ​
Q4/2016:
​ ​
-2.02%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(3/24/15)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.69 % ​ ​ ​ ​ ​ ​ -6.16 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 4.65 % ​ ​ ​ ​ ​ ​ -6.19 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 3.01 % ​ ​ ​ ​ ​ ​ -4.50 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.63 % ​ ​ ​ ​ ​ ​ -9.51 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 3.69 % ​ ​ ​ ​ ​ ​ -7.09 ​ ​ ​
​ ​ The S&P Global Natural Resources Index(net) (reflects no deduction of fees, expenses or taxes) ​ ​ ​ ​ ​ 31.45 % ​ ​ ​ ​ ​ ​ -0.03 % ​ ​ ​
The S&P Global Natural Resources Index (net) is a free-float market capitalization index calculated on a total return basis with net dividends reinvested. The index consists of 90 of the largest publicly traded companies in natural resources and commodities businesses that met specific investability requirements, offering investors diversified and investable equity exposure across three primary commodity-related sectors: agribusiness, energy, and metals and mining. 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown.
Virtus Essential Resources Fund 39 ​
TABLE OF CONTENTS ​ ​ ​ ​ ​
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 KBI Global Investors (North America) Ltd. (“KBIGI (North America)”).
Portfolio Management
>
Andros Florides,  Portfolio Manager at KBIGI (North America). Mr. Florides has served as a Portfolio Manager of the fund since inception March 2015.
​
>
Colm O'Connor,  Portfolio Manager at KBIGI (North America). 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 KBIGI (North America). 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.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
40 Virtus Essential Resources Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.33 % ​ ​ ​ ​ ​ ​ 0.23 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.43 % ​ ​ ​ ​ ​ ​ 2.18 % ​ ​ ​ ​ ​ ​ 1.18 % ​ ​ ​ ​ ​ ​ 1.08 % ​ ​ ​
(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
​ ​ ​ ​ ​ $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
​ ​ ​ ​ ​ $110 ​ ​ ​ ​ ​ ​ $343 ​ ​ ​ ​ ​ ​ $595 ​ ​ ​ ​ ​ ​ $1,317 ​ ​ ​
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 25% of the average value of its portfolio.
Virtus Foreign Opportunities Fund 41 ​
TABLE OF CONTENTS ​ ​ ​ ​
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 issuers 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.
42 Virtus Foreign Opportunities Fund
TABLE OF CONTENTS ​ ​
Calendar year total returns for Class I Shares (includes returns of a predecessor fund)
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: BIG3D3GKDGQQKMESVKD79GSLRCPO.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
18.77%
​ ​
Worst Quarter:
​ ​
Q3/2008:
​ ​
-19.23%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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 R6
Since
Inception
(11/12/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -4.20 % ​ ​ ​ ​ ​ ​ 5.24 % ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -4.33 % ​ ​ ​ ​ ​ ​ 5.12 % ​ ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -2.01 % ​ ​ ​ ​ ​ ​ 4.25 % ​ ​ ​ ​ ​ ​ 1.96 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -9.91 % ​ ​ ​ ​ ​ ​ 3.73 % ​ ​ ​ ​ ​ ​ 1.38 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -5.15 % ​ ​ ​ ​ ​ ​ 4.19 % ​ ​ ​ ​ ​ ​ 1.21 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Returns Before Taxes
​ ​ ​ ​ ​ -4.12 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ -1.50 % ​ ​ ​
​ ​ MSCI EAFE ® Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 6.53 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ -0.74 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc.
The fund’s subadviser is Vontobel Asset Management, Inc. (“Vontobel”).
Portfolio Management
>
Matthew Benkendorf,  Chief Investment Officer and Managing Director at Vontobel, is Lead Portfolio Manager of the fund. Mr. Benkendorf has served as Lead Portfolio Manager of the fund since March 2016.
​
​
Virtus Foreign Opportunities Fund 43 ​
TABLE OF CONTENTS ​ ​ ​
>
Daniel Kranson, CFA,  a Director and Portfolio Manager at Vontobel, is Deputy Portfolio Manager of the fund. Mr. Kranson has served as Deputy Portfolio Manager of the fund since June 2016.
​
>
David Souccar,  a Director and Portfolio Manager at Vontobel, is Deputy Portfolio Manager of the fund. Mr. Souccar has served as Deputy Portfolio Manager of the fund since June 2016.
​
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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
44 Virtus Foreign Opportunities Fund
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.52 % ​ ​ ​ ​ ​ ​ 0.52 % ​ ​ ​ ​ ​ ​ 0.52 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.11 % ​ ​ ​ ​ ​ ​ 0.11 % ​ ​ ​ ​ ​ ​ 0.11 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.88 % ​ ​ ​ ​ ​ ​ 2.63 % ​ ​ ​ ​ ​ ​ 1.63 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.02) % ​ ​ ​ ​ ​ ​ (0.02) % ​ ​ ​ ​ ​ ​ (0.02) % ​ ​ ​
​ ​
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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,130 ​ ​ ​ ​ ​ ​ $1,531 ​ ​ ​ ​ ​ ​ $2,648 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $364 ​ ​ ​ ​ ​ ​ $816 ​ ​ ​ ​ ​ ​ $1,393 ​ ​ ​ ​ ​ ​ $2,962 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $264 ​ ​ ​ ​ ​ ​ $816 ​ ​ ​ ​ ​ ​ $1,393 ​ ​ ​ ​ ​ ​ $2,962 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $164 ​ ​ ​ ​ ​ ​ $512 ​ ​ ​ ​ ​ ​ $885 ​ ​ ​ ​ ​ ​ $1,931 ​ ​ ​
Virtus Global Equity Trend Fund 45 ​
TABLE OF CONTENTS ​ ​ ​ ​
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 282% 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, 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 the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
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.
​
​
46 Virtus Global Equity Trend Fund
TABLE OF CONTENTS ​
>
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 issuers 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.
​
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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: P5TRO0B0D13FQPUASL56SK197UK0.JPG]
​ ​
Best Quarter:
​ ​
Q4/2013:
​ ​
7.28%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-5.59%
​ ​
Virtus Global Equity Trend Fund 47 ​
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Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
5 Years
​ ​ ​
Since
Inception
(3/15/11)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.71 % ​ ​ ​ ​ ​ ​ 3.21 % ​ ​ ​ ​ ​ ​ 2.21 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -0.71 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​ ​ ​ ​ 1.64 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -0.40 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​ ​ ​ ​ 1.78 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -6.71 % ​ ​ ​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ ​ 0.92 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.77 % ​ ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ ​ 1.21 % ​ ​ ​
​ ​ MSCI All Country World Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 7.86 % ​ ​ ​ ​ ​ ​ 9.36 % ​ ​ ​ ​ ​ ​ 6.78 % ​ ​ ​
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 MSCI AC World Index (net) 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
Portfolio Management
>
Michael Davis,  a Managing Director at VIA, is a manager of the fund. Mr. Davis has served as a Portfolio Manager of the fund since September 2016.
​
>
Brendan R. Finneran,  Managing Director and Equity Trader at VIA, is a manager of the fund. Mr. Finneran has served as a Portfolio Manager of the fund since September 2016.
​
>
Robert F. Hofeman, Jr.,  Managing Director and Equity Trader at VIA,is a manager of the fund. Mr. Hofeman has served as a Portfolio Manager of the fund since September 2016.
​
>
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.
​
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.
48 Virtus Global Equity Trend Fund
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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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Global Equity Trend Fund 49 ​
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.42 % ​ ​ ​ ​ ​ ​ 0.42 % ​ ​ ​ ​ ​ ​ 0.42 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.32 % ​ ​ ​ ​ ​ ​ 2.07 % ​ ​ ​ ​ ​ ​ 1.07 % ​ ​ ​
(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
​ ​ ​ ​ ​ $702 ​ ​ ​ ​ ​ ​ $969 ​ ​ ​ ​ ​ ​ $1,257 ​ ​ ​ ​ ​ ​ $2,074 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $310 ​ ​ ​ ​ ​ ​ $649 ​ ​ ​ ​ ​ ​ $1,114 ​ ​ ​ ​ ​ ​ $2,400 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $210 ​ ​ ​ ​ ​ ​ $649 ​ ​ ​ ​ ​ ​ $1,114 ​ ​ ​ ​ ​ ​ $2,400 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $109 ​ ​ ​ ​ ​ ​ $340 ​ ​ ​ ​ ​ ​ $590 ​ ​ ​ ​ ​ ​ $1,306 ​ ​ ​
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 17% 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
50 Virtus Global Infrastructure Fund
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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.
​
>
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/or 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 issuers 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.
​
​
Virtus Global Infrastructure Fund 51 ​
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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 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 (includes returns of a predecessor fund)
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: I1CLLOJ3FAOUQ5ED04HKDH2TTGGL.JPG]
​ ​
Best Quarter:
​ ​
Q3/2010:
​ ​
16.39%
​ ​
Worst Quarter:
​ ​
Q3/2008:
​ ​
-16.55%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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
​ ​ ​ ​ ​ 4.98 % ​ ​ ​ ​ ​ ​ 5.93 % ​ ​ ​ ​ ​ ​ 4.48 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 3.41 % ​ ​ ​ ​ ​ ​ 4.71 % ​ ​ ​ ​ ​ ​ 3.79 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 3.41 % ​ ​ ​ ​ ​ ​ 4.58 % ​ ​ ​ ​ ​ ​ 3.77 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 10.60 % ​ ​ ​ ​ ​ ​ 6.39 % ​ ​ ​ ​ ​ ​ 4.33 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 11.66 % ​ ​ ​ ​ ​ ​ 7.47 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 4.45 % ​ ​ ​
​ ​ The FTSE Developed Core Infrastructure 50/50 Index (net) ​ ​ ​ ​ ​ 10.63 % ​ ​ ​ ​ ​ ​ 8.84 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ MSCI World Infrastructure Sector Capped Index (net) ​ ​ ​ ​ ​ 11.83 % ​ ​ ​ ​ ​ ​ 6.62 % ​ ​ ​ ​ ​ ​ 3.66 % ​ ​ ​ ​ ​ ​ 2.70 % ​ ​ ​
​ ​ Global Infrastructure Linked Benchmark (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.06 % ​ ​ ​ ​ ​ ​ 6.47 % ​ ​ ​ ​ ​ ​ 3.90 % ​ ​ ​ ​ ​ ​ 2.84 % ​ ​ ​
The FTSE Developed Core Infrastructure 50/50 Index (net) is a free float-adjusted market capitalization weighted index that gives participants an industry-defined interpretation of developed market infrastructure companies and adjusts the exposure to certain infrastructure subsectors. The constituent weights are 50% Utilities, 30% Transportation (including capping of 7.5% for railroads/railways), and a 20% mix of other sectors including pipelines, satellites, and telecommunication towers. The MSCI World Infrastructure Sector Capped Index (net) is 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 sectors 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 FTSE Developed Core Infrastructure 50/50 Index (net) and the MSCI World Infrastructure Sector Capped Index (net) are each calculated on a total return basis with net dividends reinvested. The indexes are unmanaged and not available for direct investment.
52 Virtus Global Infrastructure Fund
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Beginning October 1, 2016, the Global Infrastructure Linked Benchmark consists of the FTSE 50/50. For the period September 1, 2008 through September 30, 2016, performance of the Global Infrastructure Linked Benchmark consists of the MSCI World Infrastructure Sector Capped Index. Prior to September 1, 2008, performance of the Global Infrastructure Linked Benchmark represents an allocation consisting of 65% MSCI USA/Utilities Index, 20% MSCI World Telecom Services Index, and 15% MSCI World ex USA/Utilities Index.
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Global Infrastructure Fund 53 ​
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 5.00 % (a) ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ ​ 0.37 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.47 % ​ ​ ​ ​ ​ ​ 2.22 % ​ ​ ​ ​ ​ ​ 2.22 % ​ ​ ​ ​ ​ ​ 1.22 % ​ ​ ​
(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
​ ​ ​ ​ ​ $716 ​ ​ ​ ​ ​ ​ $1,013 ​ ​ ​ ​ ​ ​ $1,332 ​ ​ ​ ​ ​ ​ $2,231 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $625 ​ ​ ​ ​ ​ ​ $894 ​ ​ ​ ​ ​ ​ $1,190 ​ ​ ​ ​ ​ ​ $2,365 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $225 ​ ​ ​ ​ ​ ​ $694 ​ ​ ​ ​ ​ ​ $1,190 ​ ​ ​ ​ ​ ​ $2,365 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $325 ​ ​ ​ ​ ​ ​ $694 ​ ​ ​ ​ ​ ​ $1,190 ​ ​ ​ ​ ​ ​ $2,554 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $225 ​ ​ ​ ​ ​ ​ $694 ​ ​ ​ ​ ​ ​ $1,190 ​ ​ ​ ​ ​ ​ $2,554 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $124 ​ ​ ​ ​ ​ ​ $387 ​ ​ ​ ​ ​ ​ $670 ​ ​ ​ ​ ​ ​ $1,477 ​ ​ ​
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 29% of the average value of its portfolio.
54 Virtus Global Opportunities Fund
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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 issuers 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 Global Opportunities Fund 55 ​
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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.
[MISSING IMAGE: U8NBGHSHS2C86IAC3NAOPPHDAIED.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
14.31%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-20.92%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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
​ ​ ​ ​ ​ -1.66 % ​ ​ ​ ​ ​ ​ 8.64 % ​ ​ ​ ​ ​ ​ 2.96 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -1.86 % ​ ​ ​ ​ ​ ​ 8.54 % ​ ​ ​ ​ ​ ​ 2.80 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -0.77 % ​ ​ ​ ​ ​ ​ 6.85 % ​ ​ ​ ​ ​ ​ 2.45 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.44 % ​ ​ ​ ​ ​ ​ 9.10 % ​ ​ ​ ​ ​ ​ 2.81 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 3.59 % ​ ​ ​ ​ ​ ​ 9.10 % ​ ​ ​ ​ ​ ​ 2.80 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.61 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 9.19 % ​ ​ ​
​ ​ MSCI All Country World Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 7.86 % ​ ​ ​ ​ ​ ​ 9.36 % ​ ​ ​ ​ ​ ​ 3.56 % ​ ​ ​ ​ ​ ​ 8.48 % ​ ​ ​
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”).
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Portfolio Management
>
Matthew Benkendorf,  Chief Investment Officer and Managing Director at Vontobel, is Lead Portfolio Manager of the fund. Mr. Benkendorf has served as Lead Portfolio Manager of the fund since March 2016, and previously served as Deputy Portfolio Manager (January 2015 to March 2016) and Co- Portfolio Manager (2009 through 2014).
​
>
Ramiz Chelat,  a Director and Portfolio Manager at Vontobel, is Deputy Portfolio Manager of the fund. Mr. Chelat has served as Deputy Portfolio Manager of the fund since June 2016.
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Global Opportunities Fund 57 ​
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.43 % ​ ​ ​ ​ ​ ​ 0.43 % ​ ​ ​ ​ ​ ​ 0.43 % ​ ​ ​ ​ ​ ​ 0.32 % (b) ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.53 % ​ ​ ​ ​ ​ ​ 2.28 % ​ ​ ​ ​ ​ ​ 1.28 % ​ ​ ​ ​ ​ ​ 1.17 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.13) % ​ ​ ​ ​ ​ ​ (0.13) % ​ ​ ​ ​ ​ ​ (0.13) % ​ ​ ​ ​ ​ ​ (0.13) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (c) ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ ​ 1.04 % ​ ​ ​
(a)
The deferred sales charge is imposed on Class C Shares redeemed during the first year only.
​
(b)
Estimated for current fiscal year, as annualized.
​
(c)
The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.40% for Class A Shares, 2.15% for Class C Shares, 1.15% for Class I Shares and 1.04% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,019 ​ ​ ​ ​ ​ ​ $1,350 ​ ​ ​ ​ ​ ​ $2,283 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $318 ​ ​ ​ ​ ​ ​ $700 ​ ​ ​ ​ ​ ​ $1,208 ​ ​ ​ ​ ​ ​ $2,605 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $218 ​ ​ ​ ​ ​ ​ $6700 ​ ​ ​ ​ ​ ​ $1,208 ​ ​ ​ ​ ​ ​ $2,605 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $117 ​ ​ ​ ​ ​ ​ $393 ​ ​ ​ ​ ​ ​ $690 ​ ​ ​ ​ ​ ​ $1,534 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $106 ​ ​ ​ ​ ​ ​ $359 ​ ​ ​ ​ ​ ​ $631 ​ ​ ​ ​ ​ ​ $1,409 ​ ​ ​
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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 22% of the average value of its portfolio.
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.
​
​
Virtus Global Real Estate Securities Fund 59 ​
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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 issuers 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: ORF61FDH8JS9EIO4GMJM38B3COF0.JPG]
​ ​
Best Quarter:
​ ​
Q3/2010:
​ ​
17.81%
​ ​
Worst Quarter:
​ ​
Q3/2011:
​ ​
-16.90%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
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 R6
Since
Inception
(11/3/16)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.21 % ​ ​ ​ ​ ​ ​ 10.35 % ​ ​ ​ ​ ​ ​ 19.15 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 3.20 % ​ ​ ​ ​ ​ ​ 9.29 % ​ ​ ​ ​ ​ ​ 17.39 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 2.51 % ​ ​ ​ ​ ​ ​ 7.81 % ​ ​ ​ ​ ​ ​ 15.35 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -2.06 % ​ ​ ​ ​ ​ ​ 8.77 % ​ ​ ​ ​ ​ ​ 17.94 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 3.18 % ​ ​ ​ ​ ​ ​ 9.25 % ​ ​ ​ ​ ​ ​ 17.96 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 3.59 % ​ ​ ​
​ ​ FTSE EPRA/NAREIT Developed Rental Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 4.74 % ​ ​ ​ ​ ​ ​ 9.83 % ​ ​ ​ ​ ​ ​ 2.02 % ​ ​ ​ ​ ​ ​ 3.73 % ​ ​ ​
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 index is unmanaged and not available for direct investment.
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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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“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.
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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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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.
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.71 % ​ ​ ​ ​ ​ ​ 0.71 % ​ ​ ​ ​ ​ ​ 0.71 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.81 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​ ​ ​ ​ 1.56 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.36) % ​ ​ ​ ​ ​ ​ (0.36) % ​ ​ ​ ​ ​ ​ (0.36) % ​ ​ ​
​ ​ 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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,079 ​ ​ ​ ​ ​ ​ $1,467 ​ ​ ​ ​ ​ ​ $2,551 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $323 ​ ​ ​ ​ ​ ​ $762 ​ ​ ​ ​ ​ ​ $1,328 ​ ​ ​ ​ ​ ​ $2,868 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $223 ​ ​ ​ ​ ​ ​ $762 ​ ​ ​ ​ ​ ​ $1,328 ​ ​ ​ ​ ​ ​ $2,868 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $122 ​ ​ ​ ​ ​ ​ $457 ​ ​ ​ ​ ​ ​ $816 ​ ​ ​ ​ ​ ​ $1,826 ​ ​ ​
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 49% 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 issuers 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.
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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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: BTV1OHTCPVV7A0AAE2J0LHDTGTD0.JPG]
​ ​
Best Quarter:
​ ​
Q1/2012:
​ ​
11.70%
​ ​
Worst Quarter:
​ ​
Q3/2011:
​ ​
-13.26%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
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 I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -6.10 % ​ ​ ​ ​ ​ ​ 6.42 % ​ ​ ​ ​ ​ ​ 9.66 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -6.34 % ​ ​ ​ ​ ​ ​ 6.03 % ​ ​ ​ ​ ​ ​ 9.01 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -2.88 % ​ ​ ​ ​ ​ ​ 5.23 % ​ ​ ​ ​ ​ ​ 8.13 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -11.72 % ​ ​ ​ ​ ​ ​ 4.90 % ​ ​ ​ ​ ​ ​ 8.55 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -7.08 % ​ ​ ​ ​ ​ ​ 5.37 % ​ ​ ​ ​ ​ ​ 8.57 % ​ ​ ​
​ ​ MSCI Europe Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ -0.40 % ​ ​ ​ ​ ​ ​ 6.25 % ​ ​ ​ ​ ​ ​ 8.62 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc.
The fund’s subadviser is Vontobel Asset Management, Inc. (“Vontobel”).
Portfolio Management
>
Daniel Kranson, CFA,  a Director and Portfolio Manager at Vontobel, is the manager of the fund. Mr. Kranson has served as Portfolio Manager of the fund since March 2016, and previously served as Deputy Portfolio Manager (January 2015 to March 2016) and Co-Portfolio Manager (March 2013 through 2014).
​
​
Virtus Greater European Opportunities Fund 65 ​
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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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
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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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.48 % ​ ​ ​ ​ ​ ​ 0.48 % ​ ​ ​ ​ ​ ​ 0.48 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 1.08 % ​ ​ ​ ​ ​ ​ 1.08 % ​ ​ ​ ​ ​ ​ 1.08 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 2.81 % ​ ​ ​ ​ ​ ​ 3.56 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.13) % ​ ​ ​ ​ ​ ​ (0.13) % ​ ​ ​ ​ ​ ​ (0.13) % ​ ​ ​
​ ​
Total Annual Fund Operating Expenses After Expense Reimbursement (b)(c)
​ ​ ​ ​ ​ 2.68 % ​ ​ ​ ​ ​ ​ 3.43 % ​ ​ ​ ​ ​ ​ 2.43 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $831 ​ ​ ​ ​ ​ ​ $1,384 ​ ​ ​ ​ ​ ​ $1,963 ​ ​ ​ ​ ​ ​ $3,524 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $446 ​ ​ ​ ​ ​ ​ $1,079 ​ ​ ​ ​ ​ ​ $1,834 ​ ​ ​ ​ ​ ​ $3,819 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $346 ​ ​ ​ ​ ​ ​ $1,079 ​ ​ ​ ​ ​ ​ $1,834 ​ ​ ​ ​ ​ ​ $3,819 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $246 ​ ​ ​ ​ ​ ​ $784 ​ ​ ​ ​ ​ ​ $1,349 ​ ​ ​ ​ ​ ​ $2,885 ​ ​ ​
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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 53% 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
TABLE OF CONTENTS
>
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.
​
>
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 ​
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>
Income Risk.  The risk that income received from the fund will vary widely over the short- and/or 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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
​
>
Master Limited Partnership Risk.  The risk that the fund’s investments in MLP units will be negatively impacted by tax law changes, changes in interest rates, the failure of the MLP's parent or sponsor to make payments as expected, regulatory developments or other factors affecting the MLP’s underlying assets, which are typically in the natural resources and energy sectors.
​
>
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 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 the fund will 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
TABLE OF CONTENTS ​
>
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 a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: PM9SL4275BD2456R2B0CJEHQI4EG.JPG]
​ ​
Best Quarter:
​ ​
Q2/2014:
​ ​
6.00%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-8.86%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(9/5/12)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 13.09 % ​ ​ ​ ​ ​ ​ 7.04 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 11.31 % ​ ​ ​ ​ ​ ​ 5.35 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 7.61 % ​ ​ ​ ​ ​ ​ 4.85 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 6.35 % ​ ​ ​ ​ ​ ​ 5.33 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 5.98 % ​ ​ ​
​ ​ Herzfeld Composite Benchmark (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 5.92 % ​ ​ ​ ​ ​ ​ 6.02 % ​ ​ ​
The Herzfeld Composite Benchmark consists of 60% MSCI AC World Index (net) and 40% Barclays U.S. Aggregate Bond Index. 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by
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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.
The fund’s subadviser is Thomas J. Herzfeld Advisors, Inc. (“Herzfeld”).
Portfolio Management
>
Erik M. Herzfeld,  President at Herzfeld. Mr. Herzfeld has served as a Portfolio Manager of the fund since inception in September 2012.
​
>
Thomas J. Herzfeld,  Chairman 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
​ ​
Shareholder Fees (fees paid directly from your investment)
​ ​ ​
Class A
​ ​ ​
Class B
​ ​ ​
Class C
​ ​ ​
Class I
​ ​ ​
Class R6
​ ​
​ ​ Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price) ​ ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 5.00 % (a) ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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
​ ​ ​
Class R6
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 0.45 % (b) ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (c) ​ ​ ​ ​ ​ 1.43 % ​ ​ ​ ​ ​ ​ 2.18 % ​ ​ ​ ​ ​ ​ 2.18 % ​ ​ ​ ​ ​ ​ 1.18 % ​ ​ ​ ​ ​ ​ 1.12 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (d) ​ ​ ​ ​ ​ (0.41) % ​ ​ ​ ​ ​ ​ (0.41) % ​ ​ ​ ​ ​ ​ (0.41) % ​ ​ ​ ​ ​ ​ (0.41) % ​ ​ ​ ​ ​ ​ (0.41) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (c)(d) ​ ​ ​ ​ ​ 1.02 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 0.77 % ​ ​ ​ ​ ​ ​ 0.71 % ​ ​ ​
(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)
Estimated for current fiscal year, as annualized.
​
(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.
​
(d)
The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.00% for Class A Shares, 1.75% for Class B Shares, 1.75% for Class C Shares, 0.75% for Class I Shares and 0.69% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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 ​
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​ ​ ​ ​ ​ ​
Share Status
​ ​ ​
1 Year
​ ​ ​
3 Years
​ ​ ​
5 Years
​ ​ ​
10 Years
​ ​
​ ​ Class A ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $475 ​ ​ ​ ​ ​ ​ $772 ​ ​ ​ ​ ​ ​ $1,090 ​ ​ ​ ​ ​ ​ $1,990 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $580 ​ ​ ​ ​ ​ ​ $843 ​ ​ ​ ​ ​ ​ $1,132 ​ ​ ​ ​ ​ ​ $2,291 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $180 ​ ​ ​ ​ ​ ​ $643 ​ ​ ​ ​ ​ ​ $1,132 ​ ​ ​ ​ ​ ​ $2,291 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $280 ​ ​ ​ ​ ​ ​ $643 ​ ​ ​ ​ ​ ​ $1,132 ​ ​ ​ ​ ​ ​ $2,481 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $180 ​ ​ ​ ​ ​ ​ $643 ​ ​ ​ ​ ​ ​ $1,132 ​ ​ ​ ​ ​ ​ $2,481 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $79 ​ ​ ​ ​ ​ ​ $334 ​ ​ ​ ​ ​ ​ $609 ​ ​ ​ ​ ​ ​ $1,395 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $73 ​ ​ ​ ​ ​ ​ $315 ​ ​ ​ ​ ​ ​ $577 ​ ​ ​ ​ ​ ​ $1,326 ​ ​ ​
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 81% 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.
​
>
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
​
​
74 Virtus High Yield Fund
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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.
>
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 issuers 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.
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.
[MISSING IMAGE: J6QDL2B1FJOA8RKAT7NM4Q18VHGD.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
11.27%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-14.67%
​ ​
Virtus High Yield Fund 75 ​
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Average Annual Total Returns (for the periods ended 12/31/16; 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 R6
Since
Inception
(11/3/16)
​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 8.80 % ​ ​ ​ ​ ​ ​ 5.93 % ​ ​ ​ ​ ​ ​ 4.68 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 6.43 % ​ ​ ​ ​ ​ ​ 3.46 % ​ ​ ​ ​ ​ ​ 2.08 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 4.91 % ​ ​ ​ ​ ​ ​ 3.45 % ​ ​ ​ ​ ​ ​ 2.45 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 8.32 % ​ ​ ​ ​ ​ ​ 5.90 % ​ ​ ​ ​ ​ ​ 4.28 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 12.44 % ​ ​ ​ ​ ​ ​ 5.94 % ​ ​ ​ ​ ​ ​ 4.29 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 13.31 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 5.69 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 1.84 % ​ ​ ​
​ ​ Bloomberg Barclays U.S. High-Yield 2% Issuer Capped Bond
Index (reflects no deduction for fees, expenses or taxes) 		​ ​ ​ ​ ​ 17.13 % ​ ​ ​ ​ ​ ​ 7.36 % ​ ​ ​ ​ ​ ​ 7.55 % ​ ​ ​ ​ ​ ​ 6.09 % ​ ​ ​ ​ ​ ​ 2.12 % ​ ​ ​
The Bloomberg 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 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 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
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•
$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, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ ​ 1.93 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 3.03 % ​ ​ ​ ​ ​ ​ 3.78 % ​ ​ ​ ​ ​ ​ 2.78 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (1.53) % ​ ​ ​ ​ ​ ​ (1.53) % ​ ​ ​ ​ ​ ​ (1.53) % ​ ​ ​
​ ​ 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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,322 ​ ​ ​ ​ ​ ​ $1,949 ​ ​ ​ ​ ​ ​ $3,627 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $328 ​ ​ ​ ​ ​ ​ $1,014 ​ ​ ​ ​ ​ ​ $1,820 ​ ​ ​ ​ ​ ​ $3,922 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $228 ​ ​ ​ ​ ​ ​ $1,014 ​ ​ ​ ​ ​ ​ $1,820 ​ ​ ​ ​ ​ ​ $3,922 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $127 ​ ​ ​ ​ ​ ​ $717 ​ ​ ​ ​ ​ ​ $1,333 ​ ​ ​ ​ ​ ​ $2,998 ​ ​ ​
Portfolio Turnover
The fund pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses or in the example, affect the fund’s performance. During the most recent fiscal year, the fund's portfolio turnover rate was 70% of the average value of its portfolio.
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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 investments 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.
​
>
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 issuers 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.
​
​
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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 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: AC0Q72BPL76TO4HMMG8K5EQ9I2DD.JPG]
​ ​
Best Quarter:
​ ​
Q1/2012:
​ ​
7.53%
​ ​
Worst Quarter:
​ ​
Q3/2011:
​ ​
-13.50%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
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 I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.80 % ​ ​ ​ ​ ​ ​ 4.52 % ​ ​ ​ ​ ​ ​ 4.28 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -1.85 % ​ ​ ​ ​ ​ ​ 3.36 % ​ ​ ​ ​ ​ ​ 3.28 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -0.55 % ​ ​ ​ ​ ​ ​ 3.48 % ​ ​ ​ ​ ​ ​ 3.40 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -7.73 % ​ ​ ​ ​ ​ ​ 3.06 % ​ ​ ​ ​ ​ ​ 3.11 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -2.83 % ​ ​ ​ ​ ​ ​ 3.48 % ​ ​ ​ ​ ​ ​ 3.24 % ​ ​ ​
​ ​ MSCI EAFE ® Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 6.53 % ​ ​ ​ ​ ​ ​ 4.48 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Duff  & Phelps Investment Management Co. (“Duff  & Phelps”) (since September 2016), an affiliate of VIA.
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Portfolio Management
>
Frederick A. Brimberg,  Senior Managing Director and International Equity Portfolio Manager at Duff  & Phelps, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus International Equity Fund 81 ​
TABLE OF CONTENTS ​ ​ ​ ​ ​
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.90 % ​ ​ ​ ​ ​ ​ 2.65 % ​ ​ ​ ​ ​ ​ 1.65 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.40) % ​ ​ ​ ​ ​ ​ (0.40) % ​ ​ ​ ​ ​ ​ (0.40) % ​ ​ ​
​ ​ 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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,101 ​ ​ ​ ​ ​ ​ $1,507 ​ ​ ​ ​ ​ ​ $2,639 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $328 ​ ​ ​ ​ ​ ​ $786 ​ ​ ​ ​ ​ ​ $1,369 ​ ​ ​ ​ ​ ​ $2,954 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $228 ​ ​ ​ ​ ​ ​ $786 ​ ​ ​ ​ ​ ​ $1,369 ​ ​ ​ ​ ​ ​ $2,954 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $127 ​ ​ ​ ​ ​ ​ $481 ​ ​ ​ ​ ​ ​ $859 ​ ​ ​ ​ ​ ​ $1,921 ​ ​ ​
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 26% 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 issuers 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 ​
TABLE OF CONTENTS ​
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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: CN62OA6K5GSH034A08BMPRKQGG6B.JPG]
​ ​
Best Quarter:
​ ​
Q3/2009:
​ ​
31.43%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-30.77%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
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 I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ ​ 8.95 % ​ ​ ​ ​ ​ ​ 0.86 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -1.90 % ​ ​ ​ ​ ​ ​ 7.29 % ​ ​ ​ ​ ​ ​ -0.66 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 0.89 % ​ ​ ​ ​ ​ ​ 6.67 % ​ ​ ​ ​ ​ ​ 0.32 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -5.34 % ​ ​ ​ ​ ​ ​ 7.43 % ​ ​ ​ ​ ​ ​ -0.02 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.34 % ​ ​ ​ ​ ​ ​ 7.89 % ​ ​ ​ ​ ​ ​ -0.14 % ​ ​ ​
​ ​ FTSE EPRA/NAREIT Developed Rental ex-U.S. Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 1.86 % ​ ​ ​ ​ ​ ​ 8.40 % ​ ​ ​ ​ ​ ​ -0.15 % ​ ​ ​
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 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Duff  & Phelps Investment Management Co. (“Duff  & Phelps”), an affiliate of VIA.
84 Virtus International Real Estate Securities Fund
TABLE OF CONTENTS ​ ​ ​ ​
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 2007.
​
>
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 primary Portfolio Manager of the fund since inception in 2007.
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus International Real Estate Securities Fund 85 ​
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Virtus International 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.61 % ​ ​ ​ ​ ​ ​ 0.61 % ​ ​ ​ ​ ​ ​ 0.61 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.86 % ​ ​ ​ ​ ​ ​ 2.61 % ​ ​ ​ ​ ​ ​ 1.61 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.26) % ​ ​ ​ ​ ​ ​ (0.26) % ​ ​ ​ ​ ​ ​ (0.26) % ​ ​ ​ ​ ​ ​ (0.26) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (c) ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ 1.24 % ​ ​ ​
(a)
The deferred sales charge is imposed on Class C Shares redeemed during the first year only.
​
(c)
The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.60% for Class A Shares, 2.35% for Class C Shares, 1.35% for Class I Shares and 1.24% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $728 ​ ​ ​ ​ ​ ​ $1,102 ​ ​ ​ ​ ​ ​ $1,500 ​ ​ ​ ​ ​ ​ $2,609 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $338 ​ ​ ​ ​ ​ ​ $787 ​ ​ ​ ​ ​ ​ $1,362 ​ ​ ​ ​ ​ ​ $2,925 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $238 ​ ​ ​ ​ ​ ​ $787 ​ ​ ​ ​ ​ ​ $1,362 ​ ​ ​ ​ ​ ​ $2,925 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $137 ​ ​ ​ ​ ​ ​ $483 ​ ​ ​ ​ ​ ​ $852 ​ ​ ​ ​ ​ ​ $1,889 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $126 ​ ​ ​ ​ ​ ​ $422 ​ ​ ​ ​ ​ ​ $768 ​ ​ ​ ​ ​ ​ $1,745 ​ ​ ​
86 Virtus International Small-Cap Fund
TABLE OF CONTENTS ​ ​ ​ ​
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.
Investments, Risks and Performance
Principal Investment Strategies
The fund pursues capital appreciation in the small-cap international arena. 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 securities of non-U.S. small capitalization companies. As of the date of the Prospectus, 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. 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. Equity securities in which the fund invests include common stocks, preferred stocks and American Depositary Receipts (ADRs). The fund may invest in emerging markets issuers. 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 investments 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.
​
>
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.
​
​
Virtus International Small-Cap Fund 87 ​
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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 issuers 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.
​
>
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. Updated performance information is available at virtus.com or by calling 800-243-1574.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: INHA81HNOKK0J741T3CIQ9A6V53Q.JPG]
​ ​
Best Quarter:
​ ​
Q1/2013:
​ ​
11.71%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-14.25%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(9/5/12)
​ ​ ​
Class R6
Since
Inception
(11/12/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 21.03 % ​ ​ ​ ​ ​ ​ 11.58 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 20.29 % ​ ​ ​ ​ ​ ​ 10.25 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 12.59 % ​ ​ ​ ​ ​ ​ 8.89 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 13.76 % ​ ​ ​ ​ ​ ​ 9.78 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 19.89 % ​ ​ ​ ​ ​ ​ 10.48 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Returns Before Taxes
​ ​ ​ ​ ​ 21.16 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 6.82 % ​ ​ ​
​ ​ MSCI All Country World ex U.S. Small Cap Index (net) (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 3.91 % ​ ​ ​ ​ ​ ​ 7.30 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​
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The MSCI AC World Index ex U.S. Small Cap Index (net) is a free float-adjusted market capitalization-weighted index that measures small cap equity performance of developed and emerging markets, excluding the U.S. 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Kayne Anderson Rudnick Investment Management, LLC (“Kayne”), an affiliate of VIA.
Portfolio Management
>
Craig Stone,  Senior Research Analyst at Kayne. Mr. Stone has served as a Portfolio Manager of the fund since inception in September 2012.
​
>
Craig Thrasher, CFA,  Research Analyst at Kayne. Mr. Thrasher 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.
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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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TABLE OF CONTENTS
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.
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Virtus International Wealth Masters 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 2.12 % ​ ​ ​ ​ ​ ​ 2.12 % ​ ​ ​ ​ ​ ​ 2.12 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 3.27 % ​ ​ ​ ​ ​ ​ 4.02 % ​ ​ ​ ​ ​ ​ 3.02 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (1.72) % ​ ​ ​ ​ ​ ​ (1.72) % ​ ​ ​ ​ ​ ​ (1.72) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 1.55 % ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 1.30 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.55% for Class A Shares, 2.30% for Class C Shares and 1.30% for Class I Shares through January 31, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $724 ​ ​ ​ ​ ​ ​ $1,372 ​ ​ ​ ​ ​ ​ $2,044 ​ ​ ​ ​ ​ ​ $3,826 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $333 ​ ​ ​ ​ ​ ​ $1,067 ​ ​ ​ ​ ​ ​ $1,917 ​ ​ ​ ​ ​ ​ $4,117 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $233 ​ ​ ​ ​ ​ ​ $1,067 ​ ​ ​ ​ ​ ​ $1,917 ​ ​ ​ ​ ​ ​ $4,117 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $132 ​ ​ ​ ​ ​ ​ $771 ​ ​ ​ ​ ​ ​ $1,436 ​ ​ ​ ​ ​ ​ $3,215 ​ ​ ​
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 34% of the average value of its portfolio.
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Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to track the performance of the Horizon Kinetics International Wealth Index (Ticker: INWTR), a public index maintained by Horizon Kinetics LLC, the parent company of the fund’s subadviser, and published by International Securities Exchange, LLC. The index is composed of non-U.S., exchange-listed companies managed by executives who have accumulated a substantial amount of their personal wealth through the companies that they manage. The issuers have market capitalizations, at time of addition to the index, in excess of  $200 million. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index. The manner in which the index is constructed is likely to result in the fund’s assets generally being focused in one or more market sectors. For example, companies eligible for inclusion in the index based upon the first requirement of having an individual with significant wealth in a control position, are often companies in the consumer discretionary sector; therefore, it would not be unusual for the fund’s assets to be similarly focused in the consumer discretionary sector.
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. 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:
>
Correlation to Index  The risk that the performance of the fund and its index may vary somewhat due to factors such as fund flows, transaction costs, whether the fund obtains every security in its index, complexities of investing in foreign markets and timing differences associated with additions to and deletions from its index.
​
>
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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
​
>
Sector Focused Investing Risk.  The risk that events negatively affecting a particular market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.
​
>
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 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.
92 Virtus International Wealth Masters 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: NM0TKCCL7AE1RSA78Q7MM2SEBJM4.JPG]
​ ​
Best Quarter:
​ ​
Q1/2015:
​ ​
5.43%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-8.45%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(11/17/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 1.91 % ​ ​ ​ ​ ​ ​ 0.49 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.71 % ​ ​ ​ ​ ​ ​ 0.02 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.56 % ​ ​ ​ ​ ​ ​ 0.41 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -4.12 % ​ ​ ​ ​ ​ ​ -2.51 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.93 % ​ ​ ​ ​ ​ ​ -0.53 % ​ ​ ​
​ ​ MSCI EAFE ® (net) (reflects no deduction of fees, expenses or taxes) ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ -0.66 % ​ ​ ​
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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc.
The fund’s subadviser is Horizon Asset Management LLC (“Horizon”).
Portfolio Management
>
Murray Stahl,  Chairman, Chief Executive Officer and Chief Investment Officer at Horizon. Mr. Stahl has served as a Portfolio Manager of the fund since inception in November 2014.
​
​
Virtus International Wealth Masters Fund 93 ​
TABLE OF CONTENTS ​ ​ ​
>
Matthew Houk,  Portfolio Manager and Research Analyst at Horizon. Mr. Houk has served as a Portfolio Manager of the fund since inception in November 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
94 Virtus International Wealth Masters Fund
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Virtus Low Duration Income Fund
​
Investment Objective
The fund’s investment objective is to provide a high level of total return, including a competitive level of current income, while limiting fluctuations in net asset value due to changes in interest rates.
Fees and Expenses
The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Virtus Mutual Funds. More information about these and other discounts, as well as eligibility requirements for each share class, is available from your financial advisor and under “Sales Charges” on page 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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)
​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value
of your investment)
​ ​ ​
Class A
​ ​ ​
Class C
​ ​ ​
Class I
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) Fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ 0.30 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.10 % ​ ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.35) % ​ ​ ​ ​ ​ ​ (0.35) % ​ ​ ​ ​ ​ ​ (0.35) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 0.75% for Class A Shares, 1.50% for Class C Shares and 0.50% for Class I Shares through January 31, 2018. 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 time 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. 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 arrangement 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
​ ​ ​ ​ ​ $300 ​ ​ ​ ​ ​ ​ $533 ​ ​ ​ ​ ​ ​ $784 ​ ​ ​ ​ ​ ​ $1,504 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $253 ​ ​ ​ ​ ​ ​ $548 ​ ​ ​ ​ ​ ​ $968 ​ ​ ​ ​ ​ ​ $2,141 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $153 ​ ​ ​ ​ ​ ​ $548 ​ ​ ​ ​ ​ ​ $968 ​ ​ ​ ​ ​ ​ $2,141 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $51 ​ ​ ​ ​ ​ ​ $236 ​ ​ ​ ​ ​ ​ $437 ​ ​ ​ ​ ​ ​ $1,017 ​ ​ ​
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 period, the fund’s portfolio turnover rate was 38% of the average value of its portfolio.
Virtus Low Duration Income Fund 95 ​
TABLE OF CONTENTS ​ ​ ​
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks current income with an emphasis on maintaining low volatility and overall short duration (within a range of 1-3 years) by investing primarily in higher quality, more liquid securities across 14 fixed income sectors. Duration represents the interest rate sensitivity of a fixed income fund. 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;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors.
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:
>
Call Risk.  The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the fund to reinvest in obligations with lower interest rates than the original obligations and otherwise not benefit fully from the increase in value that other fixed income securities experience when interest rates decline.
​
>
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.
​
>
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.
​
​
96 Virtus Low Duration Income Fund
TABLE OF CONTENTS ​
>
Income Risk.  The risk that income received from the fund will vary widely over the short- and/or long-term and/or be less than anticipated if the proceeds from maturing securities in the fund are reinvested in lower-yielding securities.
​
>
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.
​
>
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 issuers 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.
​
Performance Information
The Virtus Low Duration Income Fund, a series of Virtus Opportunities Trust (“Successor Fund”), is the successor of the Virtus Low Duration Income Fund, a series of Virtus Insight Trust (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on September 23, 2016. The Predecessor Fund and the Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Virtus Low Duration Income Fund’s commencement date.
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.
Calendar year total returns for Class I Shares
Returns do not reflect sales charges applicable to other share classes and would be lower if they did.
[MISSING IMAGE: SJFUOFTB2NVTL5MMMPFEAE6LJ2NR.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
5.42%
​ ​
Worst Quarter:
​ ​
Q3/2008:
​ ​
-3.18%
​ ​
Virtus Low Duration Income Fund 97 ​
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Average Annual Total Returns (for the periods ended 12/31/16; 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 2.58 % ​ ​ ​ ​ ​ ​ 2.65 % ​ ​ ​ ​ ​ ​ 3.86 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.66 % ​ ​ ​ ​ ​ ​ 1.73 % ​ ​ ​ ​ ​ ​ 2.68 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.46 % ​ ​ ​ ​ ​ ​ 1.63 % ​ ​ ​ ​ ​ ​ 2.52 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.12 % ​ ​ ​ ​ ​ ​ 1.95 % ​ ​ ​ ​ ​ ​ 3.37 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 1.66 % ​ ​ ​ ​ ​ ​ 1.65 % ​ ​ ​ ​ ​ ​ 2.84 % ​ ​ ​
​ ​ Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 2.08 % ​ ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​ ​ ​ 3.84 % ​ ​ ​
The Bloomberg Barclays U.S. Intermediate Government/Credit Bond Index measures U.S. investment grade government and corporate debt securities with an average maturity of four to five years. The 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“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 May 2012.
​
>
Lisa M. Baribault,  Director and Portfolio Manager at Newfleet. Ms. Baribault has served as a Portfolio Manager of the fund since January 2017.
​
>
Benjamin Caron, CFA,  Senior Managing Director and Portfolio Manager at Newfleet. Mr. Caron has served as a Portfolio Manager of the fund since May 2012.
​
>
Christopher J. Kelleher, CFA, CPA,  Senior Managing Director and Senior Portfolio Manager at Newfleet. 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:
•
$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.
​
​
98 Virtus Low Duration Income Fund
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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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Low Duration Income Fund 99 ​
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Virtus Low Volatility Equity Fund
​
Investment Objective
The fund has an investment objective of capital appreciation with lower volatility than U.S. markets over a full market cycle.
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 1.76 % ​ ​ ​ ​ ​ ​ 1.76 % ​ ​ ​ ​ ​ ​ 1.76 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.20 % ​ ​ ​ ​ ​ ​ 0.20 % ​ ​ ​ ​ ​ ​ 0.20 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 3.16 % ​ ​ ​ ​ ​ ​ 3.91 % ​ ​ ​ ​ ​ ​ 2.91 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (1.41) % ​ ​ ​ ​ ​ ​ (1.41) % ​ ​ ​ ​ ​ ​ (1.41) % ​ ​ ​
​ ​
Total Annual Fund Operating Expenses After Expense Reimbursement (b)(c)
​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 1.55% for Class A Shares, 2.30% for Class C Shares and 1.30% for Class I Shares through January 31, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $743 ​ ​ ​ ​ ​ ​ $1,369 ​ ​ ​ ​ ​ ​ $2,019 ​ ​ ​ ​ ​ ​ $3,750 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $353 ​ ​ ​ ​ ​ ​ $1,063 ​ ​ ​ ​ ​ ​ $1,892 ​ ​ ​ ​ ​ ​ $4,042 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $253 ​ ​ ​ ​ ​ ​ $1,063 ​ ​ ​ ​ ​ ​ $1,892 ​ ​ ​ ​ ​ ​ $4,042 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $153 ​ ​ ​ ​ ​ ​ $768 ​ ​ ​ ​ ​ ​ $1,409 ​ ​ ​ ​ ​ ​ $3,132 ​ ​ ​
100 Virtus Low Volatility Equity Fund
TABLE OF CONTENTS ​ ​ ​ ​
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 10% of the average value of its portfolio.
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to provide investors with long-term returns similar to U.S. large capitalization stocks with less volatility by:
•
investing in a portfolio of primarily ETFs designed to produce returns generally in line with the broad U.S. equity market, although the fund may invest directly in large capitalization U.S. equity securities,
​
•
selling (writing) equity index call options, and
​
•
buying call options on CBOE Volatility Index ® (VIX ® ) futures.
​
Writing index call options and buying call options on VIX ® futures are both techniques for limiting the volatility of the fund’s portfolio. Writing index call options is a way to monetize volatility, enhancing the fund’s risk-adjusted return as compared with an all-equity portfolio and providing steady cash flow. However, at times, it also reduces the fund’s ability to profit from increases in the value of its equity portfolio. Buying call options on VIX ® futures is designed to protect the fund from a significant market decline over a short period of time because the value of a call option on VIX ® futures generally increases as stock prices decrease, and decreases as those stocks prices increase. By employing techniques to limit the risks associated with the U.S. large capitalization stocks represented in its portfolio, the fund expects its portfolio to experience less volatility than a portfolio of U.S. large capitalization stocks alone.
Under normal circumstances, the fund intends to invest at least 80% of its net assets in equity securities, which include ETFs representing the equity securities 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. 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:
>
Call Options Risks.  The risk that selling index call options may limit the fund’s opportunity to profit from increases in the value of its equity portfolio, and the risk that buying call options may result in the loss of the premium paid for those options.
​
>
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.
​
​
Virtus Low Volatility Equity Fund 101 ​
TABLE OF CONTENTS ​
>
Low Volatility Strategy Risk.  The risk that the fund’s techniques for limiting portfolio volatility will not be successful, will cause the fund’s portfolio to underperform its benchmark, or will cause the fund to lose money.
​
>
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 issuers 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 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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: NE0HD60MVITL5HDDEBG2BPRTG1F7.JPG]
​ ​
Best Quarter:
​ ​
Q4/2015:
​ ​
5.29%
​ ​
Worst Quarter:
​ ​
Q1/2016:
​ ​
-6.48%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(6/11/13)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.41 % ​ ​ ​ ​ ​ ​ 5.79 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -0.65 % ​ ​ ​ ​ ​ ​ 5.49 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -0.03 % ​ ​ ​ ​ ​ ​ 4.48 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -6.31 % ​ ​ ​ ​ ​ ​ 3.79 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.37 % ​ ​ ​ ​ ​ ​ 4.73 % ​ ​ ​
​ ​ CBOE S&P 500 Buywrite Index (reflects no deduction of fees, expenses or taxes) ​ ​ ​ ​ ​ 7.07 % ​ ​ ​ ​ ​ ​ 6.98 % ​ ​ ​
​ ​ S&P 500 ® Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 11.74 % ​ ​ ​
The CBOE S&P 500 Buywrite Index is a passive total return index based on buying an S&P 500 stock index portfolio and "writing" (or selling) the near-term S&P 500 Index (SPXSM) "covered" call option. 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 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by
102 Virtus Low Volatility Equity Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
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 Rampart Investment Management Company, LLC (“Rampart”), an affiliate of VIA.
Portfolio Management
>
Michael Davis,  a Portfolio Manager Rampart, is a manager of the fund. Mr. Davis has served as a Portfolio Manager of the fund since September 2016.
​
>
Brendan R. Finneran,  Portfolio Manager and Trader at Rampart, is a manager of the fund. Mr. Finneran has served as a Portfolio Manager of the fund since June 2013.
​
>
Robert F. Hofeman, Jr.,  Portfolio Manager and Trader at Rampart,is a manager of the fund. Mr. Hofeman has served as a Portfolio Manager of the fund since June 2013.
​
>
Warun Kumar,  Chief Investment Officer and Portfolio Manager at Rampart, is a manager of the fund. Mr. Kumar has served as a Portfolio Manager of the fund since September 2016.
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
Virtus Low Volatility Equity Fund 103 ​
TABLE OF CONTENTS ​ ​ ​ ​ ​
Virtus Multi-Asset 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.35 % ​ ​ ​ ​ ​ ​ 0.35 % ​ ​ ​ ​ ​ ​ 0.35 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.13 % ​ ​ ​ ​ ​ ​ 0.13 % ​ ​ ​ ​ ​ ​ 0.13 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.73 % ​ ​ ​ ​ ​ ​ 2.48 % ​ ​ ​ ​ ​ ​ 1.48 % ​ ​ ​
(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.
​
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
​ ​ ​ ​ ​ $741 ​ ​ ​ ​ ​ ​ $1,089 ​ ​ ​ ​ ​ ​ $1,460 ​ ​ ​ ​ ​ ​ $2,499 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $351 ​ ​ ​ ​ ​ ​ $773 ​ ​ ​ ​ ​ ​ $1,321 ​ ​ ​ ​ ​ ​ $2,816 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $251 ​ ​ ​ ​ ​ ​ $773 ​ ​ ​ ​ ​ ​ $1,321 ​ ​ ​ ​ ​ ​ $2,816 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $151 ​ ​ ​ ​ ​ ​ $468 ​ ​ ​ ​ ​ ​ $808 ​ ​ ​ ​ ​ ​ $1,768 ​ ​ ​
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 223% of the average value of its portfolio.
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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, fixed income, alternatives, and/or cash equivalents (high-quality short-term securities). Allocations to each asset class are based on quantitative models.
The fund has the flexibility to invest in any combination of the sub-sectors, international equities, fixed income, alternatives, and high-quality short-term securities. A relative strength momentum model is utilized to rank each sub-sector, international equity component, fixed income component, and alternative asset component. The fund will allocate to those components 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 equity market. When the equity market is determined to be in a higher level of risk, a defensive cash equivalent position may be built by allocating from those equity sub-sectors and international equities of the market that are not exhibiting absolute positive momentum. The fund may invest in a basket of securities or ETFs to represent its positions.
The adviser is responsible for the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
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:
>
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.
​
>
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.
​
>
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.
​
>
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.
​
​
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>
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.
​
>
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.
​
>
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.
​
>
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 issuers 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.
​
>
Real Estate Investment Risk.  The risk that the value of the fund’s shares will be negatively affected by changes in real estate values or economic conditions, credit risk and interest rate fluctuations, changes in the value of the underlying real estate and defaults by lessees and/or borrowers..
​
>
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 a broad-based securities market index. Updated performance information is available at virtus.com or by calling 800-243-1574.
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Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: R69H7PBEKHEC23PJ0RRKAHHA53KH.JPG]
​ ​
Best Quarter:
​ ​
Q4/2013:
​ ​
5.28%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-3.11%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
5 Years
​ ​ ​
Since
Inception
(3/15/11)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 1.72 % ​ ​ ​ ​ ​ ​ 2.87 % ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.72 % ​ ​ ​ ​ ​ ​ 2.26 % ​ ​ ​ ​ ​ ​ 1.82 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 0.97 % ​ ​ ​ ​ ​ ​ 2.23 % ​ ​ ​ ​ ​ ​ 1.83 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -4.41 % ​ ​ ​ ​ ​ ​ 1.42 % ​ ​ ​ ​ ​ ​ 1.06 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.72 % ​ ​ ​ ​ ​ ​ 1.87 % ​ ​ ​ ​ ​ ​ 1.36 % ​ ​ ​
​ ​ Dow Jones Global Moderate Portfolio Index ​ ​ ​ ​ ​ 7.67 % ​ ​ ​ ​ ​ ​ 7.37 % ​ ​ ​ ​ ​ ​ 6.28 % ​ ​ ​
The Dow Jones Global Moderate Portfolio Index is a benchmark that takes 60% of the risk of the global securities market. It is a total returns index that is a time-varying weighted average of stocks, bonds, and cash. The Index is the efficient allocation of stocks, bonds, and cash in a portfolio with 60% of the risk of the Dow Jones Aggressive Portfolio Index. The indexes are 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
Portfolio Management
>
Michael Davis,  a Managing Director at VIA, is a manager of the fund. Mr. Davis has served as a Portfolio Manager of the fund since September 2016.
​
>
Brendan R. Finneran,  Managing Director and Equity Trader at VIA, is a manager of the fund. Mr. Finneran has served as a Portfolio Manager of the fund since September 2016.
​
>
Robert F. Hofeman, Jr.,  Managing Director and Equity Trader at VIA,is a manager of the fund. Mr. Hofeman has served as a Portfolio Manager of the fund since September 2016.
​
​
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>
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.
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
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Virtus Multi-Sector Intermediate Bond Fund
​
Investment Objective
The fund has an investment objective of maximizing current income while preserving 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
​ ​
Shareholder Fees (fees paid directly from your investment)
​ ​ ​
Class A
​ ​ ​
Class B
​ ​ ​
Class C
​ ​ ​
Class I
​ ​ ​
Class R6
​ ​
​ ​ Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price) ​ ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 5.00 % (a) ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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
​ ​ ​
Class R6
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.27 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.17 % ​ ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ ​ 0.92 % ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (c) ​ ​ ​ ​ ​ (0.15) % ​ ​ ​ ​ ​ ​ (0.15) % ​ ​ ​ ​ ​ ​ (0.15) % ​ ​ ​ ​ ​ ​ (0.15) % ​ ​ ​ ​ ​ ​ (0.15) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b)(c) ​ ​ ​ ​ ​ 1.02 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 0.77 % ​ ​ ​ ​ ​ ​ 0.70 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 0.99% for Class A Shares, 1.74% for Class B Shares, 1.74% for Class C Shares, 0.74% for Class I Shares and 0.67% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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:
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​ ​ ​ ​ ​ ​
Share Status
​ ​ ​
1 Year
​ ​ ​
3 Years
​ ​ ​
5 Years
​ ​ ​
10 Years
​ ​
​ ​ Class A ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $475 ​ ​ ​ ​ ​ ​ $718 ​ ​ ​ ​ ​ ​ $981 ​ ​ ​ ​ ​ ​ $1,729 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $580 ​ ​ ​ ​ ​ ​ $789 ​ ​ ​ ​ ​ ​ $1,023 ​ ​ ​ ​ ​ ​ $2,036 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $180 ​ ​ ​ ​ ​ ​ $589 ​ ​ ​ ​ ​ ​ $1,023 ​ ​ ​ ​ ​ ​ $2,036 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $280 ​ ​ ​ ​ ​ ​ $589 ​ ​ ​ ​ ​ ​ $1,023 ​ ​ ​ ​ ​ ​ $2,231 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $180 ​ ​ ​ ​ ​ ​ $589 ​ ​ ​ ​ ​ ​ $1,023 ​ ​ ​ ​ ​ ​ $2,231 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $79 ​ ​ ​ ​ ​ ​ $278 ​ ​ ​ ​ ​ ​ $495 ​ ​ ​ ​ ​ ​ $1,118 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $72 ​ ​ ​ ​ ​ ​ $256 ​ ​ ​ ​ ​ ​ $457 ​ ​ ​ ​ ​ ​ $1,035 ​ ​ ​
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 60% of the average value of its portfolio.
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to generate high current income and total return while preserving capital by applying extensive credit research and a time-tested approach designed to capitalize on opportunities across undervalued sectors of the bond market. The portfolio seeks diversification among 14 sectors in an effort to increase return potential and reduce risk.
Under normal circumstances, the fund invests at least 80% of its assets in bonds, which are debt securities of various types of issuers. The fund seeks to achieve its objective by investing in a diversified portfolio of primarily intermediate-term bonds having a dollar-weighted average maturity of between three and 10 years and that are in one of the following market sectors:
•
Securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors.
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:
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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.
​
>
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 issuers 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.
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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.
[MISSING IMAGE: OGEAJPNURADC0UP9CPD1U7KONJ49.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
16.15%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-14.37%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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
​ ​ ​ ​ ​ 6.02 % ​ ​ ​ ​ ​ ​ 4.28 % ​ ​ ​ ​ ​ ​ 5.04 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 4.07 % ​ ​ ​ ​ ​ ​ 2.06 % ​ ​ ​ ​ ​ ​ 2.71 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 3.37 % ​ ​ ​ ​ ​ ​ 2.37 % ​ ​ ​ ​ ​ ​ 2.92 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 5.37 % ​ ​ ​ ​ ​ ​ 4.29 % ​ ​ ​ ​ ​ ​ 4.65 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 9.46 % ​ ​ ​ ​ ​ ​ 4.32 % ​ ​ ​ ​ ​ ​ 4.67 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 10.54 % ​ ​ ​ ​ ​ ​ 5.36 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 6.57 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Returns Before Taxes
​ ​ ​ ​ ​ 10.62 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 2.87 % ​ ​ ​
​ ​ Bloomberg Barclays U.S. Aggregate Bond Index (reflects no
deduction for fees, expenses or taxes) 		​ ​ ​ ​ ​ 2.65 % ​ ​ ​ ​ ​ ​ 2.23 % ​ ​ ​ ​ ​ ​ 4.35 % ​ ​ ​ ​ ​ ​ 3.47 % ​ ​ ​ ​ ​ ​ 1.91 % ​ ​ ​
The Boomberg 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.
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Portfolio Management
>
David L. Albrycht, CFA,  President and Chief Investment Officer at Newfleet, is the manager of the fund. Mr. Albrycht has served as a Portfolio Manager of the fund since 1995, and co-managed the fund from 1994 to 1995.
​
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, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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 Multi-Sector Intermediate Bond Fund 113 ​
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Virtus Multi-Sector Short Term Bond Fund
​
Investment Objective
The fund has an investment objective of providing high current income while attempting to limit changes in the fund's net asset value per share caused by interest rate changes.
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
​ ​
Shareholder Fees (fees paid directly from your
investment)
​ ​ ​
Class A
​ ​ ​
Class B
​ ​ ​
Class C
​ ​ ​
Class I
​ ​ ​
Class R6
​ ​ ​
Class T
​ ​
​ ​ Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price) ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 2.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​
​ ​
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
​ ​ ​
Class R6
​ ​ ​
Class T
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.47 % ​ ​ ​ ​ ​ ​ 0.47 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1)
fees 		​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.27 % ​ ​ ​ ​ ​ ​ 0.27 % ​ ​ ​ ​ ​ ​ 0.27 % ​ ​ ​ ​ ​ ​ 0.27 % ​ ​ ​ ​ ​ ​ 0.20 % (b) ​ ​ ​ ​ ​ ​ 0.27 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (c) ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.68 % ​ ​ ​ ​ ​ ​ 1.75 % ​ ​ ​
(a)
The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 0.50% annually to 1% during the third year and to 0% after the third year. The deferred sales charge is imposed on Class T Shares redeemed during the first year only.
​
(b)
Estimated for current fiscal year, as annualized.
​
(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. In the case of Class B Shares, it assumes that your shares are converted to Class A Shares after six years. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
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​ ​ ​ ​ ​ ​
Share Status
​ ​ ​
1 Year
​ ​ ​
3 Years
​ ​ ​
5 Years
​ ​ ​
10 Years
​ ​
​ ​ Class A ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $325 ​ ​ ​ ​ ​ ​ $536 ​ ​ ​ ​ ​ ​ $765 ​ ​ ​ ​ ​ ​ $1,422 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $303 ​ ​ ​ ​ ​ ​ $474 ​ ​ ​ ​ ​ ​ $818 ​ ​ ​ ​ ​ ​ $1,532 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $153 ​ ​ ​ ​ ​ ​ $474 ​ ​ ​ ​ ​ ​ $818 ​ ​ ​ ​ ​ ​ $1,532 ​ ​ ​
​ ​ Class C ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $127 ​ ​ ​ ​ ​ ​ $397 ​ ​ ​ ​ ​ ​ $686 ​ ​ ​ ​ ​ ​ $1,511 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $77 ​ ​ ​ ​ ​ ​ $240 ​ ​ ​ ​ ​ ​ $417 ​ ​ ​ ​ ​ ​ $930 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $69 ​ ​ ​ ​ ​ ​ $218 ​ ​ ​ ​ ​ ​ $379 ​ ​ ​ ​ ​ ​ $847 ​ ​ ​
​ ​
Class T
​ ​ ​
Sold
​ ​ ​ ​ ​ $275 ​ ​ ​ ​ ​ ​ $525 ​ ​ ​ ​ ​ ​ $875 ​ ​ ​ ​ ​ ​ $1,750 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $175 ​ ​ ​ ​ ​ ​ $525 ​ ​ ​ ​ ​ ​ $875 ​ ​ ​ ​ ​ ​ $1,750 ​ ​ ​
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 53% of the average value of its portfolio.
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks current income with an emphasis on maintaining low volatility and overall short duration by investing primarily in higher quality, more liquid securities across 14 bond market sectors. The fund utilizes a value-oriented, research driven approach that seeks to strategically overweight undervalued sectors while applying strict risk controls.
Under normal circumstances, the fund invests at least 80% of its assets in bonds, which are fixed income debt obligations of various types of issuers. The fund seeks to achieve its objective by investing in a diversified portfolio of primarily short-term fixed income securities having an expected dollar-weighted average maturity of three years or less and that are in one of the following market sectors:
•
Securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors.
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 Multi-Sector Short Term Bond Fund 115 ​
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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.
​
>
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.
​
>
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 issuers 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.
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.
[MISSING IMAGE: VJ7CS5S9E54298EF1JGSTM1F8746.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
10.79%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-9.05%
​ ​
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Average Annual Total Returns (for the periods ended 12/31/16; 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 R6
Since
Inception
(11/3/16)
​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ ​ ​ 2.88 % ​ ​ ​ ​ ​ ​ 4.20 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.31 % ​ ​ ​ ​ ​ ​ 1.52 % ​ ​ ​ ​ ​ ​ 2.52 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.46 % ​ ​ ​ ​ ​ ​ 1.61 % ​ ​ ​ ​ ​ ​ 2.56 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 2.98 % ​ ​ ​ ​ ​ ​ 2.85 % ​ ​ ​ ​ ​ ​ 3.90 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.86 % ​ ​ ​ ​ ​ ​ 3.13 % ​ ​ ​ ​ ​ ​ 4.19 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 5.22 % ​ ​ ​ ​ ​ ​ 3.64 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 5.13 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ -0.06 % ​ ​ ​
​ ​ Class T ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 4.35 % ​ ​ ​ ​ ​ ​ 2.59 % ​ ​ ​ ​ ​ ​ 3.66 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ BofA Merrill Lynch 1-3 Year A-BBB US Corporate Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 2.57 % ​ ​ ​ ​ ​ ​ 2.32 % ​ ​ ​ ​ ​ ​ 3.46 % ​ ​ ​ ​ ​ ​ 3.16 % ​ ​ ​ ​ ​ ​ -0.29 % ​ ​ ​
The BofA Merrill Lynch 1-3 Year A-BBB US Corporate Index measures performance of U.S. corporate bond issues rated A1 through BBB3, inclusive (based on an average of Moody's, S&P and Fitch), with a remaining term to final maturity less than 3 years. 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 the manager of the fund. Mr. Albrycht has served as a Portfolio Manager of the fund since 1993.
​
Purchase and Sale of Fund Shares
Minimum initial investments applicable to Class A, Class C and Class T 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 Multi-Sector Short Term Bond Fund 117 ​
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Minimum additional investments applicable to Class A, Class C and Class T 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, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
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Virtus Real Estate Securities Fund
​
Investment Objective
The fund has investment objectives of capital appreciation and income with approximately equal emphasis.
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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 of the fund’s statement of additional information.
​ ​
Shareholder Fees (fees paid directly from your investment)
​ ​ ​
Class A
​ ​ ​
Class B
​ ​ ​
Class C
​ ​ ​
Class I
​ ​ ​
Class R6
​ ​
​ ​ Maximum Sales Charge (load) Imposed on Purchases (as a percentage of offering price) ​ ​ ​ ​ ​ 5.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 5.00 % (a) ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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
​ ​ ​
Class R6
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ ​ 0.74 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.39 % ​ ​ ​ ​ ​ ​ 0.39 % ​ ​ ​ ​ ​ ​ 0.39 % ​ ​ ​ ​ ​ ​ 0.39 % ​ ​ ​ ​ ​ ​ 0.22 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.38 % ​ ​ ​ ​ ​ ​ 2.13 % ​ ​ ​ ​ ​ ​ 2.13 % ​ ​ ​ ​ ​ ​ 1.13 % ​ ​ ​ ​ ​ ​ 0.96 % ​ ​ ​
(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
​ ​ ​ ​ ​ $707 ​ ​ ​ ​ ​ ​ $987 ​ ​ ​ ​ ​ ​ $1,287 ​ ​ ​ ​ ​ ​ $2,137 ​ ​ ​
​ ​
Class B
​ ​ ​
Sold
​ ​ ​ ​ ​ $616 ​ ​ ​ ​ ​ ​ $867 ​ ​ ​ ​ ​ ​ $1,144 ​ ​ ​ ​ ​ ​ $2,271 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $216 ​ ​ ​ ​ ​ ​ $667 ​ ​ ​ ​ ​ ​ $1,144 ​ ​ ​ ​ ​ ​ $2,271 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $316 ​ ​ ​ ​ ​ ​ $667 ​ ​ ​ ​ ​ ​ $1,144 ​ ​ ​ ​ ​ ​ $2,462 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $216 ​ ​ ​ ​ ​ ​ $667 ​ ​ ​ ​ ​ ​ $1,144 ​ ​ ​ ​ ​ ​ $2,462 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $115 ​ ​ ​ ​ ​ ​ $359 ​ ​ ​ ​ ​ ​ $622 ​ ​ ​ ​ ​ ​ $1,375 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $98 ​ ​ ​ ​ ​ ​ $306 ​ ​ ​ ​ ​ ​ $531 ​ ​ ​ ​ ​ ​ $1,178 ​ ​ ​
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 31% of the average value of its portfolio.
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Investments, Risks and Performance
Principal Investment Strategies
The fund offers exposure to the equity real estate investment trust (“REIT”) market utilizing a Growth at a Reasonable Price style with macroeconomic and fundamental security analysis designed to identify the most attractive investment candidates. The subadviser believes the value of a REIT extends beyond the value of the underlying real estate and that through fundamental research, it can uncover and exploit inefficiencies in the market.
Under normal circumstances, the fund invests at least 80% of its assets in publicly-traded REITs and companies that are principally engaged in the real estate industry. 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:
>
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.
​
>
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 issuers 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.
120 Virtus Real Estate Securities Fund
TABLE OF CONTENTS ​
Calendar year total returns for Class I Shares (includes returns of a predecessor fund)
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: N9RAVS63TR53SEDOTFDMKVJ0H7D8.JPG]
​ ​
Best Quarter:
​ ​
Q3/2009:
​ ​
32.93%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-38.68%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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 R6
Since
Inception
(11/12/14)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 6.94 % ​ ​ ​ ​ ​ ​ 11.08 % ​ ​ ​ ​ ​ ​ 4.90 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 1.81 % ​ ​ ​ ​ ​ ​ 8.05 % ​ ​ ​ ​ ​ ​ 3.07 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 7.10 % ​ ​ ​ ​ ​ ​ 8.24 % ​ ​ ​ ​ ​ ​ 3.42 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 0.53 % ​ ​ ​ ​ ​ ​ 9.50 % ​ ​ ​ ​ ​ ​ 4.02 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 2.38 % ​ ​ ​ ​ ​ ​ 9.97 % ​ ​ ​ ​ ​ ​ 3.85 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 5.92 % ​ ​ ​ ​ ​ ​ 9.98 % ​ ​ ​ ​ ​ ​ 3.86 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Returns Before Taxes
​ ​ ​ ​ ​ 7.13 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 6.80 % ​ ​ ​
​ ​ FTSE NAREIT Equity REITs Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 8.52 % ​ ​ ​ ​ ​ ​ 12.01 % ​ ​ ​ ​ ​ ​ 5.08 % ​ ​ ​ ​ ​ ​ 7.55 % ​ ​ ​
The FTSE NAREIT Equity REITs Index is a free-float market capitalization index measuring equity tax-qualified REITs, which meet minimum size and liquidity criteria, that are listed on the New York Stock Exchange, the American Stock Exchange and the NASDAQ National Market System. The FTSE NAREIT Equity REITs 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Duff  & Phelps Investment Management Co. (“Duff  & Phelps”), an affiliate of VIA.
Virtus Real Estate Securities Fund 121 ​
TABLE OF CONTENTS ​ ​ ​ ​
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 1998.
​
>
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 2007.
​
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, 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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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.
122 Virtus Real Estate Securities Fund
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Virtus Sector 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value
of your investment)
​ ​ ​
Class A
​ ​ ​
Class C
​ ​ ​
Class I
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​ ​ ​ ​ 0.34 % ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​ ​ ​ ​ 0.03 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (b) ​ ​ ​ ​ ​ 1.07 % ​ ​ ​ ​ ​ ​ 1.82 % ​ ​ ​ ​ ​ ​ 0.82 % ​ ​ ​
(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.
​
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
​ ​ ​ ​ ​ $678 ​ ​ ​ ​ ​ ​ $896 ​ ​ ​ ​ ​ ​ $1,131 ​ ​ ​ ​ ​ ​ $1,806 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $285 ​ ​ ​ ​ ​ ​ $573 ​ ​ ​ ​ ​ ​ $985 ​ ​ ​ ​ ​ ​ $2,137 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $185 ​ ​ ​ ​ ​ ​ $573 ​ ​ ​ ​ ​ ​ $985 ​ ​ ​ ​ ​ ​ $2,137 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $84 ​ ​ ​ ​ ​ ​ $262 ​ ​ ​ ​ ​ ​ $455 ​ ​ ​ ​ ​ ​ $1,014 ​ ​ ​
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 337% 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 primary sectors of the S&P 500 ® Index and/or cash equivalents (high-quality short-term securities). Allocations to each sector are based on quantitative models.
Virtus Sector Trend Fund 123 ​
TABLE OF CONTENTS ​ ​
The fund has the flexibility to invest in any combination of the 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 sector of the equity market. The fund will allocate to those sectors that the model determines are more likely to outperform the broad market and possess positive absolute momentum. When a sector does not possess positive absolute momentum, a defensive cash equivalent position may be built by allocating from those sectors of the market that are not exhibiting absolute positive momentum, up to 100% of fund assets.
The adviser is responsible for the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
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 issuers 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.
​
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.
124 Virtus Sector Trend Fund
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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.
[MISSING IMAGE: OOU67OFSVJO7NT5M6KNN0SD77M61.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
14.28%
​ ​
Worst Quarter:
​ ​
Q4/2008:
​ ​
-17.03%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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
​ ​ ​ ​ ​ -2.22 % ​ ​ ​ ​ ​ ​ 7.37 % ​ ​ ​ ​ ​ ​ 4.05 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -2.52 % ​ ​ ​ ​ ​ ​ 5.20 % ​ ​ ​ ​ ​ ​ 2.67 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ -1.01 % ​ ​ ​ ​ ​ ​ 5.53 % ​ ​ ​ ​ ​ ​ 3.05 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 2.95 % ​ ​ ​ ​ ​ ​ 7.86 % ​ ​ ​ ​ ​ ​ 3.91 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 3.94 % ​ ​ ​ ​ ​ ​ 8.93 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 9.51 % ​ ​ ​
​ ​ S&P 500 ® Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 14.66 % ​ ​ ​ ​ ​ ​ 6.95 % ​ ​ ​ ​ ​ ​ 13.68 % ​ ​ ​
The S&P 500 ® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The index is a 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.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
Portfolio Management
>
Michael Davis,  a Managing Director at VIA, is a manager of the fund. Mr. Davis has served as a Portfolio Manager of the fund since September 2016.
​
>
Brendan R. Finneran,  Managing Director and Equity Trader at VIA, is a manager of the fund. Mr. Finneran has served as a Portfolio Manager of the fund since September 2016.
​
>
Robert F. Hofeman, Jr.,  Managing Director and Equity Trader at VIA,is a manager of the fund. Mr. Hofeman has served as a Portfolio Manager of the fund since September 2016.
​
​
Virtus Sector Trend Fund 125 ​
TABLE OF CONTENTS ​ ​ ​
>
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.
​
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 as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
126 Virtus Sector Trend Fund
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Virtus Senior Floating Rate 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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) 		​ ​ ​ ​ ​ 2.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price or redemption proceeds) ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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) ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Interest Expense on Borrowings ​ ​ ​ ​ ​ 0.07 % ​ ​ ​ ​ ​ ​ 0.07 % ​ ​ ​ ​ ​ ​ 0.07 % ​ ​ ​ ​ ​ ​ 0.07 % ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ 0.24 % (c) ​ ​ ​
​ ​ Acquired Fund Fees and Expenses ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​ ​ ​ ​ 0.01 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses (d) ​ ​ ​ ​ ​ 1.08 % ​ ​ ​ ​ ​ ​ 1.83 % ​ ​ ​ ​ ​ ​ 0.83 % ​ ​ ​ ​ ​ ​ 0.77 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (e) ​ ​ ​ ​ ​ (0.06) % ​ ​ ​ ​ ​ ​ (0.06) % ​ ​ ​ ​ ​ ​ (0.06) % ​ ​ ​ ​ ​ ​ (0.06) % ​ ​ ​
​ ​
Total Annual Fund Operating Expenses After Expense Reimbursement (d)(e)
​ ​ ​ ​ ​ 1.02 % ​ ​ ​ ​ ​ ​ 1.77 % ​ ​ ​ ​ ​ ​ 0.77 % ​ ​ ​ ​ ​ ​ 0.71 % ​ ​ ​
(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)
Estimated for current fiscal year, as annualized.
​
(d)
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.
​
(e)
The fund's investment adviser has contractually agreed to limit the fund's total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 0.94% for Class A Shares, 1.69% for Class C Shares, 0.69% for Class I Shares and 0.63% for Class R6 Shares through January 31, 2018. 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 time 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 arrangement 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
​ ​ ​ ​ ​ $376 ​ ​ ​ ​ ​ ​ $603 ​ ​ ​ ​ ​ ​ $848 ​ ​ ​ ​ ​ ​ $1,551 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $280 ​ ​ ​ ​ ​ ​ $570 ​ ​ ​ ​ ​ ​ $985 ​ ​ ​ ​ ​ ​ $2,143 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $180 ​ ​ ​ ​ ​ ​ $570 ​ ​ ​ ​ ​ ​ $985 ​ ​ ​ ​ ​ ​ $2,143 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $79 ​ ​ ​ ​ ​ ​ $259 ​ ​ ​ ​ ​ ​ $455 ​ ​ ​ ​ ​ ​ $1,020 ​ ​ ​
​ ​ Class R6 ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $73 ​ ​ ​ ​ ​ ​ $240 ​ ​ ​ ​ ​ ​ $422 ​ ​ ​ ​ ​ ​ $949 ​ ​ ​
Virtus Senior Floating Rate Fund 127 ​
TABLE OF CONTENTS ​ ​ ​ ​
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
The fund offers the potential for attractive total return and income by investing primarily in non-investment grade bank loans with a focus on higher quality companies within a rating tier. Using extensive credit and company analysis and monitoring, the subadviser looks for those securities with strong total return potential while maintaining an emphasis on managing risk.
Under normal circumstances, the fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in a portfolio of senior floating rate loans (“Senior Loans”). The fund may invest up to 15% of total assets in U.S. and non-U.S. dollar denominated foreign securities and foreign Senior Loans, including Yankee bonds. The fund may purchase derivative instruments, including, but not limited to, options, futures contracts, credit-linked notes, and swaps.
The fund may borrow an amount up to 33 1/3% of its total assets (including the amount borrowed). The fund may borrow for investment purposes, to meet repurchase requests and for temporary, extraordinary or emergency purposes.
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.
​
>
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.
​
>
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.
​
>
Leverage Risk.  The risk that leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair the fund's liquidity, cause it to liquidate positions at an unfavorable time, increase its volatility or otherwise cause it not to achieve its intended result.
​
​
128 Virtus Senior Floating Rate Fund
TABLE OF CONTENTS ​
>
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 issuers 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.
​
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 I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: V20IHM3UR0D3DPAHFMMKSPUI5G2I.JPG]
​ ​
Best Quarter:
​ ​
Q2/2009:
​ ​
13.54%
​ ​
Worst Quarter:
​ ​
Q3/2011:
​ ​
-4.11%
​ ​
Virtus Senior Floating Rate Fund 129 ​
TABLE OF CONTENTS ​ ​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
5 Years
​ ​ ​
Since
Inception
(1/31/08)
​ ​ ​
Class R6
Since
Inception
(11/3/16)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 8.81 % ​ ​ ​ ​ ​ ​ 4.66 % ​ ​ ​ ​ ​ ​ 5.22 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 6.92 % ​ ​ ​ ​ ​ ​ 2.74 % ​ ​ ​ ​ ​ ​ 3.05 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 4.94 % ​ ​ ​ ​ ​ ​ 2.73 % ​ ​ ​ ​ ​ ​ 3.13 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 5.54 % ​ ​ ​ ​ ​ ​ 3.81 % ​ ​ ​ ​ ​ ​ 4.63 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 7.71 % ​ ​ ​ ​ ​ ​ 3.61 % ​ ​ ​ ​ ​ ​ 4.19 % ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​
​ ​ Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ 1.85 % ​ ​ ​
​ ​ S&P/LSTA Leveraged Loan Index (reflects no deduction for fees, expenses
or taxes) 		​ ​ ​ ​ ​ 10.16 % ​ ​ ​ ​ ​ ​ 5.11 % ​ ​ ​ ​ ​ ​ 5.36 % ​ ​ ​ ​ ​ ​ 1.63 % ​ ​ ​
The S&P/LSTA Leveraged Loan Index is a daily total return index that uses LSTA/ LPC Mark-to-Market Pricing to calculate market value change. On a real-time basis, the index tracks the current outstanding balance and spread over LIBOR for fully funded term loans. The facilities included in the Index represent a broad cross section of leveraged loans syndicated in the United States, including dollar-denominated loans to overseas issuers. 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“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 inception in 2008.
​
>
Kyle A. Jennings, CFA,  Senior Managing Director and Head of Credit Research at Newfleet, is a manager of the fund. Mr. Jennings has served as a Portfolio Manager of the fund since inception in 2008.
​
>
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.
​
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
​
​
130 Virtus Senior Floating Rate Fund
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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, broker-dealer or other financial intermediary.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment.
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 Senior Floating Rate Fund 131 ​
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Virtus Tax-Exempt Bond Fund
​
Investment Objective
The fund has an investment objective of providing a high level of current income that is exempt from federal income tax.
Fees and Expenses
The tables below illustrate all fees and expenses that you may pay if you buy and hold shares of the fund. You may qualify for sales charge discounts if you and your family invest, or agree to invest in the future, at least $50,000 in Virtus Mutual Funds. More information about these and other discounts, as well as eligibility requirements for each share class, is available from your financial advisor and under “Sales Charges” on page 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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)
​ ​ ​ ​ ​ 2.75 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value
of your investment)
​ ​ ​
Class A
​ ​ ​
Class C
​ ​ ​
Class I
​ ​
​ ​ Management Fees ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Distribution and Shareholder Servicing (12b-1) Fees ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.31 % ​ ​ ​ ​ ​ ​ 0.31 % ​ ​ ​ ​ ​ ​ 0.31 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.01 % ​ ​ ​ ​ ​ ​ 1.76 % ​ ​ ​ ​ ​ ​ 0.76 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.16) % ​ ​ ​ ​ ​ ​ (0.16) % ​ ​ ​ ​ ​ ​ (0.16) % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses After Expense Reimbursement (b) ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​
(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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) so that such expenses do not exceed 0.85% for Class A Shares, 1.60% for Class C Shares and 0.60% for Class I Shares through January 31, 2018. 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 time 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. 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 arrangement 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 ​ ​ ​ ​ ​ ​ $572 ​ ​ ​ ​ ​ ​ $802 ​ ​ ​ ​ ​ ​ $1,463 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $263 ​ ​ ​ ​ ​ ​ $539 ​ ​ ​ ​ ​ ​ $939 ​ ​ ​ ​ ​ ​ $2,060 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $163 ​ ​ ​ ​ ​ ​ $539 ​ ​ ​ ​ ​ ​ $939 ​ ​ ​ ​ ​ ​ $2,060 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $61 ​ ​ ​ ​ ​ ​ $227 ​ ​ ​ ​ ​ ​ $407 ​ ​ ​ ​ ​ ​ $927 ​ ​ ​
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 period, the fund’s portfolio turnover rate was 9% of the average value of its portfolio.
132 Virtus Tax-Exempt Bond Fund
TABLE OF CONTENTS ​ ​ ​ ​
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to generate current income exempt from federal income taxes by investing in a diversified portfolio with municipal bonds of varying maturities. The management team focuses on higher quality 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 (so-called "junk bonds").
Under normal circumstances, as a matter of fundamental policy, the fund invests at least 80% of its assets in municipal bonds, the income from which is exempt from federal income taxes. The portion of the fund’s assets not invested in tax-exempt securities may be invested in taxable fixed income securities. Income from these taxable 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 or specific municipalities 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:
>
Call Risk.  The risk that issuers will prepay fixed rate obligations when interest rates fall, forcing the fund to reinvest in obligations with lower interest rates than the original obligations and otherwise not benefit fully from the increase in value that other fixed income securities experience when interest rates decline.
​
>
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.
​
>
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/or long-term and/or be less than anticipated if the proceeds from maturing securities in the fund are reinvested in lower-yielding securities.
​
>
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 issuers 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.
​
>
Tax Liability Risk.  The risk that noncompliant conduct by a municipal bond issuer, or certain adverse interpretations or actions by a government or tax authority, could cause interest from a security to become taxable, possibly retroactively, subjecting shareholders to increased tax liability.
​
Performance Information
The Virtus Tax-Exempt Bond Fund, a series of Virtus Opportunities Trust (“Successor Fund”), is the successor of the Virtus Tax-Exempt Bond Fund, a series of Virtus Insight Trust (“Predecessor Fund”), resulting from a reorganization of the Predecessor Fund with and into the Successor Fund on September 23, 2016. The Predecessor Fund and the
Virtus Tax-Exempt Bond Fund 133 ​
TABLE OF CONTENTS
Successor Fund have identical investment objectives and strategies. The Successor Fund has adopted the past performance of the Predecessor Fund as its own. Therefore, the performance tables below include the performance of the shares of the Predecessor Fund prior to the Virtus Tax-Exempt Bond Fund’s commencement date.
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 I Shares
Returns do not reflect sales charges applicable to other share classes and would be lower if they did.
[MISSING IMAGE: NRNTIUR9S94V64HSB9D6A8MMBK6N.JPG]
​ ​
Best Quarter:
​ ​
Q3/2009:
​ ​
10.03%
​ ​
Worst Quarter:
​ ​
Q3/2008:
​ ​
-5.64%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16; 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -0.16 % ​ ​ ​ ​ ​ ​ 2.94 % ​ ​ ​ ​ ​ ​ 4.29 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ -0.21 % ​ ​ ​ ​ ​ ​ 2.92 % ​ ​ ​ ​ ​ ​ 4.26 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 1.16 % ​ ​ ​ ​ ​ ​ 2.95 % ​ ​ ​ ​ ​ ​ 4.15 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -3.15 % ​ ​ ​ ​ ​ ​ 2.11 % ​ ​ ​ ​ ​ ​ 3.73 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ -1.15 % ​ ​ ​ ​ ​ ​ 1.91 % ​ ​ ​ ​ ​ ​ 3.24 % ​ ​ ​
​ ​
Tax-Exempt Bond Linked Benchmark (reflects no deduction for fees, expenses or taxes)
​ ​ ​ ​ ​ 0.24 % ​ ​ ​ ​ ​ ​ 3.04 % ​ ​ ​ ​ ​ ​ 4.13 % ​ ​ ​
​ ​ Bloomberg Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 2.65 % ​ ​ ​ ​ ​ ​ 2.23 % ​ ​ ​ ​ ​ ​ 4.35 % ​ ​ ​
The Tax-Exempt Bond Linked Benchmark consists of the BofA Merrill Lynch 1-22 Year US Municipal Securities Index, a subset of the BofA Merrill Lynch US Municipal Securities Index including all securities with a remaining term to final maturity less than 22 years, calculated on a total return basis. Performance of the Tax-Exempt Bond Linked Benchmark prior to 6/30/2012 is that of the Barclays U.S. Municipal Bond Index. The Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market. The indexes are calculated on a total return basis. The 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 I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by
134 Virtus Tax-Exempt Bond Fund
TABLE OF CONTENTS ​ ​ ​ ​ ​
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
>
Timothy M. Heaney, CFA,  Senior Managing Director and Senior Portfolio Manager—Municipal Securities at Newfleet. Mr. Heaney has served as a Portfolio Manager of the fund since June 2012.
​
>
Lisa H. Leonard,  Managing Director and Portfolio Manager—Municipal Securities at Newfleet. Ms. Leonard has served as a Portfolio Manager of the fund since June 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
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.
Virtus Tax-Exempt Bond Fund 135 ​
TABLE OF CONTENTS ​ ​ ​ ​ ​
Virtus Wealth Masters 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 219 of the fund’s prospectus and “Alternative Purchase Arrangements” on page 110 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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Maximum Deferred Sales Charge (load) (as a percentage of the lesser of purchase price
or redemption proceeds) 		​ ​ ​ ​ ​ Non e ​ ​ ​ ​ ​ ​ 1.00 % (a) ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​
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 % ​ ​ ​ ​ ​ ​ Non e ​ ​ ​
​ ​ Other Expenses ​ ​ ​ ​ ​ 0.43 % ​ ​ ​ ​ ​ ​ 0.43 % ​ ​ ​ ​ ​ ​ 0.43 % ​ ​ ​
​ ​ Total Annual Fund Operating Expenses ​ ​ ​ ​ ​ 1.53 % ​ ​ ​ ​ ​ ​ 2.28 % ​ ​ ​ ​ ​ ​ 1.28 % ​ ​ ​
​ ​ Less: Fee Waiver and/or Expense Reimbursement (b) ​ ​ ​ ​ ​ (0.08 %) ​ ​ ​ ​ ​ ​ (0.08 %) ​ ​ ​ ​ ​ ​ (0.08 %) ​ ​ ​
​ ​ 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 certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) 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, 2018. 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 time 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 arrangement 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 ​ ​ ​ ​ ​ ​ $1,023 ​ ​ ​ ​ ​ ​ $1,354 ​ ​ ​ ​ ​ ​ $2,287 ​ ​ ​
​ ​
Class C
​ ​ ​
Sold
​ ​ ​ ​ ​ $323 ​ ​ ​ ​ ​ ​ $705 ​ ​ ​ ​ ​ ​ $1,213 ​ ​ ​ ​ ​ ​ $2,609 ​ ​ ​
​
Held
​ ​ ​ ​ ​ $223 ​ ​ ​ ​ ​ ​ $705 ​ ​ ​ ​ ​ ​ $1,213 ​ ​ ​ ​ ​ ​ $2,609 ​ ​ ​
​ ​ Class I ​ ​ ​
Sold or Held
​ ​ ​ ​ ​ $122 ​ ​ ​ ​ ​ ​ $398 ​ ​ ​ ​ ​ ​ $695 ​ ​ ​ ​ ​ ​ $1,538 ​ ​ ​
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 30% of the average value of its portfolio.
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Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to track the performance of the Horizon Kinetics ISE Wealth Index (Ticker: RCH), a public index maintained by Horizon Kinetics LLC, the parent company of the fund’s subadviser, and published by International Securities Exchange, LLC. The index is composed of U.S.-listed companies and equity REITs managed by executives who are among the wealthiest individuals in the United States and, in many cases, have accumulated a substantial amount of their personal wealth through the companies that they manage. The issuers have market capitalizations, at time of addition to the index, in excess of  $200 million. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.
The manner in which the index is constructed is likely to result in the fund’s assets generally being focused in one or more market sectors. For example, companies eligible for inclusion in the index based upon the first requirement of having an individual with significant wealth in a control position are often companies in the consumer discretionary sector; therefore, it would not be unusual for the fund’s assets to be similarly focused in the consumer discretionary sector.
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:
>
Correlation to Index  The risk that the performance of the fund and its index may vary somewhat due to factors such as fund flows, transaction costs, whether the fund obtains every security in its index, complexities of investing in foreign markets and timing differences associated with additions to and deletions from its index.
​
>
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.
​
>
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 issuers and/or general economic conditions. Price changes may be temporary or may last for extended periods.
​
>
Sector Focused Investing Risk.  The risk that events negatively affecting a particular market sector in which the fund focuses its investments will cause the value of the fund’s shares to decrease, perhaps significantly.
​
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.
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Calendar year total returns for Class I Shares
Returns do not reflect sales charges and would be lower if they did.
[MISSING IMAGE: F2BCAE9D99RKQ9SLH88GE3OH9G6V.JPG]
​ ​
Best Quarter:
​ ​
Q3/2013:
​ ​
11.26%
​ ​
Worst Quarter:
​ ​
Q3/2015:
​ ​
-12.44%
​ ​
Average Annual Total Returns (for the periods ended 12/31/16)
Returns reflect deduction of maximum sales charges and full redemption at end of periods shown.
​ ​ ​ ​ ​ ​
1 Year
​ ​ ​
Since
Inception
(9/5/12)
​ ​
​ ​ Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 15.69 % ​ ​ ​ ​ ​ ​ 12.17 % ​ ​ ​
​ ​
Return After Taxes on Distributions
​ ​ ​ ​ ​ 15.41 % ​ ​ ​ ​ ​ ​ 11.68 % ​ ​ ​
​ ​
Return After Taxes on Distributions and Sale of Fund Shares
​ ​ ​ ​ ​ 9.12 % ​ ​ ​ ​ ​ ​ 9.55 % ​ ​ ​
​ ​ Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 8.73 % ​ ​ ​ ​ ​ ​ 10.37 % ​ ​ ​
​ ​ Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Return Before Taxes
​ ​ ​ ​ ​ 14.51 % ​ ​ ​ ​ ​ ​ 11.05 % ​ ​ ​
​ ​ S&P 500 ® Index (reflects no deduction for fees, expenses or taxes) ​ ​ ​ ​ ​ 11.96 % ​ ​ ​ ​ ​ ​ 13.82 % ​ ​ ​
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. 
After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns are shown only for Class I Shares; after-tax returns for other classes will vary. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. After-tax returns are not relevant to investors who hold fund shares in tax-deferred accounts or to shares held by non-taxable entities. In certain cases, the Return After Taxes on Distributions and Sale of Fund Shares for a period may be higher than other return figures for the same period. This will occur when a capital loss is realized upon the sale of fund shares and provides an assumed tax benefit that increases the return.
Management
The fund’s investment adviser is Virtus Investment Advisers, Inc. (“VIA”).
The fund’s subadviser is Horizon Asset Management LLC (“Horizon”).
Portfolio Management
>
Murray Stahl,  Chairman, Chief Executive Officer and Chief Investment Officer at Horizon. Mr. Stahl has served as a Portfolio Manager of the fund since inception in September 2012.
​
>
Matthew Houk,  Portfolio Manager and Research Analyst at Horizon. Mr. Houk 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:
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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.
Taxes
The fund’s distributions are taxable to you as either ordinary income or capital gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediary’s Web site for more information.
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More Information About Fund Expenses
​
VIA has contractually agreed to limit the total operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) of certain of the funds so that such expenses do not exceed, on an annualized basis, the amounts indicated in the following table.
​ ​ ​ ​ ​ ​
Class A
Shares
​ ​ ​
Class B
Shares
​ ​ ​
Class C
Shares
​ ​ ​
Class I
Shares
​ ​ ​
Class R6
Shares
​ ​ ​
Class T
Shares
​ ​ ​
Through Date
​ ​
​ ​ Virtus Bond Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ 0.54 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.10 % ​ ​ ​ ​ ​ ​ 1.10 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ 1.26 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ ​ ​ 1.65 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.40 % ​ ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ ​ ​ 1.55 % ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ ​ 1.04 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.69 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ 1.24 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ ​ ​ 1.55 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ ​ ​ 1.55 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ ​ 0.99 % ​ ​ ​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ ​ 0.67 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ ​ ​ 1.10 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.78 % ​ ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Senior Floating Rate Fund * ​ ​ ​ ​ ​ 0.94 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.69 % ​ ​ ​ ​ ​ ​ 0.69 % ​ ​ ​ ​ ​ ​ 0.63 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​
January 31, 2018
​ ​
(*)
Excludes leverage expenses, if any.
​
Additionally, for Virtus Low Volatility Equity Fund and the Trend Funds, the Distributor has contractually agreed to waive its 12b-1 fees applicable to Class C Shares to the extent that the funds’ investments in underlying ETFs with their own 12b-1 fees would otherwise cause the total 12b-1 fees paid directly or indirectly to the fund to exceed the limits set forth in applicable laws and regulations.
Following the contractual period, VIA may discontinue these arrangements at any time. Under certain conditions, VIA may recapture operating expenses waived or reimbursed under these and/or prior expense limitation arrangements for a period three years following the time such reimbursement occurred, provided that the recapture does not cause the fund to exceed the expense limit in effect at the time of the waiver or reimbursement.
For those funds operating under an expense reimbursement arrangement or fee waiver during the prior fiscal year, total (net) fund operating expenses, including acquired fund fees and expenses, if any, after effect of any expense reimbursement and/or fee waivers were:
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​ ​ ​ ​ ​ ​
Class A
Shares
​ ​ ​
Class B
Shares
​ ​ ​
Class C
Shares
​ ​ ​
Class I
Shares
​ ​ ​
Class R6
Shares
​ ​ ​
Class T
Shares
​ ​
​ ​ Virtus Bond Fund ​ ​ ​ ​ ​ 0.87 % ​ ​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ ​ 0.62 % ​ ​ ​ ​ ​ ​ 0.56 % (3) ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund (1) ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ ​ ​ 1.36 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.11 % ​ ​ ​ ​ ​ ​ 1.11 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund (2) ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ ​ ​ 1.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Equity Trend Fund (2) ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.05 % ​ ​ ​ ​ ​ ​ 1.27 % ​ ​ ​ ​ ​ ​ 1.06 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ ​ ​ 1.65 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.40 % ​ ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ ​ ​ 1.86 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.61 % ​ ​ ​ ​ ​ ​ 1.61 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Opportunities Fund (1) ​ ​ ​ ​ ​ 1.47 % ​ ​ ​ ​ ​ ​ 2.22 % ​ ​ ​ ​ ​ ​ 2.22 % ​ ​ ​ ​ ​ ​ 1.22 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ ​ 1.04 % (3) ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ ​ ​ 2.68 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 3.43 % ​ ​ ​ ​ ​ ​ 2.43 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus High Yield Fund (2) ​ ​ ​ ​ ​ 1.17 % ​ ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ ​ 0.92 % ​ ​ ​ ​ ​ ​ 0.86 % (3) ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ ​ 1.24 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ ​ ​ 1.55 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Multi-Asset Trend Fund (1) ​ ​ ​ ​ ​ 1.73 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.48 % ​ ​ ​ ​ ​ ​ 1.48 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund (1) ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.68 % (3) ​ ​ ​ ​ ​ ​ 1.75 % ​ ​ ​
​ ​
Virtus Senior Floating Rate Fund (1) (2)
​ ​ ​ ​ ​ 1.23 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.98 % ​ ​ ​ ​ ​ ​ 0.98 % ​ ​ ​ ​ ​ ​ 0.92 % (3) ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
(1)
Fund expenses currently at or below capped level.
​
(2)
Reflects expenses under prior expense reimbursement arrangements.
​
(3)
Estimated based on then-existing share classes.
​
​
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More Information About Investment Objectives and Principal Investment Strategies
​
The investment objectives and principal strategies of each fund are described in this section. Each of the following funds has either a fundamental or a non-fundamental investment objective as noted below. A fundamental investment objective may only be changed with shareholder approval. A non-fundamental investment objective may be changed by the Board of Trustees of that fund without shareholder approval. If a fund’s investment objective is changed, the prospectus will be supplemented to reflect the new investment objective and shareholders will be provided with at least 60 days advance notice of such change. There is no guarantee that a fund will achieve its objective(s).
Please see the statement of additional information (“SAI”) for additional information about the securities and investment strategies described in this prospectus and about additional securities and investment strategies that may be used by the funds.
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Virtus Alternatives Diversifier Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
Principal Investment Strategies:
The fund emphasizes low correlating asset classes in order to help reduce volatility and increase return potential. Applying an innovative, institutional-level approach to investing, the fund invests in a diversified portfolio of alternative asset classes including managed futures, global real estate, global infrastructure, natural resources, commodities, currencies and floating rate securities.
The fund seeks to achieve its objective by investing its assets in a mix of underlying affiliated and unaffiliated mutual funds and ETFs (collectively, “underlying funds”) that employ diverse investment styles in alternative investment vehicles such as commodities, real estate investment trusts (“REITs”) and others. The fund’s emphasis on diversification is intended to moderate volatility by limiting the effect of any one investment style. The purpose of the fund is to provide a packaged investment option with an emphasis on investment styles that have less correlation to traditional equity markets.
Among the underlying funds in which the fund invests are equity funds that invest principally in equity securities of issuers of any capitalization, including those of foreign issuers including emerging markets issuers. Although the fund does not concentrate its investments, certain of the underlying funds in which the fund invests may concentrate their investments in a particular industry or market sector, such as real estate, or may engage in short sales.
The fund is a “fund of funds.” The term “fund of funds” is typically used to describe mutual funds, such as the fund, whose primary investment strategy involves investing in other investment companies, such as ETFs and other mutual funds. Investments in securities of other investment companies, including ETFs, are subject to statutory limitations prescribed in the 1940 Act. Absent an available exemption, a fund may not: (i) acquire more than 3% of the voting securities of any other investment company, (ii) invest more than 5% of its total assets in securities of any one investment company, or (iii) invest more than 10% of its assets in securities of all investment companies. The fund has obtained exemptive relief from the SEC to permit it to invest in affiliated and unaffiliated funds including ETFs, beyond these statutory limitations, subject to certain conditions. Many ETFs also have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond these statutory limitations, subject to certain conditions. The fund may rely on the various exemptive orders to invest in affiliated and unaffiliated mutual funds, including the applicable unaffiliated ETFs.
The subadviser determines the combination of and allocation to the underlying funds based on the subadviser’s assessment of the appropriate mix of risk and return characteristics to best meet the fund’s investment objective. Under normal circumstances, the fund will generally invest in affiliated mutual funds where available to represent the desired asset classes, and unaffiliated mutual funds and/or ETFs to represent the desired asset classes for which affiliated mutual funds are unavailable or deemed not to be appropriate for the fund.
The subadviser monitors the fund’s allocations to the underlying funds and may periodically rebalance assets in response to changing market or economic conditions, and investment opportunities.
The adviser or subadviser to each underlying fund is responsible for deciding which securities to purchase and sell for its respective underlying fund.
The fund may also invest in high-quality, short-term securities. The fund is non-diversified under federal securities laws.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Bond Fund
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Non-Fundamental Investment Objective:
The fund has an investment objective of high total return from both current income and capital appreciation.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in fixed income debt obligations of various types of issuers. 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.
The fund seeks to achieve its objective by applying a time-tested approach and extensive credit research designed to capitalize on opportunities across undervalued areas of the bond markets. Under normal circumstances, the fund’s investments will 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;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors. The fund’s policy of investing 80% of its assets in bonds may be changed only upon 60 days’ written notice to shareholders.
The fund employs active sector rotation and disciplined risk management to portfolio construction. The fund seeks diversification among various sectors of the fixed income markets, which, as of the date of this Prospectus, may include some or all of the following: corporate investment grade; corporate high yield; bank loans; non-agency commercial mortgage-backed securities (“CMBS”); agency and non-agency residential mortgage-backed securities (“RMBS”); non-U.S. dollar securities; emerging market high yield; Yankee investment grade bonds; asset-backed securities; taxable municipal bonds; tax-exempt municipal bonds; and securities issued or guaranteed as to principal and interest by the U.S. government, its agencies, authorities, or instrumentalities.
The fund’s investable assets are typically allocated among various sectors of the fixed income market using a top-down, relative value approach that looks at factors such as yield and spreads, supply and demand, investment environment, and sector fundamentals. The subadviser then selects particular investments using a bottom-up, fundamental research-driven analysis that includes assessment of credit risk, company management, issue structure, technical market conditions, and valuations. Securities selected for investment are those that the subadviser believes offer the best potential to achieve the fund’s investment objective of providing a high level of total return, including a competitive level of current income. The subadviser seeks to adjust the proportion of fund investments primarily in the sectors described above and the selections within sectors to obtain higher relative returns. The subadviser regularly reviews the fund’s portfolio construction, endeavoring to minimize risk exposure by closely monitoring portfolio characteristics such as sector concentration and portfolio duration and by investing no more than 5% of the fund’s total assets in securities of any single issuer (excluding the U.S. government, its agencies, authorities or instrumentalities).
The fund manages duration utilizing a duration neutral strategy. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security. Under normal circumstances, the fund’s average duration is maintained at a level similar to that of its
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benchmark, the Barclays U.S. Aggregate Bond Index. As of September 30, 2016, the modified adjusted duration of the Barclays U.S. Aggregate Bond Index was 5.42 years; the modified adjusted duration of the fund was 4.29 years. Typically, for a fund maintaining a modified adjusted duration of 4.29 years, a one percent increase in interest rates would cause a 4.29% decrease in the value of the fund’s fixed income assets. Similarly, a one percent decrease in interest rates typically would cause the value of the fund’s fixed income assets to increase by 4.29%.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing, without limit, in cash and cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus CA Tax-Exempt Bond Fund
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Non-Fundamental Investment Objective:
The fund has an investment objective 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.
Principal Investment Strategies:
The fund invests in municipal securities that are tax-exempt in California. California law requires that at least 50% of the fund’s assets be invested in California tax-exempt state and local issues or tax-exempt federal obligations at the end of each quarter of its taxable year in order to be eligible to pay dividends to California residents that are exempt from California income taxes. 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 term “bonds” includes municipal bonds, notes and lease obligations and tax-exempt commercial paper. Issuers include states, territories and possessions of the United States and their political subdivisions, agencies, authorities and instrumentalities, including Puerto Rico, Guam and the U.S. Virgin Islands.
Debt obligations may be of any maturity. Investment grade debt obligations will normally be rated within the four highest rating categories by the nationally recognized statistical rating organizations at the time of investment. The fund may invest up to 20% of its net assets in below investment grade tax-exempt municipal bonds. The fund may invest in unrated fixed income securities; the subadviser will determine such securities to be of comparable quality to either investment grade or below investment grade pursuant to procedures reviewed and approved by the Board of Trustees. Below investment grade tax-exempt municipal bonds are considered high-yield/high-risk fixed income securities.
Securities are selected using an analytical approach that focuses on the relative value of the security considering its credit rating, and the security’s coupon rate, call features, maturity and average life.
Issuers are selected based on sector (utility, healthcare, transportation, etc.), and the geographic opportunity presented by areas and regions that are experiencing economic growth.
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.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by holding taxable securities, retaining cash or investing part or all of its assets in cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Emerging Markets Debt Fund
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Non-Fundamental Investment Objective:
The fund has an investment objective of high total return from current income and capital appreciation.
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. These investments may be denominated in non-U.S. currencies or the U.S. dollar. 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’s policy of investing 80% of its assets in emerging markets fixed income securities may be changed only upon 60 days’ written notice to shareholders.
The fund will 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.
The principal investment types in which the fund may invest are:
•
Foreign government securities issued, guaranteed, or supported, as to the payment of principal and interest, by foreign governments, foreign government agencies, foreign semi-governmental entities or supranational entities, or debt instruments issued by entities organized and operated for the purpose of restructuring outstanding foreign government securities. Foreign government securities may not be supported as to the payment of principal and interest by the full faith and credit of the foreign government;
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•
Investment-grade corporate debt, which is debt issued with credit ratings within the four highest rating categories of an NRSRO, or if unrated, those that the subadviser determines to be of comparable quality, including short-term securities; and
​
•
High yield debt instruments, including bank loans (which are generally floating-rate).
​
The portfolio managers utilize a combination of top-down and bottom-up analysis in its investment process. Country analysis and allocation are done top-down, while individual securities are selected using intensive bottom-up fundamental research in constructing a well diversified portfolio.
The team follows a strict sell discipline, in which securities are sold if they become overvalued, fundamentals change, or portfolio management considerations warrant.
Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity, the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security. Under normal circumstances, the average duration of the fund’s portfolio will vary within three years (plus or minus) of the duration of its benchmark, the JP Morgan Emerging Markets Bond Index (EMBI) Global Diversified. As of September 30, 2016, the modified adjusted duration of the JP Morgan EMBI Global Diversified was 6.92 years. Typically, for an index or fund maintaining a modified adjusted duration of 6.92 years, a one percent increase in interest rates would cause a 6.92% decrease in the value of the index’s or fund’s fixed income assets. Similarly, a one percent decrease in interest rates typically would cause the value of the index’s or fund’s assets to increase by 6.92%.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
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Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Emerging Markets Equity Income Fund
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Non-Fundamental Investment Objective:
The fund has investment objectives of capital appreciation and income.
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 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.
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 fund may also invest in 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.
In selecting securities for inclusion in the portfolio the subadviser creates a diverse universe of securities by dividing the broad market index into Regional Industry Groups (“RIGs”) and calculating an average dividend yield for each RIG. Only stocks with above average dividend yields in their respective RIG become the eligible universe of stocks.
A proprietary screening and ranking process is applied to the eligible universe to identify companies that, in the opinion of the subadviser, have the financial strength to maintain and grow their dividend payout. Among factors considered are the company’s free cash flow, dividend cover, dividend growth and total payout with the objective of identifying those companies that have chosen to generate high levels of cash and to pay a high proportion of it to their shareholders.
A portfolio optimization process is applied to the remaining stocks that have met the criteria of the subadviser to create a portfolio.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Emerging Markets Opportunities Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of providing capital appreciation.
Principal Investment Strategies:
Under normal circumstances, at least 80% of the fund’s assets are invested in equity securities or equity-linked instruments of issuers located in emerging markets countries. Equity-linked instruments are instruments issued by financial institutions or special purpose entities located in foreign countries to provide the synthetic economic performance of a referenced equity security; these securities are valued at market value for purposes of the fund’s requirement to invest 80% of its assets in emerging markets countries. The World Bank and other international agencies define an emerging or developing country on the basis of such factors as trade initiatives, per capita income and level of industrialization. Emerging markets countries generally include every nation in the world except the U.S., Canada, Japan, Australia, New Zealand and most nations located in Western Europe. The fund’s policy of investing at least 80% of its assets in the securities of issuers located in emerging markets countries may be changed only upon 60 days’ written notice to shareholders.
Generally, the subadviser uses a bottom-up stock and business analysis approach. The subadviser makes its assessments by examining companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The fund may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser seeks to identify companies whose businesses are highly profitable, have consistent operating histories and financial performance and enjoy generally favorable long-term economic prospects.
A company may be sensibly priced when, in the opinion of the subadviser, the company is selling for a price that is below its intrinsic worth. A company may be sensibly priced due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company or other factors. Such factors may include buying opportunities at attractive prices compared to the subadviser’s calculation of future earnings power. The subadviser believes that buying these securities at a price that is below their intrinsic worth may generate greater returns for the fund than those obtained by paying a premium price for companies currently in favor in the market.
The subadviser seeks to achieve attractive absolute returns that exceed the “normalized risk-free” rate, defined as the rate of return available on long-term government securities or their equivalent in each country in which the fund invests. Utilization of an “absolute” rather than a “relative” valuation yardstick is designed not only to achieve a satisfactory return over the risk-free rate over a full market cycle, but at the same time to seek safety of principal. The subadviser considers the riskiness of an investment to be a function of the issuer’s business rather than the volatility of its stock price.
In determining which portfolio securities to sell, the subadviser focuses on the operating results of the portfolio companies, not price quotations, to measure the success of an investment. In making sell decisions, the subadviser considers, among other things, whether a security’s price target has been met, whether there has been an overvaluation of the issuer by the market, whether there has been a clear deterioration of future earnings power and whether, in the subadviser’s opinion, there has been a loss of a long-term competitive advantage.
Temporary Defensive Strategy: If the subadviser does not believe that market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, bankers’ acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Emerging Markets Small-Cap Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
Principal Investment Strategies:
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 or less that $5 billion.
Emerging markets countires 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 ADRs.
The subadviser uses a strategy emphasizing highly profitable, consistently growing companies with low debt and rising cash flows. If a company meets these criteria, the subadviser researches and analyzes that company's strength of managment, its relative competitive position in the industry and its financial structure.
A proprietary model is used to determine relative value.
The subadviser does not use allocation models to restrict the fund'sinvestment to certain regions, countries or industries. Generally , the fund invests in approximately 30-60 securities at any given time.
The subadviser's sell discipline seeks to dispose of holdings that, among other things, achieve a target price, or are the subject of negative developments individually or as an industry, or as necessary to provide funding to upgrade and improve portfolio holdings or meet diversification requirements.
Temporary Defensive Strategy : If the subadviser does not believe that market conditions are favorable to the fund's principle investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fundmay not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Equity Trend Fund
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Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
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 the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Essential Resources Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
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 to ensure that the companies within each theme will be exposed to the drivers of the theme in as pure a fashion as possible.
When selecting securities for investment, the subadviser's primary emphasis is on "pure plays," which the subadviser believes are companies that derive a minium of 50% of their revenue from the applicable theme. Typically, between 70 - 90% of the overall theme is invested in pure play companies. The subadviser will also invest in a "market leader" in a particular theme if, in addition to being what the subadviser believes to be a market leader in that theme, the company derives a minimum of 10% of its revenues from an activity that falls within the scope of the theme.
In evaluating stocks, the subadviser applies a rigorous fundamental analysis such as the evaluation of the financial metrics and management quality of a company, analysis of the demand/supply gap and barriers to entry within the continuum of discovery, gathering, production, transporation 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.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Foreign Opportunities Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
Principal Investment Strategies:
Under normal circumstances, at least 80% of the fund’s assets are invested in equity securities 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. As of September 30, 2016, the fund was invested in issuers representing approximately 17 different countries. The fund’s policy of investing 80% of its assets in foreign equity securities may be changed only upon 60 days’ written notice to shareholders.
The fund will primarily hold securities of companies listed on a foreign securities exchange or quoted on an established foreign over-the-counter market, or ADRs. The fund typically invests in the securities of medium to large capitalization companies, but it is not limited to investing in the securities of companies of any particular size.
Generally, the subadviser uses a bottom-up stock and business analysis approach. The subadviser makes its assessments by examining companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The fund may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser seeks to identify attractively valued companies whose businesses are highly profitable, have consistent operating histories and financial performance and enjoy generally favorable long-term economic prospects.
A company may be undervalued when, in the opinion of the subadviser, the company is selling for a price that is below its intrinsic worth. A company may be undervalued due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company or other factors. Such factors may include buying opportunities at attractive prices compared to the subadviser’s calculation of future earnings power. The subadviser believes that buying these securities at a price that is below their intrinsic worth may generate greater returns for the fund than those obtained by paying a premium price for companies currently in favor in the market.
Most of the fund’s assets are invested in equity securities of issuers in countries that are generally considered to have developed securities markets. The subadviser employs diversification by country and industry in an attempt to reduce risk.
The subadviser seeks to achieve attractive absolute returns that exceed the “normalized risk-free” rate, defined as the rate of return available on long-term government securities or their equivalent in each country in which the fund invests. Utilization of an “absolute” rather than a “relative” valuation yardstick is designed not only to achieve a satisfactory return over the risk-free rate over a full market cycle, but at the same time to seek safety of principal. The subadviser considers the riskiness of an investment to be a function of the issuer’s business rather than the volatility of its stock price.
In determining which portfolio securities to sell, the subadviser focuses on the operating results of the portfolio companies, not price quotations, to measure the success of an investment. In making sell decisions, the subadviser considers, among other things, whether a security’s price target has been met, whether there has been an overvaluation of the issuer by the market, whether there has been a clear deterioration of future earnings power and whether, in the subadviser’s opinion, there has been a loss of a long-term competitive advantage.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, bankers’ acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Global Equity Trend Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation. In pursuing this objective, the fund maintains an emphasis on preservation of capital.
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 the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
To the extent the fund invests primarily in ETFs, it will be considered a “fund of funds.” The term “fund of funds” is typically used to describe mutual funds, such as the fund, whose primary investment strategy involves investing in other investment companies, such as ETFs and other mutual funds. Investments in securities of other investment companies, including ETFs, are subject to statutory limitations prescribed in the 1940 Act. Absent an available exemption, a fund may not: (i) acquire more than 3% of the voting securities of any other investment company, (ii) invest more than 5% of its total assets in securities of any one investment company, or (iii) invest more than 10% of its assets in securities of all investment companies. The fund has obtained exemptive relief from the SEC to permit it to invest in affiliated and unaffiliated funds including ETFs, beyond these statutory limitations, subject to certain conditions. Many ETFs also have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond these statutory limitations, subject to certain conditions. The fund may rely on the various exemptive orders to invest in ETFs.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Global Infrastructure Fund
​
Non-Fundamental Investment Objective:
The fund has investment objectives of capital appreciation and current income.
Principal Investment Strategies:
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. Infrastructure companies are issuers involved to a significant extent in providing energy, utility, transportation, communication, and other essential services to society and may include issuers that are structured as master limited partnerships (“MLPs”). Under normal market conditions, the fund will invest at least 25% of its assets in securities of U.S. issuers. The fund may invest in issuers of any capitalization.
Infrastructure companies provide essential services to society including (i) the generation, transmission, distribution or storage of electricity, oil, gas or water, (ii) the provision of telecommunications services, including telephone, cable television, satellite, and other communications activities; and (iii) the construction, operation, or ownership of airports, toll roads, railroads, ports, pipelines, or educational and healthcare facilities. A company will be deemed an infrastructure company if at least 50% of its assets, gross income or profits are committed to, or derived from, one or more of the activities in the areas described above. As of September 30, 2016, the market capitalization of the issuers in which the fund was invested ranged from $1.1 billion to $249.4 billion. The fund’s policy of investing at least 80% of its assets in dividend paying equity securities of infrastructure companies may be changed only upon 60 days’ written notice to shareholders. As of September 30, 2016, the fund was invested in issuers representing 13 different countries.
The fund 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. When investing in debt obligations, the fund will invest primarily in investment grade debt obligations, although the fund may invest in high yield-high risk fixed income securities.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by holding cash or investing, without limit, in cash equivalents or other fixed income securities. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Global Opportunities Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
Principal Investment Strategies:
Under normal circumstances, the fund invests in equity securities 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. As of September 30, 2016, the fund was invested in issuers representing approximately 10 different countries.
The fund will primarily hold securities of companies listed on established securities exchanges or quoted on an established over-the-counter market. The fund typically invests in the securities of medium to large capitalization companies, but it is not limited to investing in the securities of companies of any particular size.
Generally, the subadviser uses a bottom-up stock and business analysis approach. The subadviser makes its assessments by examining companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar investment criteria. The fund may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser seeks to identify attractively valued companies whose businesses are highly profitable, have consistent operating histories and financial performance and enjoy generally favorable long-term economic prospects.
A company may be undervalued when, in the opinion of the subadviser, the company is selling for a price that is below its intrinsic worth. A company may be undervalued due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company or other factors. Such factors may include buying opportunities at attractive prices compared to the subadviser’s calculation of future earnings power. The subadviser believes that buying these securities at a price that is below their intrinsic worth may generate greater returns for the fund than those obtained by paying a premium price for companies currently in favor in the market.
Most of the fund’s assets will typically be invested in equity securities of issuers in countries that are generally considered to have developed securities markets. The subadviser employs diversification by country and industry in an attempt to reduce risk.
The subadviser seeks to achieve attractive absolute returns that exceed the “normalized risk-free” rate, defined as the rate of return available on long-term government securities or their equivalent in each country in which the fund invests. Utilization of an “absolute” rather than a “relative” valuation yardstick is designed not only to achieve a satisfactory return over the risk-free rate over a full market cycle, but at the same time to seek safety of principal. The subadviser considers the riskiness of an investment to be a function of the issuer’s business rather than the volatility of its stock price.
In determining which portfolio securities to sell, the subadviser focuses on the operating results of the portfolio companies, not price quotations, to measure the success of an investment. In making sell decisions, the subadviser considers, among other things, whether a security’s price target has been met, whether there has been an overvaluation of the issuer by the market, whether there has been a clear deterioration of future earnings power and whether, in the subadviser’s opinion, there has been a loss of a long-term competitive advantage.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, bankers’ acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Global Real Estate Securities Fund
​
Non-Fundamental Investment Objective:
The fund has a primary investment objective of long-term capital appreciation, with a secondary investment objective of income.
Principal Investment Strategies:
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. An issuer is considered principally engaged in the real estate industry if at least 50% of its gross revenues or net profits come from the ownership, development, construction, financing, management or sale of real estate. Similar to a domestic REIT, a non-U.S. real estate company generally is not subject to corporate income tax in its home country if the REIT equivalent status is available, elected, and followed, which could include distributing a significant percentage of its net income each year to stockholders, and the company meets certain other regulatory requirements. The fund is not limited to investing only in REITs or REIT-like entities; however, it invests a significant portion of its assets in these types of issuers. The fund does not make direct investments in real estate. As of September 30, 2016, the market capitalization range of the issuers in which the fund was invested was $500 million to $66 billion. The fund’s policy of investing 80% of its assets in real estate-related securities may be changed only upon 60 days’ written notice to shareholders.
Under normal market conditions, the fund expects to invest in a number of different countries and regions. The fund intends to diversify its investments among countries and regions and to normally have represented in the portfolio business activities of approximately 10 to 20 different countries. The fund may, at times, invest up to 80% of its assets in either U.S. REIT securities or non-U.S REIT-like companies. 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.
In managing the fund’s portfolio, the subadviser utilizes an investment process that is primarily bottom-up in its approach, with an emphasis on superior stock selection over country and property sector allocation. The subadviser seeks to identify superior real estate companies by performing an in-depth fundamental business analysis on securities within the targeted investment universe, which includes a qualitative and quantitative assessment of management and operations, portfolio strategy and financial strength. Using proprietary valuation models, the subadviser seeks to identify undervalued companies or those companies that are selling for a price that is below the subadviser’s estimate of their intrinsic value. The portfolio construction process is guided by the outcomes of the company and valuation analytical work within the confines of a risk management overlay as it pertains to diversification, liquidity and other risk factors.
Securities are evaluated for sale if their market value exceeds the subadviser’s estimated value, if their financial performance is expected to decline or if the subadviser believes the issuer fails to adjust its strategy to the real estate market cycle.
Temporary Defensive Strategy : When the subadviser believes there are extraordinary risks associated with investment in real estate-related securities, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Greater European Opportunities Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
Principal Investment Strategies:
Under normal circumstances, at least 80% of the fund’s assets are invested in equity or equity-linked securities of issuers located in Europe, 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. As of September 30, 2016, the fund was invested in issuers representing approximately 11 different countries. The fund’s policy of investing 80% of its assets in European equity securities may be changed only upon 60 days’ written notice to shareholders.
The fund will primarily hold securities of companies listed on a foreign securities exchange or quoted on an established foreign over-the-counter market, or ADRs. The fund typically invests in the securities of medium to large capitalization companies, but it is not limited to investing in the securities of companies of any particular size.
Generally, the subadviser uses a bottom-up stock and business analysis approach. The subadviser makes its assessments by examining companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The fund may invest substantially all of its assets in common stocks if the subadviser believes that common stocks will appreciate in value. The subadviser seeks to identify undervalued companies whose businesses are highly profitable, have consistent operating histories and financial performance and enjoy possible long-term economic prospects.
A company may be undervalued when, in the opinion of the subadviser, the company is selling for a price that is below its intrinsic worth. A company may be undervalued due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company or other factors. Such factors may include buying opportunities at attractive prices compared to the subadviser’s calculation of future earnings power. The subadviser believes that buying these securities at a price that is below their intrinsic worth may generate greater returns for the fund than those obtained by paying a premium price for companies currently in favor in the market.
Most of the fund’s assets are invested in equity securities of issuers in countries that are generally considered to have developed markets. The subadviser employs diversification by country and industry in an attempt to reduce risk.
The subadviser seeks to achieve attractive absolute returns that exceed the “normalized risk-free” rate, defined as the rate of return available on long-term government securities or their equivalent in each country in which the fund invests. Utilization of an “absolute” rather than a “relative” valuation yardstick is designed to achieve not only a satisfactory return over the risk-free rate, but at the same time seek safety of principal. The subadviser considers the riskiness of an investment to be a function of the issuer’s business rather than the volatility of its stock price.
In determining which portfolio securities to sell, the subadviser focuses on the operating results of the portfolio companies, not price quotations, to measure the success of an investment. In making sell decisions, the subadviser considers, among other things, whether a security’s price target has been met, whether there has been an overvaluation of the issuer by the market, whether there has been a clear deterioration of future earnings power and whether, in the subadviser’s opinion, there has been a loss of a long-term competitive advantage.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, bankers’ acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Herzfeld Fund
​
Non-Fundamental Investment Objective:
The fund has investment objectives of capital appreciation and current income.
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 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 ETFs, equity securities, including common and preferred stocks, cash, and/or short-term cash equivalents. If the fund invests in affiliated closed-end funds, it will do so in accordance with the 1940 Act.
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
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•
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”).
The fund seeks to invest in closed-end funds trading at excessive or unusual discount levels that the subadviser believes have an attractive probability to narrow. Discounts are evaluated and measured relative to historic premium/ discount trading patterns of the entire universe of closed-end funds, and also are specifically measured against similar closed-end funds. Selected funds are then subjected to extensive analysis of up to an additional 20+ individual factors and traded based on the subadviser’s comprehensive understanding of each individual fund’s characteristics and four decades of in-depth experience trading the industry.
Specific factors evaluated include, but are not limited to:
•
Distribution yield
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Distribution policies/sources of distributions
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•
Loss carry forwards
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•
Income ratio
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•
Expense ratio
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•
Liquidity
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•
Trading volatility
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•
Portfolio holdings
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•
Correlation analysis
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•
Leverage profile/characteristics
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•
Anti-takeover provisions
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•
“Lifeboat” provisions
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•
Special situations
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•
Vulnerability to dissident activity
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•
Corporate governance issues
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•
Regulatory concerns
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•
Management reputation
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Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus High Yield Fund
​
Non-Fundamental Investment Objective:
The fund has a primary investment objective of high current income and a secondary objective of capital growth.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in a diversified portfolio of high yield fixed income securities. The fund’s policy of investing 80% of its assets in high yield fixed income securities may be changed only upon 60 days’ written notice to shareholders.
The subadviser uses an investment process that focuses on adding value through issue selection, sector/industry selection and opportunistic trading.
•
The subadviser evaluates market conditions in the context of broad macroeconomic trends. The subadviser generally overweights those sector/industries where well-valued companies can be identified and whose business profiles (and credit measures) are viewed to be improving.
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•
The subadviser considers credit research an integral component of its high yield investment process. The manager invests across the credit rating spectrum.
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•
Principally, securities are selected from a broad universe of domestic high yield corporate bonds, although it may invest in other types of high yield securities.
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The subadviser attempts to maintain the duration of the fund at a level similar to that of its style benchmark. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally, the longer the maturity the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security. As of September 30, 2016, the modified adjusted duration of the Barclays U.S. High-Yield 2% Issuer Capped Bond Index was 3.93 years; the modified adjusted duration of the fund was 3.68 years. Typically, for a fund maintaining a modified adjusted duration of 3.68 years, a one percent increase in interest rates would cause a 3.68% decrease in the value of the fund’s assets. Similarly, a one percent decrease in interest rates typically would cause the value of the fund’s assets to increase by 3.68%.
The subadviser’s investment strategies may result in a higher portfolio turnover rate for the fund. A high portfolio turnover rate increases transaction costs to the fund, negatively affects fund performance, and may increase capital gain distributions, resulting in greater tax liability to you.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by holding cash or investing, without limit, in cash equivalents or other fixed income securities. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus International Equity Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
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 will primarily hold securities of companies listed on a foreign securities exchange or quoted on an established foreign over-the-counter market, or American Depository Receipts (ADRs). 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. The fund’s policy of investing 80% of its assets in foreign equity securities may be changed only upon 60 days’ written notice to shareholders.
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, with an expectation that a significant proportion of any long-term performance will come from security selection. 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 subadviser takes into account, among other things; monetary policy, political factors, economic growth, and valuation. The subadviser believes this approach produces long-term investment returns characterized by low absolute volatility and downside protection.
In determining which portfolio securities to sell, the subadviser considers, among other things; whether a security has become fully valued, if there has been a material change in the assessment of the company’s fundamentals or original thesis, the stock is not acting as expected, there is a better alternative available, and/or a portfolio rebalancing.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing all of its assets in domestic and foreign short-term money market instruments, including government obligations, certificates of deposit, banker’s acceptances, time deposits, commercial paper, short-term corporate debt securities and repurchase agreements. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus International Real Estate Securities Fund
​
Non-Fundamental Investment Objective:
The fund has a primary investment objective of long-term capital appreciation, with a secondary investment objective of income.
Principal Investment Strategies:
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. An issuer is considered principally engaged in the real estate industry if at least 50% of its gross revenues or net profits come from the ownership, development, construction, financing, management or sale of real estate. Similar to a domestic REIT, a non-U.S. real estate company generally is not subject to corporate income tax in its home country, if the REIT equivalent status is available, elected, and followed, which could include distributing a significant percentage of its net income each year to stockholders, and the company meets certain other regulatory requirements. The fund is not limited to investing only in REITs or REIT-like entities; however, it invests a significant portion of its assets in these types of issuers. The fund does not make direct investments in real estate. As of September 30, 2016, the market capitalization range of the issuers in which the fund was invested was $600 million to $27 billion. The fund’s policy of investing 80% of its assets in real estate-related securities may be changed only upon 60 days’ written notice to shareholders.
Under normal market conditions, the fund expects to invest in a number of different countries and regions. The fund intends to diversify its investments among countries and regions and normally to have represented in the portfolio business activities of approximately 10 to 20 different countries. 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.
In managing the fund’s portfolio, the subadviser utilizes an investment process that is primarily bottom-up in its approach, with an emphasis on superior stock selection over country and property sector allocation. The subadviser seeks to identify superior real estate companies by performing an in-depth fundamental business analysis on securities within the targeted investment universe, which includes a qualitative and quantitative assessment of management and operations, portfolio strategy and financial strength. Using proprietary valuation models, the subadviser seeks to identify undervalued companies or those companies that are selling for a price that is below the subadviser’s estimate of their intrinsic value. The portfolio construction process is guided by the outcomes of the company and valuation analytical work within the confines of a risk management overlay as it pertains to diversification, liquidity and other risk factors.
Securities are evaluated for sale if their market value exceeds the subadviser’s estimated value, if their financial performance is expected to decline or if the subadviser believes the issuer fails to adjust its strategy to the real estate market cycle.
Temporary Defensive Strategy : When the subadviser believes there are extraordinary risks associated with investment in real estate-related securities, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus International Small-Cap Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in equity securities of non-U.S. small capitalization companies. As of the date of the Prospectus, 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.
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. Equity securities in which the fund invests include common stocks, preferred stocks and ADRs. The fund may invest in emerging markets issuers.
The subadviser uses a strategy emphasizing highly profitable, consistently growing companies with low debt and rising cash flows. If a company meets these criteria, the subadviser researches and analyzes that company’s strength of management, its relative competitive position in the industry and its financial structure.
A proprietary model is used to determine relative value.
Generally, the fund invests in approximately 30-60 securities at any given time.
The subadviser’s sell discipline seeks to dispose of holdings that, among other things, achieve a target price, or are the subject of negative developments individually or as an industry, or as necessary to provide funding to upgrade and improve portfolio holdings or meet diversification requirements.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus International Wealth Masters Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
Principal Investment Strategies:
The fund seeks to track the performance of the Horizon Kinetics International Wealth Index (ticker: INWTR), a public index maintained by Horizon Kinetics LLC ("Horizon Kinetics"), the parent company of the subadviser, and published by International Securities Exchange, LLC. The index is composed of non-U.S., exchange-listed companies, generally in developed markets, managed by executives who have accumulated a substantial amount of their personal wealth through the companies that they manage. Horizon Kinetics, the creator of the index, believes that companies managed or influenced by individuals who have created significant wealth in their companies will outperform other companies because those managers tend to prioritize creation of long-term shareholder value over the shorter-term considerations that are typical of other corporate management. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index. The manner in which the index is constructed is likely to result in the fund’s assets generally being focused in one or more market sectors. For example, companies eligible for inclusion in the index based upon the first requirement of having an individual with significant wealth in a control position, are often companies in the consumer discretionary sector; therefore, it would not be unusual for the fund’s assets to be similarly focused in the consumer discretionary sector.
To be eligible for inclusion in the Index, companies must meet the following criteria:
•
The company must have an individual with significant wealth in the company and in a control position that allows for substantial decision making authority (a wealthy individual is defined as a person whose level of personal assets generally exceeds $1 billion, as measured by public data)
​
•
The wealthy individual must own at least $100 million of the common equity
​
•
The company must be a non-U.S., exhange-listed company
​
•
The company must be an operating company and not a closed-end fund, exhange-traded fund ("ETF") or limited partnership
​
•
The market capitalization must be in excess of  $200 million
​
•
The average daily value of the company's securities traded for the prior three month period must be greater than $2 million
​
•
The company's securities must have been publicly listed for at least two years
​
For purposes of determining eligibility for inclusion in the index, when calculating the average daily value of a company’s shares traded, 10% of the highest and lowest daily observations are eliminated. A company will be removed from the index if the adjusted prior 3-month average daily value of shares traded is below $1,000,000 or, is greater than $1,000,000 but below $2,000,000 for four consecutive quarters.
The index weights each country proportionally, as determined by the total nation market capitalization of each country represented in the index. Securities included in the index from a given country are then equally weighted with the other securities included from that country. Index components are reviewed quarterly for eligibility, and the weightings are reset accordingly. 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.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
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Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Low Duration Income Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of providing a high level of total return, including a competitive level of current income, while limiting fluctuations in net asset value due to changes in interest rates.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in fixed income debt obligations of various types of issuers. The fund’s average duration will range from one to three years. Principally, the fund invests 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 20% 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.
The fund seeks to achieve its objective by applying a time-tested approach and extensive credit research designed to capitalize on opportunities across undervalued areas of the bond markets. Under normal circumstances, the fund’s investments will 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;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors. The fund’s policy of investing 80% of its assets in bonds may be changed only upon 60 days’ written notice to shareholders.
The fund employs active sector rotation and disciplined risk management to portfolio construction. The fund seeks diversification among various sectors of the fixed income markets, which, as of the date of this Prospectus, may include some or all of the following: corporate investment grade; corporate high yield; bank loans; non-agency commercial mortgage-backed securities (CMBS); agency and non-agency residential mortgage-backed securities (RMBS); non-U.S. dollar securities; emerging market high yield; Yankee investment grade bonds; asset-backed securities; taxable municipal bonds; tax-exempt municipal bonds; and securities issued or guaranteed as to principal and interest by the U.S. government, its agencies, authorities, or instrumentalities.
The fund’s investable assets are typically allocated among various sectors of the fixed income market using a top-down, relative value approach that looks at factors such as yield and spreads, supply and demand, investment environment, and sector fundamentals. The subadviser then selects particular investments using a bottom-up, fundamental research driven analysis that includes assessment of credit risk, company management, issue structure, technical market conditions, and valuations. Securities selected for investment are those that the subadviser believes offer the best potential to achieve the fund’s investment objective of providing a high level of total return, including a competitive level of current income, while preserving capital. The subadviser seeks to adjust the proportion of fund investments primarily in the sectors described above and the selections within sectors to obtain higher relative returns. The subadviser regularly reviews the fund’s portfolio construction, endeavoring to minimize risk exposure by closely monitoring portfolio characteristics such as sector concentration and portfolio duration and by investing no more than 5% of the fund’s total assets in securities of any single issuer (excluding the U.S. government, its agencies, authorities or instrumentalities).
The fund manages duration utilizing a duration neutral strategy. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally the longer the maturity the greater the duration and, therefore, the greater effect interest rate changes have on the price of the
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security. Under normal circumstances, the fund’s average duration is maintained at a level similar to that of its benchmark, the Barclays U.S. Aggregate Bond Index. As of September 30, 2016, the modified adjusted duration of the Barclays U.S. Aggregate Bond Index was 5.42 years; the modified adjusted duration of the fund was 2.54 years. Typically, for a fund maintaining a modified adjusted duration of 2.54 years, a one percent increase in interest rates would cause a 2.54% decrease in the value of the fund’s fixed income assets. Similarly, a one percent decrease in interest rates typically would cause the value of the fund’s fixed income assets to increase by 2.54%.
Temporary Defensive Strategy: During periods of rising interest rates, unstable pricing and currency exchange, or in response to extreme market fluctuations, the subadviser, at its discretion, may take temporary defensive positions that are inconsistent with its principal investment strategies by investing part or all of the fund’s assets in cash or cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Low Volatility Equity Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation with lower volatility than the U.S. equity markets over a full market cycle.
Principal Investment Strategies:
The fund seeks to provide investors with long-term returns similar to U.S. large capitalization stocks with less volatility by:
•
investing in a portfolio of primarily ETFs designed to produce returns generally in line with the broad U.S. equity market, although the fund may invest directly in large capitalization U.S. equity securities,
​
•
selling (writing) equity index call options, and
​
•
buying call options on CBOE Volatility Index ® (VIX ® ) futures.
​
Writing index call options and buying call options on VIX ® futures are both techniques for limiting the volatility of the fund’s portfolio. Writing index call options is a way to monetize volatility, enhancing the fund’s risk-adjusted return as compared with an all-equity portfolio and providing steady cash flow. However, at times, it also reduces the fund’s ability to profit from increases in the value of its equity portfolio. Buying call options on VIX ® futures is designed to protect the fund from a significant market decline over a short period of time because the value of a call option on VIX ® futures generally increases as stock prices decrease, and decreases as those stocks prices increase. By employing techniques to limit the risks associated with the U.S. large capitalization stocks represented in its portfolio, the fund expects its portfolio to experience less volatility than a portfolio of U.S. large capitalization stocks alone.
Under normal circumstances, the fund intends to invest at least 80% of its net assets in equity securities, including ETFs representing the equity securities markets.
To the extent the fund invests primarily in ETFs it will be considered a “fund of funds.” The term “fund of funds” is typically used to describe mutual funds, such as the fund, whose primary investment strategy involves investing in other investment companies, such as ETFs and other mutual funds. Investments in securities of other investment companies, including ETFs, are subject to statutory limitations prescribed in the Investment Company Act of 1940 (the “1940 Act”). Absent an available exemption, a fund may not: (i) acquire more than 3% of the voting securities of any other investment company, (ii) invest more than 5% of its total assets in securities of any one investment company, or (iii) invest more than 10% of its assets in securities of all investment companies. The fund has obtained exemptive relief from the Securities and Exchange Commission (“SEC”) to permit it to invest in affiliated and unaffiliated funds, including ETFs, beyond these statutory limitations, subject to certain conditions. Many ETFs also have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond these statutory limitations, subject to certain conditions. The fund may rely on the various exemptive orders to invest in ETFs.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Multi-Asset Trend Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
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, fixed income, alternatives, and/or cash equivalents (high-quality short-term securities). Allocations to each asset class are based on quantitative models.
The fund has the flexibility to invest in any combination of the sub-sectors, international equities, fixed income, alternatives, and high-quality short-term securities. A relative strength momentum model is utilized to rank each sub-sector, international equity component, fixed income component, and alternative asset component. The fund will allocate to those components 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 equity market. When the equity market is determined to be in a higher level of risk, a defensive cash equivalent position may be built by allocating from those equity sub-sectors and international equities of the market that are not exhibiting absolute positive momentum. The fund may invest in a basket of securities or ETFs to represent its positions.
The adviser is responsible for the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
To the extent the fund invests primarily in ETFs it will be considered a “fund of funds.” The term “fund of funds” is typically used to describe mutual funds, such as the fund, whose primary investment strategy involves investing in other investment companies, such as ETFs and other mutual funds. Investments in securities of other investment companies, including ETFs, are subject to statutory limitations prescribed in the Investment Company Act of 1940 (the “1940 Act”). Absent an available exemption, a fund may not: (i) acquire more than 3% of the voting securities of any other investment company, (ii) invest more than 5% of its total assets in securities of any one investment company, or (iii) invest more than 10% of its assets in securities of all investment companies. The fund has obtained exemptive relief from the Securities and Exchange Commission (“SEC”) to permit it to invest in affiliated and unaffiliated funds, including ETFs, beyond these statutory limitations, subject to certain conditions. Many ETFs also have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond these statutory limitations, subject to certain conditions. The fund may rely on the various exemptive orders to invest in ETFs.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Multi-Sector Intermediate Bond Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of maximizing current income while preserving capital.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in bonds. “Bonds” are debt securities of various types of issuers. The fund seeks to achieve its objective by investing in a diversified portfolio of primarily intermediate-term bonds having a dollar-weighted average maturity of between three and 10 years and that are in one of the following market sectors:
•
Securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors. If, after the time of investment, the rating declines, the fund is not obligated to sell the security. The fund’s policy of investing 80% of its assets in bonds may be changed only upon 60 days’ written notice to shareholders.
Securities are selected using a sector rotation approach. The subadviser seeks to adjust the proportion of fund investments in the sectors described above and the selections within sectors to obtain higher relative returns. Sectors are analyzed by the subadviser for attractive values. Securities within sectors are selected based on general economic and financial conditions, and the issuer’s business, management, cash, assets, earnings and stability. Securities selected for investment are those that the subadviser believes offer the best potential for total return based on risk-reward tradeoff.
The fund manages duration utilizing a duration neutral strategy. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally the longer the maturity the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security. Under normal circumstances, the fund’s average duration is maintained at a level similar to that of its benchmark, the Barclays U.S. Aggregate Bond Index. As of September 30, 2016, the modified adjusted duration of the Barclays U.S. Aggregate Bond Index was 5.42 years; the modified adjusted duration of the fund was 4.29 years. Typically, for a fund maintaining a modified adjusted duration of 4.29 years, a one percent increase in interest rates would cause a 4.29% decrease in the value of the fund’s fixed income assets. Similarly, a one percent decrease in interest rates typically would cause the value of the fund’s fixed income assets to increase by 4.29%.
Temporary Defensive Strategy : During periods of rising interest rates, unstable pricing and currency exchange, or in response to extreme market fluctuations, the subadviser, at its discretion, may take temporary defensive positions that are inconsistent with its principal investment strategies by investing part or all of the fund’s assets in cash or cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Multi-Sector Short Term Bond Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of providing high current income while attempting to limit changes in the fund’s net asset value per share caused by interest rate changes.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in bonds. “Bonds” are fixed income debt obligations of various types of issuers. Principally, the fund invests in investment-grade securities which are rated at the time of investment BBB or above by Standard & Poor’s Corporation or Duff  & Phelps Credit Rating Company or Baa or above by Moody’s Investors Service or if unrated, those that the subadviser determines, pursuant to procedures reviewed and approved by the Board of Trustees, to be of comparable quality. The fund may continue to hold securities whose credit quality falls below investment grade.
The fund seeks to achieve its objective by investing in a diversified portfolio of primarily short-term fixed income securities having an expected dollar-weighted average maturity of three years or less and that are in one of the following market sectors:
•
Securities issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
Collateralized mortgage obligations (CMOs), real estate mortgage investment conduits (REMICs), and other pass-through securities, including those issued or guaranteed as to principal and interest by the U.S. Government, its agencies, authorities or instrumentalities;
​
•
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 are securities with credit ratings within the four highest rating categories of a nationally recognized statistical rating organization, including short-term securities; and
​
•
High-yield/high-risk debt instruments (so-called “junk bonds”), including bank loans (which are generally floating-rate).
​
The fund may invest in all or some of these sectors. The fund’s policy of investing 80% of its assets in bonds may be changed only upon 60 days’ written notice to shareholders.
Securities are selected using a sector rotation approach. The subadviser seeks to adjust the proportion of fund investment in the sectors described above and the selections within sectors to obtain higher relative returns. Sectors are analyzed by the subadviser for attractive values. Securities within sectors are selected based on general economic and financial conditions, and the issuer’s business, management, cash, assets, earnings and stability. Securities selected for investment are those that the subadviser believes offer the best potential for total return based on risk-reward tradeoff.
The fund manages duration utilizing a duration neutral strategy. Duration measures the interest rate sensitivity of a fixed income security by assessing and weighting the present value of the security’s payment pattern. Generally the longer the maturity, the greater the duration and, therefore, the greater effect interest rate changes have on the price of the security. Under normal circumstances, the fund’s average duration will range from one to three years. As of September 30, 2016, the modified adjusted duration of the fund’s benchmark, the BofA Merrill Lynch 1-3 Year A-BBB US Corporate Index was 1.78 years.
Temporary Defensive Strategy : During periods of rising interest rates, unstable pricing and currency exchange, or in response to extreme market fluctuations, the subadviser, at its discretion, may take temporary defensive positions that are inconsistent with its principal investment strategies by investing part or all of the fund’s assets in cash or cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Real Estate Securities Fund
​
Non-Fundamental Investment Objective:
The fund has investment objectives of capital appreciation and income with approximately equal emphasis.
Principal Investment Strategies:
Under normal circumstances, the fund invests at least 80% of its assets in publicly-traded REITs and companies that are principally engaged in the real estate industry. An issuer is considered principally engaged in the real estate industry if at least 50% of its gross revenues or net profits come from the ownership, development, construction, financing, management or sale of real estate. The fund, however, does not make direct investments in real estate. The fund’s policy of investing 80% of its assets in real estate-related securities may be changed only upon 60 days’ written notice to shareholders.
The fund concentrates its assets in the real estate industry.
The fund invests principally in equity REITs. Generally, REITs are publicly-traded companies that manage portfolios of real estate in an effort to earn profits for shareholders through investments in commercial and residential real estate. Equity REITs own real estate directly. The fund may invest in issuers of any capitalization. As of September 30, 2016, the market capitalization range of the issuers in which the fund was invested was $1.9 billion to $75 billion.
The subadviser uses a blended approach in its security selection process, combining a pursuit of growth and value. Securities are selected using a two-tiered screening process. First the subadviser screens the universe of eligible securities for those that it believes offer the potential for reasonably-priced initial appreciation, continued dividend growth and that show signs the issuer is an efficient user of capital. Securities that survive this screening are further evaluated based on interviews and fundamental research that focus on the issuer’s strength of management and property, financial and performance reviews.
Securities are evaluated for sale if their market value exceeds the subadviser’s estimated value, if its financial performance is expected to decline or if the subadviser believes the security’s issuer fails to adjust its strategy to the real estate market cycle.
Temporary Defensive Strategy : When the subadviser believes there are extraordinary risks associated with investment in real estate-related securities, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing up to 100% of its assets in short-term investments such as money market instruments, repurchase agreements, certificates of deposits and bankers’ acceptances. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Sector Trend Fund
​
Fundamental Investment Objective:
The fund has an investment objective of long-term capital appreciation.
Principal Investment Strategies:
The fund utilizes a rules based investment process and may invest in securities representing the primary sectors of the S&P 500 ® Index and/or cash equivalents (high-quality short-term securities). Allocations to each sector are based on quantitative models.
The fund has the flexibility to invest in any combination of the 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 sector of the equity market. The fund will allocate to those sectors that the model determines are more likely to outperform the broad market and possess positive absolute momentum. When a sector does not possess positive absolute momentum, a defensive cash equivalent position may be built by allocating from those sectors of the market that are not exhibiting absolute positive momentum, up to 100% of fund assets.
The adviser is responsible for the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Senior Floating Rate Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of high total return from both current income and capital appreciation.
Principal Investment Strategies:
The fund will pursue its investment objectives primarily through investment in a portfolio of senior floating rate loans (“Senior Loans”) made to U.S. and foreign borrowers that are corporations, partnerships and other business entities (“Borrowers”). Under normal circumstances, the fund will invest at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in a portfolio of Senior Loans. Such loans may be structured to include both term loans, which are generally fully funded at the time of the fund’s investment, and revolving credit facilities or delayed draw term loans, which would require the fund to make additional investments in the loans as required under the terms of the credit facility. The fund’s policy of investing 80% of its assets in a portfolio of Senior Loans may be changed only upon 60 days’ written notice to shareholders.
Senior Loans generally hold the most senior position in the capitalization structure of the Borrower. Interest rates on Senior Loans generally float daily or adjust periodically at a margin above a generally recognized base rate, such as the London Inter-Bank Offered Rate (“LIBOR”), the prime rate offered by one or more major U.S. banks, or the certificate of deposit rate. The fund will purchase Senior Loans primarily through assignments, but may also purchase participation interests in Senior Loans. An assignment represents a portion of a Senior Loan attributable to a lender. With an assignment, the fund becomes a lender for purposes of the underlying loan documentation with the Borrower. Participation interests are issued by a lender or other financial institution and represent a fractional interest in a Senior Loan. With participation interests, the fund does not become a lender under the original loan documentation.
The Fund may invest without limitation and generally intends to invest a substantial portion of its assets in Senior Loans rated below investment grade by established rating agencies ( e.g. , Standard & Poor’s Corporation and Moody’s Investors Service) (also known as junk bonds) or that are unrated but considered by the subadviser to be of comparable quality. The subadviser relies, to a significant degree, on its own credit analysis and analysis performed by third parties, rather than rating agency determinations.
The fund may purchase derivative instruments, including, but not limited to, options, futures contracts, credit linked notes, and swaps.
The fund may invest in subordinated Senior Loans, unsecured Senior Loans, adjustable rate loans, structured notes, fixed-rate obligations and other debt securities.
The fund may invest up to 15% of total assets in U.S. and non-U.S. dollar denominated foreign securities and foreign Senior Loans, including yankee bonds.
The fund may borrow an amount up to 33 1/3% of it total assets (including the amount borrowed). The fund may borrow for investment purposes, to meet repurchase requests and for temporary, extraordinary or emergency purposes. To the extent the fund borrows more money than its cash or short-term cash equivalents and invests the proceeds in Senior Loans, the Fund will create financial leverage. It will do so only when it expects to be able to invest the proceeds at a higher rate of return than its cost of borrowing. The use of borrowing for investment purposes increases both investment opportunity and investment risk.
The subadviser’s investment process is fundamentally driven and employs a value approach. The subadviser seeks to identify attractive industries, themes, and risk levels. The subadviser performs extensive credit and company analysis, i.e. management, loan structure, and financials, in its security selection process, which focuses on higher quality companies within each rating tier. The portfolio construction process utilizes both macro economic and fundamental analysis, and emphasizes portfolio diversification.
Temporary Defensive Strategy : When the subadviser determines that market conditions warrant, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing, without limit, in cash and cash equivalents. In such instances, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Tax-Exempt Bond Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of providing a high level of current income that is exempt from federal income tax.
Principal Investment Strategies:
Under normal circumstances, as a matter of fundamental policy, the fund invests at least 80% of its assets in municipal bonds of varying maturities, the income from which is exempt from federal income tax and not subject to the federal alternative minimum tax. The term “bonds” includes municipal bonds, notes and lease obligations, and tax-exempt commercial paper. Issuers include states, territories and possessions of the United States and their political subdivisions, agencies, authorities, and instrumentalities.
Debt obligations may be of any maturity. Investment grade debt obligations will normally be rated within the four highest rating categories by the nationally recognized statistical rating organizations at the time of investment. The fund may invest up to 20% of its net assets in below investment grade tax-exempt municipal bonds. The fund may invest in unrated fixed income securities; the subadviser will determine such securities to be of comparable quality to either investment grade or below investment grade pursuant to procedures reviewed and approved by the Board of Trustees. Below investment grade tax-exempt municipal bonds are considered high-yield/high-risk fixed income securities (so-called “junk bonds”).
Securities are selected using an analytical approach that focuses on the relative value of the security considering its credit rating, coupon rate, call features, maturity, and average life.
Issuers are selected based on sector (utility, healthcare, transportation, etc.), and the geographic opportunity presented by areas and regions that are experiencing economic stability.
The portion of the fund’s assets not invested in tax-exempt securities may be invested in taxable fixed income securities, as well as municipal bonds subject to the federal alternative minimum tax. Income from these investments may be subject to federal, state, and local taxes.
Temporary Defensive Strategy: During periods of rising interest rates, unstable pricing and currency exchange, or in response to extreme market fluctuations, the subadviser, at its discretion, may take temporary defensive positions that are inconsistent with its principal investment strategies by investing part or all of the fund’s assets in cash or cash equivalents. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
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Virtus Wealth Masters Fund
​
Non-Fundamental Investment Objective:
The fund has an investment objective of capital appreciation.
Principal Investment Strategies:
The fund seeks to track the performance of the Horizon Kinetics ISE Wealth Index (ticker: RCH), a public index maintained by Horizon Kinetics LLC (“Horizon Kinetics”), the parent company of the subadviser, and published by International Securities Exchange, LLC. The index is composed of U.S.-listed companies and equity REITs managed by executives who are among the wealthiest individuals in the United States and have accumulated a substantial amount of their personal wealth through the companies that they manage. Horizon Kinetics believes that companies managed or influenced by individuals who have created significant wealth in their companies will outperform other companies because those managers tend to prioritize creation of long-term shareholder value over the shorter-term considerations that are typical of other corporate management. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.
The manner in which the index is constructed is likely to result in the fund’s assets generally being focused in one or more market sectors. For example, companies eligible for inclusion in the index based upon the first requirement of having an individual with significant wealth in a control position are often companies in the consumer discretionary sector; therefore, it would not be unusual for the fund’s assets to be similarly focused in the consumer discretionary sector.
To be eligible for inclusion in the Index, companies must meet the following criteria:
•
The company must have an individual with significant wealth in the company and in a control position that allows for substantial decision making authority (a wealthy individual is defined as a person whose level of personal assets generally exceeds $500 million, as measured by public data)
​
•
The wealthy individual must own at least $100 million in the common equity
​
•
The company must be listed on a U.S. exchange
​
•
The company must be an operating company and not a closed-end fund, exchange-traded fund (“ETF”), or limited partnership
​
•
The company’s market capitalization must be in excess of  $200 million
​
•
The average daily value of the company’s securities traded for the prior three month period must be greater than $2 million
​
•
The company’s securities must have been publicly listed for at least two years
​
For purposes of determining eligibility for inclusion in the index, when calculating the average daily value of a company’s shares, 10% of the highest and lowest daily observations are eliminated. A company will be removed from the index if the adjusted prior 3-month average daily value of shares traded is below $1,000,000 or is greater than $1,000,000 but below $2,000,000 for four consecutive quarters.
The index is equally weighted and is reviewed and rebalanced quarterly.
Temporary Defensive Strategy : If the subadviser does not believe that the market conditions are favorable to the fund’s principal investment strategies, the fund may take temporary defensive positions that are inconsistent with its principal investment strategies by investing in cash or money market instruments, including, but not limited to, U.S. Government obligations maturing within one year from the date of purchase. When this allocation happens, the fund may not achieve its investment objective.
Please see “More Information About Risks Related to Principal Investment Strategies” for information about the risks of investing in the fund. Please refer to “Additional Investment Techniques” for other investment techniques of the fund.
178 Virtus Wealth Masters Fund
TABLE OF CONTENTS ​
More Information About Risks Related to Principal Investment Strategies
​
Each of the funds may not achieve its objective, and each is not intended to be a complete investment program.
Generally, the value of a fund’s investments that supports your share value may decrease. If between the time you purchase shares and the time you sell shares the value of such fund’s investments decreases, you will lose money.
Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected and investments may fail to perform as the adviser or a subadviser expects. As a result, the value of your shares may decrease.
Specific risks of investing in each fund are identified in the below table and described in detail following the table. For certain funds, the indicated risks apply indirectly through the fund’s investments in other funds.
​ ​
Risks
​ ​ ​
Virtus
Alternatives
Diversifier
Fund
​ ​ ​
Virtus Bond
Fund
​ ​ ​
Virtus CA
Tax-Exempt
Bond Fund
​ ​ ​
Virtus
Emerging
Markets Debt
Fund
​ ​ ​
Virtus
Emerging
Markets
Equity Income
Fund
​ ​ ​
Virtus
Emerging
Markets
Opportunities
Fund
​ ​ ​
Virtus
Emerging
Markets
Small-Cap
Fund
​ ​ ​
Virtus Equity
Trend Fund
​ ​ ​
Virtus
Essential
Resources
Fund
​ ​ ​
Virtus Foreign
Opportunities
Fund
​ ​ ​
Virtus Global
Equity Trend
Fund
​ ​
​ ​ Affiliated Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Allocation ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Call Options ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Closed-End Funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Discount from NAV
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Leverage
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Proxy Voting
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodities Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodity and Commodity-Linked Instruments ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Correlation to Index ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Debt Securities ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Call
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Credit
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Interest Rate
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Liquidity
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Long-Term Maturities/Durations
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity REIT Securities ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity Securities ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Growth Stocks
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Large Market Capitalization Companies
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Small and Medium Market Capitalization Companies
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Small Market Capitalization Companies
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Value Stocks
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Funds (“ETFs”) ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Exchange-Traded Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Currency Transactions ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Investing ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Currency Rate
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Emerging Market Investing
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Equity-Linked Instruments
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
​ ​
​ ​ Fund of Funds ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Geographic Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ High Yield-High Risk Securities (Junk Bonds) ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Income ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Industry/Sector Concentration ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
Virtus Mutual Funds 179 ​
TABLE OF CONTENTS
​ ​
Risks
​ ​ ​
Virtus
Alternatives
Diversifier
Fund
​ ​ ​
Virtus Bond
Fund
​ ​ ​
Virtus CA
Tax-Exempt
Bond Fund
​ ​ ​
Virtus
Emerging
Markets Debt
Fund
​ ​ ​
Virtus
Emerging
Markets
Equity Income
Fund
​ ​ ​
Virtus
Emerging
Markets
Opportunities
Fund
​ ​ ​
Virtus
Emerging
Markets
Small-Cap
Fund
​ ​ ​
Virtus Equity
Trend Fund
​ ​ ​
Virtus
Essential
Resources
Fund
​ ​ ​
Virtus Foreign
Opportunities
Fund
​ ​ ​
Virtus Global
Equity Trend
Fund
​ ​
​ ​ Infrastructure-Related Investment ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Limited Number of Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Liquidity ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Low Volatility Strategy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Market Volatility ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Master Limited Partnership (“MLP”) ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset-Backed Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Municipal Bond Market ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Natural Resources Risk ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
​ ​
​ ​ Non-Diversification ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Portfolio Turnover ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Preferred Stock ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Quantitative Model ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Sector Focused Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Short Sales ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Tax-Exempt Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Tax Liability ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Risks
​ ​ ​
Virtus Global
Infrastructure
Fund
​ ​ ​
Virtus Global
Opportunities
Fund
​ ​ ​
Virtus Global
Real Estate
Securities
​ ​ ​
Virtus Greater
European
Opportunities
Fund
​ ​ ​
Virtus
Herzfeld Fund
​ ​ ​
Virtus High
Yield Fund
​ ​ ​
Virtus
International
Equity Fund
​ ​ ​
Virtus
International
Real Estate
Securities
Fund
​ ​ ​
Virtus
International
Small-Cap
Fund
​ ​ ​
Virtus
International
Wealth
Masters Fund
​ ​ ​
Virtus Low
Duration
Income Fund
​ ​
​ ​ Affiliated Fund ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Allocation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Call Options ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Closed-End Funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Discount from NAV
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Leverage
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Proxy Voting
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodities Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodity and Commodity-Linked Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Correlation to Index ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Debt Securities ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Call
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Credit
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Interest Rate
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Liquidity
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Long-Term Maturities/Durations
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity REIT Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity Securities ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Growth Stocks
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Large Market Capitalization Companies
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Small and Medium Market Capitalization Companies
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
180 Virtus Mutual Funds
TABLE OF CONTENTS
​ ​
Risks
​ ​ ​
Virtus Global
Infrastructure
Fund
​ ​ ​
Virtus Global
Opportunities
Fund
​ ​ ​
Virtus Global
Real Estate
Securities
​ ​ ​
Virtus Greater
European
Opportunities
Fund
​ ​ ​
Virtus
Herzfeld Fund
​ ​ ​
Virtus High
Yield Fund
​ ​ ​
Virtus
International
Equity Fund
​ ​ ​
Virtus
International
Real Estate
Securities
Fund
​ ​ ​
Virtus
International
Small-Cap
Fund
​ ​ ​
Virtus
International
Wealth
Masters Fund
​ ​ ​
Virtus Low
Duration
Income Fund
​ ​
​ ​
Small Market Capitalization Companies
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Value Stocks
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Funds (“ETFs”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Currency Transactions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Investing ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Currency Rate
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​
Emerging Market Investing
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Equity-Linked Instruments
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
​ ​ Fund of Funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Geographic Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ High Yield-High Risk Securities (Junk Bonds) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Income ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Industry/Sector Concentration ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Infrastructure-Related Investment ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Limited Number of Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Liquidity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Low Volatility Strategy ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Market Volatility ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Master Limited Partnership (“MLP”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset-Backed Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Municipal Bond Market ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Natural Resources Risk ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
​ ​ Non-Diversification ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Portfolio Turnover ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Preferred Stock ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Quantitative Model ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Real Estate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Sector Focused Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Short Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Tax-Exempt Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Tax Liability ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Risks
​ ​ ​
Virtus Low
Volatility
Equity Fund
​ ​ ​
Virtus
Multi-Asset
Trend Fund
​ ​ ​
Virtus
Multi-Sector
Intermediate
Bond Fund
​ ​ ​
Virtus
Multi-Sector
Short Term
Bond Fund
​ ​ ​
Virtus Real
Estate
Securities
Fund
​ ​ ​
Virtus Sector
Trend Fund
​ ​ ​
Virtus Senior
Floating Rate
Fund
​ ​ ​
Virtus
Tax-Exempt
Bond Fund
​ ​ ​
Virtus Wealth
Masters
Fund
​ ​
​ ​ Affiliated Fund ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Allocation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Call Options ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Closed-End Funds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Discount from NAV
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Leverage
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Proxy Voting
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodities Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Commodity and Commodity-Linked Instruments ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Correlation to Index ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
Virtus Mutual Funds 181 ​
TABLE OF CONTENTS
​ ​
Risks
​ ​ ​
Virtus Low
Volatility
Equity Fund
​ ​ ​
Virtus
Multi-Asset
Trend Fund
​ ​ ​
Virtus
Multi-Sector
Intermediate
Bond Fund
​ ​ ​
Virtus
Multi-Sector
Short Term
Bond Fund
​ ​ ​
Virtus Real
Estate
Securities
Fund
​ ​ ​
Virtus Sector
Trend Fund
​ ​ ​
Virtus Senior
Floating Rate
Fund
​ ​ ​
Virtus
Tax-Exempt
Bond Fund
​ ​ ​
Virtus Wealth
Masters
Fund
​ ​
​ ​ Debt Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Call
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Credit
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Interest Rate
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​
Liquidity
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Long-Term Maturities/Durations
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity REIT Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Equity Securities ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Growth Stocks
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Large Market Capitalization Companies
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Small and Medium Market Capitalization Companies
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Small Market Capitalization Companies
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Value Stocks
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Funds (“ETFs”) ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Notes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Currency Transactions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Investing ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Currency Rate
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Emerging Market Investing
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Equity-Linked Instruments
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
​ ​ Fund of Funds ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Geographic Concentration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ High Yield-High Risk Securities (Junk Bonds) ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Income ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Industry/Sector Concentration ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Infrastructure-Related Investment ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Limited Number of Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Liquidity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Low Volatility Strategy ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Market Volatility ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Master Limited Partnership (“MLP”) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset-Backed Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Municipal Bond Market ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Natural Resources Risk ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
​ ​ Non-Diversification ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Portfolio Turnover ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Preferred Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Quantitative Model ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Real Estate ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Sector Focused Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Short Sales ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Tax-Exempt Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Tax Liability ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
182 Virtus Mutual Funds
TABLE OF CONTENTS
Affiliated Fund
The fund’s adviser has the authority to select and substitute affiliated and/or unaffiliated mutual funds to serve as underlying funds, which may create a conflict of interest because the adviser receives fees from affiliated funds, some of which pay the adviser more than others. However, as a fiduciary to the fund the adviser is obligated to act in the fund’s best interest when selecting underlying funds.
Allocation
A fund’s investment performance depends, in part, upon how its assets are allocated and reallocated by its adviser. If the fund’s exposure to equities and fixed income securities, or to different asset classes, deviates from the adviser’s intended allocation, or if the fund’s allocation is not optimal for market conditions at a given time, the fund’s performance may suffer.
Call Options Risks
•
Written Index Call Option Risk.  A liquid market may not exist for options held by the fund. If the fund is not able to close out a written call option position, the fund may not be able to sell the underlying security. The fund’s investment strategy may also result in a lack of liquidity of the purchase and sale of portfolio securities. If the fund generates premiums from its sale of call options, these premiums typically will result in short-term capital gains for federal income tax purposes once the calls are closed at a profit. Distributions of net short-term capital gains are taxable to shareholders as ordinary income for federal income tax purposes. Transactions involving the disposition of the fund’s underlying securities (whether pursuant to the exercise of a call option or otherwise) will give rise to capital gains or losses. Because the fund will have no control over the exercise of the call options, it may be forced to realize capital gains or losses at inopportune times and it will not be able to control whether such gains or losses are short-term or long-term for federal income tax purposes. The fund’s portfolio turnover rate does not take into account short-term capital gains generated from premiums on the sale of call options. The fund is not designed for investors seeking a tax efficient investment.
​
•
Purchased Call Option Risk.  When the fund purchases a call option on a security, index or index future, it may lose the entire premium paid if the underlying security, index or index future does not increase in value. The fund is also exposed to default by the option writer who may be unwilling or unable to perform its contractual obligations to the fund.
​
Closed-End Fund Investment
Investing in closed-end funds involves substantially the same risks as investing directly in the underlying instruments, but the total return on such investments at the fund level may be reduced by the operating expenses and fees of such other closed-end funds, including advisory fees. There can be no assurance that the investment objective of any fund in which the fund invests will be achieved. Closed-end funds are subject to the risks of investing in the underlying securities. The fund, as a holder of the securities of a closed-end fund, will bear its pro rata portion of the closed-end fund’s expenses, including advisory fees. These expenses are in addition to the direct expenses of the fund’s own operations. To the extent the fund invests a portion of its assets in investment company securities, those assets will be subject to the risks of the purchased investment company’s portfolio securities, and a stockholder in the fund will bear not only his proportionate share of the expenses of the fund, but also, indirectly, the expenses of the purchased investment company. The market price of a closed-end fund fluctuates and may be either higher or lower than the NAV of such closed-end fund.
•
Discount from Net Asset Value.  Shares of closed-end funds frequently trade at a discount from their net asset value. This characteristic is a risk separate and distinct from the risk that net asset value could decrease as a result of investment activities. Whether the fund will realize gains or losses upon the sale of shares of underlying closed-end funds will depend not upon the underlying closed-end funds’ net asset values, but entirely upon whether the market price of the shares at the time of sale is above or below the purchase price for the shares.
​
•
Leverage Risk.  Closed-end funds may employ the use of leverage in their portfolios through the issuance of preferred stock, borrowing from banks or other methods. While this leverage often serves to increase yield, it also subjects a closed-end fund to increased risks. These risks may include the likelihood of increased price and NAV volatility and the possibility that such closed-end fund’s common stock income will fall if the dividend rate on the preferred shares or the interest rate on any borrowings rises. The use of leverage is premised upon the expectation that the cost of leverage will be lower than the return on the investments made with the proceeds. However, if the income or capital appreciation from the securities purchased with such proceeds is not sufficient to cover the cost
​
​
Virtus Mutual Funds 183 ​
TABLE OF CONTENTS
of leverage or if the closed-end fund incurs capital losses, the return to common stockholders, such as the fund, will be less than if leverage had not been used. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed.
•
Proxy Voting.  To comply with provisions of the 1940 Act, on any matter upon which stockholders of a closed-end fund in which the fund has invested are solicited to vote, the fund’s investment adviser will vote such shares in the same general proportion as shares held by other stockholders of such closed-end fund or seek instructions from the fund’s stockholders with regard to the voting on such matter. Compliance with such provisions regarding its voting of proxies may cause the fund to incur additional costs. In addition, if the fund votes its proxies in the same general proportion as shares held by other stockholders, the fund may be required to vote contrary to that which the adviser believes is in the fund’s best interests in light of its investment objective and strategy.
​
Strategies may be employed by an underlying investment company that, under certain circumstances, has the effect of reducing its share price and the fund’s proportionate interest. These include rights offerings in which the fund does not subscribe. However, the fund would subscribe only when the subadviser believes participation is consistent with pursuing the fund’s investment objective.
Commodities Concentration
The value of the investments of a fund that focuses its investments in a particular industry or market sector, such as commodities and commodities-related companies, will be highly sensitive to financial, economic, political and other developments affecting that industry or market sector, and conditions that negatively impact that industry or market sector will have a greater impact on the fund as compared with a fund that does not have its holdings concentrated in a particular industry or market sector. Events negatively affecting commodities and commodities-related companies in which the fund has invested are therefore likely to cause the value of the fund’s shares to decrease, perhaps significantly.
Commodity and Commodity-Linked Instruments
Investments by a fund in commodities or commodity-linked instruments may subject the fund’s portfolio to greater volatility than investments in traditional securities. The value of commodity-linked instruments may be affected by overall market movements, changes in interest rates or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Individual commodity prices can fluctuate widely over short time periods. Commodity investments typically do not have dividends or income and are dependent on price movements to generate returns. Commodity price movements can deviate from equity and fixed income price movements. The means by which a fund seeks exposure to commodities, both directly and indirectly through derivatives, may be limited by the fund’s intention to qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended.
Convertible Securities
Convertible securities are bonds, debentures, notes, preferred stock, rights, warrants or other securities that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. If a convertible security is called for redemption, the respective fund may have to redeem the security, convert it into common stock or sell it to a third party at a price and time that is not beneficial for the fund. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Securities convertible into common stocks may have higher yields than common stocks but lower yields than comparable nonconvertible securities.
Correlation to Index
The risk that the performance of the fund and its index may vary somewhat due to factors such as fund flows, transaction costs, whether the fund obtains every security in its index, complexities of investing in foreign markets and timing differences associated with additions to and deletions from its index.
Debt Securities
Debt securities are subject to various risks, the most prominent of which are credit risk and interest rate risk. These risks can affect a security’s price volatility to varying degrees, depending upon the nature of the instrument. Risks associated with investing in debt securities include the following:
184 Virtus Mutual Funds
TABLE OF CONTENTS
•
Call Risk.  There is a risk that issuers will prepay fixed rate obligations when interest rates fall. A fund holding callable securities therefore may be forced to reinvest in obligations with lower interest rates than the original obligations and otherwise may not benefit fully from the increase in value that other fixed income securities experience when rates decline.
​
•
Credit Risk.  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. Senior Floating Rate Fund: Generally, Senior Loans are less susceptible to this risk than certain other types of fixed income securities, because the payment of principal and interest on Senior Loans will take precedence over other payment obligations of the borrower.
​
•
Interest Rate Risk.  The values of debt securities usually rise and fall in response to changes in interest rates. Declining interest rates generally increase the value of existing debt instruments, and rising interest rates generally decrease the value of existing debt instruments. Changes in a debt instrument’s value usually will not affect the amount of interest income paid to a fund, but will affect the value of the fund’s shares. Interest rate risk is generally greater for investments with longer maturities.
​
Certain securities pay interest at variable or floating rates. Variable rate securities reset at specified intervals, while floating rate securities reset whenever there is a change in a specified index rate. In most cases, these reset provisions reduce the effect of changes in market interest rates on the value of the security. However, some securities do not track the underlying index directly, but reset based on formulas that can produce an effect similar to leveraging; others may also provide for interest payments that vary inversely with market rates. The market prices of these securities may fluctuate significantly when interest rates change.
Some investments give the issuer the option to call or redeem an investment before its maturity date. If an issuer calls or redeems an investment during a time of declining interest rates, a fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore it might not benefit from any increase in value as a result of declining interest rates.
•
Limited Voting Rights Risk.  Debt securities typically do not provide any voting rights, except in cases when interest payments have not been made and the issuer is in default.
​
•
Liquidity Risk.  Certain debt securities may be substantially less liquid than many other securities, such as U.S. Government securities or common stocks.
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•
Long-Term Maturities/Durations Risk.  The risk that fixed income securities with longer maturities or durations may be subject to greater price fluctuations due to interest rate, tax law, and general market changes than securities with shorter maturities or durations.
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Redemption Risk.  Debt securities sometimes contain provisions that allow for redemption in the event of tax or security law changes, in addition to call features at the option of the issuer. In the event of a redemption, a fund may not be able to reinvest the proceeds at comparable rates of return.
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Depositary Receipts
Certain funds may invest in American Depositary Receipts (ADRs) sponsored by U.S. banks, European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs), ADRs not sponsored by U.S. banks, other types of depositary receipts (including non-voting depositary receipts), and other similar instruments representing securities of foreign companies.
Although certain depositary receipts may reduce or eliminate some of the risks associated with foreign investing, these types of securities generally are subject to many of the same risks as direct investment in securities of foreign issuers.
Derivatives
Derivative transactions are contracts whose value is derived from the value of an underlying asset, index or rate, including futures, options, non-deliverable forwards, forward foreign currency exchange contracts and swap agreements. A fund may use derivatives to hedge against factors that affect the value of its investments, such as interest rates and foreign currency exchange rates. A fund may also utilize derivatives as part of its overall investment technique to gain or lessen exposure to various securities, markets, volatility, dividend payments and currencies.
Derivatives typically involve greater risks than traditional investments. It is generally more difficult to ascertain the risk of, and to properly value, derivative contracts. Many derivatives, and particularly those that are privately negotiated, are
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complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the fund. The prices of derivatives may move in unexpected ways, especially in abnormal market conditions. Derivatives are usually less liquid than traditional securities and are subject to counterparty risk (the risk that the other party to the contract will default or otherwise not be able to perform its contractual obligations). In addition, some derivatives transactions may involve potentially unlimited losses.
Derivative contracts entered into for hedging purposes may also subject a fund to losses if the contracts do not correlate with the assets, indexes or rates they were designed to hedge. Gains and losses derived from hedging transactions are, therefore, more dependent upon the subadviser’s ability to correctly predict the movement of the underlying asset prices, indexes or rates.
As an investment company registered with the SEC, each fund is required to identify on its books (often referred to as “asset segregation”) liquid assets, or engage in other SEC-approved measures, to “cover” open positions with respect to certain kinds of derivative instruments. If a fund investing in such instruments has insufficient cash to meet such requirements, it may have to sell other investments, including at disadvantageous times.
Governments, agencies and/or other regulatory bodies may adopt or change laws or regulations that could adversely affect a fund’s ability to invest in derivatives as the fund’s subadviser intends. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), among other things, grants the Commodity Futures Trading Commission (the “CFTC”) and SEC broad rulemaking authority to implement various provisions of the Dodd-Frank Act including comprehensive regulation of the over-the-counter (“OTC”) derivatives market. The implementation of the Dodd-Frank Act could adversely affect a fund by placing limits on derivative transactions, and/or increasing transaction and/or regulatory compliance costs. For example, the CFTC has recently adopted new rules that will apply a new aggregation standard for position limit purposes, which may further limit a fund’s ability to trade futures contracts and swaps.
There are also special tax rules applicable to certain types of derivatives, which could affect the amount, timing and character of a fund’s income or loss and hence of its distributions to shareholders by causing holding period adjustments, converting short-term capital losses into long-term capital losses, and accelerating a fund’s income or deferring its losses. A fund’s use of derivatives may also increase the amount of taxes payable by shareholders or the resources required by the fund or its adviser and/or subadviser(s) to comply with particular regulatory requirements.
Equity REIT Securities
REITs are financial vehicles that pool investor capital to purchase or finance real estate. Equity REITs invest primarily in direct ownership or lease of real property, and they derive most of their income from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Investing in equity REITs and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs and REIT-like entities are typically small or medium market capitalization companies, and they are subject to management fees and other expenses. A fund that invests in REITs and REIT-like entities will bear its proportionate share of the costs of the REITs’ and REIT-like entities’ operations. REITs and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidation. REITs and REIT-like entities also are subject to the possibility of failing to qualify for tax-free pass-through of income. Also, because REITs and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. In the event of a default by a borrower or lessee, a REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the fund to possibly fail to qualify as a regulated investment company, depending upon the nature of dividends received by the fund.
Equity Securities
Generally, prices of equity securities are more volatile than those of fixed income securities. The prices of equity securities will rise and fall in response to a number of different factors. In particular, equity securities will respond to events that affect entire financial markets or industries (such as changes in inflation or consumer demand) and to events that affect particular issuers (such as news about the success or failure of a new product). Equity securities also are subject to “stock market risk,” meaning that stock prices in general may decline over short or extended periods of time. When the value of the stocks held by the fund goes down, the value of the fund’s shares will be affected.
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Growth Stocks Risk.  Growth stocks can react differently to issuer, political, market, and economic developments than the market as a whole and other types of stocks. Growth stocks also tend to be more expensive relative to
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their earnings or assets compared to other types of stocks, and as a result they tend to be sensitive to changes in their earnings and more volatile than other types of stocks.
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Large Market Capitalization Companies Risk.  The value of investments in larger companies may not rise as much as smaller companies, or larger companies may be unable to respond quickly to competitive challenges, such as changes in technology and consumer tastes.
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Small and Medium Market Capitalization Companies Risk.  Small and medium-sized companies often have narrower markets, fewer products or services to offer, and more limited managerial and financial resources than larger, more established companies. As a result, the performance of small and medium-sized companies may be more volatile, and they may face a greater risk of business failure, which could increase the volatility and risk of loss to the fund.
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Small Market Capitalization Companies Risk.  Small companies often have narrower markets, fewer products or services to offer, and more limited managerial and financial resources than larger, more established companies. As a result, the performance of small companies may be more volatile, and may face a greater risk of business failure, which could increase the volatility and risk of loss to the fund.
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Value Stocks Risk.  A company may be undervalued due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company and other factors, or because it is associated with a market sector that generally is out of favor with investors. Undervalued stocks tend to be inexpensive relative to their earnings or assets compared to other types of stock. However, these stocks can continue to be inexpensive for long periods of time and may not realize their full economic value.
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Exchange-Traded Funds (ETFs)
ETFs invest in a portfolio of securities designed to track a particular market segment or index. The risks associated with investing in ETFs generally reflect the risks of owning shares of the underlying securities the ETF is designed to track, although lack of liquidity in an ETF could result in its value being more volatile than the underlying portfolio of securities. Assets invested in ETFs incur a layering of expenses, including operating costs and advisory fees that fund shareholders indirectly bear; such expenses may exceed the expenses the fund would incur if it invested directly in the underlying portfolio of securities the ETF is designed to track. Shares of ETFs trade on a securities exchange and may trade at, above, or below their net asset value.
Exchange-Traded Notes (ETNs)
ETNs are unsecured, unsubordinated debt securities that have characteristics and risks similar to those of fixed income securities and trade on an exchange in a manger similar to shares of ETFs. This type of security differs from typical bonds and notes, however, because ETN returns are based upon the performance of a market index minus applicable fees and expenses, no period coupon payments are distributed, and no principal protections exist. The purpose of ETNs is to create a type of security that combines the aspects of both bonds and ETFs. The value of an ETN may be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying commodities or securities markets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political or geographic events that affect the referenced commodity or security. A fund’s decision to sell its ETN holdings also may be limited by the availability of a secondary market. If a fund must sell some or all of its ETN holdings and the secondary market is weak, the fund might have to sell such holdings at a discount. If a fund holds its investment in an ETN until maturity, the issuer will give the fund a cash amount that would be equal to principal amount (subject to the day’s index factor). ETNs also are subject to counterparty risk and debt securities risks.
Foreign Currency Transactions
A fund may engage in foreign currency transactions, including foreign currency forward contracts, options, swaps and other similar strategic transactions. These transactions may be for the purposes of hedging or efficient portfolio management, or may be for investment purposes, and they may be exchange traded or traded directly with market counterparties. Such transactions may not prove successful or may have the effect of limiting gains from favorable markets movements.
A fund may use derivatives to acquire positions in various currencies, which presents the risk that the fund could lose money on its exposure to a particular currency and also lose money on the derivative. A fund also may take positions in currencies that do not correlate to the currency exposure presented by the fund’s other investments. As a result, the fund’s currency exposure may differ, in some cases significantly, from the currency exposure of its other investments and/or its benchmarks.
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Foreign Investing
Investing in securities of non-U.S. companies involves special risks and considerations not typically associated with investing in U.S. companies, and the values of non-U.S. securities may be more volatile than those of U.S. securities. The values of non-U.S. securities are subject to economic and political developments in countries and regions where the issuers operate or are domiciled, or where the securities are traded, such as changes in economic or monetary policies, and to changes in currency exchange rates. Values may also be affected by restrictions on receiving the investment proceeds from a non-U.S. country.
In general, less information is publicly available about non-U.S. companies than about U.S. companies. Non-U.S. companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. Certain foreign issuers classified as passive foreign investment companies may be subject to additional taxation risk.
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Currency Rate Risk.  Because the foreign securities in which a fund invests generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the fund’s net asset value, the value of dividends and interest earned, and gains and losses realized on the sale of securities. Because the value of each fund’s shares is calculated in U.S. dollars, it is possible for a fund to lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the fund’s holdings goes up. Generally, a strong U.S. dollar relative to such other currencies will adversely affect the value of the fund’s holdings in foreign securities.
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Emerging Market Investing Risk.  The risks of foreign investments are generally greater in countries whose markets are still developing than they are in more developed markets. Emerging market countries typically have economic and political systems that are less fully developed, and can be expected to be less stable than those of more developed countries. For example, the economies of such countries can be subject to rapid and unpredictable rates of inflation or deflation. Since these markets are often small, they may be more likely to suffer sharp and frequent price changes or long-term price depression because of adverse publicity, investor perceptions or the actions of a few large investors. They may also have policies that restrict investment by foreigners, or that prevent foreign investors from withdrawing their money at will. Certain emerging markets may also face other significant internal or external risks, including the risk of war and civil unrest. For all of these reasons, investments in emerging markets may be considered speculative. To the extent that a fund invests a significant portion of its assets in a particular emerging market, the fund will be more vulnerable to financial, economic, political and other developments in that country, and conditions that negatively impact that country will have a greater impact on the fund as compared with a fund that does not have its holdings concentrated in a particular country.
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Equity-Linked Instruments Risk.  Equity-linked instruments are instruments of various types issued by financial institutions or special purpose entities located in foreign countries to provide the synthetic economic performance of a referenced equity security, including benefits from dividends and other corporate actions, but without certain rights of direct investment in the referenced securities, such as voting rights. In addition to the market and other risks of the referenced equity security, equity-linked instruments involve counterparty risk, which includes the risk that the issuing entity may not be able to honor its financial commitment. Equity-linked instruments have no guaranteed return of principal and may experience a return different from the referenced equity security. Typically, a fund will invest in equity-linked instruments in order to obtain exposure to certain countries in which it does not have local accounts.
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Fund of Funds
Achieving the fund’s objective will depend on the performance of the underlying mutual funds, which depends on the particular securities in which the underlying mutual funds invest. Indirectly, the fund is subject to all risks associated with the underlying mutual funds. Since the fund’s performance depends on that of each underlying mutual fund, it may be subject to increased volatility.
Assets invested in other mutual funds incur a layering of expenses, including operating costs, advisory fees and administrative fees that you, as a shareholder in the fund, indirectly bear. Such fees and expenses may exceed the fees and expenses the fund would have incurred if it invested in the underlying fund’s assets directly. As the underlying funds or the fund’s allocations among the underlying funds change from time to time, or to the extent that the expense ratio of the underlying funds changes, the weighted average operating expenses borne by the fund may increase or decrease. If the fund invests in closed-end funds, it may incur added expenses such as additional management fees and trading costs and additional risks associated with trading at a discount to NAV and use of leverage.
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The underlying funds may change their investment objective or policies without the approval of the fund, and the fund might be forced to withdraw its investment from the underlying fund at a time that is unfavorable to the fund.
Each underlying fund may be subject to risks other than those described because the types of investments made by an underlying fund can change over time. For further description of the risks associated with the underlying funds, please consult the underlying funds’ prospectus.
Geographic Concentration
The value of the investments of a fund that focuses its investments in a particular geographic location will be highly sensitive to financial, economic, political and other developments affecting the fiscal stability of that location, and conditions that negatively impact that location will have a greater impact on the fund as compared with a fund that does not have its holdings similarly concentrated. Events negatively affecting such location are therefore likely to cause the value of the fund’s shares to decrease, perhaps significantly.
High-Yield/High-Risk Fixed Income Securities (Junk Bonds)
Securities rated “BB” or below by S&P or Fitch, or “Ba” or below by Moody’s, may be known as “high-yield” securities and commonly referred to as “junk bonds.” The highest of the ratings among S&P, Fitch and Moody's is used to determine the security's classification. Such securities entail greater price volatility and credit and interest rate risk than investment-grade securities. Analysis of the creditworthiness of high-yield/high-risk issuers is more complex than for higher-rated securities, making it more difficult for a fund's subadviser to accurately predict risk. There is a greater risk with high-yield/high-risk fixed income securities that an issuer will not be able to make principal and interest payments when due. If the fund pursues missed payments, there is a risk that fund expenses could increase. In addition, lower-rated securities may not trade as often and may be less liquid than higher-rated securities, especially during periods of economic uncertainty or change. As a result of all of these factors, these bonds are generally considered to be speculative.
Income
The income shareholders receive from a fund is based primarily on the dividends and interest the fund earns from its investments, which can vary widely over the short- and long-term. If prevailing market interest rates drop, distribution rates of the fund’s preferred stock holdings and any bond holdings could drop as well. The fund’s income also would likely be affected adversely when prevailing short-term interest rates increase. In certain circumstances, a fund may be treated as receiving income even though no cash is received. A fund may not be able to pay distributions, or may have to reduce distribution levels, if the cash distributions that the fund receives from its investments decline. For investments in inflation-protected treasuries (TIPS), income may decline due to a decline in inflation (or deflation) or due to changes in inflation expectations.
Industry/Sector Concentration
The value of the investments of a fund that focuses its investments in a particular industry or market sector will be highly sensitive to financial, economic, political and other developments affecting that industry or market sector, and conditions that negatively impact that industry or market sector will have a greater impact on the fund as compared with a fund that does not have its holdings similarly concentrated. Events negatively affecting the industries or market sectors in which a fund has invested are therefore likely to cause the value of the fund’s shares to decrease, perhaps significantly.
Infrastructure-Related Investment
Infrastructure-related entities are subject to a variety of factors that may adversely affect their business or operations including high interest costs in connection with capital construction programs, costs associated with environmental and other regulations, the effects of economic slowdown and surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Additionally, infrastructure-related entities may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, service interruption due to environmental, operational or other mishaps and the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards.
Leverage
When a fund makes investments in futures contracts, forward contracts, swaps and other derivative instruments, the futures contracts, forward contracts, swaps and certain other derivatives provide the economic effect of financial leverage by creating additional investment exposure, as well as the potential for greater loss. When a fund uses
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leverage through activities such as borrowing, entering into short sales, purchasing securities on margin or on a when-issued basis, or purchasing derivative instruments in an effort to increase its returns, the fund has the risk of magnified capital losses that occur when losses affect an asset base, enlarged by borrowings or the creation of liabilities, that exceeds the net assets of the fund. The value of the shares of a fund employing leverage will be more volatile and sensitive to market movements. Leverage may also involve the creation of a liability that requires the fund to pay interest.
Limited Number of Investments
Because the fund invests in a limited number of securities, 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
Certain securities in which a fund invests may be difficult to sell at the time and price beneficial to the fund, for example due to low trading volumes or legal restrictions. When there is no willing buyer or a security cannot be readily sold, the fund may have to sell at a lower price or may be unable to sell the security at all. The sale of such securities may also require the fund to incur expenses in addition to those normally associated with the sale of a security.
In addition to this, certain shareholders, including affiliates of a fund’s investment adviser and/or subadviser(s), may from time to time own or control a significant percentage of the fund’s shares. Redemptions by these shareholders of their shares of the fund may increase the fund’s liquidity risk by causing the fund to have to sell securities at an unfavorable time and/or price.
Loans
Investing in loans (including loan assignments, loan participations and other loan instruments) carries certain risks in addition to the risks typically associated with high-yield/high-risk fixed income securities. Loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market. In the event a borrower defaults, a fund’s access to the collateral may be limited or delayed by bankruptcy or other insolvency laws. There is a risk that the value of the collateral securing the loan may decline after a fund invests and that the collateral may not be sufficient to cover the amount owed to the fund. If the loan is unsecured, there is no specific collateral on which the fund can foreclose. In addition, if a secured loan is foreclosed, a fund may bear the costs and liabilities associated with owning and disposing of the collateral, including the risk that collateral may be difficult to sell.
Transactions in many loans settle on a delayed basis. As a result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet the Fund’s redemption obligations until potentially a substantial period of time after the sale of the loans. No active trading market may exist for some loans, which may impact the ability of the Fund to realize full value in the event of the need to liquidate such assets. Adverse market conditions may impair the liquidity of some actively traded loans. Loans also may be subject to restrictions on resale, which can delay the sale and adversely impact the sale price. Difficulty in selling a loan can result in a loss. Loans made to finance highly leveraged corporate acquisitions may be especially vulnerable to adverse changes in economic or market conditions. Certain loans may not be considered “securities,” and purchasers, such as a fund, therefore may not be entitled to rely on the strong anti-fraud protections of the federal securities laws. With loan participations, a fund may not be able to control the exercise of any remedies that the lender would have under the loan and likely would not have any rights against the borrower directly, so that delays and expense may be greater than those that would be involved if a fund could enforce its rights directly against the borrower.
Low Volatility Strategy
The effectiveness of the techniques used to attempt to limit the volatility in a fund’s portfolio may be reduced if the prices of portfolio securities and call options move in unexpected ways. This may limit the fund’s gains or expose the fund to losses. The success of these techniques will depend in part upon the subadviser’s ability to correctly predict the movement of the call options in relation to the rest of the fund’s portfolio. A fund’s use of these techniques may also increase the amount of taxes payable by the fund or its shareholders.
Market Volatility
The value of the securities in which a fund invests may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be temporary or may last for extended periods.
Instability in the financial markets has exposed each fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments that it holds. In response to financial markets that experienced extreme volatility, and in
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some cases a lack of liquidity, the U.S. Government and other governments have taken a number of unprecedented actions, including acquiring distressed assets from financial institutions and acquiring ownership interests in those institutions. The implications of government ownership and disposition of these assets are unclear. Additional legislation or government regulation may also change the way in which funds themselves are regulated, which could limit or preclude a fund’s ability to achieve its investment objective.
Master Limited Partnership
An investment in MLP units involves some risks that differ from an investment in the common stock of a corporation. Holders of MLP units have limited control on matters affecting the partnership. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. MLPs that concentrate in a particular industry or a particular geographic region are subject to risks associated with such industry or region. The fees that MLPs charge for transportation of oil and gas products through their pipelines are subject to government regulation, which could negatively impact the revenue stream. Investing in MLPs also involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. These include the risk of environmental incidents, terrorist attacks, demand destruction from high commodity prices, proliferation of alternative energy sources, inadequate supply of external capital, and conflicts of interest with the general partner. The benefit derived from the fund’s investment in MLPs is largely dependent on the MLPs being treated as partnerships for federal income tax purposes, so any change to this status would adversely affect the price of the MLP units.
Certain MLPs in which the Fund may invest depend upon their parent or sponsor entities for the majority of their revenues. If their parent or sponsor entities fail to make such payments or satisfy their obligations, the revenues and cash flows of such MLPs and ability of such MLPs to make distributions to unit holders, such as the Fund, would be adversely affected.
Mortgage-Backed and Asset-Backed Securities
Mortgage-backed securities represent interests in pools of residential mortgage loans purchased from individual lenders by a federal agency or originated and issued by private lenders. Asset-backed securities represent interests in pools of underlying assets such as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. These two types of securities share many of the same risks.
The impairment of the value of collateral or other assets underlying a mortgage-backed or asset-backed security, such as that resulting from non-payment of loans, may result in a reduction in the value of such security and losses to a fund.
Early payoffs in the loans underlying such securities may result in a fund receiving less income than originally anticipated. The variability in prepayments will tend to limit price gains when interest rates drop and exaggerate price declines when interest rates rise. In the event of high prepayments, a fund may be required to invest proceeds at lower interest rates, causing the fund to earn less than if the prepayments had not occurred. Conversely, rising interest rates may cause prepayments to occur at a slower than expected rate, which may effectively change a security that was considered short- or intermediate-term into a long-term security. Long-term securities tend to fluctuate in value more widely in response to changes in interest rates than shorter-term securities.
Municipal Bond Market
The amount of public information available about municipal bonds is generally less than that of corporate equities or bonds, and the investment performance of a fund may be more dependent on the analytical abilities of the investment adviser than would be the case for a fund that does not invest in municipal bonds. The secondary market for municipal bonds also tends to be less well-developed and less liquid than many other securities markets, which may adversely affect the fund’s ability to sell its bonds at attractive prices. In addition, municipal obligations can experience downturns in trading activity, and the supply of municipal obligations may exceed the demand in the market. During such periods, the spread can widen between the price at which an obligation can be purchased and the price at which it can be sold. Less liquid obligations can become more difficult to value and be subject to erratic price movements. Economic and other events (whether real or perceived) can reduce the demand for certain investments or for investments generally, which may reduce market prices and cause the value of the fund’s shares to fall. The frequency and magnitude of such changes cannot be predicted. A fund may invest in municipal obligations that do not appear to be related, but in fact depend on the financial rating or support of a single government unit, in which case, events that affect one of the obligations will also affect the others and will impact the fund’s portfolio to a greater degree than if the fund’s investments were not so related. The increased presence of non-traditional participants in the municipal markets may lead to greater volatility in the markets.
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Natural Resources
The fund's investments in instruments issued by companies with business operations in or related to activities in natural resources industries, are likely to be significantly affected by events affecting those industries, including international political and economic developments, energy conservation, the success of exploration projects, commodity prices, taxes and other governmental regulations.
Non-Diversification
As a non-diversified investment company, the fund is not limited in the proportion of assets that it may invest in the securities of any one issuer. If the fund takes concentrated positions in a small number of issuers, the fund may be more susceptible to the risks associated with those issuers, or to a single economic, political, regulatory or other event affecting those issuers.
Portfolio Turnover
A fund’s investment strategy may result in consistently frequently high turnover rate. A high portfolio turnover rate may result in correspondingly greater brokerage commission expenses and the distribution to shareholders of additional capital gains for tax purposes, some of which may be taxable at ordinary income rates. These factors may negatively affect the fund’s performance.
Preferred Stocks
Preferred stocks may provide a higher dividend rate than the interest yield on debt securities of the same issuer, but are subject to greater risk of fluctuation in market value and greater risk of non-receipt of income. Unlike interest on debt securities, dividends on preferred stocks must be declared by the issuer’s board of directors before becoming payable. Preferred stocks are in many ways like perpetual debt securities, providing a stream of income but without stated maturity date. Because they often lack a fixed maturity or redemption date, preferred stocks are likely to fluctuate substantially in price when interest rates change. Such fluctuations generally are comparable to or exceed those of long-term government or corporate bonds (those with maturities of fifteen to thirty years). Preferred stocks have claims on assets and earnings of the issuer which are subordinate to the claims of all creditors but senior to the claims of common stockholders. A preferred stock rating differs from a bond rating because it applies to an equity issue which is intrinsically different from, and subordinated to, a debt issue. Preferred stock ratings generally represent an assessment of the capacity and willingness of an issuer to pay preferred stock dividends and any applicable sinking fund obligations. Preferred stock also may be subject to optional or mandatory redemption provisions, and may be significantly less liquid than many other securities, such as U.S. Government securities, corporate debt or common stock.
Quantitative Model
Certain funds rely heavily on quantitative models, which are constructed using information and data supplied by third-party vendors. When a model proves to be incorrect or incomplete, any decisions made in reliance thereon expose the fund to potential risks. The success of relying on such models may depend on the accuracy and reliability of historical data supplied by third-party vendors. All models rely on correct market data inputs. If incorrect market data is entered into even a well-founded model, the resulting information will be incorrect. However, even if market data is inputted correctly, “model prices” will often differ substantially from market prices, especially for securities with complex characteristics such as derivative securities, or may perform differently from their expected performance for many reasons, including factors used in building the quantitative analytical framework, the weights placed on each factor, and changing sources of market returns.
Use of a model does not guarantee any particular results. The rebalancing techniques used by the fund’s subadviser may result in a higher portfolio turnover rate and related expenses compared to traditional “buy and hold” or index fund strategies. A higher portfolio turnover rate increases the likelihood of higher gains or losses for investors. In addition, others may attempt to utilize public information related to the fund’s investment strategy in a way that may affect performance.
Real Estate Investment
Investing in companies that invest in real estate (“Real Estate Companies”) exposes the fund to the risks of owning real estate directly, as well as to risks that relate specifically to the way in which Real Estate Companies are organized and operated. Real estate is highly sensitive to general and local economic conditions and developments, and characterized by intense competition and periodic overbuilding. Real Estate Companies may lack diversification due to ownership of a limited number of properties and concentration in a particular geographic region or property type.
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REIT and REOC Securities Risks. Investing in Real Estate Investment Trusts (REITs) and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidation. REITs and REIT-like entities also are subject to the possibility of failing to qualify for tax-free pass-through of income. Also, because REITs and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. In the event of a default by a borrower or lessee, a REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the fund to possibly fail to qualify as a regulated investment company. A Real Estate Operating Company (“REOC”) is similar to an equity REIT in that it owns and operates commercial real estate, but unlike a REIT it has the freedom to retain all its funds from operations and, in general, faces fewer restrictions than a REIT. REOCs do not pay any specific level of income as dividends, if at all, and there is no minimum restriction on the number of owners nor limits on ownership concentration. The value of a fund’s REOC securities may be adversely affected by the same factors that adversely affect REITs. In addition, a corporate REOC does not qualify for the federal tax treatment that is accorded a REIT. A fund also may experience a decline in its income from REOC securities due to falling interest rates or decreasing dividend payments.
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Sector Focused Investing
The value of the investments of a fund that focuses its investments in a particular market sector will be highly sensitive to financial, economic, political and other developments affecting that market sector, and conditions that negatively impact that market sector will have a greater impact on the fund as compared with a fund that does not have its holdings similarly focused. Events negatively affecting the market sectors in which a fund has invested are therefore likely to cause the value of the fund’s shares to decrease, perhaps significantly.
Short Sales
A fund may engage in short sales, which are transactions in which a fund sells a security that it does not own (or that it owns but does not intend to deliver) in anticipation that the price of the security will decline. In order to establish a short position in a security, a fund must first borrow the security from a broker or other institution to complete the sale. The fund may not always be able to borrow a security, or to close out a short position at a particular time or at an acceptable price. If the price of the borrowed security increases between the date of the short sale and the date on which the fund replaces the security, the fund may experience a loss. A fund’s loss on a short sale is limited only by the maximum attainable price of the security (which could be limitless) less the price the fund paid for the security at the time it was borrowed.
Short-Term Investments
Short-term investments include money market instruments, repurchase agreements, certificates of deposit and bankers’ acceptances and other short-term instruments that are not U.S. Government securities. These securities generally present less risk than many other investments, but they are generally subject to credit risk and may be subject to other risks as well.
Tax-Exempt Securities
Tax-exempt securities may not provide a higher after-tax return than taxable securities, or the tax-exempt status of such securities may be lost or limited.
Tax Liability
Distributions by a fund could become taxable to shareholders as ordinary income due to noncompliant conduct by a municipal bond issuer, unfavorable changes in federal or state tax laws, or adverse interpretations of tax laws by applicable tax authorities. Such adverse interpretations or actions could cause interest from a security to become taxable, possibly retroactively, subjecting shareholders to increased tax liability. In addition, such adverse interpretations or actions could cause the value of a security, and therefore the value of a fund’s shares, to decline.
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Unrated Fixed Income Securities
A fund’s subadviser has the authority to make determinations regarding the quality of unrated fixed-income securities for the purposes of assessing whether they meet the fund’s investment restrictions. However, analysis of unrated securities is more complex than that of rated securities, making it more difficult for the subadviser to accurately predict risk. Unrated fixed income securities may not be lower in quality than rated securities, but due to their perceived risk they may not have as broad a market as rated securities, making it more difficult to sell unrated securities.
U.S. Government Securities
Obligations issued or guaranteed by the U.S. Government, its agencies, authorities and instrumentalities and backed by the full faith and credit of the United States only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will increase, and in fact, the market values of such obligations may fluctuate. In addition, not all U.S. Government securities are backed by the full faith and credit of the United States; some are the obligation solely of the entity through which they are issued. There is no guarantee that the U.S. Government would provide financial support to its agencies and instrumentalities if not required to do so by law.
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Management of the Funds
​
The Adviser
VIA is the investment adviser to the funds and is located at 100 Pearl Street, Hartford, CT 06103. VIA acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. As of September 30, 2016, VIA had approximately $26.3 billion in assets under management. VIA has acted as an investment adviser for over 80 years and is an indirect wholly-owned subsidiary of Virtus Investment Partners, Inc. (“Virtus”), a publicly traded multi-manager asset management business.
Subject to the direction of the fund’s Board of Trustees, VIA is responsible for managing the funds’ investment programs and for the general operations of the funds, including oversight of the funds’ subadvisers, and for certain of the funds, recommending their hiring, termination and replacement.
VIA has appointed and oversees the activities of each of the subadvisers for the funds as shown in the table below. For Virtus Alternatives Diversifier Fund, Virtus Equity Trend Fund, Virtus Global Equity Trend Fund, Virtus Multi-Asset Trend Fund and Virtus Sector Trend Fund, VIA is responsible for the day-to-day management of the fund’s investments and manages the investments of the fund to conform with its investment policies as described in this prospectus. For all of the other funds, each subadviser manages the investments of that fund to conform with its investment policies as described in this prospectus.
​ ​ Virtus Bond Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ KBIGI (North America) ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ Vontobel ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ Kayne Anderson Rudnick ​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ KBIGI (North America) ​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ Vontobel ​ ​
​ ​ Virtus Global Infrastructure Fund ​ ​ ​ Duff  & Phelps ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ Vontobel ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ Duff  & Phelps ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ Vontobel ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ Herzfeld ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ Duff  & Phelps ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ Duff  & Phelps ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ Kayne Anderson Rudnick ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ Horizon ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ Rampart ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ Duff  & Phelps ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ Newfleet ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ Horizon ​ ​
Management Fees
Each fund, except Virtus Alternatives Diversifier Fund pays VIA an investment management fee that is accrued daily against the value of the fund’s net assets at the following annual rates. Virtus Alternatives Diversifier Fund does not pay an investment management fee.
​ ​ Virtus Essential Resources Fund ​ ​ ​ ​ ​ 1.10 % ​ ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ ​ ​ ​ ​
First $1 billion
​ ​ ​
$1+ billion
​ ​
​ ​ Virtus Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​
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​ ​ ​ ​ ​ ​
First $1 billion
​ ​ ​
$1+ billion
​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.70 % ​ ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ ​ ​ 1.05 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ ​ 1.15 % ​ ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Sector Trend Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​
​ ​ ​ ​ ​ ​
First $4 Billion
​ ​ ​
$4+ Billion
​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ ​ ​ ​ ​
First $1 billion
​ ​ ​
$1+ billion
through $2
billion
​ ​ ​
$2+ billion
​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ ​ 0.35 % ​ ​ ​
​ ​ Virtus Global Infrastructure Fund ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.70 % ​ ​ ​ ​ ​ ​ 0.65 % ​ ​ ​
​ ​ ​ ​ ​ ​
First $2 billion
​ ​ ​
$2+ billion
through $4
billion
​ ​ ​
$4+ billion
​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ ​ 0.38 % ​ ​ ​
​ ​ ​ ​ ​ ​
First $1 billion
​ ​ ​
$1+ billion
through $2
billion
​ ​ ​
$2+ billion
through $10
billion
​ ​ ​
$10+ billion
​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ 0.425 % ​ ​ ​
In its last fiscal year, those funds that had been in operation for at least one year paid fees to the adviser at the following percentage of average net assets:
​ ​ Virtus Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ ​ ​ 0.75 % ​ ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ ​ ​ 1.05 % ​ ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ ​ ​ 1.20 % ​ ​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus Essential Resources ​ ​ ​ ​ ​ 1.10 % ​ ​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
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​ ​ Virtus Global Infrastructure Fund ​ ​ ​ ​ ​ 0.65 % ​ ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ ​ ​ 0.65 % ​ ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ ​ ​ 0.90 % ​ ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Virtus Low Volatility Fund ​ ​ ​ ​ ​ 0.95 % ​ ​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ ​ 0.55 % ​ ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ ​ ​ 0.47 % ​ ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ ​ ​ 0.73 % ​ ​ ​
​ ​ Virtus Sector Trend Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ ​ ​ 0.60 % ​ ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.45 % ​ ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ ​ ​ 0.85 % ​ ​ ​
The Subadvisers
Duff  & Phelps, an affiliate of VIA, is located at 200 South Wacker Drive, Suite 500, Chicago, IL 60606. Duff  & Phelps acts as subadviser to mutual funds and as adviser or subadviser to closed-end mutual funds and to institutional clients. Duff  & Phelps (together with its predecessor) has been in the investment advisory business for more than 70 years. As of September 30, 2016, Duff  & Phelps had approximately $10.6 billion in assets under management on a discretionary basis.
Herzfeld is located at 119 Washington Avenue, Suite 504, Miami, FL 33139. Herzfeld has specialized in the closed-end fund industry since its founding in 1984. As of September 30, 2016, Herzfeld had $305 million in assets under management.
Horizon is located at 470 Park Avenue South, New York, NY 10016 and has been an investment adviser since 1994. Horizon is owned by Horizon Kinetics LLC (“Horizon Kinetics”), an independently owned and operated firm formed in May 2011. As of September 30, 2016, Horizon Kinetics had approximately $5.9 billion in assets under management.
Kayne, an affiliate of VIA, is located at 1800 Avenue of the Stars, 2nd Floor, Los Angeles, CA 90067. Kayne acts as subadviser to mutual funds and as investment adviser to institutions and individuals. As of September 30, 2016, Kayne had approximately $12 billion in assets under management.
KBIGI (North America) is located at 2 Harbourmaster Place, IFSC, Dublin 1, D01 X5P3, Ireland and has been a registered investment adviser since 2001. As of September 30, 2016, KBIGI (North America) and KBI Global Investors Ltd., has $9.6 billion in combined assets under management.
Newfleet, an affiliate of VIA, is located at 100 Pearl Street, Hartford, CT 06103. Newfleet acts as subadviser to mutual funds and as adviser to institutions and individuals. As of September 30, 2016, Newfleet had approximately $11.9 billion in assets under management. Newfleet has been an investment adviser since 1989.
Rampart, an affiliate of VIA, is located at One International Place, 14th Floor, Boston, MA 02110. Rampart has been an investment adviser since 1983 and provides investment management services to mutual funds, institutional and high net worth investors. As of September 30, 2016, Rampart had approximately $682 million in assets under management.
Vontobel is located at 1540 Broadway, 38th Floor, New York, NY 10036. Vontobel is a wholly-owned and controlled subsidiary of Vontobel Holding AG, a Swiss bank holding company, having its registered offices in Zurich, Switzerland. In addition to U.S. registered investment companies, Vontobel also acts as subadviser to six series of a Luxembourg investment fund that accepts investments from non-U.S. investors only and that was organized by an affiliate of Vontobel. Vontobel has provided investment advisory services to mutual fund clients since 1990. As of September 30, 2016, Vontobel managed approximately $37 billion.
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VIA pays each subadviser a subadvisory fee which is calculated on the fund’s average daily net assets at the following annual rates:
​ ​ Virtus Bond Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Global Infrastructure Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ 50% of net investment management fee ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ 50% of net investment management fee ​ ​
A discussion regarding the basis for the Board of Trustees approving the investment advisory and subadvisory agreements for Emerging Markets Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund is available in the Predecessor Funds’ 2015 annual report, covering the period January 1, 2015 through December 31, 2015. A discussion regarding the basis for the Board of Trustees approving the investment advisory and subadvisory agreements for Emerging Markets Equity Income Fund and Essential Resources Fund is available in the funds’ 2016 annual report, covering the period October 1, 2015 through September 30, 2016. A discussion regarding the basis for the Board of Trustees approving the investment advisory and subadvisory agreements for all other funds is available in the funds’ 2016 semiannual report, covering the period October 1, 2015 through March 31, 2016.
VIA and the funds, except Virtus International Real Estate Securities Fund, Virtus Multi-Sector Short Term Bond Fund, Virtus Sector Trend Fund and Virtus Real Estate Securities Fund, have received an exemptive order from the SEC that permits VIA, subject to certain conditions and without the approval of shareholders to: (a) select both unaffiliated subadvisers and certain wholly-owned affiliated subadvisers to manage all or a portion of the assets of a fund, and enter into subadvisory agreements with such subadvisers, and (b) materially amend subadvisory agreements with such subadvisers. In such circumstances, shareholders would receive notice of such action.
Portfolio Management
The following individuals are jointly and primarily responsible for the day-to-day management of the funds’ portfolios.
Duff  & Phelps
​ ​ Virtus Global Infrastructure Fund ​ ​ ​
Connie M. Luecke, CFA
Randle L. Smith, CFA
(both since the fund’s inception in 2004)
​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​
Geoffrey P. Dybas, CFA
Frank J. Haggerty, Jr., CFA
(both since the fund’s inception in 2009)
​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ Frederick A. Brimberg (since May 2013) ​ ​
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​ ​ Virtus International Real Estate Securities ​ ​ ​
Geoffrey P. Dybas, CFA
Frank J. Haggerty, Jr., CFA
(both since the fund’s inception in 2007)
​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​
Geoffrey P. Dybas, CFA (since 1998)
Frank J. Haggerty, Jr., CFA (since 2007)
​ ​
Frederick A. Brimberg. Mr. Brimberg is Senior Managing Director and International Equity Portfolio Manager at Duff & Phelps (since August 2016). Prior to joining an affiliate of Virtus in 2012, he was senior vice president and international portfolio manager at Avatar Associates (2006 to 2012), where he started the international strategy in 2006. Earlier, he was vice president and portfolio manager at ING Investment Management and its predecessor Lexington Management, with a focus on global equity investing. Mr. Brimberg’s career spans 30-plus years in investment management, trading, and capital markets, with positions at Brimberg & Co., and Lehman Brothers.
Geoffrey P. Dybas, CFA. Mr. Dybas joined Duff  & Phelps in 1995 and serves as Senior Managing Director, Global Real Estate Securities team head and Senior Portfolio Manager (since 2007). He is Senior Portfolio Manager and co-founder for all dedicated REIT portfolios managed by Duff  & Phelps, inclusive of the real estate strategies in the Virtus Opportunities Trust. In addition, Mr. Dybas manages the REIT portfolio within the DNP Select Income Fund Inc., a closed-end mutual fund; an affiliated mutual fund series offered under certain universal life insurance and annuity products; and separate institutional accounts.
Frank J. Haggerty Jr., CFA. Mr. Haggerty is Senior Managing Director of Duff  & Phelps and Portfolio Manager (since 2007) for Duff  & Phelps and has served as a Senior Real Estate Securities Analyst since joining the firm in 2005, providing support for the dedicated REIT products managed by Duff  & Phelps, inclusive of the real estate strategies in the Virtus Opportunities Trust. Mr. Haggerty is also a Portfolio Manager for the REIT portfolio within the DNP Select Income Fund Inc., a closed-end mutual fund; an affiliated mutual fund series offered under certain universal life insurance and annuity products; and separate institutional accounts. Prior to joining Duff  & Phelps, Mr. Haggerty was a senior analyst and portfolio manager at ABN AMRO Asset Management for seven years.
Connie M. Luecke, CFA. Ms. Luecke joined Duff  & Phelps in 1992 and serves as Senior Managing Director. She has served as the co-portfolio manager of the Global Infrastructure Fund since its inception in 2004 as well as co-portfolio manager of Virtus Total Return Fund and the Zweig Fund. Ms. Luecke has been the senior telecommunications analyst for the DNP Select Income Fund Inc. since 1996. Ms. Luecke concentrates her research on the global telecommunications industry. Prior to joining Duff  & Phelps, Ms. Luecke was a financial valuation consultant with Coopers & Lybrand for two years and research assistant with Harris Associates L.P. for six years.
Randle L. Smith, CFA. Mr. Smith joined Duff  & Phelps in 1990 and serves as a Senior Managing Director. He has served as the co-portfolio manager of the Global Infrastructure Fund since its inception in 2004 as well as co-portfolio manager of Virtus Total Return Fund and the Zweig Fund. Mr. Smith has been a senior utilities analyst for the DNP Select Income Fund Inc. since 1996. Mr. Smith concentrates his research on the global utilities, transportation and energy infrastructure industries. Prior to joining Duff  & Phelps, Mr. Smith worked for eight years at NiSource, an Indiana-based electric and gas utility company.
Herzfeld
​ ​ Virtus Herzfeld Fund ​ ​ ​
Erik M. Herzfeld
Thomas J. Herzfeld
(both since the fund's inception in September 2012)
​ ​
Erik M. Herzfeld. Mr. Herzfeld is President at Herzfeld and is responsible for closed-end fund trading and portfolio management activities. He also serves as portfolio manager for a closed-end fund managed by Herzfeld. Before joining the firm in 2007, he served in quantitative research and trading roles with both Lehman Brothers (1998 to 2000) and JPMorgan (2000 to 2007), where he served as a Vice President in New York and Asia.
Thomas J. Herzfeld. Mr. Herzfeld is the Chairman of Herzfeld. He also serves as portfolio manager for closed-end fund trading programs and a closed-end fund managed by Herzfeld. He is author of the first textbook published on the subject of closed-end funds, The Investor’s Guide to Closed-End Funds (McGraw-Hill, 1979), as well as five other books dedicated to the industry. He is widely considered to be the leading expert in the field of closed-end funds. Mr. Herzfeld has been quoted in thousands of articles and has written hundreds of his own on the subject of closed-end funds. He has written periodically for Barron’s and has made television appearances on Wall Street Week, The Nightly Business Report and CNBC. Prior to 1981, Mr. Herzfeld was Executive Vice President and Director of a NYSE member firm.
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Horizon
​ ​ Virtus International Wealth Masters Fund ​ ​ ​
Matthew Houk
Murray Stahl
(both since the fund's inception in November 2014)
​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​
Matthew Houk
Murray Stahl
(both since the fund’s inception in September 2012)
​ ​
Matthew Houk. Mr. Houk is a Portfolio Manager at Horizon and has portfolio management and research responsibilities at Horizon Kinetics. He is a member of the investment committee where he has responsibilities in the identification, analysis and monitoring of certain investment opportunities for the Firm. Mr. Houk is also a Co-Portfolio Manager of three funds managed by an affiliate of Horizon. He joined the Firm in 2008; previously, Mr. Houk was with Goldman, Sachs & Co.
Murray Stahl. Mr. Stahl is a Portfolio Manager at Horizon and is Chief Executive Officer, Chairman of the Board and is a co-founder of Horizon Kinetics. Mr. Stahl serves as the Firm's Chief Investment Officer, and chairs the Firm's Investment Committee, which is responsible for portfolio management decisions across the entire firm. Prior to co-founding the Firm, he spent 16 years at Bankers Trust Company (1978-1994) as a senior portfolio manager and research analyst where he managed trust assets and was deeply involved in new product development.
Kayne
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ Craig Thrasher, CFA (since the fund’s inception in December 2013) ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​
Craig Stone
Craig Thrasher, CFA
(both since the fund’s inception in September 2012)
​ ​
Craig Stone. Mr. Stone is a Portfolio Manager and Senior Research Analyst at Kayne. Before joining Kayne in 2000, Mr. Stone was a Portfolio Manager at Doheny Asset Management. He has approximately 26 years of investment industry experience.
Craig Thrasher, CFA. Mr. Thrasher is a Portfolio Manager and Research Analyst at Kayne. Before joining Kayne in 2008, Mr. Thrasher was employed at Kirr, Marbach & Company as an equity analyst, and at Webbush Morgan Securities in correspondent credit. He has approximately 12 years of equity research experience.
KBIGI (North America)
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​
James Collery (since the fund's inception in September 2012)
David Hogarty (since the fund's inception in September 2012)
John Looby (since October 2014)
Ian Madden (since the fund's inception in September 2012)
Gareth Maher (since the fund's inception in September 2012)
Massimiliano Tondi, CFA (since October 2014)
​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​
Andros Florides
Colm O’Connor
Noel O’Halloran
(all since the fund's inception in March 2015)
​ ​
James Collery. Mr. Collery is Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). Mr. Collery joined the firm in 2001 as a Performance & Risk Analyst. In 2003, he was appointed as a Portfolio Manager on a hedge fund team. During this time, he worked on a fund of funds where he was responsible for manager due diligence as well as portfolio construction, and on a direct equity long short fund, which was quantitatively managed. Mr. Collery joined the Global Equity Strategy team in 2007.
Andros Florides. Mr. Florides is Senior Portfolio Manager—Agribusiness and Global Resource Solutions Strategies at KBIGI (North America), where he is responsible for the development of investment strategy as well as portfolio management. Prior to joining KBIGI (North America) in 2008, he was a senior research analyst, global consumer equities at Bank of Ireland Asset Management (1998 to 2008).
David Hogarty. Mr. Hogarty is Head of Strategy Development—Global Equity Strategies at KBIGI (North America). Mr. Hogarty joined the firm in 1994 and has held a number of senior management roles including responsibility for Product
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Development, Business Development and Consultant Relationships. Mr. Hogarty was instrumental in developing the Global equity strategy in 2003 and has been a member of the investment team since launch. He is also a former member of the Irish Association of Pension Funds (IAPF) Investment Committee.
John Looby. Mr. Looby is Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). Mr. Looby joined the firm in September 2014. Prior to joining KBIGI (North America), he was senior investment manager at Setanta Asset Management, where he was the lead portfolio manager of the flagship Global Equity Fund. Mr. Looby began his investment management career in 1990 and has had roles spanning fixed income, absolute return and equities.
Ian Madden. Mr. Madden is Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). Mr. Madden joined the firm in November 2000 as a Portfolio Assistant and joined the Global Equity Strategies team in 2004. In 2002, Mr. Madden was appointed Manager of the Institutional Business Support unit, responsible for unit trust dealing, client cash flow, audit reporting and client queries. Prior to joining KBIGI (North America), he worked for the international division of National Irish Bank.
Gareth Maher. Mr. Maher is Head of Portfolio Management—Global Equity Strategies at KBIGI (North America). He joined the KBIGI (North America) Global Equity Strategies team in 2008, having managed U.S., Irish and Far Eastern equities for the firm from 2000. Previously, Mr. Maher managed Japanese, Far Eastern and U.S. equity portfolios for Irish Life Investment Managers and Eagle Star (Zurich) from 1987 to 2000.
Colm O'Connor. Mr. O'Connor is Senior Portfolio Manager—Energy Solutions and Global Resource Solutions Strategies at KBIGI (North America). He joined the Environmental Strategies team 2006 as an analyst and was promoted to Portfolio Manager in 2008. Previously, he worked at the firm as an analyst in various departments at KBIGI (North America) (2003 to 2006).
Noel O'Halloran. Mr. O'Halloran is Chief Investment Officer and Portfolio Manager at KBIGI (North America). He joined KBIGI (North America) in 1992, was promoted to Head of Equities in 1996 and was appointed CIO in 2002. As CIO, he has overall responsibility for investment process and performance of the firm's assets across the various asset classes and specialist equity portfolios. He has specifically managed equity portfolios across Irish, European, Asian and U.S. equity markets. Prior to joining KBIGI (North America), Mr. O'Halloran was a U.S. equity asset manager with Irish Life Investment Managers.
Massimiliano Tondi, CFA. Mr. Tondi is Senior Portfolio Manager—Global Equity Strategies at KBIGI (North America). Mr. Tondi joined the firm in September 2014. Prior to joining KBIGI (North America), he was a quantitative portfolio manager at Fideuram Asset Management (2011 to 2014), where he previously served as a risk manager (2007 to 2011). Mr. Tondi began his career in the financial sector in 2004.
Newfleet
​ ​ Virtus Bond Fund ​ ​ ​
David L. Albrycht, CFA (since 2012)
Christopher J. Kelleher, CFA, CPA (since 2012)
​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ Timothy M. Heaney, CFA (since 1997) ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​
David L. Albrycht, CFA (since inception in September 2012)
Stephen H. Hooker, CFA (since inception in September 2012)
Daniel Senecal, CFA (since inception in September 2012)
​ ​
​ ​ Virtus High Yield Fund ​ ​ ​
David L. Albrycht, CFA (since 2011)
Kyle A. Jennings, CFA (since 2011)
Francesco Ossino (since 2012)
Jonathan R. Stanley, CFA (since 2012)
​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​
David L. Albrycht, CFA (since May 2012)
Benjamin Caron, CFA (since May 2012)
Lisa M. Baribault (since January 2017)
Christopher J. Kelleher, CFA, CPA (since October 2012)
​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ David L. Albrycht, CFA (since 1994) ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ David L. Albrycht, CFA (since 1993) ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​
David L. Albrycht, CFA (since 2008)
Kyle A. Jennings, CFA (since 2008)
Francesco Ossino (since 2012)
​ ​
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​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​
Timothy M. Heaney, CFA (since June 2012)
Lisa H. Leonard (since June 2012)
​ ​
David L. Albrycht, CFA. Mr. Albrycht is President and Chief Investment Officer at Newfleet. Prior to joining Newfleet in 2011, he was Executive Managing Director (2008 to 2011) and Vice President (2005 to 2008), Fixed Income, of Goodwin Capital Advisers, Inc. (“Goodwin”). Previously, he was associated with VIA, which at the time was an affiliate of Goodwin. He managed fixed income portfolios for Goodwin affiliates since 1991. Mr. Albrycht also manages several fixed income and variable investment options as well as two closed-end funds.
Lisa M. Baribault. Ms. Baribault is a Director and Portfolio Manager at Newfleet (since 2011). Prior to 2011, Ms. Baribault was a manager of Investment Accounting at Phoenix Life Insurance Company. Ms. Baribault began her career in the investment industry in 2003.
Benjamin Caron, CFA. Mr. Caron is Senior Managing Director and Portfolio Manager at Newfleet (since June 2011). Prior to June 2011, Mr. Caron was on the fixed income team at Goodwin. Mr. Caron also is a portfolio manager of a closed-end fund managed by Newfleet, in addition to assisting the senior portfolio manager in the management of several open-end funds managed by Newfleet. Mr. Caron joined Goodwin in 2002 as a client service associate for the institutional markets group focusing on institutional fixed income clients.
Timothy M. Heaney, CFA. Mr. Heaney is Senior Managing Director and Senior Portfolio Manager—Municipal Securities at Newfleet (since 2011) and served as Senior Vice President and Portfolio Manager, Fixed Income of VIA (2008 to 2011). Previously, he was associated with Goodwin (2007 to 2008), at which time it was an affiliate of VIA, and was also Managing Director, Fixed Income (1997 to 2007), Director, Fixed Income Research (1996 to 1997) and Investment Analyst (1992 to 1996) of VIA. Mr. Heaney also manages the Virtus Tax-Exempt Bond Fund, as well as high net worth municipal bond portfolios for Newfleet and institutional municipal bond portfolios for Virtus’ affiliated manager, Duff  & Phelps Investment Management Co. (“Duff  & Phelps”), as well as DTF Tax-Free Income, Inc., a closed-end fund managed by Duff  & Phelps.
Stephen H. Hooker, CFA. Mr. Hooker is the Managing Director of Foreign Research, sector manager for emerging markets debt and a member of the corporate credit research group at Newfleet (since 2011). He is responsible for the paper and packaging and chemicals industry sectors, and the Eastern Europe, Middle East, and Africa sovereign credit sector. From 2005 until 2011, Mr. Hooker was vice president, senior credit analyst at Aladdin Capital Management and Global Plus Investment Management, respectively, both of which specialize in high yield and structured credit products. Prior to 2005, he was at Goodwin for 12 years, serving in various capacities, including as a senior credit analyst and emerging markets sector manager on its fixed income team.
Kyle A. Jennings, CFA. Mr. Jennings is Senior Managing Director and Head of Credit Research (since 2011). Prior to joining Newfleet, Mr. Jennings was Managing Director of Goodwin. Previously, he was associated with VIA, which at the time was an affiliate of Goodwin, and has been a member of the corporate credit research team since 1998. He is the sector manager for the leveraged loan sector of the multi-sector fixed income strategies of Newfleet. He has over 20 years of investment experience.
Christopher J. Kelleher, CFA, CPA. Mr. Kelleher is Senior Managing Director and Senior Portfolio Manager (since 2012) at Newfleet. Prior to joining Newfleet, Mr. Kelleher was retired for two years from Goodwin, where he was Managing Director and Senior Portfolio Manager (1997 to January 2010). Previously, he was an investment officer with Phoenix Life Insurance Company (1983 to 1997), which at the time was an affiliate of Goodwin and VIA. He has more than 30 years of investment experience in all bond market sectors, including both publicly traded and private placements.
Lisa H. Leonard. Ms. Leonard is Managing Director and Portfolio Manager—Municipal Securities at Newfleet (since 2011) and served as Vice President and Portfolio Manager, Fixed Income of VIA (2008 to 2011). Previously, she was associated with Goodwin (2007 to 2008), at which time it was an affiliate of VIA, and was also Director, Municipal Research (1998 to 2007), Director, Investment Operations (1994 to 1998) and Fixed Income Trader (1987 to 1993) of VIA. Ms. Leonard manages high net worth municipal bond portfolios for Newfleet and institutional municipal bond portfolios for Duff  & Phelps. Ms. Leonard also manges a closed-end fund managed by an affiliate of Newfleet and VIA.
Francesco Ossino. Mr. Ossino is Senior Managing Director and Sector Head of the Bank Loan asset class at Newfleet, with a primary focus on floating rate bank loan products. Prior to joining Virtus in August 2012, Mr. Ossino
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was a portfolio manager at Hartford Investment Management Company (2004 to 2012), where he managed mutual funds focused on bank loans and a commingled bank loan portfolio for institutional investors. Previously, he held a variety of credit analyst and portfolio management positions at CIGNA (2002 to 2004), HVB Bank (2000 to 2002) and FleetBoston Financial (1996 to 2000).
Daniel P. Senecal, CFA. Mr. Senecal is Managing Director of Credit Research at Newfleet (since 2011). He is also responsible for the energy industry sector and the Latin America sovereign credit sector. Mr. Senecal also co-manages Virtus Global Multi-Sector Income Fund, a closed-end fund. Prior to joining Newfleet, he held the same position with Goodwin, where he began working in 1997. Mr. Senecal also completed a formal credit training program at Shawmut Bank, where he was a credit analyst reviewing investment grade and high yield borrowers; he also worked at BankBoston as a corporate bond analyst.
Jonathan R. Stanley, CFA. Mr. Stanley is Managing Director of Fixed Income Research and sector manager for high yield credit, at Newfleet (since 2011). He is also responsible for the consumer products, food and beverage, restaurants, retail and metals and mining industries, and the Asian sovereign credit sector. Prior to joining Newfleet, he was on the fixed income team at Goodwin, serving as sector manager for high yield credit. Previously, he was associated with VIA, which at the time was an affiliate of Goodwin. Mr. Stanley joined Goodwin in 1996. From 2001 to 2006, he was a portfolio manager age Global Financial Private Capital. He rejoined Goodwin in 2006 as a member of the corporate credit research group and assumed responsibilities for the management of the high yield sector in 2008.
Rampart
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​
Michael Davis (since September 2016)
Brendan R. Finneran (since June 2013)
Robert F. Hofeman, Jr. (since June 2013)
Warun Kumar (since September 2016)
​ ​
Michael Davis. Mr. Davis is a Portfolio Manager at Rampart (since September 2016) and at VIA (since 2014) and has over 15 years of experience in the financial services industry, including investment management and capital markets. Prior to joining Virtus in 2014, he was a founding partner of Varick Asset Management, an independent alternative manager focused on the development of innovative portfolio solutions and investment strategies. Before forming Varick, Mr. Davis worked in the institutional asset management division of Barclays Capital, focused on quantitative and derivative-based investment strategies. Prior to Barclays, he worked in the derivative structuring group at Lehman Brothers. Mr. Davis started his career at Merrill Lynch in the asset-backed finance business.
Brendan R. Finneran. Mr. Finneran serves as Portfolio Manager and Trader at Rampart. Mr. Finneran joined Rampart in July of 2008 and has 14 years of investment experience. Prior to Rampart, he was trader and operations manager at Andover Capital Advisors (2003 to 2008), where he was responsible for operational account management (processing and settlement) for all equity, option, bond, bank debt, CDS and swap trades. Prior to Andover Capital Advisors, Brendan held various positions at Cone Jacquards and Robert Fleming as Account Manager.
Robert F. Hofeman, Jr. Mr. Hofeman serves as Portfolio Manager and Trader at Rampart. Mr. Hofeman joined Rampart in May of 2012 with more than 14 years of investment experience. Prior to Rampart, he was an equity trading consultant for Linedata (2010 to 2012) where he translated buy-side business processes to the technology staff. Previously, Mr. Hofeman was a vice president of Evergreen Investments (2007 to 2009), where he traded stocks, options and futures, and was the primary trader at Ironwood Investment Management, LLC (2002 to 2007), focusing on small cap stocks and assisting with the research processes.
Warun Kumar. Mr. Kumar is Chief Investment Officer and Portfolio Manager at Rampart (since October 2015), and Portfolio Manager at Virtus Alternative Investment Advisers, Inc., an affiliate of VIA (since May 2014). Before joining Virtus, Mr. Kumar was founder and managing partner of Varick Asset Management, an independent alternative manager focused on the development of innovative portfolio solutions and investment strategies for high net worth investors and institutional clients (2010 to 2014). Prior to forming Varick, Mr. Kumar was the U.S. head of Barclays Capital Fund Solutions, where he led the investment committee and managed business expansion throughout the Americas (2007 to 2010). Mr. Kumar’s investment management career began at Volaris Advisors, where he was a partner and headed the derivative advisory business. In addition to these roles, Mr. Kumar has held senior positions in the capital markets divisions of Lehman Brothers and Robertson Stephens, and was a founding partner of Sigma Advisors, an alternative investment advisory firm. Mr. Kumar began his financial services career in 1993 as a member of JP Morgan’s equity derivatives business.
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VIA
​ ​ Virtus Alternatives Diversifier Fund ​ ​ ​ Warun Kumar (since September 2016) ​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​
Michael Davis (since September 2016)
Brendan R. Finneran (since September 2016)
Robert F. Hofeman, Jr. (since September 2016)
Warun Kumar (since May 2015)
​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​
Michael Davis (since September 2016)
Brendan R. Finneran (since September 2016)
Robert F. Hofeman, Jr. (since September 2016)
Warun Kumar (since May 2015)
​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​
Michael Davis (since September 2016)
Brendan R. Finneran (since September 2016)
Robert F. Hofeman, Jr. (since September 2016)
Warun Kumar (since May 2015)
​ ​
​ ​ Virtus Sector Trend Fund ​ ​ ​
Michael Davis (since September 2016)
Brendan R. Finneran (since September 2016)
Robert F. Hofeman, Jr. (since September 2016)
Warun Kumar (since May 2015)
​ ​
Michael Davis. Mr. Davis is a Managing Director at VIA (since 2014) and has over 15 years of experience in the financial services industry, including investment management and capital markets. Prior to joining Virtus in 2014, he was a founding partner of Varick Asset Management, an independent alternative manager focused on the development of innovative portfolio solutions and investment strategies. Before forming Varick, Mr. Davis worked in the institutional asset management division of Barclays Capital, focused on quantitative and derivative-based investment strategies. Prior to Barclays, he worked in the derivative structuring group at Lehman Brothers. Mr. Davis started his career at Merrill Lynch in the asset-backed finance business.
Brendan R. Finneran. Mr. Finneran serves as Managing Director and Equity Trader at VIA (since September 2016) and has served as Portfolio Manager and Trader at Rampart Investment Management Company, LLC, an affiliate of VIA (since July 2008) Mr. Finneran has 14 years of investment experience. Prior to Rampart, he was trader and operations manager at Andover Capital Advisors (2003 to 2008), where he was responsible for operational account management (processing and settlement) for all equity, option, bond, bank debt, CDS and swap trades. Prior to Andover Capital Advisors, Mr. Finneran held various positions at Cone Jacquards and Robert Fleming as Account Manager.
Robert F. Hofeman, Jr. Mr. Hofeman serves as Managing Director and Equity Trader at VIA (since September 2016) and has served as Portfolio Manager and Trader at Rampart Investment Management Company, LLC, an affiliate of VIA (since May 2012). Mr. Hofeman has more than 14 years of investment experience. Prior to Rampart, he was an equity trading consultant for Linedata (2010 to 2012) where he translated buy-side business processes to the technology staff. Previously, Mr. Hofeman was a vice president of Evergreen Investments (2007 to 2009), where he traded stocks, options and futures, and was the primary trader at Ironwood Investment Management, LLC (2002 to 2007), focusing on small cap stocks and assisting with the research processes.
Warun Kumar. Mr. Kumar is Senior Managing Director and Portfolio Manager at VIA (since April 2015), and Portfolio Manager at Virtus Alternative Investment Advisers, Inc., an affiliate of VIA (since May 2014). He also serves as the Chief Investment Officer for Rampart Investment Management LLC, an affiliate of VIA (since October 2015). Before joining Virtus, Mr. Kumar was founder and managing partner of Varick Asset Management, an independent alternative manager focused on the development of innovative portfolio solutions and investment strategies for high net worth investors and institutional clients (2010 to 2014). Prior to forming Varick, Mr. Kumar was the U.S. head of Barclays Capital Fund Solutions, where he led the investment committee and managed business expansion throughout the Americas (2007 to 2010). Mr. Kumar’s investment management career began at Volaris Advisors, where he was a partner and headed the derivative advisory business. In addition to these roles, Mr. Kumar has held senior positions in the capital markets divisions of Lehman Brothers and Robertson Stephens, and was a founding partner of Sigma Advisors, an alternative investment advisory firm. Mr. Kumar began his financial services career in 1993 as a member of JP Morgan’s equity derivatives business.
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Vontobel
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​
Brian Bandsma (since June 2016)
Matthew Benkendorf  (since March 2016)
Jin Zhang, CFA (since June 2016)
​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​
Matthew Benkendorf  (since March 2016)
Daniel Kranson, CFA (since June 2016)
David Souccar (since June 2016)
​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​
Matthew Benkendorf  (since 2009)
Ramiz Chelat (since June 2016)
​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ Daniel Kranson, CFA (since March 2013) ​ ​
Brian Bandsma. Mr. Bandsma is a Director and Portfolio Manager (since June 2016) of Vontobel. He serves as Deputy Portfolio Manager of the Emerging Markets Opportunities Fund (since June 2016). He also serves as lead portfolio manager of the Vontobel Far East Equity Strategy (since June 2016), and previously served as deputy portfolio manager of that strategy (2013 to June 2016). Mr. Bandsma joined Vontobel in 2002 as a senior research analyst and continues to maintain his research responsibilities, with a focus on the information technology, financial, telecom services and consumer discretionary sectors. He began his financial career in 1998.
Matthew Benkendorf. Mr. Benkendorf is Chief Investment Officer of Vontobel. He serves as Lead Portfolio Manager of the EM Opportunities Fund (since March 2016), the Foreign Opportunities Fund (since March 2016) and the Global Opportunities Fund (since March 2016) and previously served as Deputy Portfolio Manager (January 2015 to March 2016) and Co-Portfolio Manager (2009 through 2014) of the Global Opportunities Fund. Previously at Vontobel he served as a Managing Director (April 2013 to March 2016); Executive Director (April 2012 to April 2013); Director (July 2009 to April 2012); Vice President (2007 to 2009); Assistant Vice President (2005 to 2007); and Senior Research Analyst (2002 to 2005). Mr. Benkendorf joined Vontobel in 1999 as a Portfolio Administrator.
Ramiz Chelat. Mr. Chelat is a Director and Portfolio Manager of Vontobel. He serves as Deputy Portfolio Manager of the Global Opportunities Fund (since June 2016). Mr. Chelat also serves as deputy portfolio manager of the Vontobel Global Equity Strategy (since June 2016). Mr. Chelat joined Vontobel in 2007 as a senior research analyst and continues to maintain his research responsibilities, with a primary focus on the consumer discretionary, consumer staples and information technology sectors. He began his financial career in 1997.
Daniel Kranson, CFA. Mr. Kranson is a Portfolio Manager of Vontobel. He serves as Portfolio Manager of the Greater European Opportunities Fund (since March 2016) and Deputy Portfolio Manager of the Foreign Opportunities Fund. Mr. Kranson previously served as Deputy Portfolio Manager (January 2015 to March 2016) and Co-Portfolio Manager (March 2013 through 2014) of the Greater European Opportunities Fund. Mr. Kranson joined Vontobel in 2007 as a senior research analyst with a primary focus on consumer staples, energy, health care, and materials stocks. Previously, he was at Scout Capital Management (from 2006 to 2007) and on the sell-side at Sanford C. Bernstein & Co. (from 1999 to 2006).
David Souccar. Mr. Souccar is Director and Portfolio Manager at Vontobel. He serves as Deputy Portfolio Manager of the Foreign Opportunities Fund (since June 2016). Mr. Souccar also serves as deputy portfolio manager of the Vontobel International Equity Strategy (since June 2016). Mr. Souccar joined Vontobel in 2007 as a senior research analyst and continues to maintain his research responsibilities, with a focus on the energy, industrials and utilities sectors. He began his financial career in 1996.
Jin Zhang, CFA. Mr. Zhang is a Director and Portfolio Manager (since June 2016) of Vontobel. He serves as Deputy Portfolio Manager of the Emerging Markets Opportunities Fund (since June 2016). Mr. Zhang also serves as deputy portfolio manager of the Vontobel Emerging Markets Equity Strategy (since June 2016). Mr. Zhang joined Vontobel in 2005 as a senior research analyst and continues to maintain his research responsibilities, with a focus on the consumer staples and financial sectors. He began his financial career in 1995.
Please refer to the SAI for additional information about the funds' portfolio managers, including the structure of and method of computing compensation, other accounts they manage and their ownership of shares of the funds.
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Risks Associated with Additional Investment Techniques and Fund Operations
​
In addition to the Principal Investment Strategies and Risks Related to Principal Investment Strategies, each of the funds listed in the chart below may engage in additional investment techniques that present additional risks to a fund. Those additional investment techniques in which a fund is expected to engage as of the date of this prospectus are indicated in the chart below, although other techniques may be utilized from time to time. The information below the chart describes the additional investment techniques and their risks. Many of the additional investment techniques that a fund may use, as well as other investment techniques that are relied upon to a lesser degree, are more fully described in the SAI.
​ ​
Risks
​ ​ ​
Virtus
Alternatives
Diversifier
Fund
​ ​ ​
Virtus Bond
Fund
​ ​ ​
Virtus CA
Tax-Exempt
Bond Fund
​ ​ ​
Virtus
Emerging
Markets Debt
Fund
​ ​ ​
Virtus
Emerging
Markets
Equity Income
Fund
​ ​ ​
Virtus
Emerging
Markets
Opportunities
Fund
​ ​ ​
Virtus
Emerging
Markets
Small-Cap
Fund
​ ​ ​
Virtus Equity
Trend Fund
​ ​ ​
Virtus
Essential
Resources
Fund
​ ​ ​
Virtus Foreign
Opportunities
Fund
​ ​ ​
Virtus Global
Equity Trend
Fund
​ ​
​ ​ Brady Bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
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​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
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​ ​ Counterparty ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Cybersecurity ​ ​ ​
X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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​ ​ Debt Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
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​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Equity REIT Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Funds (ETFs) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Foreign Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Currency Transactions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ High-Yield/High- Risk Fixed Income Securities (Junk Bonds) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Illiquid and Restricted Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Infrastructure-Related Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Investment Grade Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Master Limited Partnership ("MLP") ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Money Market Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset Backed Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Municipal Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mutual Fund Investing ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Non-Performing Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Operational ​ ​ ​
X
​ ​ ​
X
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X
​ ​ ​
X
​ ​ ​
X
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X
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X
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X
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X
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X
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X
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​ ​ Private Placements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Repurchase Agreements ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Securities Lending ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ U.S. and Foreign Government Obligations ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Variable Rate, Floating Rate and Variable Amount Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ When-Issued and Delayed-Delivery Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Zero Coupon, Step Coupon, Deferred Coupon and PIK Bonds ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
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TABLE OF CONTENTS
​ ​
Risks
​ ​ ​
Virtus Global
Infrastructure
Fund
​ ​ ​
Virtus Global
Opportunities
Fund
​ ​ ​
Virtus Global
Real Estate
Securities
​ ​ ​
Virtus Greater
European
Opportunities
Fund
​ ​ ​
Virtus
Herzfeld Fund
​ ​ ​
Virtus High
Yield Fund
​ ​ ​
Virtus
International
Equity Fund
​ ​ ​
Virtus
International
Real Estate
Securities
Fund
​ ​ ​
Virtus
International
Small-Cap
Fund
​ ​ ​
Virtus
International
Wealth
Masters Fund
​ ​ ​
Virtus Low
Duration
Income Fund
​ ​
​ ​ Brady Bonds ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Counterparty ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Cybersecurity ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Debt Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Equity REIT Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Exchange-Traded Funds (ETFs) ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Foreign Currency Transactions ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ High-Yield/High- Risk Fixed Income Securities (Junk Bonds) ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Illiquid and Restricted Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Infrastructure-Related Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Investment Grade Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Master Limited Partnership ("MLP") ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Money Market Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset Backed Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Municipal Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mutual Fund Investing ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Non-Performing Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Operational ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Private Placements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Repurchase Agreements ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Securities Lending ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ U.S. and Foreign Government Obligations ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Variable Rate, Floating Rate and Variable Amount Securities ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ When-Issued and Delayed-Delivery Securities ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Zero Coupon, Step Coupon, Deferred Coupon and PIK Bonds ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​
Risks
​ ​ ​
Virtus Low
Volatility
Equity Fund
​ ​ ​
Virtus
Multi-Asset
Trend Fund
​ ​ ​
Virtus
Multi-Sector
Intermediate
Bond Fund
​ ​ ​
Virtus
Multi-Sector
Short Term
Bond Fund
​ ​ ​
Virtus Real
Estate
Securities
Fund
​ ​ ​
Virtus Sector
Trend Fund
​ ​ ​
Virtus Senior
Floating Rate
Fund
​ ​ ​
Virtus
Tax-Exempt
Bond Fund
​ ​ ​
Virtus Wealth
Masters
Fund
​ ​
​ ​ Brady Bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Convertible Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Counterparty ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Cybersecurity ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Debt Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Depositary Receipts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Derivatives ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Equity REIT Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Exchange-Traded Funds (ETFs) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 207 ​
TABLE OF CONTENTS
​ ​
Risks
​ ​ ​
Virtus Low
Volatility
Equity Fund
​ ​ ​
Virtus
Multi-Asset
Trend Fund
​ ​ ​
Virtus
Multi-Sector
Intermediate
Bond Fund
​ ​ ​
Virtus
Multi-Sector
Short Term
Bond Fund
​ ​ ​
Virtus Real
Estate
Securities
Fund
​ ​ ​
Virtus Sector
Trend Fund
​ ​ ​
Virtus Senior
Floating Rate
Fund
​ ​ ​
Virtus
Tax-Exempt
Bond Fund
​ ​ ​
Virtus Wealth
Masters
Fund
​ ​
​ ​ Foreign Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Foreign Currency Transactions ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ High-Yield/High- Risk Fixed Income Securities (Junk Bonds) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Illiquid and Restricted Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Infrastructure-Related Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Investment Grade Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Leverage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Master Limited Partnership ("MLP") ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Money Market Instruments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mortgage-Backed and Asset Backed Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Municipal Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Mutual Fund Investing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Non-Performing Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Operational ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ Private Placements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ Repurchase Agreements ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Securities Lending ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Short-Term Investments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​
​ ​ U.S. and Foreign Government Obligations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ U.S. Government Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Unrated Fixed Income Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Variable Rate, Floating Rate and Variable Amount Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ When-Issued and Delayed-Delivery Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ Zero Coupon, Step Coupon, Deferred Coupon and PIK Bonds ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Brady Bonds
Brady Bonds are dollar-denominated bonds issued by certain emerging market countries and collateralized by zero-coupon U.S. Treasury bonds. Brady Bonds have an uncollateralized component, and countries issuing such bonds have a history of defaults, making the bonds speculative in nature. In considering the risks associated with these bonds, an investor should also review and consider the risks associated with investing in emerging markets generally.
Convertible Securities
Convertible securities are bonds, debentures, notes, preferred stock, rights, warrants or other securities that may be converted into or exchanged for a prescribed amount of common stock or other security of the same or a different issuer or into cash within a particular period of time at a specified price or formula. A convertible security generally entitles the holder to receive interest paid or accrued on debt securities or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. If a convertible security is called for redemption, the respective fund may have to redeem the security, convert it into common stock or sell it to a third party at a price and time that is not beneficial for the fund. The value of convertible securities tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying securities. Securities convertible into common stocks may have higher yields than common stocks but lower yields than comparable nonconvertible securities.
Counterparty
When a fund engages in investment techniques in which it relies on another party to consummate the transaction, the fund is subject to the risk of default by the other party. To the extent that a fund enters into multiple transactions with a single or limited number of counterparties, the fund will be subject to increased levels of counterparty risk.
Cybersecurity
With the increased use of technologies such as the Internet to conduct business, the funds have become potentially more susceptible to operational and information security risks through breaches in cybersecurity. In general, a breach in cybersecurity can result from either a deliberate attack or an unintentional event. Cybersecurity breaches may involve, among other things, infection by computer viruses or other malicious software code or unauthorized access to
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TABLE OF CONTENTS
the digital information systems, networks or devices of the funds or their service providers (including, but not limited to, the funds’ investment adviser, transfer agent, custodian, administrators and other financial intermediaries) through “hacking” or other means, in each case for the purpose of misappropriating assets or sensitive information (including, for example, personal shareholder information), corrupting data or causing operational disruption or failures in the physical infrastructure or operating systems that support the funds. Any such cybersecurity breaches or losses of service may cause the funds to lose proprietary information, suffer data corruption or lose operational capacity, which, in turn, could cause the funds to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures, and/or financial loss. While the funds and their service providers have established business continuity plans and risk management systems designed to prevent or reduce the impact of cybersecurity attacks, there are inherent limitations in such plans and systems due in part to the ever-changing nature of technology and cybersecurity attack tactics, and there is a possibility that certain risks have not been adequately identified or prepared for. Cybersecurity risks may also impact issuers of securities in which the funds invest, which may cause the funds’ investments in such issuers to lose value.
Debt Securities
Debt securities are subject to various risks, the most prominent of which are credit risk and interest rate risk. These risks can affect a security’s price volatility to varying degrees, depending upon the nature of the instrument. Risks associated with investing in debt securities include the following:
•
Call Risk.  There is a risk that issuers will prepay fixed rate obligations when interest rates fall. A fund holding callable securities therefore may be forced to reinvest in obligations with lower interest rates than the original obligations and otherwise may not benefit fully from the increase in value that other fixed income securities experience when rates decline.
​
•
Credit Risk.  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. Senior Floating Rate Fund: Generally, Senior Loans are less susceptible to this risk than certain other types of fixed income securities, because the payment of principal and interest on Senior Loans will take precedence over other payment obligations of the borrower.
​
•
Interest Rate Risk.  The values of debt securities usually rise and fall in response to changes in interest rates. Declining interest rates generally increase the value of existing debt instruments, and rising interest rates generally decrease the value of existing debt instruments. Changes in a debt instrument’s value usually will not affect the amount of interest income paid to a fund, but will affect the value of the fund’s shares. Interest rate risk is generally greater for investments with longer maturities.
​
Certain securities pay interest at variable or floating rates. Variable rate securities reset at specified intervals, while floating rate securities reset whenever there is a change in a specified index rate. In most cases, these reset provisions reduce the effect of changes in market interest rates on the value of the security. However, some securities do not track the underlying index directly, but reset based on formulas that can produce an effect similar to leveraging; others may also provide for interest payments that vary inversely with market rates. The market prices of these securities may fluctuate significantly when interest rates change.
Some investments give the issuer the option to call or redeem an investment before its maturity date. If an issuer calls or redeems an investment during a time of declining interest rates, a fund might have to reinvest the proceeds in an investment offering a lower yield, and therefore it might not benefit from any increase in value as a result of declining interest rates.
•
Limited Voting Rights Risk.  Debt securities typically do not provide any voting rights, except in cases when interest payments have not been made and the issuer is in default.
​
•
Liquidity Risk.  Certain debt securities may be substantially less liquid than many other securities, such as U.S. Government securities or common stocks.
​
•
Long-Term Maturities/Durations Risk.  The risk that fixed income securities with longer maturities or durations may be subject to greater price fluctuations due to interest rate, tax law, and general market changes than securities with shorter maturities or durations.
​
•
Redemption Risk.  Debt securities sometimes contain provisions that allow for redemption in the event of tax or security law changes, in addition to call features at the option of the issuer. In the event of a redemption, a fund may not be able to reinvest the proceeds at comparable rates of return.
​
​
Virtus Mutual Funds 209 ​
TABLE OF CONTENTS
Depositary Receipts
Certain funds may invest in American Depositary Receipts (ADRs) sponsored by U.S. banks, European Depositary Receipts (EDRs), Global Depositary Receipts (GDRs), ADRs not sponsored by U.S. banks, other types of depositary receipts (including non-voting depositary receipts), and other similar instruments representing securities of foreign companies.
Although certain depositary receipts may reduce or eliminate some of the risks associated with foreign investing, these types of securities generally are subject to many of the same risks as direct investment in securities of foreign issuers.
Derivatives
Derivative transactions are contracts whose value is derived from the value of an underlying asset, index or rate, including futures, options, non-deliverable forwards, forward foreign currency exchange contracts and swap agreements. A fund may use derivatives to hedge against factors that affect the value of its investments, such as interest rates and foreign currency exchange rates. A fund may also utilize derivatives as part of its overall investment technique to gain or lessen exposure to various securities, markets, volatility, dividend payments and currencies.
Derivatives typically involve greater risks than traditional investments. It is generally more difficult to ascertain the risk of, and to properly value, derivative contracts. Many derivatives, and particularly those that are privately negotiated, are complex and often valued subjectively. Improper valuations can result in increased cash payment requirements to counterparties or a loss of value to the fund. The prices of derivatives may move in unexpected ways, especially in abnormal market conditions. Derivatives are usually less liquid than traditional securities and are subject to counterparty risk (the risk that the other party to the contract will default or otherwise not be able to perform its contractual obligations). In addition, some derivatives transactions may involve potentially unlimited losses.
Derivative contracts entered into for hedging purposes may also subject a fund to losses if the contracts do not correlate with the assets, indexes or rates they were designed to hedge. Gains and losses derived from hedging transactions are, therefore, more dependent upon the subadviser’s ability to correctly predict the movement of the underlying asset prices, indexes or rates.
As an investment company registered with the SEC, each fund is required to identify on its books (often referred to as “asset segregation”) liquid assets, or engage in other SEC-approved measures, to “cover” open positions with respect to certain kinds of derivative instruments. If a fund investing in such instruments has insufficient cash to meet such requirements, it may have to sell other investments, including at disadvantageous times.
Governments, agencies and/or other regulatory bodies may adopt or change laws or regulations that could adversely affect a fund’s ability to invest in derivatives as the fund’s subadviser intends. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), among other things, grants the Commodity Futures Trading Commission (the “CFTC”) and SEC broad rulemaking authority to implement various provisions of the Dodd-Frank Act including comprehensive regulation of the over-the-counter (“OTC”) derivatives market. The implementation of the Dodd-Frank Act could adversely affect a fund by placing limits on derivative transactions, and/or increasing transaction and/or regulatory compliance costs. For example, the CFTC has recently adopted new rules that will apply a new aggregation standard for position limit purposes, which may further limit a fund’s ability to trade futures contracts and swaps.
There are also special tax rules applicable to certain types of derivatives, which could affect the amount, timing and character of a fund’s income or loss and hence of its distributions to shareholders by causing holding period adjustments, converting short-term capital losses into long-term capital losses, and accelerating a fund’s income or deferring its losses. A fund’s use of derivatives may also increase the amount of taxes payable by shareholders or the resources required by the fund or its adviser and/or subadviser(s) to comply with particular regulatory requirements.
Equity REIT Securities
REITs are financial vehicles that pool investor capital to purchase or finance real estate. Equity REITs invest primarily in direct ownership or lease of real property, and they derive most of their income from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value. Investing in equity REITs and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs and REIT-like entities are typically small or medium market capitalization companies, and they are subject to management fees and other expenses. A fund that invests in REITs and REIT-like entities will bear its proportionate share of the costs of the REITs’ and REIT-like entities’ operations. REITs and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidation. REITs
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TABLE OF CONTENTS
and REIT-like entities also are subject to the possibility of failing to qualify for tax-free pass-through of income. Also, because REITs and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. In the event of a default by a borrower or lessee, a REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the fund to possibly fail to qualify as a regulated investment company, depending upon the nature of dividends received by the fund.
Equity Securities
Generally, prices of equity securities are more volatile than those of fixed income securities. The prices of equity securities will rise and fall in response to a number of different factors. In particular, equity securities will respond to events that affect entire financial markets or industries (such as changes in inflation or consumer demand) and to events that affect particular issuers (such as news about the success or failure of a new product). Equity securities also are subject to “stock market risk,” meaning that stock prices in general may decline over short or extended periods of time. When the value of the stocks held by the fund goes down, the value of the fund’s shares will be affected.
Exchange-Traded Funds (ETFs)
ETFs invest in a portfolio of securities designed to track a particular market segment or index. The risks associated with investing in ETFs generally reflect the risks of owning shares of the underlying securities the ETF is designed to track, although lack of liquidity in an ETF could result in its value being more volatile than the underlying portfolio of securities. Assets invested in ETFs incur a layering of expenses, including operating costs and advisory fees that fund shareholders indirectly bear; such expenses may exceed the expenses the fund would incur if it invested directly in the underlying portfolio of securities the ETF is designed to track. Shares of ETFs trade on a securities exchange and may trade at, above, or below their net asset value.
Foreign Investing
Investing in securities of non-U.S. companies involves special risks and considerations not typically associated with investing in U.S. companies, and the values of non-U.S. securities may be more volatile than those of U.S. securities. The values of non-U.S. securities are subject to economic and political developments in countries and regions where the issuers operate or are domiciled, or where the securities are traded, such as changes in economic or monetary policies, and to changes in currency exchange rates. Values may also be affected by restrictions on receiving the investment proceeds from a non-U.S. country.
In general, less information is publicly available about non-U.S. companies than about U.S. companies. Non-U.S. companies are generally not subject to the same accounting, auditing and financial reporting standards as are U.S. companies. Certain foreign issuers classified as passive foreign investment companies may be subject to additional taxation risk.
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Currency Rate Risk.  Because the foreign securities in which a fund invests generally trade in currencies other than the U.S. dollar, changes in currency exchange rates will affect the fund’s net asset value, the value of dividends and interest earned, and gains and losses realized on the sale of securities. Because the value of each fund’s shares is calculated in U.S. dollars, it is possible for a fund to lose money by investing in a foreign security if the local currency of a foreign market depreciates against the U.S. dollar, even if the local currency value of the fund’s holdings goes up. Generally, a strong U.S. dollar relative to such other currencies will adversely affect the value of the fund’s holdings in foreign securities.
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Emerging Market Investing Risk.  The risks of foreign investments are generally greater in countries whose markets are still developing than they are in more developed markets. Emerging market countries typically have economic and political systems that are less fully developed, and can be expected to be less stable than those of more developed countries. For example, the economies of such countries can be subject to rapid and unpredictable rates of inflation or deflation. Since these markets are often small, they may be more likely to suffer sharp and frequent price changes or long-term price depression because of adverse publicity, investor perceptions or the actions of a few large investors. They may also have policies that restrict investment by foreigners, or that prevent foreign investors from withdrawing their money at will. Certain emerging markets may also face other significant internal or external risks, including the risk of war and civil unrest. For all of these reasons, investments in emerging markets may be considered speculative. To the extent that a fund invests a significant portion of its assets in a particular emerging market, the fund will be more vulnerable to financial, economic, political and other developments in that country, and conditions that negatively impact that country will have a greater impact on the fund as compared with a fund that does not have its holdings concentrated in a particular country.
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Foreign Currency Transactions
A fund may engage in foreign currency transactions, including foreign currency forward contracts, options, swaps and other similar strategic transactions. These transactions may be for the purposes of hedging or efficient portfolio management, or may be for investment purposes, and they may be exchange traded or traded directly with market counterparties. Such transactions may not prove successful or may have the effect of limiting gains from favorable markets movements.
A fund may use derivatives to acquire positions in various currencies, which presents the risk that the fund could lose money on its exposure to a particular currency and also lose money on the derivative. A fund also may take positions in currencies that do not correlate to the currency exposure presented by the fund’s other investments. As a result, the fund’s currency exposure may differ, in some cases significantly, from the currency exposure of its other investments and/or its benchmarks.
High-Yield/High-Risk Fixed Income Securities (Junk Bonds)
Securities rated “BB” or below by S&P or Fitch, or “Ba” or below by Moody’s, may be known as “high-yield” securities and commonly referred to as “junk bonds.” The highest of the ratings among S&P, Fitch and Moody's is used to determine the security's classification. Such securities entail greater price volatility and credit and interest rate risk than investment-grade securities. Analysis of the creditworthiness of high-yield/high-risk issuers is more complex than for higher-rated securities, making it more difficult for a fund's subadviser to accurately predict risk. There is a greater risk with high-yield/high-risk fixed income securities that an issuer will not be able to make principal and interest payments when due. If the fund pursues missed payments, there is a risk that fund expenses could increase. In addition, lower-rated securities may not trade as often and may be less liquid than higher-rated securities, especially during periods of economic uncertainty or change. As a result of all of these factors, these bonds are generally considered to be speculative.
Illiquid and Restricted Securities
Certain securities in which a fund invests may be difficult to sell at the time and price beneficial to the fund, for example due to low trading volumes or legal restrictions. When there is no willing buyer or a security cannot be readily sold, the fund may have to sell at a lower price or may be unable to sell the security at all. The sale of such securities may also require the fund to incur expenses in addition to those normally associated with the sale of a security.
Infrastructure-Related Investment
Infrastructure-related entities are subject to a variety of factors that may adversely affect their business or operations including high interest costs in connection with capital construction programs, costs associated with environmental and other regulations, the effects of economic slowdown and surplus capacity, increased competition from other providers of services, uncertainties concerning the availability of fuel at reasonable prices, the effects of energy conservation policies and other factors. Additionally, infrastructure-related entities may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, service interruption due to environmental, operational or other mishaps and the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards.
Investment Grade Securities
A fund may invest in all types of long-term or short-term investment-grade debt obligations of U.S. issuers. In addition to the types of securities mentioned in connection with the fund’s principal investment strategies, the fund may also invest in other bonds, debentures, notes, municipal bonds, equipment lease certificates, equipment trust certificates, conditional sales contracts and commercial paper. Debt securities with lower credit ratings have a higher risk of default on payment of principal and interest, and securities with longer maturities are subject to greater price fluctuations in response to changes in interest rates. If interest rates rise, the value of debt securities generally will fall.
Leverage
When a fund makes investments in futures contracts, forward contracts, swaps and other derivative instruments, the futures contracts, forward contracts, swaps and certain other derivatives provide the economic effect of financial leverage by creating additional investment exposure, as well as the potential for greater loss. When a fund uses leverage through activities such as borrowing, entering into short sales, purchasing securities on margin or on a when-issued basis, or purchasing derivative instruments in an effort to increase its returns, the fund has the risk of
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magnified capital losses that occur when losses affect an asset base, enlarged by borrowings or the creation of liabilities, that exceeds the net assets of the fund. The value of the shares of a fund employing leverage will be more volatile and sensitive to market movements. Leverage may also involve the creation of a liability that requires the fund to pay interest.
Loans
Investing in loans (including loan assignments, loan participations and other loan instruments) carries certain risks in addition to the risks typically associated with high-yield/high-risk fixed income securities. Loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market. In the event a borrower defaults, a fund’s access to the collateral may be limited or delayed by bankruptcy or other insolvency laws. There is a risk that the value of the collateral securing the loan may decline after a fund invests and that the collateral may not be sufficient to cover the amount owed to the fund. If the loan is unsecured, there is no specific collateral on which the fund can foreclose. In addition, if a secured loan is foreclosed, a fund may bear the costs and liabilities associated with owning and disposing of the collateral, including the risk that collateral may be difficult to sell.
Transactions in many loans settle on a delayed basis. As a result, sale proceeds related to the sale of loans may not be available to make additional investments or to meet the Fund’s redemption obligations until potentially a substantial period of time after the sale of the loans. No active trading market may exist for some loans, which may impact the ability of the Fund to realize full value in the event of the need to liquidate such assets. Adverse market conditions may impair the liquidity of some actively traded loans. Loans also may be subject to restrictions on resale, which can delay the sale and adversely impact the sale price. Difficulty in selling a loan can result in a loss. Loans made to finance highly leveraged corporate acquisitions may be especially vulnerable to adverse changes in economic or market conditions. Certain loans may not be considered “securities,” and purchasers, such as a fund, therefore may not be entitled to rely on the strong anti-fraud protections of the federal securities laws. With loan participations, a fund may not be able to control the exercise of any remedies that the lender would have under the loan and likely would not have any rights against the borrower directly, so that delays and expense may be greater than those that would be involved if a fund could enforce its rights directly against the borrower.
Master Limited Partnership
An investment in MLP units involves some risks that differ from an investment in the common stock of a corporation. Holders of MLP units have limited control on matters affecting the partnership. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. MLPs that concentrate in a particular industry or a particular geographic region are subject to risks associated with such industry or region. The fees that MLPs charge for transportation of oil and gas products through their pipelines are subject to government regulation, which could negatively impact the revenue stream. Investing in MLPs also involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. These include the risk of environmental incidents, terrorist attacks, demand destruction from high commodity prices, proliferation of alternative energy sources, inadequate supply of external capital, and conflicts of interest with the general partner. The benefit derived from the fund’s investment in MLPs is largely dependent on the MLPs being treated as partnerships for federal income tax purposes, so any change to this status would adversely affect the price of the MLP units.
Certain MLPs in which the Fund may invest depend upon their parent or sponsor entities for the majority of their revenues. If their parent or sponsor entities fail to make such payments or satisfy their obligations, the revenues and cash flows of such MLPs and ability of such MLPs to make distributions to unit holders, such as the Fund, would be adversely affected.
Money Market Instruments
To meet margin requirements, redemptions or for investment purposes, a fund may hold money market instruments, including full faith and credit obligations of the United States, high quality short-term notes and commercial paper.
Mortgage-Backed and Asset-Backed Securities
Mortgage-backed securities represent interests in pools of residential mortgage loans purchased from individual lenders by a federal agency or originated and issued by private lenders. Asset-backed securities represent interests in pools of underlying assets such as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. These two types of securities share many of the same risks.
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The impairment of the value of collateral or other assets underlying a mortgage-backed or asset-backed security, such as that resulting from non-payment of loans, may result in a reduction in the value of such security and losses to a fund.
Early payoffs in the loans underlying such securities may result in a fund receiving less income than originally anticipated. The variability in prepayments will tend to limit price gains when interest rates drop and exaggerate price declines when interest rates rise. In the event of high prepayments, a fund may be required to invest proceeds at lower interest rates, causing the fund to earn less than if the prepayments had not occurred. Conversely, rising interest rates may cause prepayments to occur at a slower than expected rate, which may effectively change a security that was considered short- or intermediate-term into a long-term security. Long-term securities tend to fluctuate in value more widely in response to changes in interest rates than shorter-term securities.
Municipal Securities
The amount of public information available about municipal bonds is generally less than that for corporate equities or bonds, and the investment performance of a fund may be more dependent on the analytical abilities of the investment adviser than would be the case for a fund that does not invest in municipal bonds. The secondary market for municipal bonds also tends to be less well-developed and less liquid than many other securities markets, which may adversely affect the fund’s ability to sell its bonds at attractive prices. In addition, municipal obligations can experience downturns in trading activity, and the supply of municipal obligations may exceed the demand in the market. During such periods, the spread can widen between the price at which an obligation can be purchased and the price at which it can be sold. Less liquid obligations can become more difficult to value and be subject to erratic price movements. Economic and other events (whether real or perceived) can reduce the demand for certain investments or for investments generally, which may reduce market prices and cause the value of the fund’s shares to fall. The frequency and magnitude of such changes cannot be predicted. A fund may invest in municipal obligations that do not appear to be related, but in fact depend on the financial rating or support of a single government unit, in which case, events that affect one of the obligations will also affect the others and will impact the fund’s portfolio to a greater degree than if the fund’s investments were not so related. The increased presence of non-traditional participants in the municipal markets may lead to greater volatility in the markets.
Mutual Fund Investing
Through its investments in other mutual funds, a fund is exposed not only to the risks of the underlying funds’ investments but also to certain additional risks. Assets invested in other mutual funds incur a layering of expenses, including operating costs, advisory fees and administrative fees that you, as a shareholder in the fund, indirectly bear. Such fees and expenses may exceed the fees and expenses the fund would have incurred if it invested in the underlying fund’s assets directly. To the extent that the expense ratio of an underlying fund changes, the weighted average operating expenses borne by the fund may increase or decrease. An underlying fund may change its investment objective or policies without the approval of the fund, and the fund might be forced to withdraw its investment from the underlying fund at a time that is unfavorable to the fund. If a fund invests in closed-end funds, it may incur added expenses such as additional management fees and trading costs and additional risks associated with trading at a discount to NAV and use of leverage.
Non-Performing Securities
Non-performing securities are those whose quality is comparable to securities rated as low as D by Standard & Poor’s or C by Moody’s. Repayment of obligations under such securities is subject to significant uncertainties, and as such investment in such securities may be considered speculative.
Operational
An investment in a fund, like any mutual fund, can involve operational risks arising from factors such as processing errors, human errors, inadequate or failed internal or external processes, failures in systems and technology, changes in personnel and errors caused by third-party service providers. The occurrence of any of these failures, errors or breaches could result in a loss of information, regulatory scrutiny, reputational damage or other events, any of which could have a material adverse effect on a fund. While the funds seek to minimize such events through controls and oversight, there may still be failures that could cause losses to a fund.
Private Placements
A fund may purchase securities which have been privately issued to qualified institutional investors under special rules adopted by the SEC. Such securities may offer higher yields than comparable publicly traded securities. Privately issued securities ordinarily can be sold by a fund only in secondary market transactions to certain qualified investors
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pursuant to rules established by the SEC or privately negotiated transactions to a limited number of purchasers. Therefore, sales of such securities by a fund may involve significant delays and expense.
Repurchase Agreements
A fund may invest in repurchase agreements with commercial banks, brokers and dealers considered by the fund’s subadviser to be creditworthy. Such agreements subject the fund to the risk of default or insolvency of the counterparty.
Securities Lending
A fund may loan portfolio securities with a value up to one-third of its total assets to increase its investment returns. If the borrower is unwilling or unable to return the borrowed securities when due, the lending fund can suffer losses. In addition, there is a risk of delay in receiving additional collateral or in the recovery of the securities, and a risk of loss of rights in the collateral, in the event that the borrower fails financially. There is also a risk that the value of the investment of the collateral could decline, causing a loss to the lending fund.
Short-Term Investments
Short-term investments include money market instruments, repurchase agreements, certificates of deposit and bankers’ acceptances and other short-term instruments that are not U.S. Government securities. These securities generally present less risk than many other investments, but they are generally subject to credit risk and may be subject to other risks as well.
Unrated Fixed Income Securities
A fund’s subadviser has the authority to make determinations regarding the quality of unrated fixed-income securities for the purposes of assessing whether they meet the fund’s investment restrictions. However, analysis of unrated securities is more complex than that of rated securities, making it more difficult for the subadviser to accurately predict risk. Unrated fixed income securities may not be lower in quality than rated securities, but due to their perceived risk they may not have as broad a market as rated securities, making it more difficult to sell unrated securities.
U.S. and Foreign Government Obligations
Obligations issued or guaranteed by the U.S. Government, its agencies, authorities and instrumentalities and backed by the full faith and credit of the United States only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will increase, and in fact, the market values of such obligations may fluctuate. In addition, not all U.S. Government securities are backed by the full faith and credit of the United States; some are the obligation solely of the entity through which they are issued. There is no guarantee that the U.S. Government would provide financial support to its agencies and instrumentalities if not required to do so by law. Foreign obligations may not be backed by the government of the issuing country, and are subject to foreign investing risks.
U.S. Government Securities
Obligations issued or guaranteed by the U.S. Government, its agencies, authorities and instrumentalities and backed by the full faith and credit of the United States only guarantee principal and interest will be timely paid to holders of the securities. The entities do not guarantee that the value of fund shares will increase, and in fact, the market values of such obligations may fluctuate. In addition, not all U.S. Government securities are backed by the full faith and credit of the United States; some are the obligation solely of the entity through which they are issued. There is no guarantee that the U.S. Government would provide financial support to its agencies and instrumentalities if not required to do so by law.
Variable Rate, Floating Rate and Variable Amount Securities
Variable rate, floating rate, or variable amount securities are generally short-term, unsecured, fluctuating, interest-bearing notes of private issuers. The absence of an active secondary market with respect to certain such instruments could make it difficult for the fund to dispose of the instrument if the issuer defaulted on its payment obligation or during periods that a fund is not entitled to exercise its demand rights, and the fund could, for these or other reasons, suffer a loss with respect to such instruments.
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When-Issued and Delayed-Delivery Securities
A fund may purchase securities on a when-issued or delayed-delivery basis. The value of the security on settlement date may be more or less than the price paid as a result of changes in interest rates and market conditions. If the value of such a security on its settlement date is less than the price paid by the fund, the value of the fund's shares may decline.
Zero Coupon, Step Coupon, Deferred Coupon and PIK Bonds
A fund may invest in any combination of zero coupon and step coupon bonds and bonds on which interest is payable in kind (“PIK”). The market prices of these bonds generally are more volatile than the market prices of securities that pay interest on a regular basis. Since the fund will not receive cash payments earned on these securities on a current basis, the fund may be required to make distributions from other sources. This may result in higher portfolio turnover rates and the sale of securities at a time that is less favorable.
The funds may buy other types of securities or employ other portfolio management techniques. Please refer to the SAI for more detailed information about these and other investment techniques of the funds.
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Pricing of Fund Shares
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How is the Share Price determined?
Each fund calculates a share price for each class of its shares. The share price (net asset value or “NAV”) for each class is based on the net assets of the fund and the number of outstanding shares of that class. In general, each fund calculates a share price for each class by:
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adding the values of all securities and other assets of the fund;
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subtracting liabilities; and
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dividing the result by the total number of outstanding shares of that class.
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Assets: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or, if no closing price is available, at the last bid price. Shares of other investment companies are valued at such companies’ NAVs. Debt securities (other than short-term investments) are valued on the basis of broker quotations or valuations provided by a pricing service, which in determining value utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. Other assets, such as accrued interest, accrued dividends and cash are also included in determining a fund’s NAV. As required, some securities and assets are valued at fair value as determined in good faith by, or under the direction of, the Board of Trustees.
For each of Virtus Alternatives Diversifier Fund, Virtus Equity Trend Fund, Virtus Global Equity Trend Fund, Virtus Herzfeld Fund, Virtus Low Volatility Equity Fund, Virtus Multi-Asset Trend Fund and Virtus Sector Trend Fund, the fund’s assets may consist primarily of shares of underlying mutual funds, if any, which are valued at their respective NAVs, and ETFs, which are valued at current market prices. To determine NAV, the fund and each underlying mutual fund values its assets at market value. Equity securities held by the underlying affiliated mutual funds or directly by the funds, and ETFs held directly by the funds, are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or, if no closing price is available, at the last bid price. Debt securities (other than short-term investments) held by the underlying affiliated mutual funds or directly by the funds are valued on the basis of broker quotations or valuations provided by a pricing service, which in determining value utilizes information with respect to recent sales, market transactions in comparable securities, quotations from dealers, and various relationships between securities. Securities held by any underlying unaffiliated mutual funds will be valued as set forth in the respective prospectuses of the underlying unaffiliated funds. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market value. As required, some securities and assets held by any underlying affiliated mutual funds or directly by the funds are valued at fair value as determined in good faith by, or under the direction of, the Board of Trustees. Other assets, such as accrued interest, accrued dividends and cash are also included in determining the fund’s NAV.
Liabilities: Accrued liabilities for class-specific expenses (if any), distribution fees, service fees and other liabilities are deducted from the assets of each class. Accrued expenses and liabilities that are not class-specific (such as management fees) are allocated to each class in proportion to each class’s net assets except where an alternative allocation can be more appropriately made.
Net Asset Value (NAV): The liabilities allocated to a class are deducted from the proportionate interest of such class in the assets of the applicable fund. The resulting amount for each class is then divided by the number of shares outstanding of that class to produce each class’s NAV per share.
The NAV per share of each class of each fund is determined as of the close of regular trading (normally 4:00 PM eastern time) on days when the New York Stock Exchange (“NYSE”) is open for trading. A fund will not calculate its NAV per share class on days when the NYSE is closed for trading. If a fund (or underlying fund, as applicable) holds securities that are traded on foreign exchanges that trade on weekends or other holidays when the funds do not price their shares, the NAV of the fund’s shares may change on days when shareholders will not be able to purchase or redeem the fund’s shares.
How are securities fair valued?
If market quotations are not readily available or available prices are not reliable, the funds (or underlying fund, as applicable) determine a “fair value” for an investment according to policies and procedures approved by the Board of Trustees. The types of assets for which such pricing might be required include: (i) securities whose trading has been
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suspended; (ii) securities where the trading market is unusually thin or trades have been infrequent; (iii) debt securities that have recently gone into default and for which there is no current market quotation; (iv) a security whose market price is not available from an independent pricing source and for which otherwise reliable quotes are not available; (v) securities of an issuer that has entered into a restructuring; (vi) a security whose price as provided by any pricing source does not, in the opinion of the adviser/subadviser, reflect the security’s market value; (vii) foreign securities subject to trading collars for which no or limited trading takes place; (viii) securities where the market quotations are not readily available as a result of  “significant” events; and (ix) securities whose principal exchange or trading market is closed for an entire business day on which a fund needs to determine its NAV. This list is not inclusive of all situations that may require a security to be fair valued, nor is it intended to be conclusive in determining whether a specific event requires fair valuation.
The value of any portfolio security held by a fund for which market quotations are not readily available shall be determined in good faith and in a manner that assesses the security’s “fair value” on the valuation date (i.e., the amount that the fund might reasonably expect to receive for the security upon its current sale), based on a consideration of all available facts and all available information, including, but not limited to, the following: (i) the fundamental analytical data relating to the investment; (ii) the value of other relevant financial instruments, including derivative securities, traded on other markets or among dealers; (iii) an evaluation of the forces which influence the market in which these securities are purchased and sold ( e.g. , the existence of merger proposals or tender offers that might affect the value of the security); (iv) the type of the security; (v) the size of the holding; (vi) the initial cost of the security; (vii) trading volumes on markets, exchanges or among broker-dealers; (viii) price quotes from dealers and/or pricing services; (ix) values of baskets of securities traded on other markets, exchanges, or among dealers; (x) changes in interest rates; (xi) information obtained from the issuer, analysts, other financial institutions and/or the appropriate stock exchange (for exchange traded securities); (xii) an analysis of the company’s financial statements; (xiii) government (domestic or foreign) actions or pronouncements (xiv) recent news about the security or issuer; (xv) whether two or more dealers with whom the adviser/subadviser regularly effects trades are willing to purchase or sell the security at comparable prices; and (xvi) other news events or relevant matters.
Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the fund calculates its NAV (generally, the close of regular trading on the NYSE) that may impact the value of securities traded in these foreign markets. In such cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis.
The value of a security, as determined using the funds’ fair valuation procedures, may not reflect such security’s market value.
At what price are shares purchased?
All investments received by the funds’ authorized agents in good order prior to the close of regular trading on the NYSE (normally 4:00 PM eastern time) will be executed based on that day’s NAV; investments received by the funds’ authorized agent in good order after the close of regular trading on the NYSE will be executed based on the next business day’s NAV. Shares credited to your account from the reinvestment of a fund’s distributions will be in full and fractional shares that are purchased at the closing NAV on the next business day on which the fund’s NAV is calculated following the dividend record date.
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Sales Charges
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What are the classes and how do they differ?
Each fund offers multiple classes of shares. Each class of shares has different sales and distribution charges. (See “Fund Fees and Expenses” in each fund’s “Fund Summary,” previously in this prospectus.) For certain classes of shares, the funds have adopted distribution and service plans allowed under Rule 12b-1 of the Investment Company Act of 1940, as amended, that authorize the funds to pay distribution and service fees ("Rule 12b-1 Fees") for the sale of their shares and for services provided to shareholders.
The Rule 12b-1 Fees for each class of each fund are as follows:
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Fund
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Class A
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Class B
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Class C
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Class I
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Class R6
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Class T
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​ ​ Virtus Alternatives Diversifier Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Bond Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Infrastructure Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Low Volatility Equity Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Sector Trend Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ ​ ​ 0.25 % ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ ​ N/A ​ ​ ​
Important Information about Class B Shares. Class B shares of the funds are no longer available for purchase by new or existing shareholders, except by existing shareholders through “Qualifying Transactions,” which consist of the following: (1) reinvestment of dividends and/or capital gain distributions; and (2) exchange of Class B shares of a fund for Class B shares of other Virtus Mutual Funds, as permitted by the existing exchange privileges (discussed below under the heading “Exchange Privileges” within the section entitled “Account Policies”). Shareholders who own Class B Shares may continue to hold such shares until they convert to Class A Shares under the existing conversion schedule, as described in this prospectus section under the heading “What arrangement is best for you?”
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What arrangement is best for you?
The different classes of shares permit you to choose the method of purchasing shares that is most beneficial to you. In choosing a class of shares, consider the amount of your investment, the length of time you expect to hold the shares, whether you decide to receive distributions in cash or to reinvest them in additional shares, and any other personal circumstances. Depending upon these considerations, the accumulated distribution and service fees and contingent deferred sales charges of one class of shares may be more or less than the initial sales charge and accumulated distribution and service fees of another class of shares bought at the same time. Because distribution and service fees are paid out of a fund’s assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges.
Your financial representative should recommend only those arrangements that are suitable for you based on known information. In certain instances, you may be entitled to a reduction or waiver of sales charges. For instance, you may be entitled to a sales charge discount on Class A Shares if you purchase more than certain breakpoint amounts. You should inform or inquire of your financial representative whether or not you may be entitled to a sales charge discount attributable to your total holdings in a fund or affiliated funds. To determine eligibility for a sales charge discount, you may aggregate all of your accounts (including joint accounts, retirement accounts such as individual retirement accounts (“IRAs”), non-IRAs, etc.) and those of your spouse or domestic partner, children and minor grandchildren. Your financial representative may request that you provide an account statement or other holdings information to determine your eligibility for a breakpoint and to make certain all involved parties have the necessary data. Additional information about the classes of shares offered, sales charges, breakpoints and discounts follows in this section and also may be found in the SAI in the section entitled “How to Buy Shares.” This information is available free of charge, and in a clear and prominent format, at the Individual Investors section of virtus.com . Please be sure that you fully understand these choices before investing. If you or your financial representative require additional assistance, you may also contact Virtus Fund Services by calling toll-free 800-243-1574.
Class A Shares (all funds). If you purchase Class A Shares, you will pay a sales charge at the time of purchase equal to the following: for Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, 2.25% of the offering price (2.30% of the amount invested); for Virtus CA Tax-Exempt Bond Fund, Senior Floating Rate Fund and Virtus Tax-Exempt Bond Fund, 2.75% of the offering price (2.83% of the amount invested); for Virtus Bond Fund, Virtus Emerging Markets Debt Fund, Virtus High Yield Fund and Virtus Multi-Sector Intermediate Bond Fund, 3.75% of the offering price (3.90% of the amount invested); and for the other funds, 5.75% of the offering price (6.10% of the amount invested). The sales charge may be reduced or waived under certain conditions. (See “Initial Sales Charge Alternative—Class A Shares” and “Class A Sales Charge Reductions and Waivers” below.) Generally, Class A Shares are not subject to any charges by the fund when redeemed; however, a contingent deferred sales charge (“CDSC”) may be imposed on certain redemptions on which a finder’s fee has been paid. For Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the CDSC may be imposed on redemptions within 12 months of a finder’s fee being paid; for all other funds, the CDSC may be imposed on redemptions within 18 months of a finder’s fee being paid. The Distributor may pay broker-dealers a finder’s fee for eligible Class A Share purchases in excess of  $250,000 for Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund and eligible Class A Share purchases in excess $1 million for all other funds. For all Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The 12- or 18-month period, as applicable, begins on the last day of the month preceding the month in which the purchase was made, and shares not subject to a finder’s fee will be deemed to be redeemed first. Class A Shares have lower distribution and service fees (0.25%) and generally pay higher dividends than Class B Shares and Class C Shares.
Class B Shares (Virtus Bond Fund, Virtus Global Opportunities Fund, Virtus High Yield Fund, Virtus Multi-Sector Intermediate Bond Fund, Virtus Multi-Sector Short Term Bond Fund and Virtus Real Estate Securities Fund only). If you sell your Class B Shares of the Virtus Multi-Sector Short Term Bond Fund within the first three years after they were purchased, you will pay a deferred sales charge of up to 2% of your shares’ value. If you sell your Class B Shares of the other funds within the first five years after they were purchased, you will pay a deferred sales charge of up to 5% of your shares’ value. (See “Deferred Sales Charge Alternative—Class B Shares, Class C Shares and Class T Shares” below.) This charge declines to 0% over a period of three years for the Virtus Multi-Sector Short Term Bond Fund and a period of five years for the other funds, and may be waived under certain conditions. Class B Shares have higher distribution and service fees (1.00%; 0.75% for Virtus Multi-Sector Short Term Bond Fund) and pay lower dividends than Class A Shares. Class B Shares automatically convert to Class A Shares eight years after purchase (six years after purchase for Virtus Multi-Sector Short Term Bond Fund).
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Class C Shares (not offered by Virtus CA Tax-Exempt Bond Fund). If you purchase Class C Shares, you will not pay a sales charge at the time of purchase. You will not pay any sales charges on Class C Shares of the Virtus Multi-Sector Short-Term Bond Fund when you sell them. If you sell your Class C Shares of the other funds within the first year after they are purchased, you will pay a deferred sales charge of 1%. (See “Deferred Sales Charge Alternative—Class B Shares, Class C Shares and Class T Shares” below.) Class C Shares of the Virtus Multi-Sector Short Term Bond Fund have lower distribution and service fees (0.50%) and pay higher dividends than Class B Shares. Class C Shares of the other funds have the same distribution and service fees (1.00%) and pay comparable dividends as Class B Shares. Class C Shares do not convert to any other class of shares of the funds, so the higher distribution and service fees paid by Class C Shares continue for the life of the account.
Class I Shares. Class I Shares are offered primarily to clients of financial intermediaries that (i) charge such clients an ongoing fee for advisory, investment, consulting, or similar services; or (ii) have entered into an agreement with the fund's distributor to offer Class I Shares through a no-load network or platform. Such clients may include pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations. Class I Shares are also offered to private and institutional clients of, or referred by, the adviser, a subadviser or their affiliates, and to Trustees of the funds and trustees/directors of affiliated open- and closed-end funds, and directors, officers and employees of Virtus and its affiliates. If you are eligible to purchase and do purchase Class I Shares, you will pay no sales charge at any time. There are no distribution and service fees applicable to Class I Shares.
Class R6 Shares (Virtus Bond Fund, Virtus Emerging Markets Opportunities Fund, Virtus Equity Trend Fund, Virtus Foreign Opportunities Fund, Virtus Global Real Estate Securities Fund, Virtus High Yield Fund, Virtus International Small-Cap Fund, Virtus Multi-Sector Intermediate Bond Fund, Virtus Multi- Sector Short Term Bond Fund, Virtus Real Estate Securities Fund and Virtus Senior Floating Rate Fund only). Class R6 Shares are available only to employer sponsored retirement plans, including profit-sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans, and plans described in Section 401(k), 403(b) and 457 of the Internal Revenue Code, where the employer, administrator, sponsor or related person has entered into an agreement with the fund’s Transfer Agent to make Class R6 Shares available to plan participants where plan level or omnibus accounts are held on the books of the fund. Class R6 Shares are not available to traditional or Roth IRAs, Coverdell Savings Accounts, Keoghs, SEPs, SARSEPs, or Simple IRAs and are not available through retail, advisory fee-based wrap platforms. Individual shareholders who purchase Class R6 Shares through retirement platforms or other intermediaries are not eligible to hold Class R6 Shares outside of their respective plan or intermediary platform. If you are eligible to purchase and do purchase Class R6 Shares, you will pay no sales charge at any time. There are no distribution and service fees applicable to Class R6 Shares.
Class T Shares (Virtus Multi-Sector Short Term Bond Fund only). If you purchase Class T Shares, you will not pay a sales charge at the time of purchase. If you sell your Class T Shares within the first year after they are purchased, you will pay a sales charge of 1%. (See “Deferred Sales Charge Alternative—Class B Shares, Class C Shares and Class T Shares” below.) Class T Shares have higher distribution and service fees (1.00%) and pay lower dividends than Class B Shares. Class T Shares do not convert to any other class of shares of the fund, so the higher distribution and service fees paid by Class T Shares continue for the life of the account.
Initial Sales Charge Alternative—Class A Shares. The public offering price of Class A Shares is the NAV plus a sales charge that varies depending on the size of your purchase.(See “Class A Shares—Reduced Initial Sales Charges” in the SAI.) Shares purchased based on the automatic reinvestment of income dividends or capital gain distributions are not subject to any sales charges. The sales charge is divided between your investment dealer and the fund's underwriter, VP Distributors, LLC (“VP Distributors” or the “Distributor”).
Sales Charge you may pay to purchase Class A Shares
Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund
​ ​ ​
Sales Charge as a percentage of
​
Amount of Transaction at Offering Price
​ ​
Offering Price
​ ​
Amount Invested
​
Under $100,000 ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ 2.30 % ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​
$250,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
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Virtus CA Tax-Exempt Bond Fund, Virtus Senior Floating Rate Fund and Virtus Tax-Exempt Bond Fund
​ ​ ​
Sales Charge as a percentage of
​
Amount of Transaction at Offering Price
​ ​
Offering Price
​ ​
Amount Invested
​
Under $50,000 ​ ​ ​ ​ 2.75 % ​ ​ ​ ​ ​ 2.83 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.27 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.00 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Virtus Bond Fund, Virtus Emerging Markets Debt Fund, Virtus High Yield Fund and Virtus Multi-Sector Intermediate Bond Fund
​ ​ ​
Sales Charge as a percentage of
​
Amount of Transaction at Offering Price
​ ​
Offering Price
​ ​
Amount Invested
​
Under $50,000 ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ 3.90 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 3.50 ​ ​ ​ ​ ​ 3.63 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.25 ​ ​ ​ ​ ​ 3.36 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
All Other Funds
​ ​ ​
Sales Charge as a percentage of
​
Amount of Transaction at Offering Price
​ ​
Offering Price
​ ​
Amount Invested
​
Under $50,000 ​ ​ ​ ​ 5.75 % ​ ​ ​ ​ ​ 6.10 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 4.75 ​ ​ ​ ​ ​ 4.99 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.75 ​ ​ ​ ​ ​ 3.90 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.75 ​ ​ ​ ​ ​ 2.83 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 2.00 ​ ​ ​ ​ ​ 2.04 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Class A Sales Charge Reductions and Waivers
Investors may qualify for reduced or no initial (front-end) sales charges, as shown in the table above, through utilization of Combination Purchase Privilege, Letter of Intent, Right of Accumulation, Gifting of Shares, Purchase by Associations or the Account Reinstatement Privilege. These programs are summarized below and are described in greater detail in the SAI. These reductions and waivers do not apply to any CDSC that may be applied to certain Class A Share redemptions.
Combination Purchase Privilege. Your purchase of any class of shares of these funds or any other Virtus Mutual Fund, if made at the same time by the same person, will be added together with any existing Virtus Mutual Fund account values to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as either: (a) any individual, his or her spouse or domestic partner, children and minor grandchildren purchasing shares for his, her or their own account (including an IRA account) including his, her or their own sole proprietorship or trust where any of the above is a named beneficiary; (b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist); (c) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third party administrator; or (d) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.
Letter of Intent. If you sign a Letter of Intent, your purchase of any class of shares of these funds or any other Virtus Mutual Fund, if made by the same person within a 13-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you
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indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding arrangement between you and Virtus Mutual Funds. Shares worth 5% of the Letter of Intent amount will be held in escrow (while remaining registered in your name) to secure payment of the higher sales charges applicable to the shares actually purchased in the event the full intended amount is not purchased.
Right of Accumulation. The value of your account(s) in any class of shares of these funds or any other Virtus Mutual Fund if made over time by the same person, may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to Virtus Mutual Funds or their agents at the time of purchase to exercise this right.
Gifting of Shares. If you make a gift of shares of a Virtus Mutual Fund, upon your request you may combine purchases, if made at the same time, of any class of shares of these funds or any other Virtus Mutual Fund at the sales charge discount allowed for the combined purchase. The receiver of the gift may also be entitled to a prospective reduction in sales charges in accordance with the funds’ right of accumulation or other provisions. You or the receiver of the gift must provide certain account information to Virtus Mutual Funds or their agents at the time of purchase to exercise this right.
Purchase by Associations. Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; and (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.
Account Reinstatement Privilege. Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A Shares or Class B Shares on which you previously paid a sales charge, you may purchase Class A Shares of any Virtus Mutual Fund at NAV, with no sales charge, by reinvesting all or part of your proceeds, but not more.
Sales at Net Asset Value. In addition to the programs summarized above, the funds may sell their Class A Shares at NAV without an initial sales charge to certain types of accounts or account holders, including, but not limited to: trustees of the Virtus Mutual Funds; directors, officers, employees and sales representatives of the adviser, a subadviser or the Distributor and corporate affiliates of the adviser, a subadviser or the Distributor; private clients of an adviser or subadviser to any of the Virtus Mutual Funds; registered representatives and employees of dealers with which the Distributor has sales agreements; and certain qualified employee benefit plans, endowment funds or foundations. Please see the SAI for more information about qualifying for purchases of Class A Shares at NAV.
Contingent Deferred Sales Charge you may pay on Class A Shares
Investors buying Class A Shares on which a finder’s fee has been paid may incur a CDSC if they redeem their shares. For Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the CDSC may be imposed on redemptions within 12 months of a finder’s fee being paid; for all other funds, the CDSC may be imposed on redemptions within 18 months of a finder’s fee being paid. For Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The 12- or 18-month period, as applicable, begins on the last day of the month preceding the month in which the purchase was made, and shares not subject to a finder’s fee will be deemed to be redeemed first. The CDSC will be multiplied by the then current market value or the initial cost of the shares being redeemed, whichever is less.
Deferred Sales Charge Alternative—Class B Shares, Class C Shares and Class T Shares
Class B Shares, Class C Shares and Class T Shares are purchased without an initial sales charge; however, shares sold within a specified time period are subject to a declining CDSC at the rates listed below. Class C Shares of the Virtus Multi-Sector Short Term Bond Fund are purchased without an initial sales charge and are not subject to a deferred sales charge. The sales charge will be multiplied by the then current market value or the initial cost of the shares being redeemed, whichever is less. No sales charge will be imposed on increases in NAV or on shares purchased through the reinvestment of income dividends or capital gain distributions. To minimize the sales charge, shares not subject to any charge will be redeemed first, followed by shares held the longest time. To calculate the number of shares owned and time period held, all Class B Shares purchased in any month are considered purchased on the last day of the preceding month. For Class C Shares and Class T Shares, the date of purchase will be used to calculate the number of shares owned and time period held.
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Deferred Sales Charge you may pay to sell Class B Shares
Virtus Multi-Sector Short Term Bond Fund Only
Year
​ ​
1
​ ​
2
​ ​
3
​ ​
4+
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
CDSC ​ ​ ​ ​ 2 % ​ ​ ​ ​ ​ 1.5 % ​ ​ ​ ​ ​ 1 % ​ ​ ​ ​ ​ 0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
All Other Funds that previously offered Class B Shares
Year
​ ​
1
​ ​
2
​ ​
3
​ ​
4
​ ​
5
​ ​
6+
​ ​ ​ ​
CDSC ​ ​ ​ ​ 5 % ​ ​ ​ ​ ​ 4 % ​ ​ ​ ​ ​ 3 % ​ ​ ​ ​ ​ 2 % ​ ​ ​ ​ ​ 2 % ​ ​ ​ ​ ​ 0 % ​ ​ ​ ​ ​
Deferred Sales Charge you may pay to sell Class C Shares
Year
​ ​
1
​ ​
2+
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
CDSC ​ ​ ​ ​ 1 % ​ ​ ​ ​ ​ 0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
You will not pay any deferred sales charge to sell Class C Shares of the Virtus Multi-Sector Short Term Bond Fund.
Deferred Sales charge you may pay to sell Class T Shares
Virtus Multi-Sector Short Term Bond Fund only
Year
​ ​
1
​ ​
2+
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
CDSC ​ ​ ​ ​ 1 % ​ ​ ​ ​ ​ 0 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class A and Class C Shares—Waiver of Deferred Sales Charges
The CDSC is waived on the redemption (sale) of Class A and Class C Shares under certain limited circumstances, such as a redemption
(a)
occurring within one year of the death of a shareholder, beneficiary of a custodial account or grantor of a trust account
​
(b)
within one year of disability of a shareholder
​
(c)
as a mandatory distribution under certain qualified retirement plans
​
(d)
by 401(k) plans meeting certain criteria
​
(e)
based on the exercise of exchange privileges among Virtus Mutual Funds
​
(f)
based on any direct rollover transfer of shares meeting certain criteria
​
(g)
based on the systematic withdrawal program, subject to certain restrictions.
​
Please refer to the SAI (see "Waiver of Deferred Sales Charges") for additional detail about each of these waiver provisions.
Compensation to Dealers
Class A Shares, Class B Shares, Class C Shares and Class I Shares Only
Dealers with whom the Distributor has entered into sales agreements receive a discount or commission on Class A Shares as described below.
Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge as a
Percentage of Offering
Price
​ ​
Sales Charge as a
Percentage of Amount
Invested
​ ​
Dealer Discount as a
Percentage of Offering
Price
​
Less than $100,000 ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 2.00 % ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
$250,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Virtus CA Tax-Exempt Bond Fund, Virtus Senior Floating Rate Fund and Virtus Tax-Exempt Bond Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge as a
Percentage of Offering
Price
​ ​
Sales Charge as a
Percentage of Amount
Invested
​ ​
Dealer Discount as a
Percentage of Offering
Price
​
Under $50,000 ​ ​ ​ ​ 2.75 % ​ ​ ​ ​ ​ 2.83 % ​ ​ ​ ​ ​ 2.25 % ​ ​
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Amount of Transaction at Offering Price
​ ​
Sales Charge as a
Percentage of Offering
Price
​ ​
Sales Charge as a
Percentage of Amount
Invested
​ ​
Dealer Discount as a
Percentage of Offering
Price
​
$50,000 but under $100,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.00 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ 1.00 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 1.00 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Virtus Bond Fund, Virtus Emerging Markets Debt Fund, Virtus High Yield Fund and Virtus Multi-Sector Intermediate Bond Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge as a
Percentage of Offering
Price
​ ​
Sales Charge as a
Percentage of Amount
Invested
​ ​
Dealer Discount as a
Percentage of Offering
Price
​
Under $50,000 ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ 3.90 % ​ ​ ​ ​ ​ 3.25 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 3.50 ​ ​ ​ ​ ​ 3.63 ​ ​ ​ ​ ​ 3.00 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.25 ​ ​ ​ ​ ​ 3.36 ​ ​ ​ ​ ​ 2.75 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.00 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
All Other Funds
Amount of Transaction at Offering Price
​ ​
Sales Charge as a
Percentage of Offering
Price
​ ​
Sales Charge as a
Percentage of Amount
Invested
​ ​
Dealer Discount as a
Percentage of Offering
Price
​
Under $50,000 ​ ​ ​ ​ 5.75 % ​ ​ ​ ​ ​ 6.10 % ​ ​ ​ ​ ​ 5.00 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 4.75 ​ ​ ​ ​ ​ 4.99 ​ ​ ​ ​ ​ 4.25 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.75 ​ ​ ​ ​ ​ 3.90 ​ ​ ​ ​ ​ 3.25 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.75 ​ ​ ​ ​ ​ 2.83 ​ ​ ​ ​ ​ 2.25 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 2.00 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 1.75 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
With respect to Class C Shares and Class T Shares, the Distributor intends to pay investment dealers a sales commission of 1% of the sale price of Class C Shares sold by such dealers (0% for Virtus Multi-Sector Short Term Bond Fund) and Class T Shares (Virtus Multi-Sector Short Term Bond Fund only). Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities that enter into special arrangements with the Distributor or the funds’ transfer agent, Virtus Fund Services, LLC (the “Transfer Agent”), may receive compensation for the sale and promotion of shares of these funds. Such fees are in addition to the sales commissions referenced above and may be based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of fund shares; access to sales personnel and information dissemination services; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the funds through distribution fees, service fees or, in some cases, the Distributor may pay certain fees from its own profits and resources.
Dealers and other entities that enter into special arrangements with the Distributor or the Transfer Agent may receive compensation from or on behalf of the funds for providing certain recordkeeping and related services to the funds or their shareholders. These fees may also be referred to as shareholder accounting fees, administrative services fees, sub-transfer agent fees or networking fees. They are not for the sale, promotion or marketing of fund shares.
From its own profits and resources, the Distributor may, from time to time, make payments to qualified wholesalers, registered financial institutions and third party marketers for marketing support services and/or retention of assets. These payments are sometimes referred to as “revenue sharing.” Among others, the Distributor has agreed to make such payments for marketing support services to AXA Advisors, LLC. Additionally, for Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 0.50% of eligible Class A Share purchases from $250,000 to $3,000,000 and 0.25% on amounts greater than
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$3,000,000. For all other Virtus fixed income funds and Virtus Sector Trend Fund, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 0.50% of eligible Class A Share purchases from $1,000,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. For all other Virtus Mutual Funds, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 1.00% of eligible Class A Share purchases from $1,000,000 to $3,000,000, 0.50% on amounts of  $3,000,001 to $10,000,000, and 0.25% on amounts greater than $10,000,000. Purchases of Class A Shares by an account in the name of a qualified employee benefit plan are eligible for a finder’s fee only if such plan has at least 100 eligible employees. A CDSC may be imposed on certain redemptions of such Class A investments. For Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the CDSC may be imposed on redemptions within 12 months of a finder’s fee being paid; for all other funds, the CDSC may be imposed on redemptions within 18 months of a finder’s fee being paid. For all Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. For purposes of determining the applicability of the CDSC, the 12- or 18-month period, as applicable, begins on the last day of the month preceding the month in which the purchase was made. The Distributor will also pay broker-dealers a service fee of 0.25% beginning in the thirteenth month following purchase of Class A Shares on which a finder’s fee has been paid. VP Distributors reserves the right to discontinue or alter such fee payment plans at any time. Dealers must have an aggregate value of  $50,000 or more per Fund CUSIP to qualify for payment. VP Distributors reserves the right to discontinue or alter such fee payment plans at any time.
From its own resources or pursuant to the distribution and shareholder servicing plans, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time to time, reallow the entire portion of the sales charge on Class A Shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.
The Distributor has also agreed to pay fees to certain distributors for preferred marketing opportunities. These arrangements may be viewed as creating a conflict of interest between these distributors and investors. Investors should make due inquiry of their selling agents to ensure that they are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.
The categories of payments the Distributor and/or the Transfer Agent may make to other parties are not mutually exclusive, and such parties may receive payments under more than one or all categories. These payments could be significant to a party receiving them, creating a conflict of interest for such party in making investment recommendations to investors. Investors should make due inquiry of any party recommending the funds for purchase to ensure that such investors are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.
A document containing information about sales charges, including breakpoint (volume) discounts, is available free of charge on the Internet at virtus.com . In the Individual Investors section, go to the tab “Investors Knowledge Base” and click on the link for Breakpoint (Volume) Discounts.
Class R6 Shares Only
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.
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Your Account
​
Opening an Account
Class A Shares, Class B Shares, Class C Shares, Class I Shares and Class T Shares Only
Your financial advisor can assist you with your initial purchase as well as all phases of your investment program. If you are opening an account by yourself, please follow the instructions outlined below.
The funds have established the following preferred methods of payment for fund shares:
•
Checks drawn on an account in the name of the investor and made payable to Virtus Mutual Funds;
​
•
Checks drawn on an account in the name of the investor’s company or employer and made payable to Virtus Mutual Funds; or
​
•
Wire transfers or Automated Clearing House (“ACH”) transfers from an account in the name of the investor, or the investor’s company or employer.
​
Payment in other forms may be accepted at the discretion of the funds; however, the funds generally do not accept such other forms of payment as cash equivalents (such as traveler’s checks, cashier’s checks, money orders or bank drafts), starter checks, credit card convenience checks, or certain third party checks. Please specify the name(s) of the fund or funds in which you would like to invest on the check or transfer instructions.
To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. Accordingly, when you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may check the information you provide against publicly available databases, information obtained from consumer reporting agencies, other financial institutions or other sources. If, after reasonable effort, we cannot verify your identity, we reserve the right to close the account and redeem the shares at the NAV next calculated after the decision is made by us to close the account.
Step 1.
Your first choice will be the initial amount you intend to invest in each fund.
Minimum initial investments applicable to Class A, Class C and Class T Shares:
•
$100 for individual retirement accounts (“IRAs”), accounts that use the systematic exchange privilege, or accounts that use the Systematic Purchase program. (See Investor Services and Other Information for additional detail.)
​
•
There is no initial dollar requirement for defined contribution plans, asset-based fee programs, profit-sharing plans, or employee benefit plans. There is also no minimum for reinvesting dividends and capital gains into another account. Additionally, shareholders who own Class B Shares of a fund may purchase Class A Shares, Class C Shares or Class T shares of the same fund without regard to the minimum initial investment requirements.
​
•
$2,500 for all other accounts.
​
Minimum additional investments applicable to Class A, Class C and Class T Shares:
•
$100 for any account.
​
•
There is no minimum additional investment requirement for defined contribution plans, asset-based fee programs, profit-sharing plans, or employee benefit plans. There is also no minimum additional investment requirement for reinvesting dividends and capital gains into another account.
​
Minimum initial investments applicable to Class I Shares:
•
$100,000 for any account for qualified investors. (Call Virtus Fund Services at 800-243-1574 for additional detail.)
​
There is no minimum additional investment requirement applicable to Class I Shares.
Step 2.
Your second choice will be what class of shares to buy. Each share class, except Class I Shares and Class R6 Shares, has different sales and distribution charges. Because all future investments in your account will be made in the share
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class you choose when you open your account, you should make your decision carefully. Your financial advisor can help you pick the share class that makes the most sense for your situation.
Step 3.
Your next choice will be how you want to receive any dividends and capital gain distributions. Your options are:
•
Receive both dividends and capital gain distributions in additional shares;
​
•
Receive dividends in additional shares and capital gain distributions in cash;
​
•
Receive dividends in cash and capital gain distributions in additional shares; or
​
•
Receive both dividends and capital gain distributions in cash.
​
No interest will be paid on uncashed distribution checks.
Class R6 Shares Only
If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to open an account and buy Class R6 Shares.
All Share Classes
The funds reserve the right to refuse any purchase order for any reason. The fund will notify the investor of any such rejection in accordance with industry and regulatory standards, which is generally within three business days.
How to Buy Shares
​
Class A Shares, Class B Shares, Class C Shares, Class I Shares and Class T Shares Only
​ ​ ​ ​ ​ ​
To Open An Account
​ ​
​ ​ Through a financial advisor ​ ​ ​ Contact your advisor. Some advisors may charge a fee and may set different minimum investments or limitations on buying shares. ​ ​
​ ​ Through the mail ​ ​ ​ Complete a new account application and send it with a check payable to the fund. Mail them to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. ​ ​
​ ​ Through express delivery ​ ​ ​ Complete a new account application and send it with a check payable to the fund. Send them to: Virtus Mutual Funds, 4400 Computer Drive, Westborough, MA 01581-1722. ​ ​
​ ​ By Federal Funds wire ​ ​ ​ Call us at 800-243-1574 (press 1, then 0). ​ ​
​ ​ By Systematic Purchase ​ ​ ​ Complete the appropriate section on the application and send it with your initial investment payable to the fund. Mail them to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. ​ ​
​ ​ By telephone exchange ​ ​ ​ Call us at 800-243-1574 (press 1, then 0). ​ ​
Class R6 Shares Only
If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to buy Class R6 Shares.
All Share Classes
The price at which a purchase is effected is based on the NAV next determined after receipt of a purchase order in good order by the funds’ Transfer Agent or an authorized agent. A purchase order is generally in “good order” if an acceptable form of payment accompanies the purchase order and the order includes the appropriate application(s) and/or other form(s) and any supporting legal documentation required by the fund's Transfer Agent or an authorized agent, each in legible form.
Each fund reserves the right to refuse any order that may disrupt the efficient management of that fund.
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How to Sell Shares
​
Class A Shares, Class B Shares, Class C Shares and Class I Shares Only
​ ​ ​ ​ ​ ​
To Sell Shares
​ ​
​ ​ Through a financial advisor ​ ​ ​ Contact your advisor. Some advisors may charge a fee and may set different minimums on redemptions of accounts. ​ ​
​ ​ Through the mail ​ ​ ​ Send a letter of instruction to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. Be sure to include the registered owner’s name, fund and account number and number of shares or dollar value you wish to sell. ​ ​
​ ​ Through express delivery ​ ​ ​ Send a letter of instruction to: Virtus Mutual Funds, 4400 Computer Drive, Westborough, MA 01581-1722. Be sure to include the registered owner’s name, fund and account number and number of shares or dollar value you wish to sell. ​ ​
​ ​ By telephone ​ ​ ​ For sales up to $50,000, requests can be made by calling 800-243-1574. ​ ​
​ ​ By telephone exchange ​ ​ ​ Call us at 800-243-1574 (press 1, then 0). ​ ​
​ ​ By check (certain fixed income funds only) ​ ​ ​ If you selected the checkwriting feature, you may write checks for amounts of  $250 or more. Checks may not be used to close accounts. Please call us at 800-243-1574 for a listing of funds offering this feature. ​ ​
Class R6 Shares Only
If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to sell Class R6 Shares.
All Share Classes
You have the right to have the funds buy back shares at the NAV next determined after receipt of a redemption request in good order by the funds' Transfer Agent or an authorized agent. In the case of a Class B Share, Class C Share or Class T Share redemption, and certain Class A Share redemptions, you will be subject to the applicable contingent deferred sales charge, if any, for such shares. Subject to certain restrictions, shares may be redeemed by telephone or in writing. In addition, shares may be sold through securities dealers, brokers or agents who may charge customary commissions or fees for their services. The funds do not charge any redemption fees. Payment for shares redeemed is generally made within seven days; however, redemption proceeds will not be disbursed until each check used for purchases of shares has been cleared for payment by your bank, which may take up to 15 days after receipt of the check.
Things You Should Know When Selling Shares
​
You may realize a taxable gain or loss (for federal income tax purposes) if you redeem or exchange shares of the funds.
Class A Shares, Class B Shares, Class C Shares, Class I Shares and Class T Shares
Redemption requests will not be honored until all required documents, in proper form, have been received. Additional documentation will be required for redemptions by organizations, fiduciaries, or retirement plans, or if a redemption is requested by anyone but the shareholder(s) of record. To avoid delay in redemption or transfer, shareholders having questions about specific requirements should contact the funds’ Transfer Agent at 800-243-1574.
Transfers between broker-dealer “street” accounts are governed by the accepting broker-dealer. Questions regarding this type of transfer should be directed to your financial advisor.
As stated in the applicable account applications, accounts associated with certain types of retirement plans and individual retirement accounts may incur fees payable to the Transfer Agent in the event of redeeming an account in full. Shareholders with questions about this should contact the funds’ Transfer Agent at 800-243-1574.
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Redemptions by Mail
➔ If you are selling shares held individually, jointly, or as custodian under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act:
Send a clear letter of instruction if both of these apply:
•
The proceeds do not exceed $50,000.
​
•
The proceeds are payable to the registered owner at the address on record.
​
Send a clear letter of instructions with a signature guarantee when any of these apply:
•
You are selling more than $50,000 worth of shares.
​
•
The name or address on the account has changed within the last 30 days.
​
•
You want the proceeds to go to a different name or address than on the account.
​
➔ If you are selling shares held in a corporate or fiduciary account, please contact the funds’ Transfer Agent at 800-243-1574.
The signature guarantee, if required, must be a STAMP 2000 Medallion guarantee made by an eligible guarantor institution as defined by the funds’ Transfer Agent in accordance with its signature guarantee procedures. Guarantees using previous technology medallions will not be accepted. As of the date of this prospectus, the Transfer Agent’s signature guarantee procedures generally permit guarantees by banks, broker-dealers, credit unions, national securities exchanges, registered securities associations, clearing agencies and savings associations.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures to confirm that telephone instructions are genuine. Address and bank account information are verified, redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an unauthorized third party that the Transfer Agent reasonably believed to be genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at any time with 60 days’ notice to shareholders, except for instances of disruptive trading or market timing; in such cases, the telephone redemption privilege may be suspended immediately, followed by written notice. (See “Disruptive Trading and Market Timing” in this prospectus.)
During times of drastic economic or market changes, telephone redemptions may be difficult to make or temporarily suspended; however, shareholders would be able to make redemptions through other methods described above.
Class R6 Shares Only
If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to know when selling Class R6 Shares.
All Share Classes
Payment of Redemptions In Kind
Each fund reserves the right to pay large redemptions “in kind” (i.e., in securities owned by the fund) rather than in cash. Large redemptions are those that exceed $250,000 or 1% of the fund’s net assets, whichever is less, over any 90-day period. Additional documentation will be required for redemptions by organizations, fiduciaries, or retirement plans, or if a redemption is requested by anyone but the shareholder(s) of record. Investors who are paid redemption proceeds in kind will receive a pro rata share of the fund’s portfolio, which may include illiquid securities. Any securities received remain at market risk until sold. Brokerage commissions and capital gains may be incurred when converting securities received into cash. On any illiquid securities received, the investor will bear the risk of not being able to sell the securities at all.
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Account Policies
​
Account Reinstatement Privilege
Subject to the funds’ policies and procedures regarding market timing, for 180 days after you sell your Class A Shares or Class B Shares on which you have previously paid a sales charge, you may purchase Class A Shares of any Virtus Mutual Fund at NAV, with no sales charge, by reinvesting all or part of your proceeds, but not more. Send your written request to Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. You can call Virtus Mutual Fund Services at 800-243-1574 for more information.
Please remember, a redemption and reinvestment are considered to be a sale and purchase for tax-reporting purposes. Class B shareholders who have had the contingent deferred sales charge waived because they are in the Systematic Withdrawal Program are not eligible for this reinstatement privilege.
Annual Fee on Small Accounts
To help offset the costs associated with maintaining small accounts, the funds reserve the right to assess an annual $25 small account fee on fund accounts with a balance below $2,500. The small account fee may be waived in certain circumstances, such as for accounts that have elected electronic delivery of statements/regulatory documents and accounts owned by shareholders having multiple accounts with a combined value of over $25,000. The small account fee does not apply to accounts held through a financial intermediary.
The small account fee will be collected through the automatic sale of shares in your account. We will send you written notice before we charge the $25 fee so that you may increase your account balance above the minimum, sign up for electronic delivery, consolidate your accounts or liquidate your account. You may take these actions at any time by contacting your investment professional or the Transfer Agent.
Redemption of Small Accounts
Due to the high cost of maintaining small accounts, if your redemption activity causes your account balance to fall below $200, you may receive a notice requesting you to bring the balance up to $200 within 60 days. If you do not, the shares in the account will be sold at NAV, and a check will be mailed to the address of record. Any applicable sales charges will be deducted.
Distributions of Small Amounts
Distributions in amounts less than $10 will automatically be reinvested in additional shares of the fund.
Uncashed Checks
If any correspondence sent by a fund is returned by the postal or other delivery service as “undeliverable,” your dividends or any other distribution may be automatically reinvested in the fund.
If your distribution check is not cashed within six months, the distribution may be reinvested in the fund at the current NAV. You will not receive any interest on uncashed distribution or redemption checks. This provision may not apply to certain retirement or qualified accounts.
Inactive Accounts
As required by the laws of certain states, if no activity occurs in an account within the time period specified by your state law, Virtus may be required to transfer the assets to your state under the state's abandoned property law.
Exchange Privileges
You should read the prospectus of the Virtus Mutual Fund(s) into which you want to make an exchange before deciding to make an exchange. You can obtain a prospectus from your financial advisor; by calling 800-243-4361; or on the Internet at virtus.com .
•
You may exchange shares of one fund for the same class of shares of another Virtus Mutual Fund ( e.g. , Class A Shares for Class A Shares). Class C Shares are also exchangeable for Class T Shares of those Virtus Mutual Funds offering them. Exchange privileges may not be available for all Virtus Mutual Funds and may be rejected or suspended.
​
•
Exchanges may be made by telephone (800-243-1574) or by mail (Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074).
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​
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•
The amount of the exchange must be equal to or greater than the minimum initial investment required, unless the minimum has been waived (as described in the SAI).
​
•
The exchange of shares of one fund for shares of a different fund is treated as a sale of the original fund's shares and any gain on the transaction may be subject to federal income tax.
​
•
In certain circumstances, a fund, the Distributor or the Transfer Agent may enter into an agreement with a financial intermediary to permit exchanges from one class of a fund into another class of the same fund, subject to certain conditions. Such exchanges will only be permitted if, among other things, the financial intermediary agrees to follow procedures established by the fund, Distributor or Transfer Agent, which generally will require that the exchanges be carried out (i) within accounts maintained and controlled by the intermediary, (ii) on behalf of all or a particular segment of beneficial owners holding shares of the affected fund within those accounts, and (iii) all at once or within a given time period, or as agreed upon in writing by the fund, the Distributor or the Transfer Agent and the financial intermediary. A shareholder’s ability to make this type of exchange may be limited by operational or other limitations of his or her financial intermediary or the fund.
​
Disruptive Trading and Market Timing
These funds are not suitable for market timers, and market timers are discouraged from becoming investors. Your ability to make exchanges among Virtus Mutual Funds is subject to modification if we determine, in our sole opinion, that your exercise of the exchange privilege may disadvantage or potentially harm the rights or interests of other shareholders.
Frequent purchases, redemptions and exchanges, programmed exchanges, exchanges into and then out of a fund in a short period of time, and exchanges of large amounts at one time may be indicative of market timing and otherwise disruptive trading (“Disruptive Trading”) which can have risks and harmful effects for other shareholders. These risks and harmful effects include:
•
dilution of the interests of long-term investors, if market timers or others exchange into a fund at prices that are below the true value or exchange out of a fund at prices that are higher than the true value;
​
•
an adverse effect on portfolio management, as determined by the adviser or subadviser in its sole discretion, such as causing a fund to maintain a higher level of cash than would otherwise be the case, or causing a fund to liquidate investments prematurely; and
​
•
reducing returns to long-term shareholders through increased brokerage and administrative expenses.
​
Additionally, the nature of the portfolio holdings of certain funds (or the underlying funds as applicable), may expose those funds to investors who engage in the type of market timing trading that seeks to take advantage of possible delays between the change in the value of a mutual fund’s portfolio holdings and the reflection of the change in the NAV of the fund’s shares, sometimes referred to as “time-zone arbitrage.” Arbitrage market timers seek to exploit possible delays between the change in the value of a mutual fund’s portfolio holdings and the NAV of the fund’s shares in funds that hold significant investments in foreign securities because certain foreign markets close several hours ahead of the U.S. markets. If an arbitrageur is successful, the value of the fund’s shares may be diluted if redeeming shareholders receive proceeds (and buying shareholders receive shares) based upon NAVs which do not reflect appropriate fair value prices.
In order to attempt to protect our shareholders from the potential harmful effects of Disruptive Trading, the funds’ Board of Trustees has adopted market timing policies and procedures designed to discourage Disruptive Trading. The Board of Trustees has adopted these policies and procedures as a preventive measure to protect all shareholders from the potential effects of Disruptive Trading, while also abiding by any rights that shareholders may have to make exchanges and provide reasonable and convenient methods of making exchanges that do not have the potential to harm other shareholders.
Excessive trading activity is measured by the number of roundtrip transactions in an account. A roundtrip transaction is one where a shareholder buys and then sells, or sells and then buys, shares of any fund within 30 days. Shareholders of the funds are limited to one roundtrip transaction within any rolling 30-day period. Roundtrip transactions are counted at the shareholder level. In considering a shareholder’s trading activity, the funds may consider, among other factors, the shareholder’s trading history both directly and, if known, through financial intermediaries, in the funds, in other funds within the Virtus Mutual Fund complex, in non-Virtus funds or in accounts under common control or ownership. We do not include exchanges made pursuant to the dollar cost averaging or other similar programs when applying our market timing policies. Systematic withdrawal and/or contribution programs, mandatory retirement distributions, and
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transactions initiated by a plan sponsor also will not count towards the roundtrip limits. The funds may permit exchanges that management believes, in the exercise of their judgment, are not disruptive. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.
Shareholders holding shares for at least 30 days following investment will ordinarily be in compliance with the funds’ policies regarding excessive trading activity. The funds may, however, take action if activity is deemed disruptive even if shares are held longer than 30 days, such as a request for a transaction of an unusually large size. The size of the fund and the size of the requested transaction may be considered when determining whether or not the transaction would be disruptive.
Under our market timing policies, we may modify your exchange privileges for some or all of the funds by not accepting an exchange request from you or from any person, asset allocation service, and/or market timing service made on your behalf. We may also limit the amount that may be exchanged into or out of any fund at any one time, or may revoke your right to make Internet, telephone or facsimile exchanges. We may reinstate Internet, telephone and facsimile exchange privileges after they are revoked, but we will not reinstate these privileges if we have reason to believe that they might be used thereafter for Disruptive Trading.
The funds currently do not charge exchange or redemption fees, or any other administrative charges on fund exchanges. The funds reserve the right to impose such fees and/or charges in the future.
Orders for the purchase of fund shares are subject to acceptance by the relevant fund. We reserve the right to reject, without prior notice, any exchange request into any fund if the purchase of shares in the corresponding fund is not accepted for any reason.
The funds do not have any arrangements with any person, organization or entity to permit frequent purchases and redemptions of fund shares.
We may, without prior notice, take whatever action we deem appropriate to comply with or take advantage of any state or federal regulatory requirement. The funds reserve the right to reject any purchase or exchange transaction at any time. If we reject a purchase or exchange for any reason, we will notify you of our decision in writing.
The funds cannot guarantee that their policies and procedures regarding market timing will be effective in detecting and deterring all Disruptive Trading.
Retirement Plans
Shares of the funds may be used as investments under the following retirement plans: traditional IRA, rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k) plans, profit-sharing, money purchase plans, and certain 403(b) plans. For more information, call 800-243-4361.
Investor Services and Other Information
​
Systematic Purchase is a systematic investment plan that allows you to have a specified amount automatically deducted from your checking or savings account and then deposited into your mutual fund account. (Complete the “Systematic Purchase” section on the application and include a voided check.)
Systematic Exchange allows you to automatically move money from one Virtus Mutual Fund to another on a monthly, quarterly, semiannual or annual basis. Shares of one Virtus Mutual Fund will be exchanged for shares of the same class of another Virtus Mutual Fund at the interval you select. (Complete the “Systematic Exchange” section on the application.) Exchange privileges may not be available for all Virtus Mutual Funds and may be rejected or suspended.
Telephone Exchange lets you exchange shares of one Virtus Mutual Fund for the same class of shares in another Virtus Mutual Fund, using our customer service telephone number (800-243-1574). (See the “Telephone Exchange” section on the application.) Exchange privileges may not be available for all Virtus Mutual Funds and may be rejected or suspended.
Systematic Withdrawal allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual, or annual basis. Sufficient shares from your account will be redeemed at the closing NAV on the applicable payment date, with proceeds to be mailed to you or sent through ACH to your bank (at your selection). For payments to be mailed, shares will be redeemed on the 15 th of the month so that the payment is made about the 20 th of
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the month. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15 th of the month. The minimum withdrawal is $25, and minimum account balance requirements continue to apply. Shareholders in the program must own Virtus Mutual Fund shares worth at least $5,000.
Disclosure of Fund Portfolio Holdings. A description of the funds' policies and procedures with respect to the disclosure of the funds' portfolio securities is available in the SAI.
Tax Status of Distributions
​
The funds plan to make distributions from net investment income at intervals stated in the table below and to distribute net realized capital gains, if any, at least annually.
​ ​
Fund
​ ​ ​
Dividend Paid
​ ​
​ ​ Virtus Alternatives Diversifier Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Bond Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus CA Tax-Exempt Bond Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Emerging Markets Debt Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Emerging Markets Equity Income Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Emerging Markets Opportunities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Emerging Markets Small-Cap Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Equity Trend Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Essential Resources Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Foreign Opportunities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Global Equity Trend Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Global Infrastructure Fund ​ ​ ​ Quarterly ​ ​
​ ​ Virtus Global Opportunities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Global Real Estate Securities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Greater European Opportunities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Herzfeld Fund ​ ​ ​ Quarterly ​ ​
​ ​ Virtus High Yield Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus International Equity Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus International Real Estate Securities Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus International Small-Cap Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus International Wealth Masters Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Low Duration Income Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Low Volatility Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Multi-Asset Trend Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Multi-Sector Short Term Bond Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Real Estate Securities Fund ​ ​ ​ Quarterly ​ ​
​ ​ Virtus Sector Trend Fund ​ ​ ​ Semiannually ​ ​
​ ​ Virtus Senior Floating Rate Fund ​ ​ ​ Monthly (Declared Daily) ​ ​
​ ​ Virtus Tax-Exempt Bond Fund ​ ​ ​ Monthly ​ ​
234 Virtus Mutual Funds
TABLE OF CONTENTS
​ ​
Fund
​ ​ ​
Dividend Paid
​ ​
​ ​ Virtus Wealth Masters Fund ​ ​ ​ Semiannually ​ ​
Distributions of short-term capital gains (gains on securities held for a year or less) and net investment income are taxable to shareholders as ordinary income. Certain distributions of long-term capital gains and certain dividends are taxable at a lower rate than ordinary income. Long-term capital gains, if any, which are distributed to shareholders and which are designated by a fund as capital gain distributions, are taxable to shareholders as long-term capital gain distributions regardless of the length of time you have owned your shares. For Virtus Alternatives Diversifier Fund, Virtus Equity Trend Fund, Virtus Global Equity Trend Fund, Virtus Multi-Asset Trend Fund and Virtus Sector Trend Fund, the use of a fund of funds structure may affect the amount, timing and character of distributions to shareholders.
With respect to Virtus CA Tax-Exempt Bond Fund and Virtus Tax-Exempt Bond Fund, 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 federal income tax. Such net investment income attributable to “private activity” bonds 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. These funds may invest a portion of its assets in securities that generate income that is not exempt from federal or state income tax.
Unless you elect to receive distributions in cash, dividends and capital gain distributions are paid in additional shares. All distributions, whether paid in cash or in additional shares, are subject to federal income tax and may be subject to state, local and other taxes.
The Virtus Senior Floating Rate Fund seeks to maintain a target rate of distribution for each month. In order to do so, the fund may distribute less or more investment income than it earns on its investments each month. If, for any fiscal year, the total distributions exceed net investment income and realized net capital gains, the excess, distributed from the fund’s assets, will generally be treated as a tax-free return of capital (up to the amount of the shareholder’s tax basis in his or her shares). The amount treated as a tax-free return of capital will reduce a shareholder’s adjusted basis in his or her shares, thereby increasing his or her potential gain or reducing his or her potential loss on the sale of his or her shares. Generally, distribution rates or yields from month to month may be impacted by accruals of undistributed income, changes in the fund’s net asset value, changes in the number of accrual days, and adjustments for accounting purposes (including but not limited to changes in maturity dates of holdings and for currency gains or losses). The target rate of distribution is evaluated regularly and can change at any time. The target rate of distribution is not equivalent to the 30-day SEC yield of the fund.
Virtus Mutual Funds 235 ​
TABLE OF CONTENTS ​
Financial Highlights
​
These tables are intended to help you understand each fund’s financial performance for the past five years or since inception. Some of this information reflects financial information for a single fund share. The total returns in the tables represent the rate that an investor would have earned or lost on an investment in a fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, the funds' independent registered public accounting firm. PricewaterhouseCoopers LLP's report, together with each fund’s financial statements, is included in the funds’ most recent Annual Report, which is available upon request.
For EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund, the tables present performance of the respective Predecessor Fund and for the Successor Fund for its most recent fiscal period.
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Capital Gains
Distributions
Received
from
Affiliated
Funds (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Alternatives Diversifier Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.99 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ $ 10.89 ​ ​ ​ ​ ​ 9.74 % ​ ​ ​ ​ $ 19,171 ​ ​ ​ ​ ​ 0.74 % (11)(15) ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 56 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.31 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (1.39 ) ​ ​ ​ ​ ​ (1.11 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.32 ) ​ ​ ​ ​ ​ 9.99 ​ ​ ​ ​ ​ (10.02 ) ​ ​ ​ ​ ​ 25,377 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 46 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 11.31 ​ ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 39,076 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 27 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 51,339 ​ ​ ​ ​ ​ 0.58 (7) ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 24 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 15.37 ​ ​ ​ ​ ​ 65,463 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 0.95 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.90 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 0.87 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ $ 10.73 ​ ​ ​ ​ ​ 8.86 % ​ ​ ​ ​ $ 19,611 ​ ​ ​ ​ ​ 1.49 % (11)(15) ​ ​ ​ ​ ​ 1.49 % ​ ​ ​ ​ ​ 0.04 % ​ ​ ​ ​ ​ 56 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.21 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (1.39 ) ​ ​ ​ ​ ​ (1.19 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.31 ) ​ ​ ​ ​ ​ 9.90 ​ ​ ​ ​ ​ (10.66 ) ​ ​ ​ ​ ​ 25,637 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 46 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 11.21 ​ ​ ​ ​ ​ 3.47 ​ ​ ​ ​ ​ 38,005 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 27 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.93 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 44,850 ​ ​ ​ ​ ​ 1.33 (7) ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 24 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.55 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 10.93 ​ ​ ​ ​ ​ 14.45 ​ ​ ​ ​ ​ 57,336 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.98 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ $ 10.89 ​ ​ ​ ​ ​ 9.94 % ​ ​ ​ ​ $ 19,777 ​ ​ ​ ​ ​ 0.49 % (11)(15) ​ ​ ​ ​ ​ 0.49 % ​ ​ ​ ​ ​ 1.04 % ​ ​ ​ ​ ​ 56 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.30 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (1.39 ) ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.32 ) ​ ​ ​ ​ ​ 9.98 ​ ​ ​ ​ ​ (9.77 ) ​ ​ ​ ​ ​ 30,543 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 1.99 ​ ​ ​ ​ ​ 46 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.98 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 11.30 ​ ​ ​ ​ ​ 4.52 ​ ​ ​ ​ ​ 47,949 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 27 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.12 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ 10.98 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 111,396 ​ ​ ​ ​ ​ 0.36 (7) ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 24 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.70 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ 11.12 ​ ​ ​ ​ ​ 15.63 ​ ​ ​ ​ ​ 37,590 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
236 Virtus Mutual Funds
Virtus Mutual Funds 237 ​
​
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Return of
Capital
​ ​
Total
Distributions
​ ​ ​ ​ ​
Payment
from
Affiliate
​ ​
Change in
Net Asset
Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating
Expenses to
Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to
Average Net
Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Bond Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.02 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ $ 11.38 ​ ​ ​ ​ ​ 6.38 % (13) ​ ​ ​ ​ $ 44,136 ​ ​ ​ ​ ​ 0.86 % (11)(15) ​ ​ ​ ​ ​ 1.18 % ​ ​ ​ ​ ​ 3.28 % ​ ​ ​ ​ ​ 64 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.43 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ 11.02 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ 48,064 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 3.55 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.21 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 11.43 ​ ​ ​ ​ ​ 6.18 ​ ​ ​ ​ ​ 53,603 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 4.08 ​ ​ ​ ​ ​ 38 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.61 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 11.21 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 57,286 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 3.75 ​ ​ ​ ​ ​ 107 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 11.61 ​ ​ ​ ​ ​ 9.34 ​ ​ ​ ​ ​ 67,804 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 3.12 ​ ​ ​ ​ ​ 210 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.74 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ $ 11.07 ​ ​ ​ ​ ​ 5.47 % (13) ​ ​ ​ ​ $ 74 ​ ​ ​ ​ ​ 1.61 % (11)(15) ​ ​ ​ ​ ​ 1.92 % ​ ​ ​ ​ ​ 2.54 % ​ ​ ​ ​ ​ 64 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.14 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 10.74 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ 126 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 2.82 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.95 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 11.14 ​ ​ ​ ​ ​ 5.27 ​ ​ ​ ​ ​ 233 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.84 ​ ​ ​ ​ ​ 3.34 ​ ​ ​ ​ ​ 38 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.34 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 10.95 ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ 401 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.82 ​ ​ ​ ​ ​ 2.95 ​ ​ ​ ​ ​ 107 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.71 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ 11.34 ​ ​ ​ ​ ​ 8.48 ​ ​ ​ ​ ​ 727 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 2.43 ​ ​ ​ ​ ​ 210 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.78 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ $ 11.12 ​ ​ ​ ​ ​ 5.54 % (13) ​ ​ ​ ​ $ 9,409 ​ ​ ​ ​ ​ 1.61 % (11)(15) ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ 2.52 % ​ ​ ​ ​ ​ 64 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ 10.78 ​ ​ ​ ​ ​ (1.00 ) ​ ​ ​ ​ ​ 8,853 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.87 ​ ​ ​ ​ ​ 2.74 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 5.34 ​ ​ ​ ​ ​ 6,315 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 3.33 ​ ​ ​ ​ ​ 38 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.38 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 10.99 ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ 6,825 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.82 ​ ​ ​ ​ ​ 2.99 ​ ​ ​ ​ ​ 107 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.75 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ 11.38 ​ ​ ​ ​ ​ 8.55 ​ ​ ​ ​ ​ 8,756 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 2.36 ​ ​ ​ ​ ​ 210 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.19 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ $ 11.56 ​ ​ ​ ​ ​ 6.63 % (13) ​ ​ ​ ​ $ 24,236 ​ ​ ​ ​ ​ 0.61 % (11)(15) ​ ​ ​ ​ ​ 0.93 % ​ ​ ​ ​ ​ 3.51 % ​ ​ ​ ​ ​ 64 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.59 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 0.08 % ​ ​ ​ ​ ​ 17,456 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.87 ​ ​ ​ ​ ​ 3.78 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.37 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.71 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 11.59 ​ ​ ​ ​ ​ 6.35 ​ ​ ​ ​ ​ 16,468 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 4.33 ​ ​ ​ ​ ​ 38 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.76 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 11.37 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 22,037 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.82 ​ ​ ​ ​ ​ 3.98 ​ ​ ​ ​ ​ 107 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 11.76 ​ ​ ​ ​ ​ 9.64 ​ ​ ​ ​ ​ 29,527 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 3.39 ​ ​ ​ ​ ​ 210 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 239 ​
238 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Return of
Capital
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
CA Tax-Exempt Bond Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.14 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.63 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ $ 12.17 ​ ​ ​ ​ ​ 5.56 % ​ ​ ​ ​ $ 19,464 ​ ​ ​ ​ ​ 0.86 % (15) ​ ​ ​ ​ ​ 1.22 % ​ ​ ​ ​ ​ 3.03 % ​ ​ ​ ​ ​ 21 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.51 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.79 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ 12.14 ​ ​ ​ ​ ​ 3.44 ​ ​ ​ ​ ​ 19,978 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.18 ​ ​ ​ ​ ​ 3.16 ​ ​ ​ ​ ​ 24 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 12.10 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 12.51 ​ ​ ​ ​ ​ 9.16 ​ ​ ​ ​ ​ 21,729 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 3.49 ​ ​ ​ ​ ​ 7 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.96 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ (0.68 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.61 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.86 ) ​ ​ ​ ​ ​ 12.10 ​ ​ ​ ​ ​ (2.12 ) ​ ​ ​ ​ ​ 22,612 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 3.39 ​ ​ ​ ​ ​ 22 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 12.30 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ 0.68 ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 12.96 ​ ​ ​ ​ ​ 9.40 ​ ​ ​ ​ ​ 28,803 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 3.65 ​ ​ ​ ​ ​ 16 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.12 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ $ 12.15 ​ ​ ​ ​ ​ 5.83 % ​ ​ ​ ​ $ 11,649 ​ ​ ​ ​ ​ 0.61 % (15) ​ ​ ​ ​ ​ 0.97 % ​ ​ ​ ​ ​ 3.28 % ​ ​ ​ ​ ​ 21 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.49 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.82 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ 12.12 ​ ​ ​ ​ ​ 3.71 ​ ​ ​ ​ ​ 11,059 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 3.41 ​ ​ ​ ​ ​ 24 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 12.09 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 1.09 ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.69 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 12.49 ​ ​ ​ ​ ​ 9.36 ​ ​ ​ ​ ​ 11,453 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ ​ 3.74 ​ ​ ​ ​ ​ 7 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.95 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ (0.68 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.86 ) ​ ​ ​ ​ ​ 12.09 ​ ​ ​ ​ ​ (1.88 ) ​ ​ ​ ​ ​ 26,026 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 3.65 ​ ​ ​ ​ ​ 22 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 12.29 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.68 ​ ​ ​ ​ ​ 1.17 ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 12.95 ​ ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 28,639 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 3.90 ​ ​ ​ ​ ​ 16 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Emerging Markets Debt Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.54 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ $ 9.45 ​ ​ ​ ​ ​ 15.58 % ​ ​ ​ ​ $ 864 ​ ​ ​ ​ ​ 1.35 % (11) ​ ​ ​ ​ ​ 1.54 % ​ ​ ​ ​ ​ 4.95 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.69 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ (1.18 ) ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.15 ) ​ ​ ​ ​ ​ 8.54 ​ ​ ​ ​ ​ (7.85 ) ​ ​ ​ ​ ​ 718 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 4.80 ​ ​ ​ ​ ​ 47 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.43 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 9.69 ​ ​ ​ ​ ​ 7.83 ​ ​ ​ ​ ​ 982 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.52 ​ ​ ​ ​ ​ 4.88 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.48 ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ 9.43 ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ 3,200 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 4.92 ​ ​ ​ ​ ​ 60 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.90 (4) ​ ​ ​ ​ ​ 101 ​ ​ ​ ​ ​ 1.35 (3) ​ ​ ​ ​ ​ 3.49 (3) ​ ​ ​ ​ ​ 3.35 (3) ​ ​ ​ ​ ​ 13 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.54 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ $ 9.44 ​ ​ ​ ​ ​ 14.60 % ​ ​ ​ ​ $ 377 ​ ​ ​ ​ ​ 2.10 % (11) ​ ​ ​ ​ ​ 2.28 % ​ ​ ​ ​ ​ 4.20 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (1.17 ) ​ ​ ​ ​ ​ (0.80 ) ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.14 ) ​ ​ ​ ​ ​ 8.54 ​ ​ ​ ​ ​ (8.44 ) ​ ​ ​ ​ ​ 565 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 4.06 ​ ​ ​ ​ ​ 47 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 7.03 ​ ​ ​ ​ ​ 788 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ 4.08 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ (2.68 ) ​ ​ ​ ​ ​ 374 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ 2.32 ​ ​ ​ ​ ​ 4.11 ​ ​ ​ ​ ​ 60 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.90 (4) ​ ​ ​ ​ ​ 110 ​ ​ ​ ​ ​ 2.10 (3) ​ ​ ​ ​ ​ 4.26 (3) ​ ​ ​ ​ ​ 2.63 (3) ​ ​ ​ ​ ​ 13 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.54 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ $ 9.45 ​ ​ ​ ​ ​ 15.88 % ​ ​ ​ ​ $ 29,203 ​ ​ ​ ​ ​ 1.10 % (11) ​ ​ ​ ​ ​ 1.29 % ​ ​ ​ ​ ​ 5.21 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ (1.17 ) ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.14 ) ​ ​ ​ ​ ​ 8.54 ​ ​ ​ ​ ​ (7.52 ) ​ ​ ​ ​ ​ 25,293 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.23 ​ ​ ​ ​ ​ 5.05 ​ ​ ​ ​ ​ 47 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 9.68 ​ ​ ​ ​ ​ 8.11 ​ ​ ​ ​ ​ 31,452 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.23 ​ ​ ​ ​ ​ 5.09 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.10 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.68 ) ​ ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ (1.80 ) ​ ​ ​ ​ ​ 24,686 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.33 ​ ​ ​ ​ ​ 4.99 ​ ​ ​ ​ ​ 60 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 10.10 ​ ​ ​ ​ ​ 1.00 (4) ​ ​ ​ ​ ​ 25,036 ​ ​ ​ ​ ​ 1.10 (3) ​ ​ ​ ​ ​ 3.24 (3) ​ ​ ​ ​ ​ 3.61 (3) ​ ​ ​ ​ ​ 13 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 241 ​
240 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Emerging Markets Equity Income Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.30 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.84 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ $ 9.03 ​ ​ ​ ​ ​ 12.42 % ​ ​ ​ ​ $ 870 ​ ​ ​ ​ ​ 1.76 % (11)(15) ​ ​ ​ ​ ​ 2.17 % ​ ​ ​ ​ ​ 1.95 % ​ ​ ​ ​ ​ 74 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ (2.18 ) ​ ​ ​ ​ ​ (1.98 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.24 ) ​ ​ ​ ​ ​ 8.30 ​ ​ ​ ​ ​ (19.13 ) ​ ​ ​ ​ ​ 727 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.76 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 72 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.57 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ 1,210 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 1.96 ​ ​ ​ ​ ​ 72 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 10.57 ​ ​ ​ ​ ​ 2.19 ​ ​ ​ ​ ​ 830 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 2.90 ​ ​ ​ ​ ​ 3.00 ​ ​ ​ ​ ​ 100 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 10.59 ​ ​ ​ ​ ​ 5.90 (4) ​ ​ ​ ​ ​ 106 ​ ​ ​ ​ ​ 1.75 (3) ​ ​ ​ ​ ​ 10.28 (3) ​ ​ ​ ​ ​ (0.78 ) (3) ​ ​ ​ ​ ​ 37 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.26 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ $ 8.98 ​ ​ ​ ​ ​ 11.54 % ​ ​ ​ ​ $ 638 ​ ​ ​ ​ ​ 2.51 % (11)(15) ​ ​ ​ ​ ​ 2.90 % ​ ​ ​ ​ ​ 1.18 % ​ ​ ​ ​ ​ 74 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (2.19 ) ​ ​ ​ ​ ​ (2.05 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.24 ) ​ ​ ​ ​ ​ 8.26 ​ ​ ​ ​ ​ (19.78 ) ​ ​ ​ ​ ​ 638 ​ ​ ​ ​ ​ 2.50 ​ ​ ​ ​ ​ 2.52 ​ ​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ 72 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ 0.80 ​ ​ ​ ​ $ 799 ​ ​ ​ ​ ​ 2.50 ​ ​ ​ ​ ​ 2.65 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 72 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 417 ​ ​ ​ ​ ​ 2.50 ​ ​ ​ ​ ​ 3.77 ​ ​ ​ ​ ​ 1.89 ​ ​ ​ ​ ​ 100 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 5.80 (4) ​ ​ ​ ​ ​ 106 ​ ​ ​ ​ ​ 2.50 (3) ​ ​ ​ ​ ​ 11.03 (3) ​ ​ ​ ​ ​ (1.54 ) (3) ​ ​ ​ ​ ​ 37 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.31 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ $ 9.04 ​ ​ ​ ​ ​ 12.69 % ​ ​ ​ ​ $ 29,608 ​ ​ ​ ​ ​ 1.51 % (11)(15) ​ ​ ​ ​ ​ 1.88 % ​ ​ ​ ​ ​ 1.90 % ​ ​ ​ ​ ​ 74 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.56 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (2.17 ) ​ ​ ​ ​ ​ (1.96 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.25 ) ​ ​ ​ ​ ​ 8.31 ​ ​ ​ ​ ​ (18.95 ) ​ ​ ​ ​ ​ 42,096 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 2.14 ​ ​ ​ ​ ​ 72 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 10.56 ​ ​ ​ ​ ​ 1.87 ​ ​ ​ ​ ​ 80,745 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 2.60 ​ ​ ​ ​ ​ 72 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.59 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ 8,655 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 2.87 ​ ​ ​ ​ ​ 2.56 ​ ​ ​ ​ ​ 100 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 10.59 ​ ​ ​ ​ ​ 5.90 (4) ​ ​ ​ ​ ​ 5,082 ​ ​ ​ ​ ​ 1.50 (3) ​ ​ ​ ​ ​ 10.03 (3) ​ ​ ​ ​ ​ (0.54 ) (3) ​ ​ ​ ​ ​ 37 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 243 ​
242 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain/(Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Net
Investment
Income to
Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Emerging Markets Opportunities Fund ​ ​
Class A ​ ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 8.68 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 1.19 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ $ 9.90 ​ ​ ​ ​ ​ 14.06 % (4) ​ ​ ​ ​ $ 1,082,242 ​ ​ ​ ​ ​ 1.59 % (3)(15) ​ ​ ​ ​ ​ 1.60 % (3) ​ ​ ​ ​ ​ 0.40 % (3) ​ ​ ​ ​ ​ 25 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 9.58 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.84 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ 8.68 ​ ​ ​ ​ ​ (8.77 ) ​ ​ ​ ​ ​ 745,947 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 1.56 (11) ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 27 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 9.26 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 9.58 ​ ​ ​ ​ ​ 5.23 ​ ​ ​ ​ ​ 770,941 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 0.71 ​ ​ ​ ​ ​ 28 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ 9.26 ​ ​ ​ ​ ​ (6.58 ) ​ ​ ​ ​ ​ 1,097,753 ​ ​ ​ ​ ​ 1.58 ​ ​ ​ ​ ​ 1.58 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 31 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 8.44 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.57 ​ ​ ​ ​ ​ 1.64 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 19.62 ​ ​ ​ ​ ​ 1,208,195 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 0.78 ​ ​ ​ ​ ​ 28 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 8.83 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 8.44 ​ ​ ​ ​ ​ (3.13 ) ​ ​ ​ ​ ​ 474,368 ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 1.09 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 8.49 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ $ 9.63 ​ ​ ​ ​ ​ 13.56 % (4) ​ ​ ​ ​ $ 222,221 ​ ​ ​ ​ ​ 2.34 % (3)(15) ​ ​ ​ ​ ​ 2.35 % (3) ​ ​ ​ ​ ​ (0.31 )% (3) ​ ​ ​ ​ ​ 25 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 9.37 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.88 ) ​ ​ ​ ​ ​ (0.88 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.88 ) ​ ​ ​ ​ ​ 8.49 ​ ​ ​ ​ ​ (9.50 ) ​ ​ ​ ​ ​ 223,303 ​ ​ ​ ​ ​ 2.31 ​ ​ ​ ​ ​ 2.31 (11) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 27 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 9.08 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 9.37 ​ ​ ​ ​ ​ 4.40 ​ ​ ​ ​ ​ 228,652 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 28 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 9.82 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.72 ) ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ 9.08 ​ ​ ​ ​ ​ (7.21 ) ​ ​ ​ ​ ​ 217,034 ​ ​ ​ ​ ​ 2.33 ​ ​ ​ ​ ​ 2.33 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 31 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 8.31 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 9.82 ​ ​ ​ ​ ​ 18.66 ​ ​ ​ ​ ​ 203,974 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 28 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 8.72 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ 8.31 ​ ​ ​ ​ ​ (3.77 ) ​ ​ ​ ​ ​ 70,198 ​ ​ ​ ​ ​ 2.36 ​ ​ ​ ​ ​ 2.36 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 8.96 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ $ 10.24 ​ ​ ​ ​ ​ 14.29 % (4) ​ ​ ​ ​ $ 6,214,272 ​ ​ ​ ​ ​ 1.33 % (3)(15) ​ ​ ​ ​ ​ 1.34 (3) ​ ​ ​ ​ ​ 0.64 (3) ​ ​ ​ ​ ​ 25 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 9.89 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ (0.95 ) ​ ​ ​ ​ ​ (0.85 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ 8.96 ​ ​ ​ ​ ​ (8.55 ) ​ ​ ​ ​ ​ 8,726,303 ​ ​ ​ ​ ​ 1.31 ​ ​ ​ ​ ​ 1.32 (11) ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 27 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 9.55 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 9.89 ​ ​ ​ ​ ​ 5.54 ​ ​ ​ ​ ​ 7,572,633 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 28 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 10.31 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.76 ) ​ ​ ​ ​ ​ (0.65 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.76 ) ​ ​ ​ ​ ​ 9.55 ​ ​ ​ ​ ​ (6.32 ) ​ ​ ​ ​ ​ 6,357,443 ​ ​ ​ ​ ​ 1.33 ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ 31 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 8.70 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 10.31 ​ ​ ​ ​ ​ 19.88 ​ ​ ​ ​ ​ 5,352,379 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 28 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 9.10 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 8.70 ​ ​ ​ ​ ​ (2.92 ) ​ ​ ​ ​ ​ 2,082,147 ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.34 ​ ​ ​ ​ ​ 29 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 8.96 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ $ 10.25 ​ ​ ​ ​ ​ 14.40 % (4) ​ ​ ​ ​ $ 45,197 ​ ​ ​ ​ ​ 1.21 % (3)(15) ​ ​ ​ ​ ​ 1.22 % (3) ​ ​ ​ ​ ​ 0.72 % (3) ​ ​ ​ ​ ​ 25 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ $ 9.89 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.83 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ $ 8.96 ​ ​ ​ ​ ​ (8.44 )% ​ ​ ​ ​ $ 34,379 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 1.21 % (11) ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ 27 % ​ ​
11/12/14 (6) to 12/31/14 ​ ​ ​ ​ 10.42 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.53 ) ​ ​ ​ ​ ​ 9.89 ​ ​ ​ ​ ​ (4.60 ) (4) ​ ​ ​ ​ ​ 95 ​ ​ ​ ​ ​ 1.24 (3) ​ ​ ​ ​ ​ 1.24 (3) ​ ​ ​ ​ ​ (0.41 ) (3) ​ ​ ​ ​ ​ 28 (4)(12) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 245 ​
244 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Emerging Markets Small-Cap Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 7.85 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.59 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.44 ​ ​ ​ ​ $ 9.29 ​ ​ ​ ​ ​ 20.66 % ​ ​ ​ ​ $ 382 ​ ​ ​ ​ ​ 1.86 % (11)(15) ​ ​ ​ ​ ​ 3.77 % ​ ​ ​ ​ ​ 2.18 % ​ ​ ​ ​ ​ 34 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.32 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (2.28 ) ​ ​ ​ ​ ​ (2.12 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.47 ) ​ ​ ​ ​ ​ 7.85 ​ ​ ​ ​ ​ (21.20 ) ​ ​ ​ ​ ​ 332 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 3.62 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 35 ​ ​
12/17/13 (6) to 9/30/14 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 10.32 ​ ​ ​ ​ ​ 3.45 (4) ​ ​ ​ ​ ​ 217 ​ ​ ​ ​ ​ 1.85 (3) ​ ​ ​ ​ ​ 4.82 (3) ​ ​ ​ ​ ​ 2.25 (3) ​ ​ ​ ​ ​ 44 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 7.80 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.53 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ $ 9.31 ​ ​ ​ ​ ​ 19.62 % ​ ​ ​ ​ $ 117 ​ ​ ​ ​ ​ 2.61 % (11)(15) ​ ​ ​ ​ ​ 4.51 % ​ ​ ​ ​ ​ 1.39 % ​ ​ ​ ​ ​ 34 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.26 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ (2.24 ) ​ ​ ​ ​ ​ (2.17 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.46 ) ​ ​ ​ ​ ​ 7.80 ​ ​ ​ ​ ​ (21.68 ) ​ ​ ​ ​ ​ 128 ​ ​ ​ ​ ​ 2.60 ​ ​ ​ ​ ​ 4.34 ​ ​ ​ ​ ​ 0.76 ​ ​ ​ ​ ​ 35 ​ ​
12/17/13 (6) to 9/30/14 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 10.26 ​ ​ ​ ​ ​ 2.82 (4) ​ ​ ​ ​ ​ 159 ​ ​ ​ ​ ​ 2.60 (3) ​ ​ ​ ​ ​ 5.59 (3) ​ ​ ​ ​ ​ 1.54 (3) ​ ​ ​ ​ ​ 44 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 7.88 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ $ 9.31 ​ ​ ​ ​ ​ 20.82 % ​ ​ ​ ​ $ 4,420 ​ ​ ​ ​ ​ 1.61 % (11)(15) ​ ​ ​ ​ ​ 3.53 % ​ ​ ​ ​ ​ 2.44 % ​ ​ ​ ​ ​ 34 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.34 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ (2.28 ) ​ ​ ​ ​ ​ (2.10 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.46 ) ​ ​ ​ ​ ​ 7.88 ​ ​ ​ ​ ​ (20.96 ) ​ ​ ​ ​ ​ 3,871 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 3.35 ​ ​ ​ ​ ​ 1.87 ​ ​ ​ ​ ​ 35 ​ ​
12/17/13 (6) to 9/30/14 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 10.34 ​ ​ ​ ​ ​ 3.66 (4) ​ ​ ​ ​ ​ 3,480 ​ ​ ​ ​ ​ 1.60 (3) ​ ​ ​ ​ ​ 4.6 % (3) ​ ​ ​ ​ ​ 2.50 (3) ​ ​ ​ ​ ​ 44 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Equity Trend Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.14 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ $ 12.23 ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ $ 245,109 ​ ​ ​ ​ ​ 1.50 % (7)(15) ​ ​ ​ ​ ​ 1.58 % ​ ​ ​ ​ ​ (0.05 )% ​ ​ ​ ​ ​ 229 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 17.39 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (1.79 ) ​ ​ ​ ​ ​ (1.82 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (3.42 ) ​ ​ ​ ​ ​ (3.43 ) ​ ​ ​ ​ ​ ​ ​ ​ (5.25 ) ​ ​ ​ ​ ​ 12.14 ​ ​ ​ ​ ​ (12.79 ) ​ ​ ​ ​ ​ 520,337 ​ ​ ​ ​ ​ 1.60 (10) ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ 674 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.52 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 2.29 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.87 ​ ​ ​ ​ ​ 17.39 ​ ​ ​ ​ ​ 15.31 ​ ​ ​ ​ ​ 2,044,955 ​ ​ ​ ​ ​ 1.61 (10) ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 227 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 13.43 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 2.09 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.09 ​ ​ ​ ​ ​ 15.52 ​ ​ ​ ​ ​ 16.50 ​ ​ ​ ​ ​ 1,937,456 ​ ​ ​ ​ ​ 1.62 (10) ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ 140 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.69 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 1.83 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 13.43 ​ ​ ​ ​ ​ 15.74 ​ ​ ​ ​ ​ 1,323,109 ​ ​ ​ ​ ​ 1.64 ​ ​ ​ ​ ​ 1.64 ​ ​ ​ ​ ​ 0.80 ​ ​ ​ ​ ​ 297 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.87 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ $ 11.88 ​ ​ ​ ​ ​ 0.08 % ​ ​ ​ ​ $ 423,675 ​ ​ ​ ​ ​ 2.16 % (7)(15) ​ ​ ​ ​ ​ 2.33 % ​ ​ ​ ​ ​ (0.69 )% ​ ​ ​ ​ ​ 229 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 17.16 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (1.76 ) ​ ​ ​ ​ ​ (1.89 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (3.40 ) ​ ​ ​ ​ ​ (3.40 ) ​ ​ ​ ​ ​ ​ ​ ​ (5.29 ) ​ ​ ​ ​ ​ 11.87 ​ ​ ​ ​ ​ (13.45 ) ​ ​ ​ ​ ​ 746,390 ​ ​ ​ ​ ​ 2.36 (10) ​ ​ ​ ​ ​ 2.36 ​ ​ ​ ​ ​ (0.97 ) ​ ​ ​ ​ ​ 674 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.39 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ 2.27 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 17.16 ​ ​ ​ ​ ​ 14.48 ​ ​ ​ ​ ​ 1,988,290 ​ ​ ​ ​ ​ 2.36 (10) ​ ​ ​ ​ ​ 2.36 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ 227 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 13.34 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.05 ​ ​ ​ ​ ​ 15.39 ​ ​ ​ ​ ​ 15.55 ​ ​ ​ ​ ​ 1,307,857 ​ ​ ​ ​ ​ 2.37 (10) ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 140 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.62 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 13.34 ​ ​ ​ ​ ​ 14.91 ​ ​ ​ ​ ​ 767,602 ​ ​ ​ ​ ​ 2.38 ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 297 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.19 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ $ 12.31 ​ ​ ​ ​ ​ 0.98 % ​ ​ ​ ​ $ 282,818 ​ ​ ​ ​ ​ 1.29 % (7)(15) ​ ​ ​ ​ ​ 1.33 % ​ ​ ​ ​ ​ 0.16 % ​ ​ ​ ​ ​ 229 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 17.42 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (1.80 ) ​ ​ ​ ​ ​ (1.79 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (3.42 ) ​ ​ ​ ​ ​ (3.44 ) ​ ​ ​ ​ ​ ​ ​ ​ (5.23 ) ​ ​ ​ ​ ​ 12.19 ​ ​ ​ ​ ​ (12.57 ) ​ ​ ​ ​ ​ 594,460 ​ ​ ​ ​ ​ 1.35 (10) ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 674 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.54 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 17.42 ​ ​ ​ ​ ​ 15.61 ​ ​ ​ ​ ​ 3,840,271 ​ ​ ​ ​ ​ 1.36 (10) ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 227 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 13.45 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 2.08 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.09 ​ ​ ​ ​ ​ 15.54 ​ ​ ​ ​ ​ 16.75 ​ ​ ​ ​ ​ 2,580,005 ​ ​ ​ ​ ​ 1.37 (10) ​ ​ ​ ​ ​ 1.37 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 140 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.71 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 13.45 ​ ​ ​ ​ ​ 15.98 ​ ​ ​ ​ ​ 1,479,042 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 297 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.20 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ $ 12.34 ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ $ 182 ​ ​ ​ ​ ​ 1.10 % (7)(15) ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ 0.49 % ​ ​ ​ ​ ​ 229 % ​ ​
11/12/14 (6) to 9/30/15 ​ ​ ​ ​ 17.20 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (1.57 ) ​ ​ ​ ​ ​ (1.56 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (3.42 ) ​ ​ ​ ​ ​ (3.44 ) ​ ​ ​ ​ ​ ​ ​ ​ (5.00 ) ​ ​ ​ ​ ​ 12.20 ​ ​ ​ ​ ​ (11.39 ) (4) ​ ​ ​ ​ ​ 89 ​ ​ ​ ​ ​ 1.28 (3)(10) ​ ​ ​ ​ ​ 1.28 (3) ​ ​ ​ ​ ​ 0.10 (3) ​ ​ ​ ​ ​ 674 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 247 ​
246 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​ ​
Essential Resources Fund ​ ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.04 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ $ 9.03 ​ ​ ​ ​ ​ 12.93 % ​ ​ ​ ​ $ 169 ​ ​ ​ ​ ​ 1.67 % (11)(15) ​ ​ ​ ​ ​ 4.30 % ​ ​ ​ ​ ​ 0.51 % ​ ​ ​ ​ ​ 88 % ​ ​ ​
3/24/15 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ (1.99 ) ​ ​ ​ ​ ​ (1.96 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.96 ) ​ ​ ​ ​ ​ 8.04 ​ ​ ​ ​ ​ (19.60 ) (4) ​ ​ ​ ​ ​ 84 ​ ​ ​ ​ ​ 1.65 (3) ​ ​ ​ ​ ​ 6.26 (3) ​ ​ ​ ​ ​ 0.66 (3) ​ ​ ​ ​ ​ 48 (4) ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.01 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ $ 8.97 ​ ​ ​ ​ ​ 12.07 % ​ ​ ​ ​ $ 119 ​ ​ ​ ​ ​ 2.41 % (11)(15) ​ ​ ​ ​ ​ 5.12 % ​ ​ ​ ​ ​ (0.19 )% ​ ​ ​ ​ ​ 88 % ​ ​ ​
3/24/15 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ (— ) (5) ​ ​ ​ ​ ​ (1.99 ) ​ ​ ​ ​ ​ (1.99 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.99 ) ​ ​ ​ ​ ​ 8.01 ​ ​ ​ ​ ​ (19.90 ) (4) ​ ​ ​ ​ ​ 104 ​ ​ ​ ​ ​ 2.40 (3) ​ ​ ​ ​ ​ 7.26 (3) ​ ​ ​ ​ ​ (0.10 ) (3) ​ ​ ​ ​ ​ 48 (4) ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 8.05 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ $ 9.05 ​ ​ ​ ​ ​ 13.27 % ​ ​ ​ ​ $ 4,507 ​ ​ ​ ​ ​ 1.41 % (11)(15) ​ ​ ​ ​ ​ 4.14 % ​ ​ ​ ​ ​ 0.83 % ​ ​ ​ ​ ​ 88 % ​ ​ ​
3/24/15 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ (2.00 ) ​ ​ ​ ​ ​ (1.95 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.95 ) ​ ​ ​ ​ ​ 8.05 ​ ​ ​ ​ ​ (19.50 ) (4) ​ ​ ​ ​ $ 3,889 ​ ​ ​ ​ ​ 1.40 (3) ​ ​ ​ ​ ​ 5.98 (3) ​ ​ ​ ​ ​ 0.93 (3) ​ ​ ​ ​ ​ 48 (4) ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 27.21 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 2.47 ​ ​ ​ ​ ​ 2.66 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.41 ​ ​ ​ ​ $ 29.62 ​ ​ ​ ​ ​ 9.77 % ​ ​ ​ ​ $ 367,684 ​ ​ ​ ​ ​ 1.45 % (11)(15) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.68 % ​ ​ ​ ​ ​ 25 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 28.12 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ (0.92 ) ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ 27.21 ​ ​ ​ ​ ​ (2.41 ) ​ ​ ​ ​ ​ 406,429 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.89 ​ ​ ​ ​ ​ 32 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 27.01 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 1.03 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 28.12 ​ ​ ​ ​ ​ 4.72 ​ ​ ​ ​ ​ 477,036 ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 31 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 25.42 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 1.63 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.59 ​ ​ ​ ​ ​ 27.01 ​ ​ ​ ​ ​ 7.37 ​ ​ ​ ​ ​ 676,149 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 29 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 20.83 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 4.73 ​ ​ ​ ​ ​ 5.00 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.59 ​ ​ ​ ​ ​ 25.42 ​ ​ ​ ​ ​ 24.34 ​ ​ ​ ​ ​ 398,166 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 47 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 26.95 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 2.42 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.28 ​ ​ ​ ​ $ 29.23 ​ ​ ​ ​ ​ 8.94 % ​ ​ ​ ​ $ 112,180 ​ ​ ​ ​ ​ 2.20 % (11)(15) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 )% ​ ​ ​ ​ ​ 25 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 27.88 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.87 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ 26.95 ​ ​ ​ ​ ​ (3.13 ) ​ ​ ​ ​ ​ 117,568 ​ ​ ​ ​ ​ 2.17 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 32 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 26.82 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ 27.88 ​ ​ ​ ​ ​ 3.95 ​ ​ ​ ​ ​ 117,906 ​ ​ ​ ​ ​ 2.18 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 31 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 25.27 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 1.65 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​
​
​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 26.82 ​ ​ ​ ​ ​ 6.56 ​ ​ ​ ​ ​ 101,655 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 29 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 20.57 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 4.70 ​ ​ ​ ​ ​ 4.80 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.70 ​ ​ ​ ​ ​ 25.27 ​ ​ ​ ​ ​ 23.43 ​ ​ ​ ​ ​ 54,634 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 47 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 27.23 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 2.46 ​ ​ ​ ​ ​ 2.72 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ $ 29.63 ​ ​ ​ ​ ​ 10.05 % ​ ​ ​ ​ $ 958,835 ​ ​ ​ ​ ​ 1.20 % (11)(15) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ 25 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 28.14 ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.59 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ 27.23 ​ ​ ​ ​ ​ (2.16 ) ​ ​ ​ ​ ​ 1,231,349 ​ ​ ​ ​ ​ 1.17 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ 32 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 27.03 ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 1.34 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 28.14 ​ ​ ​ ​ ​ 4.97 ​ ​ ​ ​ ​ 1,263,398 ​ ​ ​ ​ ​ 1.18 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ 31 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 25.43 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 1.66 ​ ​ ​ ​ ​ 1.94 ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 27.03 ​ ​ ​ ​ ​ 7.66 ​ ​ ​ ​ ​ 1,048,274 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 29 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 20.89 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 4.72 ​ ​ ​ ​ ​ 5.06 ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.54 ​ ​ ​ ​ ​ 25.43 ​ ​ ​ ​ ​ 24.64 ​ ​ ​ ​ ​ 672,948 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 47 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 27.24 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 2.42 ​ ​ ​ ​ ​ 2.75 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ $ 29.63 ​ ​ ​ ​ ​ 10.16 % ​ ​ ​ ​ $ 6,587 ​ ​ ​ ​ ​ 1.10 % (11)(15) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.14 % ​ ​ ​ ​ ​ 25 % ​ ​ ​
11/12/14 (6) to 9/30/15 ​ ​ ​ ​ 28.66 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (1.45 ) ​ ​ ​ ​ ​ (1.09 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.42 ) ​ ​ ​ ​ ​ 27.24 ​ ​ ​ ​ ​ (3.84 ) (4) ​ ​ ​ ​ ​ 4,502 ​ ​ ​ ​ ​ 1.07 (3) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1.44 (3) ​ ​ ​ ​ ​ 32 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 249 ​
248 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Global Equity Trend Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.76 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ $ 9.94 ​ ​ ​ ​ ​ 1.84 % ​ ​ ​ ​ $ 8,351 ​ ​ ​ ​ ​ 1.77 % (15) ​ ​ ​ ​ ​ 1.79 % ​ ​ ​ ​ ​ (0.60 )% ​ ​ ​ ​ ​ 282 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.42 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (1.48 ) ​ ​ ​ ​ ​ (1.51 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ (1.15 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.66 ) ​ ​ ​ ​ ​ 9.76 ​ ​ ​ ​ ​ (13.21 ) ​ ​ ​ ​ ​ 18,523 ​ ​ ​ ​ ​ 1.68 (10) ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ 614 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.76 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 12.42 ​ ​ ​ ​ ​ 8.43 ​ ​ ​ ​ ​ 75,879 ​ ​ ​ ​ ​ 1.66 (9) ​ ​ ​ ​ ​ 1.65 ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ 205 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.56 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 11.76 ​ ​ ​ ​ ​ 12.32 ​ ​ ​ ​ ​ 56,689 ​ ​ ​ ​ ​ 1.75 (9) ​ ​ ​ ​ ​ 1.71 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 194 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ 10.56 ​ ​ ​ ​ ​ 12.75 ​ ​ ​ ​ ​ 27,699 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ ​ 258 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.59 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ $ 9.69 ​ ​ ​ ​ ​ 1.04 % ​ ​ ​ ​ $ 11,267 ​ ​ ​ ​ ​ 2.52 % (15) ​ ​ ​ ​ ​ 2.54 % ​ ​ ​ ​ ​ (1.35 )% ​ ​ ​ ​ ​ 282 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.24 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (1.48 ) ​ ​ ​ ​ ​ (1.57 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.65 ) ​ ​ ​ ​ ​ 9.59 ​ ​ ​ ​ ​ (13.88 ) ​ ​ ​ ​ ​ 22,376 ​ ​ ​ ​ ​ 2.41 (10) ​ ​ ​ ​ ​ 2.43 ​ ​ ​ ​ ​ (0.87 ) ​ ​ ​ ​ ​ 614 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.64 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 12.24 ​ ​ ​ ​ ​ 7.69 ​ ​ ​ ​ ​ 72,013 ​ ​ ​ ​ ​ 2.37 (9) ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ 205 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ 11.64 ​ ​ ​ ​ ​ 11.52 ​ ​ ​ ​ ​ 44,239 ​ ​ ​ ​ ​ 2.48 (9) ​ ​ ​ ​ ​ 2.46 ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ 194 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.40 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ 12.04 ​ ​ ​ ​ ​ 21,051 ​ ​ ​ ​ ​ 2.50 ​ ​ ​ ​ ​ 2.53 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 258 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.79 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ $ 10.00 ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ $ 4,312 ​ ​ ​ ​ ​ 1.51 % (15) ​ ​ ​ ​ ​ 1.52 % ​ ​ ​ ​ ​ (0.40 )% ​ ​ ​ ​ ​ 282 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.47 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (1.50 ) ​ ​ ​ ​ ​ (1.50 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ (1.18 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.68 ) ​ ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ (13.06 ) ​ ​ ​ ​ ​ 15,998 ​ ​ ​ ​ ​ 1.43 (10) ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 614 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.80 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ 12.47 ​ ​ ​ ​ ​ 8.68 ​ ​ ​ ​ ​ 99,642 ​ ​ ​ ​ ​ 1.44 (9) ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 0.80 ​ ​ ​ ​ ​ 205 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 11.80 ​ ​ ​ ​ ​ 12.59 ​ ​ ​ ​ ​ 38,889 ​ ​ ​ ​ ​ 1.50 (9) ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 194 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.42 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ 1.23 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 13.15 ​ ​ ​ ​ ​ 19,112 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.52 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 258 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Global Infrastructure Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.62 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ 1.83 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ (1.23 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ $ 14.22 ​ ​ ​ ​ ​ 14.79 % ​ ​ ​ ​ $ 51,148 ​ ​ ​ ​ $ 1.34 (11) ​ ​ ​ ​ ​ 1.34 % ​ ​ ​ ​ ​ 2.16 % ​ ​ ​ ​ ​ 17 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (1.60 ) ​ ​ ​ ​ ​ (1.24 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.76 ) ​ ​ ​ ​ ​ 13.62 ​ ​ ​ ​ ​ (8.27 ) ​ ​ ​ ​ ​ 60,744 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 2.38 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.94 ​ ​ ​ ​ ​ 0.71 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 2.11 ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.44 ​ ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ 15.21 ​ ​ ​ ​ ​ 60,673 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ 4.69 ​ ​ ​ ​ ​ 24 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.88 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ 13.94 ​ ​ ​ ​ ​ 11.05 ​ ​ ​ ​ ​ 53,354 ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ 2.62 ​ ​ ​ ​ ​ 14 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 2.26 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.91 ​ ​ ​ ​ ​ 12.88 ​ ​ ​ ​ ​ 20.80 ​ ​ ​ ​ ​ 36,347 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 2.59 ​ ​ ​ ​ ​ 21 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.57 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 1.53 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ (1.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ $ 14.17 ​ ​ ​ ​ ​ 13.94 % ​ ​ ​ ​ $ 29,616 ​ ​ ​ ​ ​ 2.08 % (11) ​ ​ ​ ​ ​ 2.08 % ​ ​ ​ ​ ​ 1.42 % ​ ​ ​ ​ ​ 17 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.33 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ (1.59 ) ​ ​ ​ ​ ​ (1.34 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.76 ) ​ ​ ​ ​ ​ 13.57 ​ ​ ​ ​ ​ (8.94 ) ​ ​ ​ ​ ​ 41,039 ​ ​ ​ ​ ​ 1.97 ​ ​ ​ ​ ​ 1.97 ​ ​ ​ ​ ​ 1.66 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.90 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.99 ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ 15.33 ​ ​ ​ ​ ​ 14.37 ​ ​ ​ ​ ​ 26,322 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 3.82 ​ ​ ​ ​ ​ 24 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.85 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 13.90 ​ ​ ​ ​ ​ 10.23 ​ ​ ​ ​ ​ 17,969 ​ ​ ​ ​ ​ 2.03 ​ ​ ​ ​ ​ 2.03 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 14 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.95 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 2.16 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 12.85 ​ ​ ​ ​ ​ 19.97 ​ ​ ​ ​ ​ 9,117 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 21 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.63 ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ (1.26 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ $ 14.23 ​ ​ ​ ​ ​ 15.07 % ​ ​ ​ ​ $ 41,056 ​ ​ ​ ​ ​ 1.08 % (11) ​ ​ ​ ​ ​ 1.08 % ​ ​ ​ ​ ​ 2.37 % ​ ​ ​ ​ ​ 17 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ (1.58 ) ​ ​ ​ ​ ​ (1.19 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.75 ) ​ ​ ​ ​ ​ 13.63 ​ ​ ​ ​ ​ (7.98 ) ​ ​ ​ ​ ​ 50,522 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ 2.61 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.94 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.44 ​ ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ 15.49 ​ ​ ​ ​ ​ 55,557 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 4.87 ​ ​ ​ ​ ​ 24 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.89 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 13.94 ​ ​ ​ ​ ​ 11.23 ​ ​ ​ ​ ​ 70,485 ​ ​ ​ ​ ​ 1.03 ​ ​ ​ ​ ​ 1.03 ​ ​ ​ ​ ​ 2.86 ​ ​ ​ ​ ​ 14 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.92 ​ ​ ​ ​ ​ 12.89 ​ ​ ​ ​ ​ 21.19 ​ ​ ​ ​ ​ 48,830 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 2.85 ​ ​ ​ ​ ​ 21 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 251 ​
250 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​ ​
Global Opportunities Fund ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.32 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.37 ​ ​ ​ ​ $ 13.69 ​ ​ ​ ​ ​ 11.38 % ​ ​ ​ ​ $ 105,967 ​ ​ ​ ​ ​ 1.47 % (11) ​ ​ ​ ​ ​ 1.48 % ​ ​ ​ ​ ​ 0.37 % ​ ​ ​ ​ ​ 29 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.12 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 12.32 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 87,769 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 40 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.07 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 12.12 ​ ​ ​ ​ ​ 10.18 ​ ​ ​ ​ ​ 77,738 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ 41 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 9.91 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 1.19 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 11.07 ​ ​ ​ ​ ​ 12.05 ​ ​ ​ ​ ​ 78,434 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ 61 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 7.91 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 1.99 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.00 ​ ​ ​ ​ ​ 9.91 ​ ​ ​ ​ ​ 25.80 ​ ​ ​ ​ ​ 71,592 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 73 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.85 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ $ 12.00 ​ ​ ​ ​ ​ 10.60 % ​ ​ ​ ​ $ 259 ​ ​ ​ ​ ​ 2.22 % (11) ​ ​ ​ ​ ​ 2.23 % ​ ​ ​ ​ ​ (0.41 )% ​ ​ ​ ​ ​ 29 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.73 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 10.85 ​ ​ ​ ​ ​ 1.33 ​ ​ ​ ​ ​ 474 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ 40 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.81 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 10.73 ​ ​ ​ ​ ​ 9.38 ​ ​ ​ ​ ​ 652 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 41 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 8.82 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 9.81 ​ ​ ​ ​ ​ 11.22 ​ ​ ​ ​ ​ 798 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ 61 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 7.06 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.76 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.76 ​ ​ ​ ​ ​ 8.82 ​ ​ ​ ​ ​ 24.93 ​ ​ ​ ​ ​ 1,048 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ 73 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.79 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 1.18 ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ $ 11.93 ​ ​ ​ ​ ​ 10.57 % ​ ​ ​ ​ $ 23,070 ​ ​ ​ ​ ​ 2.23 % (11) ​ ​ ​ ​ ​ 2.24 % ​ ​ ​ ​ ​ (0.34 )% ​ ​ ​ ​ ​ 29 % ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.66 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 10.79 ​ ​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ 14,431 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 40 ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.76 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 10.66 ​ ​ ​ ​ ​ 9.32 ​ ​ ​ ​ ​ 3,455 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 41 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 8.77 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 9.76 ​ ​ ​ ​ ​ 11.29 ​ ​ ​ ​ ​ 2,963 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.24 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 61 ​ ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 7.02 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 8.77 ​ ​ ​ ​ ​ 24.93 ​ ​ ​ ​ ​ 1,700 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ 73 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 12.32 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.37 ​ ​ ​ ​ $ 13.69 ​ ​ ​ ​ ​ 11.65 % ​ ​ ​ ​ $ 48,155 ​ ​ ​ ​ ​ 1.23 % (11) ​ ​ ​ ​ ​ 1.23 % ​ ​ ​ ​ ​ 0.64 % ​ ​ ​ ​ ​ 29 % ​ ​ ​ ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 12.11 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 12.32 ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ 38,104 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ 40 ​ ​ ​ ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.07 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 12.11 ​ ​ ​ ​ ​ 10.49 ​ ​ ​ ​ ​ 33,917 ​ ​ ​ ​ ​ 1.23 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ 41 ​ ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 9.91 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 11.07 ​ ​ ​ ​ ​ 12.36 ​ ​ ​ ​ ​ 29,540 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 61 ​ ​ ​
8/8/12 (6) to 9/30/12 ​ ​ ​ ​ 9.38 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 9.91 ​ ​ ​ ​ ​ 5.54 (4) ​ ​ ​ ​ ​ 23,617 ​ ​ ​ ​ ​ 1.30 (3) ​ ​ ​ ​ ​ 1.30 (3) ​ ​ ​ ​ ​ 0.02 (3) ​ ​ ​ ​ ​ 73 (4) ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 253 ​
252 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Global Real Estate Securities Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 26.19 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 3.12 ​ ​ ​ ​ ​ 3.52 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.78 ​ ​ ​ ​ $ 28.97 ​ ​ ​ ​ ​ 13.75 % ​ ​ ​ ​ $ 68,078 ​ ​ ​ ​ ​ 1.41 % (11)(15) ​ ​ ​ ​ ​ 1.54 % ​ ​ ​ ​ ​ 1.45 % ​ ​ ​ ​ ​ 22 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 25.18 ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ 1.08 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.73 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 26.19 ​ ​ ​ ​ ​ 6.83 ​ ​ ​ ​ ​ 36,315 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 2.45 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 23.14 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 2.19 ​ ​ ​ ​ ​ 2.57 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.53 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 25.18 ​ ​ ​ ​ ​ 11.36 ​ ​ ​ ​ ​ 21,502 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 1.57 ​ ​ ​ ​ ​ 1.52 ​ ​ ​ ​ ​ 29 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 22.40 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ 1.09 ​ ​ ​ ​ ​ 1.44 ​ ​ ​ ​ ​ (0.70 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.70 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 23.14 ​ ​ ​ ​ ​ 6.48 ​ ​ ​ ​ ​ 15,306 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 1.66 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 18 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 17.78 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 4.77 ​ ​ ​ ​ ​ 5.10 ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.62 ​ ​ ​ ​ ​ 22.40 ​ ​ ​ ​ ​ 29.21 ​ ​ ​ ​ ​ 8,695 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 31 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 25.71 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 3.06 ​ ​ ​ ​ ​ 3.26 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.70 ​ ​ ​ ​ $ 28.41 ​ ​ ​ ​ ​ 12.89 % ​ ​ ​ ​ $ 13,560 ​ ​ ​ ​ ​ 2.16 % (11)(15) ​ ​ ​ ​ ​ 2.29 % ​ ​ ​ ​ ​ 0.73 % ​ ​ ​ ​ ​ 22 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 24.77 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 1.52 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.58 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 25.71 ​ ​ ​ ​ ​ 6.07 ​ ​ ​ ​ ​ 8,421 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 2.26 ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 22.78 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 2.13 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.99 ​ ​ ​ ​ ​ 24.77 ​ ​ ​ ​ ​ 10.51 ​ ​ ​ ​ ​ 5,850 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 2.32 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 29 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 22.14 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 1.08 ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ (0.62 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.62 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 22.78 ​ ​ ​ ​ ​ 5.70 ​ ​ ​ ​ ​ 3,545 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 2.41 ​ ​ ​ ​ ​ 0.80 ​ ​ ​ ​ ​ 18 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 17.65 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 4.72 ​ ​ ​ ​ ​ 4.89 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.49 ​ ​ ​ ​ ​ 22.14 ​ ​ ​ ​ ​ 28.18 ​ ​ ​ ​ ​ 1,356 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 3.11 ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ ​ 31 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 26.37 ​ ​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 3.11 ​ ​ ​ ​ ​ 3.62 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.80 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.82 ​ ​ ​ ​ $ 29.19 ​ ​ ​ ​ ​ 14.06 % ​ ​ ​ ​ $ 114,428 ​ ​ ​ ​ ​ 1.16 % (11)(15) ​ ​ ​ ​ ​ 1.29 % ​ ​ ​ ​ ​ 1.79 % ​ ​ ​ ​ ​ 22 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 25.33 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.83 ​ ​ ​ ​ ​ (0.70 ) ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.79 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.04 ​ ​ ​ ​ ​ 26.37 ​ ​ ​ ​ ​ 7.11 ​ ​ ​ ​ ​ 32,659 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 2.69 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 23.28 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 2.22 ​ ​ ​ ​ ​ 2.63 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.58 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.05 ​ ​ ​ ​ ​ 25.33 ​ ​ ​ ​ ​ 11.60 ​ ​ ​ ​ ​ 26,985 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 1.65 ​ ​ ​ ​ ​ 29 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 22.51 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 1.09 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.74 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 23.28 ​ ​ ​ ​ ​ 6.78 ​ ​ ​ ​ ​ 25,332 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 18 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 17.85 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 4.71 ​ ​ ​ ​ ​ 5.16 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.66 ​ ​ ​ ​ ​ 22.51 ​ ​ ​ ​ ​ 29.50 ​ ​ ​ ​ ​ 12,063 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 31 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Greater European Opportunities Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 15.20 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 0.76 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ $ 15.86 ​ ​ ​ ​ ​ 4.99 % ​ ​ ​ ​ $ 11,364 ​ ​ ​ ​ ​ 1.46 % (11)(15) ​ ​ ​ ​ ​ 1.82 % ​ ​ ​ ​ ​ 1.06 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.32 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ 15.20 ​ ​ ​ ​ ​ 1.19 ​ ​ ​ ​ ​ 13,306 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 1.89 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 35 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.87 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ 15.32 ​ ​ ​ ​ ​ (0.88 ) ​ ​ ​ ​ ​ 12,703 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 1.91 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 65 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 14.20 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 2.09 ​ ​ ​ ​ ​ 2.22 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.67 ​ ​ ​ ​ ​ 15.87 ​ ​ ​ ​ ​ 15.92 ​ ​ ​ ​ ​ 13,433 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 2.22 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 75 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.80 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 2.87 ​ ​ ​ ​ ​ 3.03 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ (0.63 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 14.20 ​ ​ ​ ​ ​ 26.75 ​ ​ ​ ​ ​ 6,513 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 2.82 ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ 49 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 14.95 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ $ 15.58 ​ ​ ​ ​ ​ 4.21 % ​ ​ ​ ​ $ 2,292 ​ ​ ​ ​ ​ 2.23 % (11)(15) ​ ​ ​ ​ ​ 2.58 % ​ ​ ​ ​ ​ 0.26 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.08 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 14.95 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 1,564 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.64 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 35 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.71 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.63 ) ​ ​ ​ ​ ​ 15.08 ​ ​ ​ ​ ​ (1.62 ) ​ ​ ​ ​ ​ 1,130 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.67 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ 65 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 14.10 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.61 ​ ​ ​ ​ ​ 15.71 ​ ​ ​ ​ ​ 15.11 ​ ​ ​ ​ ​ 607 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.92 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 75 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.69 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 2.85 ​ ​ ​ ​ ​ 2.92 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.41 ​ ​ ​ ​ ​ 14.10 ​ ​ ​ ​ ​ 25.73 ​ ​ ​ ​ ​ 187 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 3.57 ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 49 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 15.26 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ $ 15.91 ​ ​ ​ ​ ​ 5.22 % ​ ​ ​ ​ $ 8,893 ​ ​ ​ ​ ​ 1.22 % (11)(15) ​ ​ ​ ​ ​ 1.56 % ​ ​ ​ ​ ​ 1.57 % ​ ​ ​ ​ ​ 49 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ 15.26 ​ ​ ​ ​ ​ 1.47 ​ ​ ​ ​ ​ 5,751 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.63 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 35 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 15.92 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.54 ) ​ ​ ​ ​ ​ 15.38 ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ 2,751 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ 0.89 ​ ​ ​ ​ ​ 65 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 14.23 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.26 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.57 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.69 ​ ​ ​ ​ ​ 15.92 ​ ​ ​ ​ ​ 16.19 ​ ​ ​ ​ ​ 1,918 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.96 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 75 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 11.83 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 2.90 ​ ​ ​ ​ ​ 3.07 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 14.23 ​ ​ ​ ​ ​ 26.99 ​ ​ ​ ​ ​ 155 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 2.57 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 49 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 255 ​
254 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Herzfeld Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.91 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.53 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ $ 10.92 ​ ​ ​ ​ ​ 16.04 % ​ ​ ​ ​ $ 11,060 ​ ​ ​ ​ ​ 1.61 % (11)(15) ​ ​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ 3.33 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.37 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ (1.12 ) ​ ​ ​ ​ ​ (0.77 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ (0.69 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.46 ) ​ ​ ​ ​ ​ 9.91 ​ ​ ​ ​ ​ (7.17 ) ​ ​ ​ ​ ​ 8,324 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 3.20 ​ ​ ​ ​ ​ 57 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.45 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 11.37 ​ ​ ​ ​ ​ 13.21 ​ ​ ​ ​ ​ 9,212 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 3.04 ​ ​ ​ ​ ​ 53 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 10.45 ​ ​ ​ ​ ​ 5.10 ​ ​ ​ ​ ​ 2,917 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 2.60 ​ ​ ​ ​ ​ 3.13 ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 2.10 (4) ​ ​ ​ ​ ​ 105 ​ ​ ​ ​ ​ 1.60 (3) ​ ​ ​ ​ ​ 37.91 (3) ​ ​ ​ ​ ​ 5.93 ​ ​ ​ ​ ​ 3 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.87 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 1.19 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ $ 10.88 ​ ​ ​ ​ ​ 15.22 % ​ ​ ​ ​ $ 15,568 ​ ​ ​ ​ ​ 2.36 % (11)(15) ​ ​ ​ ​ ​ 2.49 % ​ ​ ​ ​ ​ 2.61 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.34 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ (1.11 ) ​ ​ ​ ​ ​ (0.85 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ (0.62 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.47 ) ​ ​ ​ ​ ​ 9.87 ​ ​ ​ ​ ​ (7.94 ) ​ ​ ​ ​ ​ 14,761 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 2.48 ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ 57 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.43 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 11.34 ​ ​ ​ ​ ​ 12.34 ​ ​ ​ ​ ​ 10,624 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 2.70 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 53 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 10.43 ​ ​ ​ ​ ​ 4.36 ​ ​ ​ ​ ​ 4,942 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 3.25 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 2.10 (4) ​ ​ ​ ​ ​ 102 ​ ​ ​ ​ ​ 2.35 (3) ​ ​ ​ ​ ​ 38.62 (3) ​ ​ ​ ​ ​ 5.21 ​ ​ ​ ​ ​ 3 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.92 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 1.58 ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ $ 10.94 ​ ​ ​ ​ ​ 16.40 % ​ ​ ​ ​ $ 20,511 ​ ​ ​ ​ ​ 1.36 % (11)(15) ​ ​ ​ ​ ​ 1.49 % ​ ​ ​ ​ ​ 3.59 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.39 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (1.12 ) ​ ​ ​ ​ ​ (0.75 ) ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ (0.72 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.47 ) ​ ​ ​ ​ ​ 9.92 ​ ​ ​ ​ ​ (7.01 ) ​ ​ ​ ​ ​ 15,148 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.47 ​ ​ ​ ​ ​ 3.39 ​ ​ ​ ​ ​ 57 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.46 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 11.39 ​ ​ ​ ​ ​ 13.54 ​ ​ ​ ​ ​ 3,441 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.71 ​ ​ ​ ​ ​ 3.40 ​ ​ ​ ​ ​ 53 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 10.46 ​ ​ ​ ​ ​ 5.41 ​ ​ ​ ​ ​ 1,765 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 3.71 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 2.10 (4) ​ ​ ​ ​ ​ 1,017 ​ ​ ​ ​ ​ 1.35 (3) ​ ​ ​ ​ ​ 38.61 (3) ​ ​ ​ ​ ​ 4.39 ​ ​ ​ ​ ​ 3 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 257 ​
256 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Payment
from
Affiliate
​ ​
Change in
Net Asset
Value
​ ​ ​ ​ ​
Net Asset Value,
End of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating
Expenses to
Average Net
Assets (8)
​ ​
Ratio of Gross Expenses
to Average Net Assets
(before waivers and
reimbursements) (8)
​ ​
Ratio of Net Investment
Income (Loss) to
Average Net Assets
​ ​
Portfolio
Turnover Rate
​
High Yield Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 3.98 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ ​ ​ $ 4.18 ​ ​ ​ ​ ​ 10.59 % (13) ​ ​ ​ ​ $ 64,338 ​ ​ ​ ​ ​ 1.15 % (11)(15) ​ ​ ​ ​ ​ 1.42 % ​ ​ ​ ​ ​ 5.15 % ​ ​ ​ ​ ​ 81 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.35 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.98 ​ ​ ​ ​ ​ (3.39 ) ​ ​ ​ ​ ​ 60,951 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.32 ​ ​ ​ ​ ​ 5.26 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.27 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ ​ ​ ​ 4.35 ​ ​ ​ ​ ​ 7.53 ​ ​ ​ ​ ​ 71,042 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.31 ​ ​ ​ ​ ​ 5.55 ​ ​ ​ ​ ​ 82 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.27 ​ ​ ​ ​ ​ 5.98 ​ ​ ​ ​ ​ 80,155 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.31 ​ ​ ​ ​ ​ 6.05 ​ ​ ​ ​ ​ 100 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 3.85 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 19.19 ​ ​ ​ ​ ​ 98,701 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.31 ​ ​ ​ ​ ​ 6.82 ​ ​ ​ ​ ​ 92 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 3.88 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ ​ ​ $ 4.06 ​ ​ ​ ​ ​ 9.52 % (13) ​ ​ ​ ​ $ 26 ​ ​ ​ ​ ​ 1.90 % (11)(15) ​ ​ ​ ​ ​ 2.16 % ​ ​ ​ ​ ​ 4.40 % ​ ​ ​ ​ ​ 81 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.24 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.88 ​ ​ ​ ​ ​ (3.96 ) ​ ​ ​ ​ ​ 41 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 4.54 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.17 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ ​ ​ ​ 4.24 ​ ​ ​ ​ ​ 6.68 ​ ​ ​ ​ ​ 106 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 4.80 ​ ​ ​ ​ ​ 82 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.19 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.17 ​ ​ ​ ​ ​ 5.06 ​ ​ ​ ​ ​ 131 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.05 ​ ​ ​ ​ ​ 5.31 ​ ​ ​ ​ ​ 100 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 3.77 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ 0.68 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ ​ ​ ​ 4.19 ​ ​ ​ ​ ​ 18.46 ​ ​ ​ ​ ​ 307 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.06 ​ ​ ​ ​ ​ 6.07 ​ ​ ​ ​ ​ 92 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 3.92 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ ​ ​ $ 4.11 ​ ​ ​ ​ ​ 9.68 % (13) ​ ​ ​ ​ $ 4,231 ​ ​ ​ ​ ​ 1.90 % (11)(15) ​ ​ ​ ​ ​ 2.17 % ​ ​ ​ ​ ​ 4.40 % ​ ​ ​ ​ ​ 81 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.92 ​ ​ ​ ​ ​ (3.93 ) ​ ​ ​ ​ ​ 3,705 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 4.52 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.21 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 6.60 ​ ​ ​ ​ ​ 4,038 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 4.79 ​ ​ ​ ​ ​ 82 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.23 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.21 ​ ​ ​ ​ ​ 5.00 ​ ​ ​ ​ ​ 3,302 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.06 ​ ​ ​ ​ ​ 5.31 ​ ​ ​ ​ ​ 100 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 3.80 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.44 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ ​ ​ ​ 4.23 ​ ​ ​ ​ ​ 18.59 ​ ​ ​ ​ ​ 2,944 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 2.07 ​ ​ ​ ​ ​ 6.07 ​ ​ ​ ​ ​ 92 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 3.98 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ ​ ​ $ 4.18 ​ ​ ​ ​ ​ 10.86 % (13) ​ ​ ​ ​ $ 7,954 ​ ​ ​ ​ ​ 0.90 % (11)(15) ​ ​ ​ ​ ​ 1.16 % ​ ​ ​ ​ ​ 5.38 % ​ ​ ​ ​ ​ 81 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.35 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.98 ​ ​ ​ ​ ​ (3.15 ) ​ ​ ​ ​ ​ 4,625 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 5.53 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.27 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ ​ ​ ​ 4.35 ​ ​ ​ ​ ​ 7.80 ​ ​ ​ ​ ​ 6,120 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 5.80 ​ ​ ​ ​ ​ 82 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ 4.27 ​ ​ ​ ​ ​ 6.25 ​ ​ ​ ​ ​ 5,812 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ 6.37 ​ ​ ​ ​ ​ 100 ​ ​
8/8/12 (6) to 9/30/12 ​ ​ ​ ​ 4.23 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ ​ ​ ​ 4.28 ​ ​ ​ ​ ​ 2.37 (4) ​ ​ ​ ​ ​ 102 ​ ​ ​ ​ ​ 0.90 (3) ​ ​ ​ ​ ​ 1.08 (3) ​ ​ ​ ​ ​ 6.86 (3) ​ ​ ​ ​ ​ 92 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 259 ​
258 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
International Equity Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.80 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ $ 10.22 ​ ​ ​ ​ ​ 4.64 % ​ ​ ​ ​ $ 1,402 ​ ​ ​ ​ ​ 1.51 % (11)(15) ​ ​ ​ ​ ​ 3.05 % ​ ​ ​ ​ ​ 0.28 % ​ ​ ​ ​ ​ 70 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.90 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ (1.05 ) ​ ​ ​ ​ ​ (1.02 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.10 ) ​ ​ ​ ​ ​ 9.80 ​ ​ ​ ​ ​ (9.43 ) ​ ​ ​ ​ ​ 1,923 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 2.27 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 10.90 ​ ​ ​ ​ ​ 7.42 ​ ​ ​ ​ ​ 3,915 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 2.42 ​ ​ ​ ​ ​ 1.18 ​ ​ ​ ​ ​ 115 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.87 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 1.19 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (1.47 ) ​ ​ ​ ​ ​ (1.72 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ 10.50 ​ ​ ​ ​ ​ 13.38 ​ ​ ​ ​ ​ 170 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 277 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 1.57 ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.08 ​ ​ ​ ​ ​ 10.87 ​ ​ ​ ​ ​ 16.58 ​ ​ ​ ​ ​ 193 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.80 ​ ​ ​ ​ ​ 2.02 ​ ​ ​ ​ ​ 25 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.60 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ $ 9.97 ​ ​ ​ ​ ​ 3.85 % ​ ​ ​ ​ $ 967 ​ ​ ​ ​ ​ 2.26 % (11)(15) ​ ​ ​ ​ ​ 3.76 % ​ ​ ​ ​ ​ (0.52 )% ​ ​ ​ ​ ​ 70 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.68 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (1.05 ) ​ ​ ​ ​ ​ (1.07 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.08 ) ​ ​ ​ ​ ​ 9.60 ​ ​ ​ ​ ​ (10.01 ) ​ ​ ​ ​ ​ 1,689 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 3.06 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.37 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 0.66 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 10.68 ​ ​ ​ ​ ​ 6.56 ​ ​ ​ ​ ​ 804 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 3.13 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 115 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ (1.47 ) ​ ​ ​ ​ ​ (1.68 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 10.37 ​ ​ ​ ​ ​ 12.53 ​ ​ ​ ​ ​ 124 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.73 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ 277 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.76 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 15.37 ​ ​ ​ ​ ​ 115 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.51 ​ ​ ​ ​ ​ 1.94 ​ ​ ​ ​ ​ 25 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.78 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 0.48 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​
​
—
​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ $ 10.19 ​ ​ ​ ​ ​ 4.89 % ​ ​ ​ ​ $ 2,650 ​ ​ ​ ​ ​ 1.26 % (11)(15) ​ ​ ​ ​ ​ 2.76 % ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ 70 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.87 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ (1.06 ) ​ ​ ​ ​ ​ (0.99 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.09 ) ​ ​ ​ ​ ​ 9.78 ​ ​ ​ ​ ​ (9.14 ) ​ ​ ​ ​ ​ 4,324 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 2.02 ​ ​ ​ ​ ​ 0.61 ​ ​ ​ ​ ​ 94 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.45 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 10.87 ​ ​ ​ ​ ​ 7.67 ​ ​ ​ ​ ​ 6,435 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 2.19 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 115 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ (1.47 ) ​ ​ ​ ​ ​ (1.75 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ 10.45 ​ ​ ​ ​ ​ 13.68 ​ ​ ​ ​ ​ 2,185 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ 1.97 ​ ​ ​ ​ ​ 277 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.80 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ (0.54 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 16.47 ​ ​ ​ ​ ​ 26,398 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 2.94 ​ ​ ​ ​ ​ 25 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
International Real Estate Securities Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 6.63 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.58 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ $ 7.25 ​ ​ ​ ​ ​ 10.47 % ​ ​ ​ ​ $ 8,680 ​ ​ ​ ​ ​ 1.51 % (11)(15) ​ ​ ​ ​ ​ 1.91 % ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ 26 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 7.03 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ 6.63 ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 12,415 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 4.09 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 6.61 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 7.03 ​ ​ ​ ​ ​ 8.61 ​ ​ ​ ​ ​ 11,257 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 2.38 ​ ​ ​ ​ ​ 32 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 6.50 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 6.61 ​ ​ ​ ​ ​ 9.39 ​ ​ ​ ​ ​ 10,234 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 22 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 5.23 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ 6.50 ​ ​ ​ ​ ​ 27.35 ​ ​ ​ ​ ​ 3,916 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 2.69 ​ ​ ​ ​ ​ 41 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 6.59 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ $ 7.21 ​ ​ ​ ​ ​ 9.69 % ​ ​ ​ ​ $ 2,006 ​ ​ ​ ​ ​ 2.26 % (11)(15) ​ ​ ​ ​ ​ 2.68 % ​ ​ ​ ​ ​ 0.97 % ​ ​ ​ ​ ​ 26 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 6.97 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ 6.59 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 2,226 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.52 ​ ​ ​ ​ ​ 3.36 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 6.56 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 6.97 ​ ​ ​ ​ ​ 7.75 ​ ​ ​ ​ ​ 2,553 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.48 ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ 32 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 6.48 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 6.56 ​ ​ ​ ​ ​ 8.55 ​ ​ ​ ​ ​ 1,911 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.49 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 22 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 5.20 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ 6.48 ​ ​ ​ ​ ​ 26.36 ​ ​ ​ ​ ​ 1,531 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.60 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 41 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 6.64 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ $ 7.26 ​ ​ ​ ​ ​ 10.72 % ​ ​ ​ ​ $ 24,348 ​ ​ ​ ​ ​ 1.25 % (11)(15) ​ ​ ​ ​ ​ 1.68 % ​ ​ ​ ​ ​ 1.98 % ​ ​ ​ ​ ​ 26 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 7.03 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 6.64 ​ ​ ​ ​ ​ 1.31 ​ ​ ​ ​ ​ 24,999 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.52 ​ ​ ​ ​ ​ 4.36 ​ ​ ​ ​ ​ 27 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 6.61 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 7.03 ​ ​ ​ ​ ​ 8.87 ​ ​ ​ ​ ​ 28,738 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 2.64 ​ ​ ​ ​ ​ 32 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 6.49 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 6.61 ​ ​ ​ ​ ​ 9.66 ​ ​ ​ ​ ​ 29,999 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 22 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 5.23 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ 6.49 ​ ​ ​ ​ ​ 27.74 ​ ​ ​ ​ ​ 28,095 ​ ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.59 ​ ​ ​ ​ ​ 2.92 ​ ​ ​ ​ ​ 41 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 261 ​
260 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
International Small-Cap Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.85 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 2.38 ​ ​ ​ ​ ​ 2.59 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.16 ​ ​ ​ ​ $ 13.01 ​ ​ ​ ​ ​ 24.58 % ​ ​ ​ ​ $ 1,985 ​ ​ ​ ​ ​ 1.61 % (11)(15) ​ ​ ​ ​ ​ 1.87 % ​ ​ ​ ​ ​ 1.80 % ​ ​ ​ ​ ​ 40 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 13.70 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ (1.83 ) ​ ​ ​ ​ ​ (1.66 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.96 ) ​ ​ ​ ​ ​ (1.19 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.85 ) ​ ​ ​ ​ ​ 10.85 ​ ​ ​ ​ ​ (12.58 ) ​ ​ ​ ​ ​ 1,916 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.20 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 0.88 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 13.70 ​ ​ ​ ​ ​ 6.65 ​ ​ ​ ​ ​ 2,477 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 3.31 ​ ​ ​ ​ ​ 44 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ 2.91 ​ ​ ​ ​ ​ 3.21 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.11 ​ ​ ​ ​ ​ 13.20 ​ ​ ​ ​ ​ 31.97 ​ ​ ​ ​ ​ 403 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 2.51 ​ ​ ​ ​ ​ 2.52 ​ ​ ​ ​ ​ 26 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.90 (4) ​ ​ ​ ​ ​ 101 ​ ​ ​ ​ ​ 1.60 (3) ​ ​ ​ ​ ​ 16.64 (3) ​ ​ ​ ​ ​ 3.65 (3) ​ ​ ​ ​ ​ 0 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.72 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ 2.49 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ $ 12.92 ​ ​ ​ ​ ​ 23.76 % ​ ​ ​ ​ $ 1,465 ​ ​ ​ ​ ​ 2.36 % (11)(15) ​ ​ ​ ​ ​ 2.63 % ​ ​ ​ ​ ​ 1.02 % ​ ​ ​ ​ ​ 40 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 13.63 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (1.82 ) ​ ​ ​ ​ ​ (1.74 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ (0.96 ) ​ ​ ​ ​ ​ (1.17 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.91 ) ​ ​ ​ ​ ​ 10.72 ​ ​ ​ ​ ​ (13.28 ) ​ ​ ​ ​ ​ 1,464 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 2.49 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.16 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.78 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 13.63 ​ ​ ​ ​ ​ 5.89 ​ ​ ​ ​ ​ 1,194 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 2.49 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 44 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 2.93 ​ ​ ​ ​ ​ 3.12 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.07 ​ ​ ​ ​ ​ 13.16 ​ ​ ​ ​ ​ 30.92 ​ ​ ​ ​ ​ 374 ​ ​ ​ ​ ​ 2.35 ​ ​ ​ ​ ​ 3.34 ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 26 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 10.09 ​ ​ ​ ​ ​ 0.90 (4) ​ ​ ​ ​ ​ 107 ​ ​ ​ ​ ​ 2.35 (3) ​ ​ ​ ​ ​ 17.43 (3) ​ ​ ​ ​ ​ 2.86 (3) ​ ​ ​ ​ ​ 0 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.89 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 2.63 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ $ 13.04 ​ ​ ​ ​ ​ 24.94 % ​ ​ ​ ​ $ 40,424 ​ ​ ​ ​ ​ 1.36 % (11)(15) ​ ​ ​ ​ ​ 1.62 % ​ ​ ​ ​ ​ 1.95 % ​ ​ ​ ​ ​ 40 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 13.74 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (1.85 ) ​ ​ ​ ​ ​ (1.64 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.95 ) ​ ​ ​ ​ ​ (1.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.85 ) ​ ​ ​ ​ ​ 10.89 ​ ​ ​ ​ ​ (12.43 ) ​ ​ ​ ​ ​ 40,512 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 64 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.21 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 13.74 ​ ​ ​ ​ ​ 7.04 ​ ​ ​ ​ ​ 46,599 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 2.57 ​ ​ ​ ​ ​ 44 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.10 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 2.89 ​ ​ ​ ​ ​ 3.23 ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 3.11 ​ ​ ​ ​ ​ 13.21 ​ ​ ​ ​ ​ 32.13 ​ ​ ​ ​ ​ 18,123 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 2.82 ​ ​ ​ ​ ​ 26 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 10.10 ​ ​ ​ ​ ​ 1.00 (4) ​ ​ ​ ​ ​ 2,834 ​ ​ ​ ​ ​ 1.35 (3) ​ ​ ​ ​ ​ 16.39 (3) ​ ​ ​ ​ ​ 3.89 (3) ​ ​ ​ ​ ​ 0 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.89 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ 2.64 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ ​ ​ ​ 2.14 ​ ​ ​ ​ $ 13.03 ​ ​ ​ ​ ​ 25.06 % ​ ​ ​ ​ $ 112 ​ ​ ​ ​ ​ 1.27 % (11)(15) ​ ​ ​ ​ ​ 1.52 % ​ ​ ​ ​ ​ 2.19 % ​ ​ ​ ​ ​ 40 % ​ ​
11/12/14 to 9/30/15 ​ ​ ​ ​ 13.43 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (1.55 ) ​ ​ ​ ​ ​ (1.33 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ (0.96 ) ​ ​ ​ ​ ​ (1.21 ) ​ ​ ​ ​ ​ ​ ​ ​ (2.54 ) ​ ​ ​ ​ ​ 10.89 ​ ​ ​ ​ ​ (10.41 ) (4) ​ ​ ​ ​ ​ 90 ​ ​ ​ ​ ​ 1.27 (3) ​ ​ ​ ​ ​ 1.41 (3) ​ ​ ​ ​ ​ 2.02 (3) ​ ​ ​ ​ ​ 64 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
International Wealth Masters Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.52 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.88 ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ $ 10.21 ​ ​ ​ ​ ​ 10.29 % ​ ​ ​ ​ $ 232 ​ ​ ​ ​ ​ 1.56 % (11)(15) ​ ​ ​ ​ ​ 3.28 % ​ ​ ​ ​ ​ 0.81 % ​ ​ ​ ​ ​ 34 % ​ ​
11/17/14 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ 9.52 ​ ​ ​ ​ ​ (4.80 ) (4) ​ ​ ​ ​ ​ 126 ​ ​ ​ ​ ​ 1.55 (3) ​ ​ ​ ​ ​ 3.84 (3) ​ ​ ​ ​ ​ 0.91 (3) ​ ​ ​ ​ ​ 32 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.46 ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ 0.87 ​ ​ ​ ​ ​ 0.87 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ $ 10.13 ​ ​ ​ ​ ​ 9.39 % ​ ​ ​ ​ $ 115 ​ ​ ​ ​ ​ 2.31 % (11)(15) ​ ​ ​ ​ ​ 4.27 % ​ ​ ​ ​ ​ 0.00 % ​ ​ ​ ​ ​ 34 % ​ ​
11/17/14 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ (0.54 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.54 ) ​ ​ ​ ​ ​ 9.46 ​ ​ ​ ​ ​ (5.40 ) (4) ​ ​ ​ ​ ​ 114 ​ ​ ​ ​ ​ 2.30 (3) ​ ​ ​ ​ ​ 4.59 (3) ​ ​ ​ ​ ​ 0.14 (3) ​ ​ ​ ​ ​ 32 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.54 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.89 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ $ 10.24 ​ ​ ​ ​ ​ 10.62 % ​ ​ ​ ​ $ 5,089 ​ ​ ​ ​ ​ 1.31 % (11)(15) ​ ​ ​ ​ ​ 3.25 % ​ ​ ​ ​ ​ 1.01 % ​ ​ ​ ​ ​ 34 % ​ ​
11/17/14 (6) to 9/30/15 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.57 ) ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ 9.54 ​ ​ ​ ​ ​ (4.60 ) (4) ​ ​ ​ ​ ​ 4,602 ​ ​ ​ ​ ​ 1.30 (3) ​ ​ ​ ​ ​ 3.56 (3) ​ ​ ​ ​ ​ 1.19 (3) ​ ​ ​ ​ ​ 32 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 263 ​
262 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and Unrealized
Gain/(Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Return of
Capital
​ ​
Total
Distributions
​ ​ ​ ​ ​
Payment
from
Affiliate
​ ​
Change in
Net Asset
Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating
Expenses to
Average Net
Assets (8)
​ ​
Ratio of Gross
Operating
Expenses to
Average Net
Assets (8)
​ ​
Ratio of Net
Investment
Income to
Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Low Duration Income Fund ​ ​
Class A ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 10.70 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ $ 10.90 ​ ​ ​ ​ ​ 3.25 % (4) ​ ​ ​ ​ $ 102,049 ​ ​ ​ ​ ​ 0.76 % (3)(15) ​ ​ ​ ​ ​ 1.12 % (3) ​ ​ ​ ​ ​ 1.89 % (3) ​ ​ ​ ​ ​ 38 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ 10.70 ​ ​ ​ ​ ​ 0.89 (13) ​ ​ ​ ​ ​ 85,666 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ 1.12 ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 56 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 1.94 ​ ​ ​ ​ ​ 75,456 ​ ​ ​ ​ ​ 0.92 (7) ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 2.02 ​ ​ ​ ​ ​ 58 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ 0.76 ​ ​ ​ ​ ​ 39,436 ​ ​ ​ ​ ​ 0.95 ​ ​ ​ ​ ​ 1.14 ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 51 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 6.14 ​ ​ ​ ​ ​ 28,266 ​ ​ ​ ​ ​ 0.96 (15) ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 2.12 ​ ​ ​ ​ ​ 87 (16) ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.51 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 2.99 ​ ​ ​ ​ ​ 15,145 ​ ​ ​ ​ ​ 0.95 ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ 2.62 ​ ​ ​ ​ ​ 47 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 10.70 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ $ 10.90 ​ ​ ​ ​ ​ 2.67 % (4) ​ ​ ​ ​ $ 46,642 ​ ​ ​ ​ ​ 1.51 % (3)(15) ​ ​ ​ ​ ​ 1.87 % (3) ​ ​ ​ ​ ​ 1.15 % (3) ​ ​ ​ ​ ​ 38 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ 10.70 ​ ​ ​ ​ ​ 0.13 (13) ​ ​ ​ ​ ​ 44,621 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 56 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.84 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 10.82 ​ ​ ​ ​ ​ 1.08 ​ ​ ​ ​ ​ 51,303 ​ ​ ​ ​ ​ 1.68 (7) ​ ​ ​ ​ ​ 1.87 ​ ​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ 58 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 10.84 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 25,463 ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 1.89 ​ ​ ​ ​ ​ 1.17 ​ ​ ​ ​ ​ 51 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 10.97 ​ ​ ​ ​ ​ 5.44 ​ ​ ​ ​ ​ 20,156 ​ ​ ​ ​ ​ 1.71 (15) ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 87 (16) ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.51 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 13,761 ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 47 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 10.70 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ $ 10.90 ​ ​ ​ ​ ​ 3.44 % (4) ​ ​ ​ ​ $ 251,630 ​ ​ ​ ​ ​ 0.52 % (3)(15) ​ ​ ​ ​ ​ 0.87 % (3) ​ ​ ​ ​ ​ 2.15 % (3) ​ ​ ​ ​ ​ 38 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 10.81 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ 10.70 ​ ​ ​ ​ ​ 1.24 (13) ​ ​ ​ ​ ​ 150,977 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.88 ​ ​ ​ ​ ​ 2.03 ​ ​ ​ ​ ​ 56 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 10.81 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ 92,794 ​ ​ ​ ​ ​ 0.68 (7) ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 2.27 ​ ​ ​ ​ ​ 58 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ 10.83 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 52,790 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 2.18 ​ ​ ​ ​ ​ 51 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 6.40 ​ ​ ​ ​ ​ 29,513 ​ ​ ​ ​ ​ 0.73 (15) ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 87 (16) ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.51 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 10.54 ​ ​ ​ ​ ​ 3.25 ​ ​ ​ ​ ​ 65,206 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 2.91 ​ ​ ​ ​ ​ 47 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 265 ​
264 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​
Payment
from
Affiliate
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Low Volatility Equity Fund ​
Class A
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.45 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ $ 11.57 ​ ​ ​ ​ ​ 2.82 % ​ ​ ​ ​ $ 1,633 ​ ​ ​ ​ ​ 1.56 % (11)(15) ​ ​ ​ ​ ​ 2.98 % ​ ​ ​ ​ ​ 0.46 % ​ ​ ​ ​ ​ 10 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.71 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ 11.45 ​ ​ ​ ​ ​ (1.88 ) (13) ​ ​ ​ ​ ​ 2,055 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 2.70 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 1 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.47 ​ ​ ​ ​ ​ 11.71 ​ ​ ​ ​ ​ 15.23 ​ ​ ​ ​ ​ 485 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 6.15 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 3 ​ ​
6/11/13 (6) to 9/30/13 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 2.40 (4) ​ ​ ​ ​ ​ 136 ​ ​ ​ ​ ​ 1.55 (3) ​ ​ ​ ​ ​ 7.66 (3) ​ ​ ​ ​ ​ 2.00 (3) ​ ​ ​ ​ ​ 0 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.32 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ $ 11.39 ​ ​ ​ ​ ​ 2.05 % ​ ​ ​ ​ $ 491 ​ ​ ​ ​ ​ 2.31 % (11)(15) ​ ​ ​ ​ ​ 3.64 % ​ ​ ​ ​ ​ (0.39 )% ​ ​ ​ ​ ​ 10 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.64 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ 11.32 ​ ​ ​ ​ ​ (2.61 ) (13) ​ ​ ​ ​ ​ 1,423 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 3.47 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 1 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 1.50 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.43 ​ ​ ​ ​ ​ 11.64 ​ ​ ​ ​ ​ 14.47 ​ ​ ​ ​ ​ 291 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 6.72 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ 3 ​ ​
6/11/13 (6) to 9/30/13 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 2.10 (4) ​ ​ ​ ​ ​ 130 ​ ​ ​ ​ ​ 2.30 (3) ​ ​ ​ ​ ​ 8.49 (3) ​ ​ ​ ​ ​ 0.99 (3) ​ ​ ​ ​ ​ 0 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.50 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ $ 11.63 ​ ​ ​ ​ ​ 3.08 % ​ ​ ​ ​ $ 1,606 ​ ​ ​ ​ ​ 1.32 % (11)(15) ​ ​ ​ ​ ​ 2.78 % ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 10 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.73 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ 11.50 ​ ​ ​ ​ ​ (1.57 ) (13) ​ ​ ​ ​ ​ 1,581 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ 2.62 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 1 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.25 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 1.58 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 11.73 ​ ​ ​ ​ ​ 15.45 ​ ​ ​ ​ ​ 1,539 ​ ​ ​ ​ ​ 1.30 ​ ​ ​ ​ ​ 5.32 ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ 3 ​ ​
6/11/13 (6) to 9/30/13 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 10.25 ​ ​ ​ ​ ​ 2.50 (4) ​ ​ ​ ​ ​ 1,332 ​ ​ ​ ​ ​ 1.30 (3) ​ ​ ​ ​ ​ 7.51 (3) ​ ​ ​ ​ ​ 2.23 (3) ​ ​ ​ ​ ​ 0 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Multi-Asset Trend Fund ​ ​ ​
Class A
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.94 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ $ 10.31 ​ ​ ​ ​ ​ 3.82 % ​ ​ ​ ​ $ 29,798 ​ ​ ​ ​ ​ 1.61 % (10)(15) ​ ​ ​ ​ ​ 1.61 % ​ ​ ​ ​ ​ (0.07 )% ​ ​ ​ ​ ​ 223 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.85 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.92 ) ​ ​ ​ ​ ​ (0.94 ) ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (0.97 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.91 ) ​ ​ ​ ​ ​ 9.94 ​ ​ ​ ​ ​ (8.85 ) ​ ​ ​ ​ ​ 55,214 ​ ​ ​ ​ ​ 1.62 (10) ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ 519 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.28 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 11.85 ​ ​ ​ ​ ​ 6.97 ​ ​ ​ ​ ​ 143,765 ​ ​ ​ ​ ​ 1.62 (10) ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 0.83 ​ ​ ​ ​ ​ 337 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 0.68 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.61 ​ ​ ​ ​ ​ 11.28 ​ ​ ​ ​ ​ 6.39 ​ ​ ​ ​ ​ 114,697 ​ ​ ​ ​ ​ 1.64 (10) ​ ​ ​ ​ ​ 1.64 ​ ​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 275 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.69 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 11.08 ​ ​ ​ ​ ​ 66,122 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 0.84 ​ ​ ​ ​ ​ 211 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.80 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ $ 10.10 ​ ​ ​ ​ ​ 3.06 % ​ ​ ​ ​ $ 80,962 ​ ​ ​ ​ ​ 2.36 % (10)(15) ​ ​ ​ ​ ​ 2.36 % ​ ​ ​ ​ ​ (0.80 )% ​ ​ ​ ​ ​ 223 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.73 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (1.00 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.93 ) ​ ​ ​ ​ ​ 9.80 ​ ​ ​ ​ ​ (9.23 ) ​ ​ ​ ​ ​ 139,223 ​ ​ ​ ​ ​ 2.36 (10) ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ (0.89 ) ​ ​ ​ ​ ​ 519 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 0.68 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 11.73 ​ ​ ​ ​ ​ 6.15 ​ ​ ​ ​ ​ 331,980 ​ ​ ​ ​ ​ 2.35 (10) ​ ​ ​ ​ ​ 2.37 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ 337 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.60 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ 0.61 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.59 ​ ​ ​ ​ ​ 11.19 ​ ​ ​ ​ ​ 5.71 ​ ​ ​ ​ ​ 230,459 ​ ​ ​ ​ ​ 2.37 (10) ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ 275 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.66 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 10.60 ​ ​ ​ ​ ​ 10.13 ​ ​ ​ ​ ​ 131,330 ​ ​ ​ ​ ​ 2.45 ​ ​ ​ ​ ​ 2.45 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 211 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.99 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ $ 10.34 ​ ​ ​ ​ ​ 3.97 % ​ ​ ​ ​ $ 28,522 ​ ​ ​ ​ ​ 1.36 % (10)(15) ​ ​ ​ ​ ​ 1.36 % ​ ​ ​ ​ ​ 0.16 % ​ ​ ​ ​ ​ 223 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 11.88 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (0.99 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (1.89 ) ​ ​ ​ ​ ​ 9.99 ​ ​ ​ ​ ​ (8.36 ) ​ ​ ​ ​ ​ 73,528 ​ ​ ​ ​ ​ 1.36 (10) ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 519 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 11.31 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ 0.82 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.25 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 11.88 ​ ​ ​ ​ ​ 7.20 ​ ​ ​ ​ ​ 316,599 ​ ​ ​ ​ ​ 1.37 (10) ​ ​ ​ ​ ​ 1.37 ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ 337 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.69 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.63 ​ ​ ​ ​ ​ 0.71 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 11.31 ​ ​ ​ ​ ​ 6.70 ​ ​ ​ ​ ​ 248,984 ​ ​ ​ ​ ​ 1.39 (10) ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 275 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.71 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ ​ 1.08 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 10.69 ​ ​ ​ ​ ​ 11.24 ​ ​ ​ ​ ​ 146,634 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 1.17 ​ ​ ​ ​ ​ 211 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 267 ​
266 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (2)
​ ​
Net Realized
and Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Return of
Capital
​ ​
Total
Distributions
​ ​ ​ ​ ​
Payment
from
Affiliate
​ ​
Change in
Net Asset
Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (1)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating
Expenses to
Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to
Average Net
Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Multi-Sector Intermediate Bond Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.76 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ $ 10.30 ​ ​ ​ ​ ​ 10.15 % ​ ​ ​ ​ $ 98,969 ​ ​ ​ ​ ​ 1.14 % (11)(15) ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ 4.80 % ​ ​ ​ ​ ​ 60 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.70 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ (0.85 ) ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.58 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.94 ) ​ ​ ​ ​ ​ 9.76 ​ ​ ​ ​ ​ (3.41 ) (13) ​ ​ ​ ​ ​ 104,833 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 4.81 ​ ​ ​ ​ ​ 66 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ (0.52 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.72 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 10.70 ​ ​ ​ ​ ​ 6.18 ​ ​ ​ ​ ​ 119,423 ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 5.00 ​ ​ ​ ​ ​ 54 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.15 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.67 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 2.59 ​ ​ ​ ​ ​ 184,524 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 1.10 ​ ​ ​ ​ ​ 5.13 ​ ​ ​ ​ ​ 77 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 11.15 ​ ​ ​ ​ ​ 15.51 ​ ​ ​ ​ ​ 196,554 ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ 5.73 ​ ​ ​ ​ ​ 76 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.73 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.89 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ $ 10.27 ​ ​ ​ ​ ​ 9.36 % ​ ​ ​ ​ $ 1,717 ​ ​ ​ ​ ​ 1.88 % (11)(15) ​ ​ ​ ​ ​ 1.90 % ​ ​ ​ ​ ​ 4.04 % ​ ​ ​ ​ ​ 60 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ (0.84 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.94 ) ​ ​ ​ ​ ​ 9.73 ​ ​ ​ ​ ​ (4.14 ) (13) ​ ​ ​ ​ ​ 2,868 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 4.01 ​ ​ ​ ​ ​ 66 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.74 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 5.40 ​ ​ ​ ​ ​ 5,360 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 4.26 ​ ​ ​ ​ ​ 54 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.12 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.59 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ 10.74 ​ ​ ​ ​ ​ 1.83 ​ ​ ​ ​ ​ 7,603 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 4.39 ​ ​ ​ ​ ​ 77 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.22 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 11.12 ​ ​ ​ ​ ​ 14.59 ​ ​ ​ ​ ​ 9,974 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 5.02 ​ ​ ​ ​ ​ 76 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.85 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ $ 10.40 ​ ​ ​ ​ ​ 9.34 % ​ ​ ​ ​ $ 75,350 ​ ​ ​ ​ ​ 1.88 % (11)(15) ​ ​ ​ ​ ​ 1.90 % ​ ​ ​ ​ ​ 4.04 % ​ ​ ​ ​ ​ 60 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.79 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ (0.85 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.51 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.94 ) ​ ​ ​ ​ ​ 9.85 ​ ​ ​ ​ ​ (4.11 ) (13) ​ ​ ​ ​ ​ 84,099 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 4.06 ​ ​ ​ ​ ​ 66 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.86 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 10.79 ​ ​ ​ ​ ​ 5.33 ​ ​ ​ ​ ​ 96,072 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 4.25 ​ ​ ​ ​ ​ 54 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.23 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.59 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ 10.86 ​ ​ ​ ​ ​ 1.90 ​ ​ ​ ​ ​ 104,591 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 4.39 ​ ​ ​ ​ ​ 77 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.31 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.94 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 11.23 ​ ​ ​ ​ ​ 14.65 ​ ​ ​ ​ ​ 108,595 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 1.88 ​ ​ ​ ​ ​ 4.98 ​ ​ ​ ​ ​ 76 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.77 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.45 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ $ 10.31 ​ ​ ​ ​ ​ 10.42 % ​ ​ ​ ​ $ 123,435 ​ ​ ​ ​ ​ 0.88 % (11)(15) ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ 5.04 % ​ ​ ​ ​ ​ 60 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 10.71 ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ (0.85 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.61 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.94 ) ​ ​ ​ ​ ​ 9.77 ​ ​ ​ ​ ​ (3.17 ) (13) ​ ​ ​ ​ ​ 138,956 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 5.06 ​ ​ ​ ​ ​ 66 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.69 ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.75 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ 10.71 ​ ​ ​ ​ ​ 6.54 ​ ​ ​ ​ ​ 144,298 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 0.86 ​ ​ ​ ​ ​ 5.24 ​ ​ ​ ​ ​ 54 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 11.15 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ (0.28 ) ​ ​ ​ ​ ​ 0.32 ​ ​ ​ ​ ​ (0.58 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.70 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ 10.77 ​ ​ ​ ​ ​ 2.85 ​ ​ ​ ​ ​ 86,387 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 5.38 ​ ​ ​ ​ ​ 77 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 0.64 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 1.57 ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 11.15 ​ ​ ​ ​ ​ 15.80 ​ ​ ​ ​ ​ 74,847 ​ ​ ​ ​ ​ 0.88 ​ ​ ​ ​ ​ 0.88 ​ ​ ​ ​ ​ 5.93 ​ ​ ​ ​ ​ 76 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.77 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ $ 10.31 ​ ​ ​ ​ ​ 10.50 % ​ ​ ​ ​ $ 2,004 ​ ​ ​ ​ ​ 0.81 % (11)(15) ​ ​ ​ ​ ​ 0.83 % ​ ​ ​ ​ ​ 5.12 % ​ ​ ​ ​ ​ 60 % ​ ​
11/12/14 (6) to 9/30/15 ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ (0.81 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.55 ) ​ ​ ​ ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.90 ) ​ ​ ​ ​ ​ 9.77 ​ ​ ​ ​ ​ (3.31 ) (4)(13) ​ ​ ​ ​ ​ 1,778 ​ ​ ​ ​ ​ 0.76 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 5.12 ​ ​ ​ ​ ​ 66 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 269 ​
268 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Return of
Capital
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Multi-Sector Short Term Bond Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 4.69 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ $ 4.78 ​ ​ ​ ​ ​ 4.90 % ​ ​ ​ ​ $ 1,307,484 ​ ​ ​ ​ ​ 1.00 % (11)(15) ​ ​ ​ ​ ​ 1.01 % ​ ​ ​ ​ ​ 3.19 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.84 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ 4.69 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ 1,575,629 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ 0.97 ​ ​ ​ ​ ​ 3.15 ​ ​ ​ ​ ​ 37 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.85 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 4.84 ​ ​ ​ ​ ​ 3.03 ​ ​ ​ ​ ​ 1,894,633 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 3.30 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.94 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 4.85 ​ ​ ​ ​ ​ 1.84 ​ ​ ​ ​ ​ 3,574,450 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 3.65 ​ ​ ​ ​ ​ 49 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 4.67 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.48 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 4.94 ​ ​ ​ ​ ​ 10.58 ​ ​ ​ ​ ​ 3,038,093 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 4.31 ​ ​ ​ ​ ​ 52 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 4.66 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.11 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ $ 4.75 ​ ​ ​ ​ ​ 4.41 % ​ ​ ​ ​ $ 108 ​ ​ ​ ​ ​ 1.49 % (11)(15) ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ 2.64 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.81 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ 4.66 ​ ​ ​ ​ ​ (0.73 ) ​ ​ ​ ​ ​ 382 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 1.47 ​ ​ ​ ​ ​ 2.67 ​ ​ ​ ​ ​ 37 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.82 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 4.81 ​ ​ ​ ​ ​ 2.53 ​ ​ ​ ​ ​ 1,421 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 2.80 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.91 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 4.82 ​ ​ ​ ​ ​ 1.34 ​ ​ ​ ​ ​ 2,572 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 1.49 ​ ​ ​ ​ ​ 3.17 ​ ​ ​ ​ ​ 49 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 4.65 ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 4.91 ​ ​ ​ ​ ​ 9.87 ​ ​ ​ ​ ​ 3,590 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 3.86 ​ ​ ​ ​ ​ 52 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 4.75 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ $ 4.84 ​ ​ ​ ​ ​ 4.58 % ​ ​ ​ ​ $ 1,321,202 ​ ​ ​ ​ ​ 1.25 % (11)(15) ​ ​ ​ ​ ​ 1.26 % ​ ​ ​ ​ ​ 2.94 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.89 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ 4.75 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ 1,460,120 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 2.90 ​ ​ ​ ​ ​ 37 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.90 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 4.89 ​ ​ ​ ​ ​ 2.73 ​ ​ ​ ​ ​ 1,720,245 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 3.03 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.99 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 4.90 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 1,567,725 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 1.24 ​ ​ ​ ​ ​ 3.40 ​ ​ ​ ​ ​ 49 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 4.72 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 4.99 ​ ​ ​ ​ ​ 10.19 ​ ​ ​ ​ ​ 1,067,276 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ 4.04 ​ ​ ​ ​ ​ 52 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class T ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 4.73 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ $ 4.83 ​ ​ ​ ​ ​ 4.29 % ​ ​ ​ ​ $ 489,924 ​ ​ ​ ​ ​ 1.75 % (11)(15) ​ ​ ​ ​ ​ 1.76 % ​ ​ ​ ​ ​ 2.44 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.88 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ 4.73 ​ ​ ​ ​ ​ (0.98 ) ​ ​ ​ ​ ​ 583,694 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ 37 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.89 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 4.88 ​ ​ ​ ​ ​ 2.23 ​ ​ ​ ​ ​ 719,840 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 2.53 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.98 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 4.89 ​ ​ ​ ​ ​ 1.06 ​ ​ ​ ​ ​ 751,220 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 2.91 ​ ​ ​ ​ ​ 49 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 4.71 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 0.45 ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.18 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 4.98 ​ ​ ​ ​ ​ 9.67 ​ ​ ​ ​ ​ 704,225 ​ ​ ​ ​ ​ 1.76 ​ ​ ​ ​ ​ 1.76 ​ ​ ​ ​ ​ 3.56 ​ ​ ​ ​ ​ 52 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 4.69 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ $ 4.78 ​ ​ ​ ​ ​ 5.16 % ​ ​ ​ ​ $ 4,033,610 ​ ​ ​ ​ ​ 0.75 % (11)(15) ​ ​ ​ ​ ​ 0.76 % ​ ​ ​ ​ ​ 3.44 % ​ ​ ​ ​ ​ 53 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 4.84 ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ 4.69 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 4,095,547 ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ 3.40 ​ ​ ​ ​ ​ 37 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 4.85 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 0.16 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 4.84 ​ ​ ​ ​ ​ 3.28 % ​ ​ ​ ​ ​ 4,766,491 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 3.51 ​ ​ ​ ​ ​ 39 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 4.94 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.19 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 4.85 ​ ​ ​ ​ ​ 2.09 ​ ​ ​ ​ ​ 2,418,863 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 3.90 ​ ​ ​ ​ ​ 49 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 4.68 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 4.94 ​ ​ ​ ​ ​ 10.62 ​ ​ ​ ​ ​ 1,606,957 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 4.55 ​ ​ ​ ​ ​ 52 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 271 ​
270 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net Operating
Expenses to Average Net
Assets (8)
​ ​
Ratio of Net Investment
Income (Loss) to
Average Net Assets
​ ​
Portfolio
Turnover Rate
​
Real Estate Securities Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 38.45 ​ ​ ​ ​ ​ 0.47 ​ ​ ​ ​ ​ 4.80 ​ ​ ​ ​ ​ 5.27 ​ ​ ​ ​ ​ (0.48 ) ​ ​ ​ ​ ​ (6.37 ) ​ ​ ​ ​ ​ (6.85 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.58 ) ​ ​ ​ ​ $ 36.87 ​ ​ ​ ​ ​ 15.58 % ​ ​ ​ ​ $ 530,135 ​ ​ ​ ​ ​ 1.39 % (15) ​ ​ ​ ​ ​ 1.29 % ​ ​ ​ ​ ​ 31 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 36.65 ​ ​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 3.76 ​ ​ ​ ​ ​ 4.27 ​ ​ ​ ​ ​ (0.53 ) ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ (2.47 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.80 ​ ​ ​ ​ ​ 38.45 ​ ​ ​ ​ ​ 11.34 ​ ​ ​ ​ ​ 621,507 ​ ​ ​ ​ ​ 1.36 ​ ​ ​ ​ ​ 1.26 ​ ​ ​ ​ ​ 22 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 35.10 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 3.86 ​ ​ ​ ​ ​ 4.15 ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ (2.31 ) ​ ​ ​ ​ ​ (2.60 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 36.65 ​ ​ ​ ​ ​ 12.75 ​ ​ ​ ​ ​ 745,473 ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 28 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 34.19 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 35.10 ​ ​ ​ ​ ​ 3.70 ​ ​ ​ ​ ​ 745,631 ​ ​ ​ ​ ​ 1.40 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 30 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 26.05 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 8.24 ​ ​ ​ ​ ​ 8.45 ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ ​ ​ ​ 8.14 ​ ​ ​ ​ ​ 34.19 ​ ​ ​ ​ ​ 32.49 ​ ​ ​ ​ ​ 789,925 ​ ​ ​ ​ ​ 1.41 ​ ​ ​ ​ ​ 0.67 ​ ​ ​ ​ ​ 24 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class B ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 37.90 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 4.75 ​ ​ ​ ​ ​ 4.92 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (6.37 ) ​ ​ ​ ​ ​ (6.54 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.62 ) ​ ​ ​ ​ $ 36.28 ​ ​ ​ ​ ​ 14.70 % ​ ​ ​ ​ $ 524 ​ ​ ​ ​ ​ 2.14 % (15) ​ ​ ​ ​ ​ 0.48 % ​ ​ ​ ​ ​ 31 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 36.13 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 3.74 ​ ​ ​ ​ ​ 3.91 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ (2.14 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 37.90 ​ ​ ​ ​ ​ 10.51 ​ ​ ​ ​ ​ 1,418 ​ ​ ​ ​ ​ 2.11 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 22 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 34.62 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 3.84 ​ ​ ​ ​ ​ 3.83 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (2.31 ) ​ ​ ​ ​ ​ (2.32 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 36.13 ​ ​ ​ ​ ​ 11.91 ​ ​ ​ ​ ​ 2,770 ​ ​ ​ ​ ​ 2.13 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ 28 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 33.72 ​ ​ ​ ​ ​ 0.10 ​ ​ ​ ​ ​ 0.89 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 34.62 ​ ​ ​ ​ ​ 2.92 ​ ​ ​ ​ ​ 3,978 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ ​ 30 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 25.71 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 8.06 ​ ​ ​ ​ ​ 8.08 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 8.01 ​ ​ ​ ​ ​ 33.72 ​ ​ ​ ​ ​ 31.49 ​ ​ ​ ​ ​ 6,761 ​ ​ ​ ​ ​ 2.16 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 24 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 38.37 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 4.78 ​ ​ ​ ​ ​ 4.98 ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ (6.37 ) ​ ​ ​ ​ ​ (6.58 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.60 ) ​ ​ ​ ​ $ 36.77 ​ ​ ​ ​ ​ 14.70 % ​ ​ ​ ​ $ 67,216 ​ ​ ​ ​ ​ 2.15 % (15) ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ 31 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 36.59 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 3.73 ​ ​ ​ ​ ​ 3.95 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ (2.17 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 38.37 ​ ​ ​ ​ ​ 10.49 ​ ​ ​ ​ ​ 66,023 ​ ​ ​ ​ ​ 2.11 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 22 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 35.04 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 3.87 ​ ​ ​ ​ ​ 3.88 ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (2.31 ) ​ ​ ​ ​ ​ (2.33 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 36.59 ​ ​ ​ ​ ​ 11.91 ​ ​ ​ ​ ​ 62,889 ​ ​ ​ ​ ​ 2.13 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 28 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 34.14 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ 35.04 ​ ​ ​ ​ ​ 2.93 ​ ​ ​ ​ ​ 63,005 ​ ​ ​ ​ ​ 2.15 ​ ​ ​ ​ ​ 0.23 ​ ​ ​ ​ ​ 30 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 26.02 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 8.22 ​ ​ ​ ​ ​ 8.19 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ ​ ​ ​ 8.12 ​ ​ ​ ​ ​ 34.14 ​ ​ ​ ​ ​ 31.48 ​ ​ ​ ​ ​ 60,941 ​ ​ ​ ​ ​ 2.16 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ 24 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 38.42 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 4.80 ​ ​ ​ ​ ​ 5.36 ​ ​ ​ ​ ​ (0.58 ) ​ ​ ​ ​ ​ (6.37 ) ​ ​ ​ ​ ​ (6.95 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.59 ) ​ ​ ​ ​ $ 36.83 ​ ​ ​ ​ ​ 15.85 % ​ ​ ​ ​ $ 619,818 ​ ​ ​ ​ ​ 1.14 % (15) ​ ​ ​ ​ ​ 1.52 % ​ ​ ​ ​ ​ 31 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 36.62 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 3.75 ​ ​ ​ ​ ​ 4.37 ​ ​ ​ ​ ​ (0.63 ) ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ (2.57 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.80 ​ ​ ​ ​ ​ 38.42 ​ ​ ​ ​ ​ 11.63 ​ ​ ​ ​ ​ 647,976 ​ ​ ​ ​ ​ 1.11 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 22 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 35.07 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 3.86 ​ ​ ​ ​ ​ 4.25 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (2.31 ) ​ ​ ​ ​ ​ (2.70 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 36.62 ​ ​ ​ ​ ​ 13.04 ​ ​ ​ ​ ​ 673,005 ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ 1.07 ​ ​ ​ ​ ​ 28 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 34.16 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 0.92 ​ ​ ​ ​ ​ 1.35 ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ 35.07 ​ ​ ​ ​ ​ 3.96 ​ ​ ​ ​ ​ 494,963 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 30 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 26.03 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ 8.22 ​ ​ ​ ​ ​ 8.52 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ ​ ​ ​ 8.13 ​ ​ ​ ​ ​ 34.16 ​ ​ ​ ​ ​ 32.80 ​ ​ ​ ​ ​ 422,374 ​ ​ ​ ​ ​ 1.16 ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 24 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class R6 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 38.42 ​ ​ ​ ​ ​ 0.70 ​ ​ ​ ​ ​ 4.73 ​ ​ ​ ​ ​ 5.43 ​ ​ ​ ​ ​ (0.64 ) ​ ​ ​ ​ ​ (6.37 ) ​ ​ ​ ​ ​ (7.01 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.58 ) ​ ​ ​ ​ $ 36.84 ​ ​ ​ ​ ​ 16.06 % ​ ​ ​ ​ $ 21,604 ​ ​ ​ ​ ​ 0.98 % (15) ​ ​ ​ ​ ​ 1.93 % ​ ​ ​ ​ ​ 31 % ​ ​
11/12/14 (6) to 9/30/15 ​ ​ ​ ​ 40.32 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ (0.69 ) ​ ​ ​ ​ ​ (1.94 ) ​ ​ ​ ​ ​ (2.63 ) ​ ​ ​ ​ ​ ​ ​ ​ (1.90 ) ​ ​ ​ ​ ​ 38.42 ​ ​ ​ ​ ​ 1.54 (4) ​ ​ ​ ​ ​ 1,647 ​ ​ ​ ​ ​ 0.94 (3) ​ ​ ​ ​ ​ 2.30 (3) ​ ​ ​ ​ ​ 22 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 273 ​
272 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (before
waivers and
reimbursements) (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Sector Trend Fund ​
Class A ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.00 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.29 ​ ​ ​ ​ $ 11.29 ​ ​ ​ ​ ​ 3.36 % ​ ​ ​ ​ $ 131,389 ​ ​ ​ ​ ​ 1.05 % (15) ​ ​ ​ ​ ​ 1.05 % ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ 337 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.21 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (3.50 ) ​ ​ ​ ​ ​ (3.55 ) ​ ​ ​ ​ ​ ​ ​ ​ (4.21 ) ​ ​ ​ ​ ​ 11.00 ​ ​ ​ ​ ​ (6.19 ) ​ ​ ​ ​ ​ 156,759 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 576 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.87 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.40 ​ ​ ​ ​ ​ (0.13 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (1.06 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.34 ​ ​ ​ ​ ​ 15.21 ​ ​ ​ ​ ​ 17.81 ​ ​ ​ ​ ​ 316,571 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 129 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.15 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 2.11 ​ ​ ​ ​ ​ 2.28 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.56 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 13.87 ​ ​ ​ ​ ​ 19.63 ​ ​ ​ ​ ​ 257,492 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ 123 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 0.14 ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ 1.82 ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 12.15 ​ ​ ​ ​ ​ 17.51 ​ ​ ​ ​ ​ 199,268 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 1.02 ​ ​ ​ ​ ​ 1.22 ​ ​ ​ ​ ​ 190 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 10.76 ​ ​ ​ ​ ​ 0.03 ​ ​ ​ ​ ​ 0.25 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ $ 11.04 ​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ $ 167,265 ​ ​ ​ ​ ​ 1.80 % (15) ​ ​ ​ ​ ​ 1.80 % ​ ​ ​ ​ ​ 0.24 % ​ ​ ​ ​ ​ 337 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.02 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.69 ) ​ ​ ​ ​ ​ (0.73 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (3.51 ) ​ ​ ​ ​ ​ (3.53 ) ​ ​ ​ ​ ​ ​ ​ ​ (4.26 ) ​ ​ ​ ​ ​ 10.76 ​ ​ ​ ​ ​ (6.86 ) ​ ​ ​ ​ ​ 206,556 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ 576 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.73 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (0.96 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ 15.02 ​ ​ ​ ​ ​ 16.89 ​ ​ ​ ​ ​ 296,160 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ 129 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.03 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 2.10 ​ ​ ​ ​ ​ 2.17 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 13.73 ​ ​ ​ ​ ​ 18.80 ​ ​ ​ ​ ​ 217,861 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 123 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.56 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 1.67 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ (0.04 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.26 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.47 ​ ​ ​ ​ ​ 12.03 ​ ​ ​ ​ ​ 16.60 ​ ​ ​ ​ ​ 157,461 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.77 ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 190 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 11.02 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​ ​ ​ ​ ​ ​ 0.26 ​ ​ ​ ​ $ 11.28 ​ ​ ​ ​ ​ 3.65 % ​ ​ ​ ​ $ 102,905 ​ ​ ​ ​ ​ 0.80 % (15) ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 1.21 % ​ ​ ​ ​ ​ 337 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 15.21 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.63 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (3.51 ) ​ ​ ​ ​ ​ (3.56 ) ​ ​ ​ ​ ​ ​ ​ ​ (4.19 ) ​ ​ ​ ​ ​ 11.02 ​ ​ ​ ​ ​ (5.90 ) ​ ​ ​ ​ ​ 169,977 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 0.65 ​ ​ ​ ​ ​ 576 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.87 ​ ​ ​ ​ ​ 0.19 ​ ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.44 ​ ​ ​ ​ ​ (0.17 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (1.10 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.34 ​ ​ ​ ​ ​ 15.21 ​ ​ ​ ​ ​ 18.08 ​ ​ ​ ​ ​ 313,147 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 0.73 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ 129 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 12.15 ​ ​ ​ ​ ​ 0.20 ​ ​ ​ ​ ​ 2.11 ​ ​ ​ ​ ​ 2.31 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.59 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.72 ​ ​ ​ ​ ​ 13.87 ​ ​ ​ ​ ​ 19.92 ​ ​ ​ ​ ​ 173,096 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ 1.56 ​ ​ ​ ​ ​ 123 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 0.17 ​ ​ ​ ​ ​ 1.68 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ 12.15 ​ ​ ​ ​ ​ 17.71 ​ ​ ​ ​ ​ 122,198 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 1.53 ​ ​ ​ ​ ​ 190 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 275 ​
274 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​
Payment
from
Affiliate
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Asets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets (8)
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Senior Floating Rate Fund ​
Class A
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.36 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.06 ​ ​ ​ ​ $ 9.42 ​ ​ ​ ​ ​ 4.42 % ​ ​ ​ ​ $ 227,588 ​ ​ ​ ​ ​ 1.23 % (10)(11)(15) ​ ​ ​ ​ ​ 1.24 % ​ ​ ​ ​ ​ 3.67 % ​ ​ ​ ​ ​ 48 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.72 ​ ​ ​ ​ ​ 0.38 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.42 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ 9.36 ​ ​ ​ ​ ​ 0.53 (13) ​ ​ ​ ​ ​ 268,596 ​ ​ ​ ​ ​ 1.20 (10) ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 3.94 ​ ​ ​ ​ ​ 34 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 0.37 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.37 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ 9.72 ​ ​ ​ ​ ​ 3.08 ​ ​ ​ ​ ​ 294,617 ​ ​ ​ ​ ​ 1.18 (10) ​ ​ ​ ​ ​ 1.18 ​ ​ ​ ​ ​ 3.79 ​ ​ ​ ​ ​ 77 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ 0.04 ​ ​ ​ ​ ​ 0.46 ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ (— ) (5) ​ ​ ​ ​ ​ (0.46 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ — ​ ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 4.84 ​ ​ ​ ​ ​ 386,113 ​ ​ ​ ​ ​ 1.21 (10) ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 4.29 ​ ​ ​ ​ ​ 68 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.28 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.47 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 10.75 ​ ​ ​ ​ ​ 256,397 ​ ​ ​ ​ ​ 1.23 (10) ​ ​ ​ ​ ​ 1.23 ​ ​ ​ ​ ​ 5.06 ​ ​ ​ ​ ​ 56 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.37 ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.06 ​ ​ ​ ​ $ 9.43 ​ ​ ​ ​ ​ 3.63 % ​ ​ ​ ​ $ 111,839 ​ ​ ​ ​ ​ 1.98 % (10)(11)(15) ​ ​ ​ ​ ​ 1.99 % ​ ​ ​ ​ ​ 292 % ​ ​ ​ ​ ​ 48 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.73 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​ ​ ​ (0.31 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.34 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ 9.37 ​ ​ ​ ​ ​ (0.22 ) (13) ​ ​ ​ ​ ​ 138,478 ​ ​ ​ ​ ​ 1.95 (10) ​ ​ ​ ​ ​ 1.95 ​ ​ ​ ​ ​ 3.19 ​ ​ ​ ​ ​ 34 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.81 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 9.73 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 177,485 ​ ​ ​ ​ ​ 1.93 (10) ​ ​ ​ ​ ​ 1.93 ​ ​ ​ ​ ​ 3.04 ​ ​ ​ ​ ​ 77 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 9.80 ​ ​ ​ ​ ​ 0.35 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ (— ) (5) ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 9.81 ​ ​ ​ ​ ​ 4.15 ​ ​ ​ ​ ​ 182,667 ​ ​ ​ ​ ​ 1.96 (10) ​ ​ ​ ​ ​ 1.96 ​ ​ ​ ​ ​ 3.51 ​ ​ ​ ​ ​ 68 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.29 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ 0.91 ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.40 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 9.80 ​ ​ ​ ​ ​ 9.92 ​ ​ ​ ​ ​ 95,078 ​ ​ ​ ​ ​ 1.98 (10) ​ ​ ​ ​ ​ 1.98 ​ ​ ​ ​ ​ 4.31 ​ ​ ​ ​ ​ 56 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 9.35 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 0.42 ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.06 ​ ​ ​ ​ $ 9.41 ​ ​ ​ ​ ​ 4.69 % ​ ​ ​ ​ $ 210,752 ​ ​ ​ ​ ​ 0.97 % (10)(11)(15) ​ ​ ​ ​ ​ 0.98 % ​ ​ ​ ​ ​ 3.91 % ​ ​ ​ ​ ​ 48 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 9.71 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.44 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ ​ ​ ​ (0.36 ) ​ ​ ​ ​ ​ 9.35 ​ ​ ​ ​ ​ 0.78 (13) ​ ​ ​ ​ ​ 284,735 ​ ​ ​ ​ ​ 0.95 (12) ​ ​ ​ ​ ​ 0.95 ​ ​ ​ ​ ​ 4.20 ​ ​ ​ ​ ​ 34 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 0.40 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 9.71 ​ ​ ​ ​ ​ 3.23 ​ ​ ​ ​ ​ 457,494 ​ ​ ​ ​ ​ 0.93 (12) ​ ​ ​ ​ ​ 0.93 ​ ​ ​ ​ ​ 4.06 ​ ​ ​ ​ ​ 77 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 9.78 ​ ​ ​ ​ ​ 0.43 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 0.50 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ (— ) (5) ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 9.79 ​ ​ ​ ​ ​ 5.21 % ​ ​ ​ ​ ​ 381,791 ​ ​ ​ ​ ​ 0.96 (12) ​ ​ ​ ​ ​ 0.96 ​ ​ ​ ​ ​ 4.41 ​ ​ ​ ​ ​ 68 ​ ​
10/1/11 to 9/30/12 ​ ​ ​ ​ 9.27 ​ ​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 0.49 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.49 ) ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.51 ​ ​ ​ ​ ​ 9.78 ​ ​ ​ ​ ​ 11.04 ​ ​ ​ ​ ​ 94,193 ​ ​ ​ ​ ​ 0.98 (12) ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 5.31 ​ ​ ​ ​ ​ 56 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 277 ​
276 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain/(Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​
Payment
from
Affiliate
​ ​ ​ ​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Assets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Net
Investment
Income to
Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Tax-Exempt Bond Fund ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 11.43 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ $ 11.55 ​ ​ ​ ​ ​ 3.00 % (4) ​ ​ ​ ​ $ 69,711 ​ ​ ​ ​ ​ 0.87 % (3)(15) ​ ​ ​ ​ ​ 1.03 % (3) ​ ​ ​ ​ ​ 2.53 % (3) ​ ​ ​ ​ ​ 9 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 0.27 ​ ​ ​ ​ ​ (0.29 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 11.43 ​ ​ ​ ​ ​ 2.39 ​ ​ ​ ​ ​ 74,418 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 2.60 ​ ​ ​ ​ ​ 10 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.91 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 0.87 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 7.94 ​ ​ ​ ​ ​ 79,906 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 0.99 ​ ​ ​ ​ ​ 2.73 ​ ​ ​ ​ ​ 22 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 11.62 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ 10.91 ​ ​ ​ ​ ​ (3.48 ) ​ ​ ​ ​ ​ 89,303 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 2.66 ​ ​ ​ ​ ​ 29 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 0.82 ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 11.62 ​ ​ ​ ​ ​ 7.45 ​ ​ ​ ​ ​ 143,397 ​ ​ ​ ​ ​ 0.87 (15) ​ ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 2.61 ​ ​ ​ ​ ​ 35 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.38 ​ ​ ​ ​ ​ 0.39 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 1.13 ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.41 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 10.98 ​ ​ ​ ​ ​ 107,873 ​ ​ ​ ​ ​ 0.81 ​ ​ ​ ​ ​ 0.98 ​ ​ ​ ​ ​ 3.62 ​ ​ ​ ​ ​ 59 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 11.43 ​ ​ ​ ​ ​ 0.15 ​ ​ ​ ​ ​ 0.13 ​ ​ ​ ​ ​ 0.28 ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.16 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ $ 11.55 ​ ​ ​ ​ ​ 2.42 % (4) ​ ​ ​ ​ $ 26,833 ​ ​ ​ ​ ​ 1.61 % (3)(15) ​ ​ ​ ​ ​ 1.78 % (3) ​ ​ ​ ​ ​ 1.78 % (3) ​ ​ ​ ​ ​ 9 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 0.18 ​ ​ ​ ​ ​ (0.20 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 11.43 ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ 30,316 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.85 ​ ​ ​ ​ ​ 10 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.92 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.23 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 7.13 ​ ​ ​ ​ ​ 30,967 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.74 ​ ​ ​ ​ ​ 1.98 ​ ​ ​ ​ ​ 22 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 11.63 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ (0.72 ) ​ ​ ​ ​ ​ (0.50 ) ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.21 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ 10.92 ​ ​ ​ ​ ​ (4.29 ) ​ ​ ​ ​ ​ 28,845 ​ ​ ​ ​ ​ 1.60 ​ ​ ​ ​ ​ 1.73 ​ ​ ​ ​ ​ 1.92 ​ ​ ​ ​ ​ 29 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.54 ​ ​ ​ ​ ​ 0.75 ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.22 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.53 ​ ​ ​ ​ ​ 11.63 ​ ​ ​ ​ ​ 6.74 ​ ​ ​ ​ ​ 39,792 ​ ​ ​ ​ ​ 1.62 (15) ​ ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.86 ​ ​ ​ ​ ​ 35 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.38 ​ ​ ​ ​ ​ 0.31 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 1.05 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 10.15 ​ ​ ​ ​ ​ 28,641 ​ ​ ​ ​ ​ 1.54 ​ ​ ​ ​ ​ 1.70 ​ ​ ​ ​ ​ 2.91 ​ ​ ​ ​ ​ 59 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I ​ ​ ​ ​ ​
1/1/16 to 9/30/16 (14) ​ ​ ​ $ 11.43 ​ ​ ​ ​ ​ 0.24 ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.12 ​ ​ ​ ​ $ 11.55 ​ ​ ​ ​ ​ 3.19 % (4) ​ ​ ​ ​ $ 104,679 ​ ​ ​ ​ ​ 0.62 % (3)(15) ​ ​ ​ ​ ​ 0.78 % (3) ​ ​ ​ ​ ​ 2.78 % (3) ​ ​ ​ ​ ​ 9 % (4) ​ ​
1/1/15 to 12/31/15 ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 0.30 ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 11.43 ​ ​ ​ ​ ​ 2.64 ​ ​ ​ ​ ​ 90,912 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 2.85 ​ ​ ​ ​ ​ 10 ​ ​
1/1/14 to 12/31/14 ​ ​ ​ ​ 10.91 ​ ​ ​ ​ ​ 0.34 ​ ​ ​ ​ ​ 0.56 ​ ​ ​ ​ ​ 0.90 ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — (5 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.55 ​ ​ ​ ​ ​ 11.46 ​ ​ ​ ​ ​ 8.30 ​ ​ ​ ​ ​ 86,459 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 2.98 ​ ​ ​ ​ ​ 22 ​ ​
1/1/13 to 12/31/13 ​ ​ ​ ​ 11.62 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ (0.38 ) ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ (0.71 ) ​ ​ ​ ​ ​ 10.91 ​ ​ ​ ​ ​ (3.33 ) ​ ​ ​ ​ ​ 82,936 ​ ​ ​ ​ ​ 0.60 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 2.88 ​ ​ ​ ​ ​ 29 ​ ​
1/1/12 to 12/31/12 ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 0.85 ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.33 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 11.62 ​ ​ ​ ​ ​ 7.72 ​ ​ ​ ​ ​ 162,094 ​ ​ ​ ​ ​ 0.62 (15) ​ ​ ​ ​ ​ 0.79 ​ ​ ​ ​ ​ 2.84 ​ ​ ​ ​ ​ 35 ​ ​
1/1/11 to 12/31/11 ​ ​ ​ ​ 10.38 ​ ​ ​ ​ ​ 0.41 ​ ​ ​ ​ ​ 0.74 ​ ​ ​ ​ ​ 1.15 ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.43 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ 0.72 ​ ​ ​ ​ ​ 11.10 ​ ​ ​ ​ ​ 11.36 ​ ​ ​ ​ ​ 94,228 ​ ​ ​ ​ ​ 0.57 ​ ​ ​ ​ ​ 0.77 ​ ​ ​ ​ ​ 3.78 ​ ​ ​ ​ ​ 59 ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Virtus Mutual Funds 279 ​
278 Virtus Mutual Funds
TABLE OF CONTENTS
Financial Highlights (continued)
​
​ ​ ​
Net Asset
Value,
Beginning
of Period
​ ​
Net
Investment
Income
(Loss) (1)
​ ​
Net Realized
and
Unrealized
Gain (Loss)
​ ​
Total from
Investment
Operations
​ ​
Dividends
from Net
Investment
Income
​ ​
Distributions
from Net
Realized
Gains
​ ​
Total
Distributions
​ ​
​ ​
Change in Net
Asset Value
​ ​
Net Asset
Value, End
of Period
​ ​
Total
Return (2)
​ ​
Net Asets,
End of Period
(in thousands)
​ ​
Ratio of Net
Operating Expenses
to Average Net
Assets (8)
​ ​
Ratio of Gross
Expenses to Average
Net Assets
​ ​
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets
​ ​
Portfolio
Turnover Rate
​
Wealth Masters Fund ​
Class A
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.25 ​ ​ ​ ​ ​ 0.07 ​ ​ ​ ​ ​ 1.55 ​ ​ ​ ​ ​ 1.62 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​
​
​ ​ ​ ​ 1.35 ​ ​ ​ ​ $ 14.60 ​ ​ ​ ​ ​ 12.44 % ​ ​ ​ ​ $ 33,204 ​ ​ ​ ​ ​ 1.46 % (11)(15) ​ ​ ​ ​ ​ 1.54 % ​ ​ ​ ​ ​ 0.53 % ​ ​ ​ ​ ​ 30 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 14.50 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ (0.98 ) ​ ​ ​ ​ ​ (0.93 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.32 ) ​ ​ ​
​
​ ​ ​ ​ (1.25 ) ​ ​ ​ ​ ​ 13.25 ​ ​ ​ ​ ​ (6.74 ) ​ ​ ​ ​ ​ 54,109 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 0.36 ​ ​ ​ ​ ​ 51 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.12 ​ ​ ​ ​ ​ 0.02 ​ ​ ​ ​ ​ 1.37 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​
​
​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 14.50 ​ ​ ​ ​ ​ 10.67 ​ ​ ​ ​ ​ 55,881 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 1.46 ​ ​ ​ ​ ​ 0.11 ​ ​ ​ ​ ​ 62 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.22 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ 3.05 ​ ​ ​ ​ ​ 3.04 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.14 ) ​ ​ ​
​
​ ​ ​ ​ 2.90 ​ ​ ​ ​ ​ 13.12 ​ ​ ​ ​ ​ 30.09 ​ ​ ​ ​ ​ 5,169 ​ ​ ​ ​ ​ 1.45 ​ ​ ​ ​ ​ 3.29 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 10.22 ​ ​ ​ ​ ​ 2.20 (4) ​ ​ ​ ​ ​ 106 ​ ​ ​ ​ ​ 1.45 (3) ​ ​ ​ ​ ​ 44.72 (3) ​ ​ ​ ​ ​ 0.78 (3) ​ ​ ​ ​ ​ 26 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class C
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.02 ​ ​ ​ ​ ​ (0.03 ) ​ ​ ​ ​ ​ 1.51 ​ ​ ​ ​ ​ 1.48 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​
​
​ ​ ​ ​ 1.24 ​ ​ ​ ​ $ 14.26 ​ ​ ​ ​ ​ 11.56 % ​ ​ ​ ​ $ 24,816 ​ ​ ​ ​ ​ 2.21 % (11)(15) ​ ​ ​ ​ ​ 2.29 % ​ ​ ​ ​ ​ (0.22 )% ​ ​ ​ ​ ​ 30 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 14.32 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.97 ) ​ ​ ​ ​ ​ (1.03 ) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​
​
​ ​ ​ ​ (1.30 ) ​ ​ ​ ​ ​ 13.02 ​ ​ ​ ​ ​ (7.41 ) ​ ​ ​ ​ ​ 34,171 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.21 ​ ​ ​ ​ ​ (0.39 ) ​ ​ ​ ​ ​ 51 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.04 ​ ​ ​ ​ ​ (0.09 ) ​ ​ ​ ​ ​ 1.38 ​ ​ ​ ​ ​ 1.29 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​
​
​ ​ ​ ​ 1.28 ​ ​ ​ ​ ​ 14.32 ​ ​ ​ ​ ​ 9.90 ​ ​ ​ ​ ​ 30,511 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 2.22 ​ ​ ​ ​ ​ (0.65 ) ​ ​ ​ ​ ​ 62 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ 3.03 ​ ​ ​ ​ ​ 2.95 ​ ​ ​ ​ ​ (0.07 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.12 ) ​ ​ ​
​
​ ​ ​ ​ 2.83 ​ ​ ​ ​ ​ 13.04 ​ ​ ​ ​ ​ 29.11 ​ ​ ​ ​ ​ 1,742 ​ ​ ​ ​ ​ 2.20 ​ ​ ​ ​ ​ 4.41 ​ ​ ​ ​ ​ (0.66 ) ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ (— ) (5) ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 10.21 ​ ​ ​ ​ ​ 2.10 (4) ​ ​ ​ ​ ​ 107 ​ ​ ​ ​ ​ 2.20 (3) ​ ​ ​ ​ ​ 45.67 (3) ​ ​ ​ ​ ​ 0.04 (3) ​ ​ ​ ​ ​ 26 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class I
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
10/1/15 to 9/30/16 ​ ​ ​ $ 13.30 ​ ​ ​ ​ ​ 0.08 ​ ​ ​ ​ ​ 1.58 ​ ​ ​ ​ ​ 1.66 ​ ​ ​ ​ ​ (0.06 ) ​ ​ ​ ​ ​ (0.24 ) ​ ​ ​ ​ ​ (0.30 ) ​ ​ ​
​
​ ​ ​ ​ 1.36 ​ ​ ​ ​ $ 14.66 ​ ​ ​ ​ ​ 12.75 % ​ ​ ​ ​ $ 20,134 ​ ​ ​ ​ ​ 1.21 % (11)(15) ​ ​ ​ ​ ​ 1.29 % ​ ​ ​ ​ ​ 0.61 % ​ ​ ​ ​ ​ 30 % ​ ​
10/1/14 to 9/30/15 ​ ​ ​ ​ 14.56 ​ ​ ​ ​ ​ 0.09 ​ ​ ​ ​ ​ (1.00 ) ​ ​ ​ ​ ​ (0.91 ) ​ ​ ​ ​ ​ (0.08 ) ​ ​ ​ ​ ​ (0.27 ) ​ ​ ​ ​ ​ (0.35 ) ​ ​ ​
​
​ ​ ​ ​ (1.26 ) ​ ​ ​ ​ ​ 13.30 ​ ​ ​ ​ ​ (6.53 ) ​ ​ ​ ​ ​ 32,495 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.21 ​ ​ ​ ​ ​ 0.62 ​ ​ ​ ​ ​ 51 ​ ​
10/1/13 to 9/30/14 ​ ​ ​ ​ 13.14 ​ ​ ​ ​ ​ 0.05 ​ ​ ​ ​ ​ 1.39 ​ ​ ​ ​ ​ 1.44 ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.01 ) ​ ​ ​ ​ ​ (0.02 ) ​ ​ ​
​
​ ​ ​ ​ 1.42 ​ ​ ​ ​ ​ 14.56 ​ ​ ​ ​ ​ 10.96 ​ ​ ​ ​ ​ 48,918 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 0.33 ​ ​ ​ ​ ​ 62 ​ ​
10/1/12 to 9/30/13 ​ ​ ​ ​ 10.22 ​ ​ ​ ​ ​ 0.06 ​ ​ ​ ​ ​ 3.01 ​ ​ ​ ​ ​ 3.07 ​ ​ ​ ​ ​ (0.10 ) ​ ​ ​ ​ ​ (0.05 ) ​ ​ ​ ​ ​ (0.15 ) ​ ​ ​
​
​ ​ ​ ​ 2.92 ​ ​ ​ ​ ​ 13.14 ​ ​ ​ ​ ​ 30.37 ​ ​ ​ ​ ​ 44,813 ​ ​ ​ ​ ​ 1.20 ​ ​ ​ ​ ​ 4.64 ​ ​ ​ ​ ​ 0.52 ​ ​ ​ ​ ​ 22 ​ ​
9/5/12 (6) to 9/30/12 ​ ​ ​ ​ 10.00 ​ ​ ​ ​ ​ 0.01 ​ ​ ​ ​ ​ 0.21 ​ ​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​
​
​ ​ ​ ​ 0.22 ​ ​ ​ ​ ​ 10.22 ​ ​ ​ ​ ​ 2.20 (4) ​ ​ ​ ​ ​ 818 ​ ​ ​ ​ ​ 1.20 (3) ​ ​ ​ ​ ​ 44.40 (3) ​ ​ ​ ​ ​ 1.04 (3) ​ ​ ​ ​ ​ 26 (4) ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
(1)
Computed using average shares outstanding.
​
(2)
Sales charges, where applicable, are not reflected in the total return calculation.
​
(3)
Annualized.
​
(4)
Not annualized.
​
(5)
Amount is less than $0.005.
​
(6)
Inception date.
​
(7)
Due to a change in expense cap, the ratio shown is a blended expense ratio.
​
(8)
The Funds will also indirectly bear their prorated share of expenses of the underlying funds in which they invest. Such expenses are not included in the calculation of this ratio.
​
(9)
See Note 3C in the Notes to Financial Statements in the Annual Report for information on recapture of expenses previously waived.
​
(10)
The Fund is currently under its expense limitation.
​
(11)
Earnings credits from Custodian were not material, as reflected in the Statements of Operations, and had no impact on Financial Highlights.
​
(12)
Reported on Fund level not class level.
​
(13)
Payment from affiliate had no impact on total return.
​
(14)
The Fund changed its fiscal-year-end to September 30 during the period.
​
(15)
Net expense ratio includes extraordinary proxy expenses.
​
(16)
Portfolio turnover calculation excludes security transactions that were distributed as a result of a redemption-in-kind.
​
​
Virtus Mutual Funds 281 ​
280 Virtus Mutual Funds
TABLE OF CONTENTS ​
Appendix A
Virtus Alternatives Diversifier Fund—Underlying Funds
​
Underlying Affiliated Mutual Funds and Exchange-Traded Funds (“ETFs”)
Following is a list of underlying affiliated mutual funds and ETFs (collectively, “underlying funds”) in which the fund is currently invested or anticipated to be invested and their associated target weightings, as of the date of this prospectus. Not all of these underlying funds will be purchased by the fund. The underlying funds and their target weightings have been selected for use over long time periods, but may be changed in the future without shareholder approval or notice. Target weightings will deviate over the short term due to market movements and capital flows. The adviser periodically rebalances the fund’s investments in the underlying funds to bring them back within their target weightings. Some portion of the fund’s portfolio will be held in cash due to purchase and redemption activity and short-term cash needs. The fund’s cash position is not reflected in the asset allocations or target weightings. Additional information about each underlying affiliated mutual fund, including a copy of an underlying affiliated mutual fund’s prospectus, SAI, and Annual and Semiannual reports is available on the Internet at virtus.com , or you can request copies by calling Virtus Mutual Fund Services toll-free at 800-243-1574.
Fund Name/Asset Class
​ ALTERNATIVES ​ ​ ​ ​ ​ ​ ​
​ Virtus Global Infrastructure Fund ​ ​ ​ ​ 15 % ​ ​
​ Virtus Global Real Estate Securities ​ ​ ​ ​ 9 % ​ ​
​ Virtus International Real Estate Securities Fund ​ ​ ​ ​ 10 % ​ ​
​ Virtus Real Estate Securities Fund ​ ​ ​ ​ 6 % ​ ​
​ Virtus Senior Floating Rate Fund ​ ​ ​ ​ 9 % ​ ​
​ EXCHANGE-TRADED FUNDS ​ ​ ​ ​ ​ ​ ​
​ Global X Uranium ETF ​ ​ ​ ​ 1 % ​ ​
​ iShares North America Natural Resources ETF ​ ​ ​ ​ 19 % ​ ​
​ Market Vectors Agribusiness ​ ​ ​ ​ 4 % ​ ​
​ Market Vectors Coal ​ ​ ​ ​ 3 % ​ ​
​ PowerShares DB Commodity Index Tracking Fund ​ ​ ​ ​ 14 % ​ ​
​ PowerShares DB G10 Currency Harvest Fund ​ ​ ​ ​ 10 % ​ ​
Virtus Mutual Funds 282 ​
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Virtus Mutual Funds
P.O. Box 9874
Providence, RI 02940-8074
ADDITIONAL INFORMATION
You can find more information about the funds in the following documents:
Annual and Semiannual Reports Annual and semiannual reports contain more information about the funds’ investments. The annual report discusses the market conditions and investment strategies that significantly affected the funds’ performance during the last fiscal year.
Statement of Additional Information (SAI) The SAI contains more detailed information about the funds. It is incorporated by reference and is legally part of the prospectus.
To obtain free copies of these documents, you can download copies from the Individual Investors section of our Web site, virtus.com , or you can request copies by calling Virtus Fund Services toll-free at 800-243-1574. You may also call this number to request other information about the funds or to make shareholder inquiries.
Information about the funds (including the SAI) can be reviewed and copied at the Securities and Exchange Commission’s ("SEC") Public Reference Room in Washington, DC. For information about the operation of the Public Reference Room, call 202-551-8090. Reports and other information about the funds are available in the EDGAR database on the SEC’s Internet site at sec.gov . You may also obtain copies upon payment of a duplicating fee by writing the Public Reference Section of the SEC, Washington, DC 20549-6009 or by electronic request at publicinfo@sec.gov .
Virtus Fund Services: 800-243-1574
Daily NAV Information
The daily NAV for each fund may be obtained from the Our Products section of our Web site, virtus.com .
​ Investment Company Act File No. 811-74551 ​ ​
1-17​
​
​ 8020 ​ ​ ​ ​
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Virtus Opportunities Trust
STATEMENT OF ADDITIONAL INFORMATION
January 30, 2017
Virtus Opportunities Trust (The “Trust”) is an open-end management investment company issuing shares in 31 separate series or “Funds”, all of which are publicly offered and described herein:
​ ​ ​
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
​ ​
VBFRX
​ ​ ​ ​ ​
Virtus CA Tax-Exempt Bond Fund ​ ​
CTESX
​ ​ ​ ​ ​ ​ ​ ​
CTXEX
​ ​ ​ ​ ​ ​ ​ ​
Virtus Emerging Markets Debt Fund ​ ​
VEDAX
​ ​ ​ ​ ​
VEDCX
​ ​
VIEDX
​ ​ ​ ​ ​ ​ ​ ​
Virtus Emerging Markets Equity Income Fund ​ ​
VEIAX
​ ​ ​ ​ ​
VEICX
​ ​
VEIIX
​ ​ ​ ​ ​ ​ ​ ​
Virtus Emerging Markets Opportunities Fund ​ ​
HEMZX
​ ​ ​ ​ ​
PICEX
​ ​
HIEMX
​ ​
VREMX
​ ​ ​ ​ ​
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
​ ​
VRGEX
​ ​ ​ ​ ​
Virtus Greater European Opportunities Fund ​ ​
VGEAX
​ ​ ​ ​ ​
VGECX
​ ​
VGEIX
​ ​ ​ ​ ​ ​ ​ ​
Virtus Herzfeld Fund ​ ​
VHFAX
​ ​ ​ ​ ​
VHFCX
​ ​
VHFIX
​ ​ ​ ​ ​ ​ ​ ​
Virtus High Yield Fund ​ ​
PHCHX
​ ​
PHCCX
​ ​
PGHCX
​ ​
PHCIX
​ ​
VRHYX
​ ​ ​ ​ ​
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 Duration Income Fund ​ ​
HIMZX
​ ​ ​ ​ ​
PCMZX
​ ​
HIBIX
​ ​ ​ ​ ​ ​ ​ ​
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
​ ​
VMSSX
​ ​
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
​ ​
VRSFX
​ ​ ​ ​ ​
Virtus Tax-Exempt Bond Fund ​ ​
HXBZX
​ ​ ​ ​ ​
PXCZX
​ ​
HXBIX
​ ​ ​ ​ ​ ​ ​ ​
Virtus Wealth Masters Fund ​ ​
VWMAX
​ ​ ​ ​ ​
VWMCX
​ ​
VWMIX
​ ​ ​ ​ ​ ​ ​ ​
This Statement of Additional Information ("SAI") relates to the Class A, Class B, Class C, Class I, Class T and Class R6 shares of the Funds. This SAI is not a prospectus, and it should be read in conjunction with the Prospectus for the Funds dated January 30, 2017 as described below and as supplemented and amended from time to time. Each Fund’s Prospectuses are incorporated by reference into this SAI, and the portions of this SAI that relate to each Fund have been incorporated by reference into such Fund’s Prospectuses. The portions of this SAI that do not relate to a Fund do not form a part of such Fund’s SAI, have not been incorporated by reference into such Fund’s Prospectuses and should not be relied upon by investors in such Fund.
The Prospectuses may be obtained by downloading them from virtus.com ; by calling VP Distributors, LLC at 800.243.1574; or by writing to the Distributor at 100 Pearl Street, Hartford, CT 06103.
Capitalized terms used and not defined herein have the same meanings as those used in the Prospectuses.
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The audited financial statements for the Funds appear in each Fund’s annual report for its most recent fiscal year. The financial statements from the foregoing annual report are incorporated herein by reference. Shareholders may obtain a copy of the Annual Report dated September 30, 2016, without charge, by calling 800.243.1574 or by downloading it from virtus.com .
TABLE OF CONTENTS ​ ​
Table of Contents
​ ​ ​
Page
​
Glossary ​ ​ ​ ​ 4 ​ ​
​ ​ ​ ​ 8 ​ ​
​ ​ ​ ​ 16 ​ ​
​ ​ ​ ​ 72 ​ ​
​ ​ ​ ​ 75 ​ ​
​ ​ ​ ​ 87 ​ ​
​ ​ ​ ​ 87 ​ ​
​ ​ ​ ​ 98 ​ ​
​ ​ ​ ​ 100 ​ ​
​ ​ ​ ​ 106 ​ ​
​ ​ ​ ​ 110 ​ ​
​ ​ ​ ​ 118 ​ ​
​ ​ ​ ​ 120 ​ ​
​ ​ ​ ​ 125 ​ ​
​ ​ ​ ​ 126 ​ ​
​ ​ ​ ​ 127 ​ ​
Appendix B — Control Persons and Principal Shareholders
​ ​ ​ ​ ​129 ​ ​
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Glossary
​ 1933 Act ​ ​ The Securities Act of 1933, as amended ​
​ 1940 Act ​ ​ The Investment Company Act of 1940, as amended ​
​ ACH ​ ​ Automated Clearing House, a nationwide electronic money transfer system that provides for the inter-bank clearing of credit and debit transactions and for the exchange of information among participating financial institutions ​
​ Administrator ​ ​ The Trust’s administrative agent, Virtus Fund Services, LLC ​
​ ADRs ​ ​ American Depositary Receipts ​
​ ADSs ​ ​ American Depositary Shares ​
​ Adviser ​ ​ The investment adviser to the Funds, Virtus Investment Advisers, Inc. ​
​ Alternatives Diversifier Fund ​ ​ Virtus Alternatives Diversifier Fund ​
​ BNY Mellon ​ ​ BNY Mellon Investment Servicing (US) Inc., the sub-administrative and accounting agent for the Funds ​
​ Board ​ ​ The Board of Trustees of Virtus Opportunities Trust (also referred to herein as the “Trustees”) ​
​ Bond Fund ​ ​ Virtus Bond Fund ​
​ CA Tax-Exempt Bond Fund ​ ​ Virtus CA Tax-Exempt Bond Fund ​
​ CCO ​ ​ Chief Compliance Officer ​
​ CDRs ​ ​ Continental Depositary Receipts (another name for EDRs) ​
​ CDSC ​ ​ Contingent Deferred Sales Charge ​
​ CEA ​ ​ Commodity Exchange Act, which is the U.S. law governing trading in commodity futures ​
​ CFTC ​ ​ Commodity Futures Trading Commission, which is the U.S. regulator governing trading in commodity futures ​
​ Code ​ ​ The Internal Revenue Code of 1986, as amended, which is the law governing U.S. federal taxes ​
​ Custodian ​ ​ The custodian of the Funds’ assets, JPMorgan Chase Bank, N.A. ​
​ Distributor ​ ​ The principal underwriter of shares of the Funds, VP Distributors, LLC ​
​ Duff  & Phelps ​ ​ Duff  & Phelps Investment Management Co., subadviser to the Global Infrastructure Fund, Global Real Estate Fund, International Equity Fund, International Real Estate Fund and Real Estate Fund ​
​ EDRs ​ ​ European Depositary Receipts (another name for CDRs) ​
​ EM Debt Fund ​ ​ Virtus Emerging Markets Debt Fund ​
​ EM Equity Income Fund ​ ​ Virtus Emerging Markets Equity Income Fund ​
​ EM Opportunities Fund ​ ​ Virtus Emerging Markets Opportunities Fund ​
​ EM Small-Cap Fund ​ ​ Virtus Emerging Markets Small-Cap Fund ​
​ Equity Trend Fund ​ ​ Virtus Equity Trend Fund ​
​ Essential Resources Fund ​ ​ Virtus Essential Resources Fund ​
​ ETFs ​ ​ Exchange-traded Funds ​
​ FHFA ​ ​ Federal Housing Finance Agency, an independent Federal agency that regulates FNMA, FHLMC and the twelve Federal Home Loan Banks ​
​ FHLMC ​ ​ Federal Home Loan Mortgage Corporation, also known as “Freddie Mac”, which is a government-sponsored corporation formerly owned by the twelve Federal Home Loan Banks and now owned entirely by private stockholders ​
​ FINRA ​ ​ Financial Industry Regulatory Authority, a self-regulatory organization with authority over registered broker-dealers operating in the United States, including VP Distributors ​
​ Fitch ​ ​ Fitch Ratings, Inc. ​
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​ FNMA ​ ​ Federal National Mortgage Association, also known as “Fannie Mae”, which is a government-sponsored corporation owned entirely by private stockholders and subject to general regulation by the Secretary of Housing and Urban Development ​
​ Foreign Opportunities Fund ​ ​ Virtus Foreign Opportunities Fund ​
​ Fund Complex ​ ​ The group of Funds sponsored by Virtus and managed by VIA, including the Virtus Mutual Funds, Virtus Variable Insurance Trust and certain other closed-end funds. ​
​ Funds ​ ​ The series of the Trust discussed in this SAI ​
​ Funds of Funds ​ ​ Collectively, Alternatives Diversifier Fund, Herzfeld Fund, Low Volatility Fund and Trend Funds ​
​ GDRs ​ ​ Global Depositary Receipts ​
​ GICs ​ ​ Guaranteed Investment Contracts ​
​ Global Equity Trend Fund ​ ​ Virtus Global Equity Trend Fund ​
​ Global Infrastructure Fund ​ ​ Virtus Global Infrastructure Fund ​
​ Global Opportunities Fund ​ ​ Virtus Global Opportunities Fund ​
​ Global Real Estate Fund ​ ​ Virtus Global Real Estate Securities Fund ​
​ GNMA ​ ​ Government National Mortgage Association, also known as “Ginnie Mae”, is a wholly-owned United States Government corporation within the Department of Housing and Urban Development ​
​ Greater European Fund ​ ​ Virtus Greater European Opportunities Fund ​
​ Herzfeld ​ ​ Thomas J. Herzfeld Advisors, Inc., subadviser to the Herzfeld Fund ​
​ Herzfeld Fund ​ ​ Virtus Herzfeld Fund ​
​ High Yield Fund ​ ​ Virtus High Yield Fund ​
​ Horizon ​ ​ Horizon Asset Management LLC, subadviser to the International Wealth Masters Fund and the Wealth Masters Fund ​
​ IMF ​ ​ International Monetary Fund, an international organization seeking to promote international economic cooperation, international trade, employment and exchange rate stability, among other things ​
​ Independent Trustees ​ ​ Trustees who are not “interested persons” of the Trust, as that term is defined by the 1940 Act ​
​ International Equity Fund ​ ​ Virtus International Equity Fund ​
​ International Real Estate Fund ​ ​ Virtus International Real Estate Securities Fund ​
​ International Small-Cap Fund ​ ​ Virtus International Small-Cap Fund ​
​ IRA ​ ​ Individual Retirement Account ​
​ IRS ​ ​ The United States Internal Revenue Service, which is the arm of the U.S. government that administers and enforces the Code ​
​ JPMorgan ​ ​ JPMorgan Chase Bank, N.A. ​
​ Kayne Anderson Rudnick ​ ​ Kayne Anderson Rudnick Investment Management, LLC, subadviser to the EM Small-Cap Fund and International Small-Cap Fund ​
​ KBIGI (North America) ​ ​ KBI Global Investors (North America) Ltd., subadviser to the EM Equity Income Fund and Essential Resources Fund ​
​ LIBOR ​ ​ London Interbank Offering Rate, an interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market ​
​ Low Duration Income Fund ​ ​ Virtus Low Duration Income Fund ​
​ Low Volatility Fund ​ ​ Virtus Low Volatility Equity Fund ​
​ Moody’s ​ ​ Moody’s Investors Service, Inc. ​
​ Multi-Asset Trend Fund ​ ​ Virtus Multi-Asset Trend Fund ​
​
Multi-Sector Intermediate Bond Fund
​ ​ Virtus Multi-Sector Intermediate Bond Fund ​
​ Multi-Sector Short Term Bond Fund ​ ​ Virtus Multi-Sector Short Term Bond Fund ​
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​ NAV ​ ​ Net Asset Value, which is the per-share price of a Fund ​
​ Newfleet ​ ​ Newfleet Asset Management, LLC, subadviser to the Bond Fund, CA Tax-Exempt Bond Fund, EM Debt Fund, High Yield Fund, Low Duration Income Fund, Multi-Sector Intermediate Bond Fund, Multi-Sector Short Term Bond Fund, Senior Floating Rate Fund and Tax-Exempt Bond Fund ​
​ NYSE ​ ​ New York Stock Exchange ​
​ OCC ​ ​ Options Clearing Corporation, the world’s largest equity derivatives clearing corporation ​
​ OECD ​ ​ Organization for Economic Cooperation and Development, an international organization seeking to promote economic progress and world trade ​
​ PERLS ​ ​ Principal Exchange Rate Linked Securities ​
​ PNX ​ ​ Phoenix Life Insurance Company, which is the former parent company of Virtus Investment Partners, Inc., and certain of its corporate affiliates ​
​ Prospectuses ​ ​ The prospectuses for the Funds, as amended from time to time ​
​ PwC ​ ​ PricewaterhouseCoopers, LLP, the independent registered public accounting firm for the Trust ​
​ Rampart ​ ​ Rampart Investment Management Company, LLC, subadviser to the Low Volatility Equity Fund ​
​ Real Estate Fund ​ ​ Virtus Real Estate Securities Fund ​
​ Regulations ​ ​ The Treasury Regulations promulgated under the Internal Revenue Code of 1986, as amended ​
​ RIC ​ ​ Regulated Investment Company, a designation under the Code indicating a U.S.-registered investment company meeting the specifications under the Code allowing the investment company to be exempt from paying U.S. federal income taxes ​
​ S&P ​ ​ Standard & Poor’s Corporation ​
​ S&P 500 ® Index ​ ​ The Standard & Poor’s 500 ® Index, which is a free-float market capitalization-weighted index of 500 of the largest U.S. companies, calculated on a total return basis with dividends reinvested ​
​ SAI ​ ​ This Statement of Additional Information ​
​ SEC ​ ​ U.S. Securities and Exchange Commission ​
​ Sector Trend Fund ​ ​ Virtus Sector Trend Fund ​
​ Senior Floating Rate Fund ​ ​ Virtus Senior Floating Rate Fund ​
​ SIFMA ​ ​ Securities Industry and Financial Markets Association (formerly, the Bond Market Association), a financial industry trade group consisting of broker-dealers and asset managers across the United States ​
​ SMBS ​ ​ Stripped Mortgage-backed Securities ​
​ Tax-Exempt Bond Fund ​ ​ Virtus Tax-Exempt Bond Fund ​
​ Transfer Agent ​ ​ The Trust’s transfer agent, Virtus Fund Services, LLC ​
​ Trend Funds ​ ​ Collectively, Virtus Equity Trend Fund, Virtus Global Equity Trend Fund, Virtus Multi-Asset Trend Fund and Virtus Sector Trend Fund ​
​ VIA ​ ​ Virtus Investment Advisers, Inc., the Adviser to the Funds ​
​ Virtus ​ ​ Virtus Investment Partners, Inc., which is the parent company of the Adviser, the Distributor, the Administrator/Transfer Agent, Duff  & Phelps, Kayne Anderson Rudnick, Newfleet and Rampart ​
​ Virtus Mutual Funds ​ ​ The family of funds consisting of the Funds, the series of Virtus Alternative Solutions Trust, the series of Virtus Equity Trust and the series of Virtus Retirement Trust ​
​ Vontobel ​ ​ Vontobel Asset Management, Inc., subadviser to the EM Opportunities Fund, Foreign Opportunities Fund, Global Opportunities Fund and Greater European Fund ​
​ VP Distributors ​ ​ VP Distributors, LLC , the Trust's Distributor ​
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​ VVIT ​ ​ Virtus Variable Insurance Trust, a separate trust consisting of several series advised by VIA and distributed by VP Distributors ​
​ Wealth Masters Fund ​ ​ Virtus Wealth Masters Fund ​
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GENERAL INFORMATION AND HISTORY
The Trust is an open-end management investment company organized as a Delaware statutory trust December 18, 1995. Prior to January 27, 2006, the Trust was named “Phoenix-Seneca Funds.” From January 27, 2006 to October 20, 2008, the Trust was named “Phoenix Opportunities Trust.”
The Trust’s Prospectuses describe the investment objectives of the Funds and the strategies that each Fund will employ in seeking to achieve its investment objective. The respective investment objective(s) for Multi-Sector Short Term Bond Fund, Real Estate Fund and Sector Trend Fund is a fundamental policy and may not be changed without the vote of a majority of the outstanding voting securities of that Fund. The respective investment objective(s) for each of the other Funds is a non-fundamental policy of that Fund and may be changed without shareholder approval upon 60 days' notice. The following discussion supplements the disclosure in the Prospectuses. Prior to October 1, 2008, each of the funds indicated with an asterisk (*) below had "Phoenix" in their names instead of  "Virtus".
​ ​
Fund Type
​ ​ ​
Fund
​ ​ ​
Investment Objective
​ ​
​ ​ Alternatives ​ ​ ​ Alternatives Diversifier Fund ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Global Infrastructure Fund * ​ ​ ​ The fund has investment objectives of both capital appreciation and current income. ​ ​
​ ​ ​ ​ ​ ​ Global Real Estate Fund ​ ​ ​ The fund has a primary investment objective of long-term capital appreciation, with a secondary investment objective of income. ​ ​
​ ​ ​ ​ ​ ​ Herzfeld Fund ​ ​ ​ The fund has investment objectives of capital appreciation and current income. ​ ​
​ ​ ​ ​ ​ ​ International Real Estate Fund * ​ ​ ​ The fund has a primary investment objective of long-term capital appreciation, with a secondary investment objective of income. ​ ​
​ ​ ​ ​ ​ ​ Real Estate Fund * ​ ​ ​ The fund has investment objectives of capital appreciation and income with approximately equal emphasis. ​ ​
​ ​ Asset Allocation ​ ​ ​ Multi-Asset Trend Fund ​ ​ ​ The fund has an investment objective of capital appreciation. In pursuing this objective, the fund maintains an emphasis on preservation of capital. ​ ​
​ ​ Equity ​ ​ ​ Equity Trend Fund ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Essential Resources Fund ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Low Volatility Fund ​ ​ ​ The fund has an investment objective of capital appreciation with lower volatility than the U.S. equity markets over a full market cycle. ​ ​
​ ​ ​ ​ ​ ​ Sector Trend Fund * ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Wealth Masters Fund ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ Fixed Income ​ ​ ​ Bond Fund * ​ ​ ​ The fund has an investment objective of high total return from both current income and capital appreciation. ​ ​
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​ ​
Fund Type
​ ​ ​
Fund
​ ​ ​
Investment Objective
​ ​
​ ​ ​ ​ ​ ​ CA Tax-Exempt Bond Fund * ​ ​ ​ The fund has an investment objective 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. ​ ​
​ ​ ​ ​ ​ ​ EM Debt Fund ​ ​ ​ The fund has an investment objective of total return from current income and capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ High Yield Fund * ​ ​ ​ The fund has a primary investment objective of high current income and a secondary objective of capital growth. ​ ​
​ ​ ​ ​ ​ ​ Low Duration Income Fund ​ ​ ​ The fund has an investment objective of providing a high level of total return, including a competitive level of current income, while limiting fluctuations in net asset value due to changes in interest rates. ​ ​
​ ​ ​ ​ ​ ​ Multi-Sector Intermediate Bond Fund * ​ ​ ​ The fund has an investment objective of maximizing current income while preserving capital. ​ ​
​ ​ ​ ​ ​ ​
Multi-Sector Short Term Bond Fund *
​ ​ ​ The fund has an investment objective of providing high current income while attempting to limit changes in the fund’s net asset value per share caused by interest rate changes. ​ ​
​ ​ ​ ​ ​ ​ Senior Floating Rate Fund * ​ ​ ​ The fund has an investment objective of high total return from both current income and capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Tax-Exempt Bond Fund ​ ​ ​ The fund has an investment objective of providing a high level of current income that is exempt from federal income tax. ​ ​
​ ​ International/Global ​ ​ ​ EM Equity Income Fund ​ ​ ​ The fund has investment objectives of seeking capital appreciation and income. ​ ​
​ ​ ​ ​ ​ ​ EM Opportunities Fund ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ EM Small-Cap Fund * ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Foreign Opportunities Fund * ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Global Equity Trend Fund ​ ​ ​ The fund has an investment objective of capital appreciation. In pursuing this objective, the fund maintains an emphasis on preservation of capital. ​ ​
​ ​ ​ ​ ​ ​ Global Opportunities Fund * ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ Greater European Fund ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ International Equity Fund ​ ​ ​ The fund has an investment objective of long-term capital appreciation. ​ ​
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​ ​
Fund Type
​ ​ ​
Fund
​ ​ ​
Investment Objective
​ ​
​ ​ ​ ​ ​ ​ International Small-Cap Fund ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
​ ​ ​ ​ ​ ​ International Wealth Masters Fund ​ ​ ​ The fund has an investment objective of capital appreciation. ​ ​
Capital Stock and Organization of the Trust
The capitalization of the Trust consists solely of an unlimited number of shares of beneficial interest. The Trust currently offers shares in different series called Funds and different classes of those Funds. Holders of shares of a Fund have equal rights with regard to voting, redemptions, dividends, distributions, and liquidations with respect to that Fund. Shareholders of all Funds vote on the election of Trustees. On matters affecting an individual Fund (such as approval of an investment advisory agreement or a change in fundamental investment policies) and also on matters affecting an individual class (such as approval of matters relating to a Plan of Distribution for a particular class of shares), a separate vote of that Fund or class is required. The Trust does not hold regular meetings of shareholders of the Funds. The Board will call a meeting of shareholders of a Fund when at least 10% of the outstanding shares of that Fund so request in writing. If the Board fails to call a meeting after being so notified, the shareholders may call the meeting. The Board will assist the shareholders by identifying other shareholders or mailing communications, as required under Section 16(c) of the 1940 Act.
Shares are fully paid, nonassessable, redeemable and fully transferable when they are issued. Shares do not have cumulative voting rights, preemptive rights or subscription rights. The assets received by the Trust for the issue or sale of shares of each Fund, and any class thereof and all income, earnings, profits and proceeds thereof, are allocated to such Fund, and class, respectively, subject only to the rights of creditors, and constitute the underlying assets of such Fund or class. The underlying assets of each Fund are required to be segregated on the books of account, and are to be charged with the expenses in respect to such Fund and with a share of the general expenses of the Trust. Any general expenses of the Trust not readily identifiable as belonging to a particular Fund or class will be allocated by or under the direction of the Board as it determines to be fair and equitable. The Trust is not bound to recognize any transfer of shares of a Fund or class until the transfer is recorded on the Trust’s books pursuant to policies and procedures of the Transfer Agent.
As a Delaware statutory trust, the Trust’s operations are governed by its Amended and Restated Agreement and Declaration of Trust dated March 1, 2001, as amended. A copy of the Trust’s Certificate of Trust, as amended, is on file with the Office of the Secretary of State of the State of Delaware. Upon the initial purchase of shares, the shareholder agrees to be bound by the Trust’s Agreement and Declaration of Trust, as amended. Generally, Delaware statutory trust shareholders are not personally liable for obligations of the Delaware statutory trust under Delaware law. The Delaware Statutory Trust Act (the “Delaware Act”) provides that a shareholder of a Delaware statutory trust shall be entitled to the same limitation of liability extended to shareholders of private for-profit corporations. The Trust’s Amended and Restated Agreement and Declaration of Trust expressly provides that the Trust has been organized under the Delaware Act and that the Declaration of Trust is to be governed by Delaware law. It is nevertheless possible that a Delaware statutory trust, such as the Trust, might become a party to an action in another state whose courts refused to apply Delaware law, in which case the Trust’s shareholders could be subject to personal liability. To guard against this risk, the Amended and Restated Agreement and Declaration of Trust (i) contains an express disclaimer of shareholder liability for acts or obligations of the Trust and provides that notice of such disclaimer may be given in each agreement, obligation and instrument entered into or executed by the Trust or its Trustees, (ii) provides for the indemnification out of Trust property of any shareholders held personally liable for any obligations of the Trust or any series of the Trust and (iii) provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a Trust shareholder incurring financial loss beyond his or her investment because of shareholder liability is limited to circumstances in which all of the following factors are present: (1) a court refused to apply Delaware law; (2) the liability arose under tort law or, if not, no contractual limitation of liability was in effect; and (3) the Trust itself would be unable to meet its obligations. In the light of Delaware law, the nature of the Trust’s business and the nature of its assets, the risk of personal liability to a Fund shareholder is remote.
The Amended and Restated Agreement and Declaration of Trust further provides that the Trust shall indemnify each of its Trustees and officers against liabilities and expenses reasonably incurred by them, in connection with, or arising out of, any action, suit or proceeding, threatened against or otherwise involving such Trustee or officer, directly or indirectly, by reason of being or having been a Trustee or officer of the Trust. The Amended and Restated Agreement and Declaration of Trust does not authorize the Trust to indemnify any Trustee or officer against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person’s duties.
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Under the Amended and Restated Agreement and Declaration of Trust, the Trust is not required to hold annual meetings to elect Trustees or for other purposes. It is not anticipated that the Trust will hold shareholders’ meetings unless required by law or the Declaration of Trust. The Trust will be required to hold a meeting to elect Trustees to fill any existing vacancies on the Board if, at any time, fewer than a majority of the Trustees have been elected by the shareholders of the Trust. The Board is required to call a meeting for the purpose of considering the removal of persons serving as Trustee if requested in writing to do so by the holders of not less than 10% of the outstanding shares of the Trust.
Shares of the Trust do not entitle their holders to cumulative voting rights, so that the holders of more than 50% of the outstanding shares of the Trust may elect all of the Trustees, in which case the holders of the remaining shares would not be able to elect any Trustees. As determined by the Trustees, shareholders are entitled to one vote for each dollar of NAV (number of shares held times the NAV of the applicable class of the applicable Fund).
Pursuant to the Amended and Restated Agreement and Declaration of Trust, the Trustees may create additional funds by establishing additional series of shares in the Trust. The establishment of additional series would not affect the interests of current shareholders in the existing Funds. Pursuant to the Amended and Restated Agreement and Declaration of Trust, the Trustees may establish and issue multiple classes of shares for each Fund.
Each share of each class of a Fund is entitled to such dividends and distributions out of the income earned on the assets belonging to that Fund which are attributable to such class as are declared in the discretion of the Trustees. In the event of the liquidation or dissolution of the Trust, shares of each class of each Fund are entitled to receive their proportionate share of the assets which are attributable to such class of such Fund and which are available for distribution as the Trustees in their sole discretion may determine. Shareholders are not entitled to any preemptive, conversion or subscription rights. All shares, when issued, will be fully paid and non-assessable by the Trust.
Subject to shareholder approval (if then required), the Trustees may authorize each Fund to invest all or part of its investable assets in a single open-end investment company that has substantially the same investment objectives, policies and restrictions as the Fund. As of the date of this SAI, the Trustees do not have any plan to authorize any Fund to so invest its assets.
Diversification of Funds
Each Fund is diversified under the 1940 Act with the exception of Alternatives Diversifier Fund, which is a non-diversified fund. Each Fund also intends to diversify its assets to the extent necessary to qualify for tax treatment as a regulated investment company under the Code. (For information regarding qualification under the Code, see “Dividends, Distributions and Taxes” in this SAI.)
Fund Names and Investment Policies
Each of the Funds noted below has a name that suggests a focus on a particular type of investment. In accordance with Rule 35d-1 under the 1940 Act, each of these Funds has adopted a policy that it will, under normal circumstances, invest at least 80% of its assets in investments of the type suggested by its name. For this policy, “assets” means net assets plus the amount of any borrowings for investment purposes. In addition, in appropriate circumstances, synthetic investments may be included in the 80% basket if they have economic characteristics similar to the other investments included in the basket. A Fund’s policy to invest at least 80% of its assets in such a manner is not a “fundamental” one, which means that it may be changed without a vote of a majority of the Fund’s outstanding shares as defined in the 1940 Act. However, under Rule 35d-1, shareholders must be given written notice at least 60 days prior to any change by a Fund of its 80% investment policy.
These funds have a policy that states at least 80% of its assets in investments of the type suggested by its name.
​ Bond Fund ​ ​ High Yield Fund ​
​ CA Tax-Exempt Bond Fund ​ ​ International Equity Fund ​
​ EM Debt Fund ​ ​ International Real Estate Fund ​
​ EM Equity Income Fund ​ ​ International Small-Cap Fund ​
​ EM Opportunities Fund ​ ​ Low Duration Income Fund ​
​ EM Small-Cap Fund ​ ​ Low Volatility Fund ​
​ Essential Resources Fund ​ ​ Multi-Sector Intermediate Bond Fund ​
​ Foreign Opportunities Fund ​ ​ Multi-Sector Short-Term Bond Fund ​
​ Global Infrastructure Fund ​ ​ Real Estate Fund ​
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​ Global Real Estate Fund ​ ​ Senior Floating Rate Fund ​
​ Greater European Fund ​ ​ Tax-Exempt Bond Fund ​
Portfolio Turnover
The portfolio turnover rate of each Fund is calculated by dividing the lesser of purchases or sales of portfolio securities during the fiscal year by the monthly average of the value of the Fund's securities (excluding all securities, including options, with maturities at the time of acquisition of one year or less). All long-term securities, including long-term U.S. Government securities, are included. A high rate of portfolio turnover generally involves correspondingly greater brokerage commission expenses, which must be borne directly by the Fund. Turnover rates may vary greatly from year to year as well as within a particular year and also may be affected by cash requirements for redemptions of each Fund's shares by requirements that enable the Trust to receive certain favorable tax treatments. The portfolio turnover rate for each Fund that has completed a fiscal period of operations is set forth in its summary prospectus and under "Financial Highlights" in the statutory prospectus.
Disclosure of Portfolio Holdings
The Trustees of the Trust have adopted policies with respect to the disclosure of the Funds’ portfolio holdings. These policies provide that the Funds’ portfolio holdings information generally may not be disclosed to any party prior to the information becoming public. Certain limited exceptions are described below. Additionally, the Funds’ policies prohibit Virtus and the Funds’ service providers from entering into any agreement to disclose Fund portfolio holdings in exchange for any form of compensation or consideration. These policies apply to disclosures to all categories of persons, including individual investors, institutional investors, intermediaries who sell shares of the Funds, third parties providing services to the Funds (accounting agent, print vendors, etc.), rating and ranking organizations (Lipper, Morningstar, etc.) and affiliated persons of the Funds.
The Board has delegated to the Trust’s Administrator the authority to make decisions regarding requests for information on portfolio holdings prior to public disclosure. The Administrator generally carries out this duty through its chief compliance officer, in consultation with other officers representing various areas of management.
The Trust’s CCO is responsible for monitoring the use of portfolio holdings information, for the Funds’ compliance with these policies and for providing reports to the Board regarding their compliance, including information with respect to any potential conflicts of interest between the interests of Fund shareholders and those of Virtus and its affiliates identified during the reporting period and how such conflicts were resolved.
Public Disclosures
In accordance with rules established by the SEC, each Fund sends semiannual and annual reports to shareholders that contain a full listing of portfolio holdings as of the second and fourth fiscal quarters, respectively, within 60 days of quarter end. The Funds also disclose complete portfolio holdings as of the end of the first and third fiscal quarters on Form N-Q, which is filed with the SEC within 60 days of quarter end. The Funds’ shareholder reports are available on Virtus’ Web site at virtus.com . Certain Funds also make publicly available on Virtus’ Web site a full listing of portfolio holdings as of the end of each month with a 30-day delay, while other of the Funds make such full listings available as of the end of each quarter with a 15-, 30- or 60-day delay. Portfolio holdings may be released sooner at the Administrator's discretion. Additionally, each Fund except certain of the Trend Funds provides its top 10 holdings and summary composition data derived from portfolio holdings information on Virtus’ Web site. This information is posted to the Web site at the end of each month with respect to the top 10 holdings, and at the end of each quarter with respect to summary composition information, generally within 10 business days. With respect to certain Funds, the top 10 holdings and summary composition information may be reported on a one-month lag. This information will be available on the Web site until full portfolio holdings information becomes publicly available as described above. The Funds also provide publicly-available portfolio holdings information directly to ratings agencies, the frequency and timing of which is determined under the terms of the contractual arrangements with such agencies, and may provide to financial intermediaries, upon request, monthly portfolio holdings for periods included in publicly-available quarterly portfolio holdings disclosures.
Other Disclosures
The Administrator may authorize the disclosure of non-public portfolio holdings information under certain limited circumstances. The Funds’ policies provide that non-public disclosures of a Fund's portfolio holdings may only be made if  (i) the Fund has a legitimate business purpose for making such disclosure and (ii) the party receiving the non-public information enters into a confidentiality agreement, which includes a duty not to trade on the non-public information. The Administrator will consider any actual or potential conflicts of interest between Virtus and the Funds’ shareholders and
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will act in the best interest of the Funds’ shareholders with respect to any such disclosure of portfolio holdings information. If a potential conflict can be resolved in a manner that does not present detrimental effects to the Funds’ shareholders, the Administrator may authorize release of portfolio holdings information. Conversely, if the potential conflict cannot be resolved in a manner that does not present detrimental effects to the Funds’ shareholders, the Administrator will not authorize such release.
Ongoing Arrangements to Disclose Portfolio Holdings
As previously authorized by the Funds’ Board and/or the Funds’ Administrator, the Funds periodically disclose non-public portfolio holdings on a confidential basis to various service providers that require such information in order to assist the Funds in their day-to-day operations, as well as public information to certain ratings organizations. In addition to Virtus and its affiliates, the entities receiving non-public portfolio holdings as of the date of this SAI are described in the following table. The table also includes information as to the timing of these entities receiving the portfolio holdings information from the Funds.
Non-Public Portfolio Holdings Information
​ ​
Type of Service Provider
​ ​ ​
Name of Service Provider
​ ​ ​
Timing of Release of Portfolio Holdings
Information
​ ​
​ ​ Adviser ​ ​ ​ Virtus Investment Advisers, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (Global Infrastructure Fund, Global Real Estate Fund, International Equity Fund, International Real Estate Fund and Real Estate Fund) ​ ​ ​ Duff  & Phelps Investment Management Co. ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (Herzfeld Fund) ​ ​ ​ Thomas J. Herzfeld Advisors, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (International Wealth Masters Fund and Wealth Masters Fund) ​ ​ ​ Horizon Asset Management LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (EM Small-Cap Fund and International Small-Cap Fund) ​ ​ ​ Kayne Anderson Rudnick Investment Management, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (EM Equity Income Fund and Essential Resources Fund) ​ ​ ​ KBI Global Investors (North America) Ltd. ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (Bond Fund, CA Tax-Exempt Bond Fund, EM Debt Fund, High Yield Fund, Low Duration Income Fund, Multi-Sector Intermediate Bond Fund, Multi-Sector Short Term Bond Fund, Senior Floating Rate Fund and Tax-Exempt Bond Fund) ​ ​ ​ Newfleet Asset Management, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (Low Volatility Fund) ​ ​ ​ Rampart Investment Management Company, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser (EM Opportunities Fund, Foreign Opportunities Fund, Global Opportunities Fund and Greater European Fund) ​ ​ ​ Vontobel Asset Management, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Subadviser Trading Support (EM Opportunities Fund, Foreign Opportunities Fund, Global Opportunities Fund and Greater European Fund) ​ ​ ​ Northern Trust Corporation ​ ​ ​ Daily with no delay ​ ​
​ ​ Administrator ​ ​ ​ Virtus Fund Services, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Distributor ​ ​ ​ VP Distributors, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Custodian ​ ​ ​ JPMorgan Chase Bank, N.A. ​ ​ ​ Daily with no delay ​ ​
​ ​ Class Action Service Provider ​ ​ ​ Battea ​ ​ ​ Daily with no delay ​ ​
​ ​ Sub-Financial Agent ​ ​ ​ BNY Mellon Investment Servicing (US) Inc. ​ ​ ​ Daily with no delay ​ ​
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​ ​
Type of Service Provider
​ ​ ​
Name of Service Provider
​ ​ ​
Timing of Release of Portfolio Holdings
Information
​ ​
​ ​ Consultant (EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund) ​ ​ ​ Vestek ​ ​ ​ Fiscal quarter with 20 day delay ​ ​
​ ​ Consultant (Foreign Opportunities Fund) ​ ​ ​ Rogercasey ​ ​ ​ Monthly with four day delay ​ ​
​ ​ Reconciliation Firm for Subadviser (Kayne Anderson Rudnick) (EM Small-Cap Fund and International Small-Cap Fund) ​ ​ ​ Fiserve, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Middle Office for Subadviser (Duff  & Phelps) (Global Infrastructure Fund, Global Real Estate Fund, International Real Estate Fund and Real Estate Fund), (Kayne Anderson Rudnick) (EM Small-Cap Fund and International Small-Cap Fund), (Rampart) (Low Volatility Fund) ​ ​ ​ SS&C, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Distributor (EM Opportunities Fund, Foreign Opportunities Fund, Real Estate Fund, Multi-Sector Short Term Bond Fund) ​ ​ ​ Morgan Stanley Smith Barney LLC ​ ​ ​ Monthly with four day delay ​ ​
​ ​ Portfolio Redistribution Firm (Foreign Opportunities Fund) ​ ​ ​ Thomson Financial LLC ​ ​ ​ Fiscal quarter with 20 day delay ​ ​
​ ​ Independent Registered Public Accounting Firm ​ ​ ​ PricewaterhouseCoopers LLP ​ ​ ​ Annually, within 15 business days of end of fiscal year. ​ ​
​ ​ Performance Analytics Firm ​ ​ ​ FactSet Research Systems, Inc. ​ ​ ​ Daily with no delay ​ ​
​ ​ Back-end Compliance Monitoring System ​ ​ ​ Financial Tracking Technologies, LLC ​ ​ ​ Daily with no delay ​ ​
​ ​ Typesetting and Printing firm for Financial Reports ​ ​ ​ R.R. Donnelley & Sons Co. ​ ​ ​ Quarterly, within 15 days of end of reporting period. ​ ​
​ ​ Security Lending (as applicable) ​ ​ ​ Brown Brothers Harriman & Co. ​ ​ ​ Daily with no delay ​ ​
​ ​ Proxy Voting Service ​ ​ ​ Institutional Shareholder Services ​ ​ ​ Daily, weekly, monthly, quarterly depending on subadviser ​ ​
​ ​ Intermediary Selling Shares of the Fund ​ ​ ​ Merrill Lynch ​ ​ ​ Quarterly within 10 days of quarter end ​ ​
Public Portfolio Holdings Information
​ ​ Portfolio Redistribution Firms ​ ​ ​ Bloomberg, Standard & Poor’s and Thompson Reuters ​ ​ ​ Various frequencies depending on the fund, which includes, but is not limited to: Monthly with 30-day delay or fiscal quarter with a 15-,30-, or 60-day delay. ​ ​
​ ​ Rating Agencies ​ ​ ​ Lipper Inc. and Morningstar ​ ​ ​ Various frequencies depending on the fund, which includes, but is not limited to: Monthly with 30-day delay or fiscal quarter with a 15-,30-, or 60-day delay. ​ ​
​ ​ Virtus Public Web site ​ ​ ​ Virtus Investment Partners, Inc. ​ ​ ​ Various frequencies depending on the fund, which includes, but is not limited to: Monthly with 30-day delay or fiscal quarter with a 15-,30-, or 60-day delay. ​ ​
These service providers are required to keep all non-public information confidential and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Funds. There is no guarantee that the Funds’ policies on use and dissemination of holdings information will protect the Funds from the potential misuse of holdings by individuals or firms in possession of such information.
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Other Virtus Mutual Funds
In addition to the Funds of the Trust, the funds commonly referred to as “Virtus Mutual Funds” also include the series of Virtus Alternative Solutions Trust, Virtus Equity Trust and Virtus Retirement Trust. Virtus Mutual Funds are generally offered in multiple classes. The following chart shows the share classes offered by each Virtus Mutual Fund as of the date of this SAI:
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Class/Shares
​ ​ ​ ​ ​ ​
​ ​
Trust
​ ​ ​
Fund
​ ​ ​
A
​ ​ ​
B
​ ​ ​
C
​ ​ ​
I
​ ​ ​
R6
​ ​
​ ​ Virtus Alternative Solutions Trust ​ ​ ​ Credit Opportunities Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​ Multi-Strategy Target Return Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​ Select MLP and Energy Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Strategic Income Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ Virtus Equity Trust ​ ​ ​ Contrarian Value Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​ Enhanced Core Equity Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Mid-Cap Core Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Mid-Cap Growth Fund ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Quality Large-Cap Value Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Quality Small-Cap Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​ Small-Cap Core Fund ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​ Small-Cap Sustainable Growth Fund ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Strategic Allocation Fund ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Strategic Growth Fund ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ Tactical Allocation Fund ​ ​ ​
X
​ ​ ​
X
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​
Virtus Retirement Trust
​ ​ ​
DFA 2015 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2020 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2025 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2030 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2035 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2040 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2045 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2050 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2055 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
​ ​ ​ ​ ​ ​
DFA 2060 Target Date Retirement Income Fund
​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​
X
​ ​
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MORE INFORMATION ABOUT FUND INVESTMENT STRATEGIES & RELATED RISKS
The following investment strategies and policies supplement each Fund’s investment strategies and policies set forth in the Funds' prospectuses. Some of the investment strategies and policies described below and in each Fund's prospectus set forth percentage limitations on a Fund’s investment in, or holdings of, certain types of investments. Unless otherwise required by law or stated in this SAI, compliance with these strategies and policies will be determined immediately after the acquisition of such investments by the Fund. Subsequent changes in values, net assets, or other circumstances will not be considered when determining whether the investment complies with the Fund’s investment strategies and policies.To the extent that a Fund invests primarily in other funds, including ETFs, except as otherwise noted the following descriptions pertain to the underlying mutual funds in which such Fund invests. Generally, Alternatives Diversifier Fund, Herzfeld Fund and Low Volatility Fund and certain of the Trend Funds do not use these techniques directly. Each of those Funds pursues its investment objective(s) by investing its assets in underlying mutual funds and/or ETFs. Each underlying mutual fund will engage in certain investment techniques and practices to the extent permitted and consistent with the underlying mutual fund’s investment objective. The following is a description of key investment techniques, and their associated risks, of the underlying mutual funds in which the Alternatives Diversifier Fund, the Herzfeld Fund, the Low Volatility Fund and the applicable Trend Funds invest as of the date of this SAI. Please refer to the prospectus and SAI for each ETF and underlying mutual fund for specific details.
Throughout this section, the term “adviser” may be used to refer to a subadviser, if any, and the term the “Fund” may be used to refer to any Fund.
Investment Technique
​ ​
Description and Risks
​ ​
Fund-Specific Limitations
​
Commodities-Related Investing
​ ​
Commodity-related companies may underperform the stock market as a whole. The value of securities issued by commodity-related companies may be affected by factors affecting a particular industry or commodity. The operations and financial performance of commodity-related companies may be directly affected by commodity prices, especially those commodity-related companies that own the underlying commodity. The stock prices of such companies may also experience greater price volatility than other types of common stocks. Securities issued by commodity-related companies are sensitive to changes in the supply and demand for, and thus the prices of, commodities. Volatility of commodity prices, which may lead to a reduction in production or supply, may also negatively impact the performance of commodity and natural resources companies that are solely involved in the transportation, processing, storing, distribution or marketing of commodities. Volatility of commodity prices may also make it more difficult for commodity-related companies to raise capital to the extent the market perceives that their performance may be directly or indirectly tied to commodity prices.
Certain types of commodities instruments (such as commodity-linked notes) are subject to the risk that the counterparty to the instrument will not perform or will be unable to perform in accordance with the terms of the instrument.
Exposure to commodities and commodities markets may subject the Fund to greater volatility than investments in traditional securities. No active trading market may exist for certain commodities investments, which may impair the ability of the Fund to sell or to realize the full value of such investments in the event of the need to liquidate such investments. In addition, adverse market conditions may impair the liquidity of actively traded commodities investments.
​ ​ ​ ​
Debt Investing
​ ​
Each Fund may invest in debt, or fixed income, securities. Debt, or fixed income, securities (which include corporate bonds, commercial paper, debentures, notes, government securities, municipal obligations, state- or state agency-issued obligations, obligations of foreign issuers, asset- or mortgage-backed securities, and other obligations) are used by issuers to borrow money and thus are debt obligations of the issuer. Holders of debt securities are creditors of the issuer, normally ranking ahead of holders of both common and preferred stock as to dividends or upon liquidation. The issuer usually pays a fixed, variable, or floating rate of interest and must repay the
​ ​ ​ ​
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Investment Technique
​ ​
Description and Risks
​ ​
Fund-Specific Limitations
​
​ ​ ​
amount borrowed at the security’s maturity. Some debt securities, such as zero-coupon securities (discussed below), do not pay interest but may be sold at a deep discount from their face value.
Yields on debt securities depend on a variety of factors, including the general conditions of the money, bond, and note markets, the size of a particular offering, the maturity date of the obligation, and the rating of the issue. Debt securities with longer maturities tend to produce higher yields and are generally subject to greater price fluctuations in response to changes in market conditions than obligations with shorter maturities. An increase in interest rates generally will reduce the market value of portfolio debt securities, while a decline in interest rates generally will increase the value of the same securities. The achievement of a Fund’s investment objective depends in part on the continuing ability of the issuers of the debt securities in which the Fund invests to meet their obligations for the payment of principal and interest when due. Obligations of issuers of debt securities are subject to the provisions of bankruptcy, insolvency, sovereign immunity, and other laws that affect the rights and remedies of creditors. There is also the possibility that, as a result of litigation or other conditions, the ability of an issuer to pay, when due, the principal of and interest on its debt securities may be materially affected.
​ ​ ​ ​
Convertible Securities
​ ​
A convertible security is a bond, debenture, note, or other security that entitles the holder to acquire common stock or other equity securities of the same or a different issuer within a particular period of time at a specific price or formula. It generally entitles the holder to receive interest paid or accrued until the security matures or is redeemed, converted, or exchanged. Convertible securities may have several unique investment characteristics such as (1) higher yields than common stocks, but lower yields than comparable nonconvertible securities, (2) a lesser degree of fluctuation in value than the underlying stock since they have fixed income characteristics and (3) the potential for capital appreciation if the market price of the underlying common stock increases.
Before conversion, convertible securities have characteristics similar to nonconvertible debt securities. Convertible securities often rank senior to common stock in a corporation’s capital structure and, therefore, are often viewed as entailing less risk than the corporation’s common stock, although the extent to which this is true depends in large measure on the degree to which the convertible security sells above its value as a fixed income security. However, because convertible securities are often viewed by the issuer as future common stock, they are often subordinated to other senior securities and therefore are rated one category lower than the issuer’s nonconvertible debt obligations or preferred stock.
A convertible security may be subject to redemption or conversion at the option of the issuer at a predetermined price. If a convertible security held by the Fund is called for redemption, the Fund could be required to permit the issuer to redeem the security and convert it to the underlying common stock. The Fund generally would invest in convertible securities for their favorable price characteristics and total return potential, and would normally not exercise an option to convert. The Fund might be more willing to convert such securities to common stock.
A Fund’s subadviser will select only those convertible securities for which it believes (a) the underlying common stock is a suitable investment for the Fund and (b) a greater potential for total return exists by purchasing the convertible security because of its higher yield and/or favorable market valuation. However, the Fund may invest in convertible debt securities rated less than investment grade. Debt securities rated less than investment grade are commonly
​ ​ ​ ​
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Investment Technique
​ ​
Description and Risks
​ ​
Fund-Specific Limitations
​
​ ​ ​
referred to as “junk bonds.” (For information about debt securities rated less than investment grade, see “High-Yield/High-Risk Fixed Income Securities (Junk Bonds)” under “Debt Investing” in this section of the SAI; for additional information about ratings on debt obligations, see Appendix A to this SAI.)
​ ​ ​ ​
Corporate Debt Securities
​ ​
Each Fund may invest in debt securities issued by corporations, limited partnerships and other similar entities. A Fund’s investments in debt securities of domestic or foreign corporate issuers include bonds, debentures, notes and other similar corporate debt instruments, including convertible securities that meet the Fund’s minimum ratings criteria or if unrated are, in the Fund’s subadviser’s opinion, comparable in quality to corporate debt securities that meet those criteria. The rate of return or return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies or to the value of commodities, such as gold.
​ ​ ​ ​
Dollar-denominated Foreign Debt Securities (“Yankee Bonds”)
​ ​
Each Fund may invest in “Yankee bonds”, which are dollar-denominated instruments issued in the U.S. market by foreign branches of U.S. banks and U.S. branches of foreign banks. Since these instruments are dollar-denominated, they are not affected by variations in currency exchange rates. They are influenced primarily by interest rate levels in the United States and by the financial condition of the issuer, or of the issuer’s foreign parent. However, investing in these instruments may present a greater degree of risk than investing in domestic securities, due to less publicly available information, less securities regulation, war or expropriation. Special considerations may include higher brokerage costs and thinner trading markets. Investments in foreign countries could be affected by other factors including extended settlement periods. (See “Foreign Investing” in this section of the SAI for additional information about investing in foreign countries.)
​ ​ ​ ​
Duration
​ ​
Duration is a time measure of a bond’s interest-rate sensitivity, based on the weighted average of the time periods over which a bond’s cash flows accrue to the bondholder. Time periods are weighted by multiplying by the present value of its cash flow divided by the bond’s price. (A bond’s cash flows consist of coupon payments and repayment of capital.) A bond’s duration will almost always be shorter than its maturity, with the exception of zero-coupon bonds, for which maturity and duration are equal.
​ ​ ​ ​
Exchange-Traded Notes (ETNs)
​ ​
Generally, ETNs are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market benchmark or strategy minus applicable fees. ETNs are traded on an exchange during normal trading hours. However, investors can also hold the ETN until maturity. At maturity, the issuer pays to the investor a cash amount equal to the principal amount, subject to the day’s market benchmark or strategy factor.
ETNs do not make periodic coupon payments or provide principal protection. ETNs are subject to credit risk, and the value of the ETN may drop due to a downgrade in the issuer’s credit rating, despite the underlying market benchmark or strategy remaining unchanged. The value of an ETN may also be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer’s credit rating, and economic, legal, political, or geographic events that affect the referenced underlying asset. When a Fund invests in ETNs it will bear its proportionate share of any fees and expenses borne by the ETN. The Fund’s decision to sell its ETN holdings may be limited by the availability of a secondary market. In addition, although an ETN may be listed on an exchange, the issuer
​ ​ ​ ​
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Investment Technique
​ ​
Description and Risks
​ ​
Fund-Specific Limitations
​
​ ​ ​
may not be required to maintain the listing, and there can be no assurance that a secondary market will exist for an ETN.
ETNs are also subject to tax risk. No assurance can be given that the IRS will accept, or a court will uphold, how a Fund characterizes and treats ETNs for tax purposes. Further, the IRS and Congress are considering proposals that would change the timing and character of income and gains from ETNs.
An ETN that is tied to a specific market benchmark or strategy may not be able to replicate and maintain exactly the composition and relative weighting of securities, commodities or other components in the applicable market benchmark or strategy. Some ETNs that use leverage can, at times, be relatively illiquid and, thus, they may be difficult to purchase or sell at a fair price. Leveraged ETNs are subject to the same risks as other instruments that use leverage in any form.
The market value of ETNs may differ from that of their market benchmark or strategy. This difference in price may be due to the fact that the supply and demand in the market for ETNs at any point in time is not always identical to the supply and demand in the market for the securities, commodities or other components underlying the market benchmark or strategy that the ETN seeks to track. As a result, there may be times when an ETN trades at a premium or discount to its market benchmark or strategy.
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High-Yield/High-Risk Fixed Income Securities (“Junk Bonds”)
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Investments in securities rated “BB” or below by S&P or Fitch, or “Ba” or below by Moody’s generally provide greater income (leading to the name “high-yield” securities) and opportunity for capital appreciation than investments in higher quality securities, but they also typically entail greater price volatility, liquidity, and principal and income risk. These securities are regarded as predominantly speculative as to the issuer’s continuing ability to meet principal and interest payment obligations. Analysis of the creditworthiness of issuers of lower-quality debt securities may be more complex than for issuers of higher-quality debt securities.
Interest-bearing securities typically experience appreciation when interest rates decline and depreciation when interest rates rise. The market values of low-rated securities tend to reflect individual corporate developments to a greater extent than do higher-rated securities, which react primarily to fluctuations in the general level of interest rates. Low-rated securities also tend to be more sensitive to economic conditions than higher-rated securities. As a result, they generally involve more credit risks than securities in the higher-rated categories. During an economic downturn or a sustained period of rising interest rates, highly leveraged issuers of low-rated securities may experience financial stress and may not have sufficient revenues to meet their payment obligations. The issuer’s ability to service its debt obligations may also be adversely affected by specific corporate developments, the issuer’s inability to meet specific projected business forecasts or the unavailability of additional financing. The risk of loss due to default by an issuer of low-rated securities is generally considered to be significantly greater than issuers of higher-rated securities because such securities are usually unsecured and are often subordinated to other creditors. Further, if the issuer of a low-rated security defaulted, the applicable Fund might incur additional expenses in seeking recovery. Periods of economic uncertainty and changes would also generally result in increased volatility in the market prices of low-rated securities and thus in the applicable Fund’s NAV.
Low-rated securities often contain redemption, call or prepayment provisions which permit the issuer of the securities containing such provisions to, at its discretion, redeem the securities. During periods of falling interest rates, issuers of low-rated securities are likely to
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redeem or prepay the securities and refinance them with debt securities with a lower interest rate. To the extent an issuer is able to refinance the securities or otherwise redeem them, the applicable Fund may have to replace the securities with a lower yielding security which would result in lower returns for the Fund.
A Fund may have difficulty disposing of certain low-rated securities because there may be a thin trading market for such securities. Because not all dealers maintain markets in all low-rated securities, there is no established retail secondary market for many of these securities. The Funds anticipate that such securities could be sold only to a limited number of dealers or institutional investors. To the extent a secondary trading market does exist, it is generally not as liquid as the secondary market for higher-rated securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security, and accordingly, the NAV of a particular Fund and its ability to dispose of particular securities when necessary to meet its liquidity needs, or in response to a specific economic event, or an event such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities may also make it more difficult for the Fund to obtain accurate market quotations for purposes of valuing its respective portfolio. Market quotations are generally available on many low-rated issues only from a limited number of dealers and may not necessarily represent firm bids of such dealers or prices for actual sales. During periods of thin trading, the spread between bid and asked prices is likely to increase significantly. In addition, adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the values and liquidity of low-rated securities, especially in a thinly-traded market. If a Fund experiences unexpected net redemptions, it may be forced to liquidate a portion of its portfolio securities without regard to their investment merits. Due to the limited liquidity of low-rated securities, the Fund may be forced to liquidate these securities at a substantial discount. Any such liquidation would reduce the Fund’s asset base over which expenses could be allocated and could result in a reduced rate of return for the Fund.
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Interest Rate Environment Risk
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In the wake of the financial crisis that began in 2007, the Federal Reserve System attempted to stabilize the U.S. economy and support the U.S. economic recovery by keeping the federal funds rate at or near zero percent. In addition, the Federal Reserve has purchased large quantities of securities issued or guaranteed by the U.S. government, its agencies or instrumentalities on the open market (the “quantitative easing program”). The Federal Reserve has since increased the federal funds rate as of December 2015, however, the United States continues to experience historically low interest rate levels. A low interest rate environment may have an adverse impact on each Fund’s ability to provide a positive yield to its shareholders and pay expenses out of Fund assets because of the low yields from the Fund’s portfolio investments.
However, continued economic recovery and the cessation of the quantitative easing program increase the risk that interest rates will rise in the near future and that the Funds will face a heightened level of interest rate risk. Federal Reserve policy changes may expose fixed-income and related markets to heightened volatility and may reduce liquidity for certain Fund investments, which could cause the value of a Fund’s investments and a Fund’s share price to decline or create difficulties for the Fund in disposing of investments. A Fund that invests in derivatives tied to fixed-income markets may be more substantially exposed to these risks than a Fund that does not invest in derivatives. A Fund could also be forced to liquidate its investments at disadvantageous times or prices, thereby adversely affecting the Fund. To the extent a Fund experiences high redemptions because of
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these policy changes, the Fund may experience increased portfolio turnover, which will increase the costs that the Fund incurs and lower the Fund’s performance.
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Inverse Floating Rate Obligations
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Certain variable rate securities pay interest at a rate that varies inversely to prevailing short-term interest rates (sometimes referred to as inverse floaters). For example, upon reset the interest rate payable on a security may go down when the underlying index has risen. During periods when short-term interest rates are relatively low as compared to long-term interest rates, the Fund may attempt to enhance its yield by purchasing inverse floaters. Certain inverse floaters may have an interest rate reset mechanism that multiplies the effects of changes in the underlying index. While this form of leverage may increase the security’s yield, it may also increase the volatility of the security’s market value.
Similar to other variable and floating rate obligations, effective use of inverse floaters requires skills different from those needed to select most portfolio securities. If movements in interest rates are incorrectly anticipated, a Fund holding these instruments could lose money and its NAV could decline.
​ ​ No Fund will invest more than 5% of its assets in inverse floaters. ​
Letters of Credit
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Debt obligations, including municipal obligations, certificates of participation, commercial paper and other short-term obligations, may be backed by an irrevocable letter of credit of a bank that assumes the obligation for payment of principal and interest in the event of default by the issuer. Only banks that, in the opinion of the relevant Fund’s subadviser, are of investment quality comparable to other permitted investments of the Fund may be used for Letter of Credit-backed investments.
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Loan and Debt Participations and Assignments
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A loan participation agreement involves the purchase of a share of a loan made by a bank to a company in return for a corresponding share of the borrower’s principal and interest payments. Loan participations of the type in which the Fund may invest include interests in both secured and unsecured corporate loans. When a Fund purchases loan assignments from lenders, it will acquire direct rights against the borrower, but these rights and the Fund’s obligations may differ from, and be more limited than, those held by the assignment lender. The principal credit risk associated with acquiring loan participation and assignment interests is the credit risk associated with the underlying corporate borrower. There is also a risk that there may not be a readily available market for participation loan interests and, in some cases, this could result in the Fund disposing of such securities at a substantial discount from face value or holding such securities until maturity.
There is typically a limited amount of public information available about loans because loans normally are not registered with the SEC or any state securities commission or listed on any securities exchange. Certain of the loans in which a Fund may invest may not be considered “securities,” and therefore the Fund may not be entitled to rely on the anti-fraud protections of the federal securities laws with respect to those loans in the event of fraud or misrepresentation by a borrower. A Fund may come into possession of material, non-public information about a borrower as a result of the Fund’s ownership of a loan or other floating-rate instrument of the borrower. Because of prohibitions on trading in securities of issuers while in possession of material, non-public information, the Fund might be unable to enter into a transaction in a publicly-traded security of the borrower when it would otherwise be advantageous to do so.
Loans trade in an unregulated inter-dealer or inter-bank secondary market. Purchases and sales of loans are generally subject to contractual restrictions that must be satisfied before a loan can be
​ ​ The Tax-Exempt Bond Fund may not invest in loan participations and assignments. ​
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bought or sold. These restrictions may (i) impede the Fund’s ability to buy or sell loans; (ii) negatively affect the transaction price; (iii) affect the counterparty credit risk borne by the Fund; (iv) impede the Fund’s ability to timely vote or otherwise act with respect to loans; and (v) expose the Fund to adverse tax or regulatory consequences.
In the event that a corporate borrower failed to pay its scheduled interest or principal payments on participations held by the Fund, the market value of the affected participation would decline, resulting in a loss of value of such investment to the Fund. Accordingly, such participations are speculative and may result in the income level and net assets of the Fund being reduced. Moreover, loan participation agreements generally limit the right of a participant to resell its interest in the loan to a third party and, as a result, loan participations may be deemed by the Fund to be illiquid investments. A Fund will invest only in participations with respect to borrowers whose creditworthiness is, or is determined by the Fund’s subadviser to be, substantially equivalent to that of issuers whose senior unsubordinated debt securities are rated B or higher by Moody’s or S&P. For the purposes of diversification and/or concentration calculations, both the borrower and issuer will be considered an “issuer.”
The Funds may purchase from banks participation interests in all or part of specific holdings of debt obligations. Each participation interest is backed by an irrevocable letter of credit or guarantee of the selling bank that the relevant Fund’s subadviser has determined meets the prescribed quality standards of the Fund. Thus, even if the credit of the issuer of the debt obligation does not meet the quality standards of the Fund, the credit of the selling bank will.
Loan participations and assignments may be illiquid and therefore subject to the Funds’ limitations on investments in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.)
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Municipal Securities and Related Investments
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Tax-exempt municipal securities are debt obligations issued by the various states and their subdivisions (e.g., cities, counties, towns, and school districts) to raise funds, generally for various public improvements requiring long-term capital investment. Purposes for which tax-exempt bonds are issued include flood control, airports, bridges and highways, housing, medical facilities, schools, mass transportation and power, water or sewage plants, as well as others. Tax-exempt bonds also are occasionally issued to retire outstanding obligations, to obtain funds for operating expenses or to loan to other public or, in some cases, private sector organizations or to individuals.
Yields on municipal securities are dependent on a variety of factors, including the general conditions of the money market and the municipal bond market, the size of a particular offering, the maturity of the obligations and the rating of the issue. Municipal securities with longer maturities tend to produce higher yields and are generally subject to potentially greater capital appreciation and depreciation than obligations with shorter maturities and lower yields. The market prices of municipal securities usually vary, depending upon available yields. An increase in interest rates will generally reduce the value of portfolio investments, and a decline in interest rates will generally increase the value of portfolio investments. The ability of the Fund to achieve its investment objective is also dependent on the continuing ability of the issuers of municipal securities in which the Fund invests to meet their obligations for the payment of interest and principal when due. The ratings of Moody’s and S&P represent their opinions as to the quality of municipal securities which they undertake to rate. Ratings are not absolute standards of quality; consequently, municipal securities with the same maturity, coupon, and rating may have different yields. There are variations in municipal securities, both within a particular classification and between classifications,
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depending on numerous factors. It should also be pointed out that, unlike other types of investments, municipal securities have traditionally not been subject to regulation by, or registration with, the SEC, although there have been proposals which would provide for such regulation in the future.
The federal bankruptcy statutes relating to the debts of political subdivisions and authorities of states of the United States provide that, in certain circumstances, such subdivisions or authorities may be authorized to initiate bankruptcy proceedings without prior notice to or consent of creditors, which proceedings could result in material and adverse changes in the rights of holders of their obligations.
Lawsuits challenging the validity under state constitutions of present systems of financing public education have been initiated or adjusted in a number of states, and legislation has been introduced to effect changes in public school financing in some states. In other instances there have been lawsuits challenging the issuance of pollution control revenue bonds or the validity of their issuance under state or federal law which could ultimately affect the validity of those municipal securities or the tax-free nature of the interest thereon.
Descriptions of some of the municipal securities and related investment types most commonly acquired by the Funds are provided below. In addition to those shown, other types of municipal investments are, or may become, available for investment by the Funds. For the purpose of each Fund’s investment restrictions set forth in this SAI, the identification of the “issuer” of a municipal security which is not a general obligation bond is made by the applicable Fund’s subadviser on the basis of the characteristics of the obligation, the most significant of which is the source of funds for the payment of principal and interest on such security.
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Municipal Bonds
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Municipal bonds, which meet longer-term capital needs and generally have maturities of more than one year when issued, have two principal classifications: general obligation bonds and revenue bonds. Another type of municipal bond is referred to as an industrial development bond.
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General Obligation Bonds ​ ​
Issuers of general obligation bonds include states, counties, cities, towns, and regional districts. The proceeds of these obligations are used to fund a wide range of public projects, including construction or improvement of schools, highways and roads, and water and sewer systems. The basic security behind general obligation bonds is the issuer’s pledge of its full faith and credit and taxing power for the payment of principal and interest. The taxes that can be levied for the payment of debt service may be limited or unlimited as to the rate or amount of special assessments.
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Industrial Development Bonds ​ ​
Industrial development bonds, which are considered municipal bonds if the interest paid is exempt from Federal income tax, are issued by or on behalf of public authorities to raise money to finance various privately operated facilities for business and manufacturing, housing, sports arenas and pollution control. These bonds are also used to finance public facilities such as airports, mass transit systems, ports and parking. The payment of the principal and interest on such bonds is dependent solely on the ability of the facility’s user to meet its financial obligations and the pledge, if any, of real and personal property so financed as security for such payment.
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Revenue Bonds ​ ​
The principal security for a revenue bond is generally the net revenues derived from a particular facility, group of facilities, or, in some cases, the proceeds of a special excise or other specific revenue source. Revenue bonds are issued to finance a wide variety of capital projects including: electric, gas, water and sewer systems; highways, bridges,
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and tunnels; port and airport facilities; colleges and universities; and hospitals. Although the principal security behind these bonds may vary, many provide additional security in the form of a debt service reserve fund whose money may be used to make principal and interest payments on the issuer’s obligations. Housing finance authorities have a wide range of security; including partially or fully insured mortgages, rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or other public projects. Some authorities provide further security in the form of a state’s ability (without obligation) to make up deficiencies in the debt service reserve fund.
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Municipal Leases
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Each Fund may acquire participations in lease obligations or installment purchase contract obligations (hereinafter collectively called “lease obligations”) of municipal authorities or entities. Although lease obligations do not constitute general obligations of the municipality for which the municipality’s taxing power is pledged, a lease obligation may be backed by the municipality’s covenant to budget for, appropriate, and make the payments due under the lease obligation. However, certain lease obligations contain “non-appropriation” clauses which provide that the municipality has no obligation to make lease or installment purchase payments in future years unless money is appropriated for such purpose on a yearly basis. In addition to the “non-appropriation” risk, these securities represent a relatively new type of financing that has not yet developed the depth of marketability associated with more conventional bonds. In the case of a “non-appropriation” lease, the Fund’s ability to recover under the lease in the event of non-appropriation or default will be limited solely to the repossession of the leased property in the event foreclosure might prove difficult. The Fund’s subadviser will evaluate the credit quality of a municipal lease and whether it will be considered liquid. (See “Illiquid and Restricted Investments” in this section of the SAI for information regarding the implications of these investments being considered illiquid.)
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Municipal Notes
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Municipal notes generally are used to provide for short-term working capital needs and generally have maturities of one year or less. Municipal notes include bond anticipation notes, construction loan notes, revenue anticipation notes and tax anticipation notes.
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Bond Anticipation Notes ​ ​
Bond anticipation notes are issued to provide interim financing until long-term financing can be arranged. In most cases, the long-term bonds then provide the money for the repayment of the notes.
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Construction Loan Notes ​ ​
Construction loan notes are sold to provide construction financing. After successful completion and acceptance, many projects receive permanent financing through FNMA or GNMA.
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Revenue Anticipation Notes ​ ​
Revenue anticipation notes are issued in expectation of receipt of other types of revenue, such as Federal revenues available under Federal revenue sharing programs.
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Tax Anticipation Notes
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Tax anticipation notes are issued to finance working capital needs of municipalities. Generally, they are issued in anticipation of various seasonal tax revenue, such as income, sales, use and business taxes, and are payable from these specific future taxes.
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Tax-Exempt Commercial Paper
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Tax-exempt commercial paper is a short-term obligation with a stated maturity of 365 days or less. It is issued by state and local governments or their agencies to finance seasonal working capital needs or as short-term financing in anticipation of longer-term financing.
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Participation on Creditors’ Committees
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While the Funds do not invest in securities to exercise control over the securities’ issuers, each Fund may, from time to time, participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by the Fund. Such participation may subject the relevant Fund to expenses such as legal fees and may deem the Fund an “insider” of the issuer for purposes of the Federal securities laws, and expose the Fund to material non-public information of the issuer, and therefore may restrict the Fund’s ability to purchase or sell a particular security when it might otherwise desire to do so. Participation by a Fund on such committees also may expose the Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. A Fund will participate on such committees only when the Fund’s subadviser believes that such participation is necessary or desirable to enforce the Fund’s rights as a creditor or to protect the value of securities held by the Fund.
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Payable in Kind (“PIK”) Bonds
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PIK bonds are obligations which provide that the issuer thereof may, at its option, pay interest on such bonds in cash or “in kind”, which means in the form of additional debt securities. Such securities benefit the issuer by mitigating its need for cash to meet debt service, but also require a higher rate of return to attract investors who are willing to defer receipt of such cash. The Funds will accrue income on such investments for tax and accounting purposes, which is distributable to shareholders and which, because no cash is received at the time of accrual, may require the liquidation of other portfolio securities to satisfy the Funds’ distribution obligations. The market prices of PIK bonds generally are more volatile than the market prices of securities that pay interest periodically, and they are likely to respond to changes in interest rates to a greater degree than would otherwise similar bonds on which regular cash payments of interest are being made.
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Ratings
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The rating or quality of a debt security refers to a rating agency’s assessment of the issuer’s creditworthiness, i.e., its ability to pay principal and interest when due. Higher ratings indicate better credit quality, as rated by independent rating organizations such as Moody’s, S&P or Fitch, which publish their ratings on a regular basis. Appendix A provides a description of the various ratings provided for bonds (including convertible bonds), municipal bonds, and commercial paper.
After a Fund purchases a debt security, the rating of that security may be reduced below the minimum rating acceptable for purchase by the Fund. A subsequent downgrade does not require the sale of the security, but the Fund’s subadviser will consider such an event in determining whether to continue to hold the obligation. To the extent that ratings established by Moody’s or S&P may change as a result of changes in such organizations or their rating systems, a Fund will invest in securities which are deemed by the Fund’s subadviser to be of comparable quality to securities whose current ratings render them eligible for purchase by the Fund.
Credit ratings issued by credit rating agencies evaluate the safety of principal and interest payments of rated securities. They do not, however, evaluate the market-value risk and therefore may not fully reflect the true risks of an investment. In addition, credit rating agencies may or may not make timely changes in a rating to reflect changes in the economy or in the condition of the issuer that affect the market value of the security. Consequently, credit ratings are used only as a preliminary indicator of investment quality.
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Sovereign Debt
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Each Fund may invest in “sovereign debt,” which is issued or guaranteed by foreign governments (including countries, provinces and municipalities) or their agencies and instrumentalities. Sovereign debt may trade at a substantial discount from face value. The Funds may hold and trade sovereign debt of foreign countries in appropriate circumstances to participate in debt conversion programs. Emerging-market country sovereign debt involves a higher degree of risk than that of developed markets, is generally lower-quality debt, and is considered speculative in nature due, in part, to the extreme and volatile nature of debt burdens in such countries and because emerging market governments can be relatively unstable. The issuer or governmental authorities that control sovereign-debt repayment (“sovereign debtors”) may be unable or unwilling to repay principal or interest when due in accordance with the terms of the debt. A sovereign debtor’s willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash-flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor’s policy towards the IMF, and the political constraints to which the sovereign debtor may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearage on their debt. The commitment of these third parties to make such disbursements may be conditioned on the sovereign debtor’s implementation of economic reforms or economic performance and the timely service of the debtor’s obligations. The sovereign debtor’s failure to meet these conditions may cause these third parties to cancel their commitments to provide funds to the sovereign debtor, which may further impair the debtor’s ability or willingness to timely service its debts. In certain instances, the Funds may invest in sovereign debt that is in default as to payments of principal or interest. In the event that the Funds hold non-performing sovereign debt, the Funds may incur additional expenses in connection with any restructuring of the issuer’s obligations or in otherwise enforcing their rights thereunder.
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Brady Bonds
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Each Fund may invest a portion of its assets in certain sovereign debt obligations known as “Brady Bonds.” Brady Bonds are issued under the framework of the Brady Plan, an initiative announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to restructure their outstanding external indebtedness. The Brady Plan contemplates, among other things, the debtor nation’s adoption of certain economic reforms and the exchange of commercial bank debt for newly issued bonds. In restructuring its external debt under the Brady Plan framework, a debtor nation negotiates with its existing bank lenders as well as the World Bank or the IMF. The World Bank or IMF supports the restructuring by providing funds pursuant to loan agreements or other arrangements that enable the debtor nation to collateralize the new Brady Bonds or to replenish reserves used to reduce outstanding bank debt. Under these loan agreements or other arrangements with the World Bank or IMF, debtor nations have been required to agree to implement certain domestic monetary and fiscal reforms. The Brady Plan sets forth only general guiding principles for economic reform and debt reduction, emphasizing that solutions must be negotiated on a case-by-case basis between debtor nations and their creditors.
Brady Bonds are often viewed as having three or four valuation components: (i) the collateralized repayment of principal at final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv) any uncollateralized repayment of principal at maturity (these uncollateralized amounts
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constitute the “residual risk”). In light of the residual risk of Brady Bonds and, among other factors, the history of defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds can be viewed as speculative.
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Stand-by Commitments
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Each Fund may purchase securities together with the right to resell them to the seller or a third party at an agreed-upon price or yield within specified periods prior to their maturity dates. Such a right to resell is commonly known as a stand-by commitment, and the aggregate price which a Fund pays for securities with a stand-by commitment may increase the cost, and thereby reduce the yield, of the security. The primary purpose of this practice is to permit the Fund to be as fully invested as practicable in municipal securities while preserving the necessary flexibility and liquidity to meet unanticipated redemptions. Stand-by commitments acquired by a Fund are valued at zero in determining the Fund’s NAV. Stand-by commitments involve certain expenses and risks, including the inability of the issuer of the commitment to pay for the securities at the time the commitment is exercised, non-marketability of the commitment, and differences between the maturity of the underlying security and the maturity of the commitment.
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Strip Bonds
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Strip bonds are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity.
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Tender Option Bonds
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Tender option bonds are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security’s liquidity.
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Variable and Floating Rate Obligations
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Each Fund may purchase securities having a floating or variable rate of interest. These securities pay interest at rates that are adjusted periodically according to a specific formula, usually with reference to some interest rate index or market interest rate (the “underlying index”). The floating rate tends to decrease the security’s price sensitivity to changes in interest rates. These securities may carry demand features permitting the holder to demand payment of principal at any time or at specified intervals prior to maturity. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less than for fixed-rate obligations.
In order to most effectively use these investments, a Fund’s subadviser must correctly assess probable movements in interest rates. This involves different skills than those used to select most other portfolio securities. If the Fund’s subadviser incorrectly forecasts such movements, the Fund could be adversely affected by the use of variable or floating rate obligations.
The floating and variable rate obligations that the Funds may purchase include variable rate demand securities. Variable rate demand securities are variable rate securities that have demand features entitling the purchaser to resell the securities to the issuer at an amount approximately equal to amortized cost or the principal amount thereof plus accrued interest, which may be more or less than the price that the Fund paid for them. The interest rate on variable rate demand securities also varies either according to some objective standard, such as an index of short-term, tax-exempt rates, or according to rates set by or on behalf of the issuer.
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When a Fund purchases a floating or variable rate demand instrument, the Fund’s subadviser will monitor, on an ongoing basis, the ability of the issuer to pay principal and interest on demand. The Fund’s right to obtain payment at par on a demand instrument could be affected by events occurring between the date the Fund elects to demand payment and the date payment is due that may affect the ability of the issuer of the instrument to make payment when due, except when such demand instrument permits same day settlement. To facilitate settlement, these same day demand instruments may be held in book entry form at a bank other than the Funds’ custodian subject to a sub-custodian agreement between the bank and the Funds’ custodian.
The floating and variable rate obligations that the Funds may purchase also include certificates of participation in such obligations purchased from banks. A certificate of participation gives the Fund an undivided interest in the underlying obligations in the proportion that the Fund’s interest bears to the total principal amount of the obligation. Certain certificates of participation may carry a demand feature that would permit the holder to tender them back to the issuer prior to maturity.
The income received on certificates of participation in tax-exempt municipal obligations constitutes interest from tax-exempt obligations.
Each Fund will limit its purchases of floating and variable rate obligations to those of the same quality as it otherwise is allowed to purchase. Similar to fixed rate debt instruments, variable and floating rate instruments are subject to changes in value based on changes in prevailing market interest rates or changes in the issuer’s creditworthiness.
A floating or variable rate instrument may be subject to a Fund’s percentage limitation on illiquid securities if there is no reliable trading market for the instrument or if the Fund may not demand payment of the principal amount within seven days. (See “Illiquid and Restricted Securities” in this section of the SAI.)
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Zero and Deferred Coupon Debt Securities
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Each Fund may invest in debt obligations that do not make any interest payments for a specified period of time prior to maturity (“deferred coupon” bonds) or until maturity (“zero coupon” bonds). The nonpayment of interest on a current basis may result from the bond’s having no stated interest rate, in which case the bond pays only principal at maturity and is normally initially issued at a discount from face value. Alternatively, the bond may provide for a stated rate of interest, but provide that such interest is not payable until maturity, in which case the bond may initially be issued at par. The value to the investor of these types of bonds is represented by the economic accretion either of the difference between the purchase price and the nominal principal amount (if no interest is stated to accrue) or of accrued, unpaid interest during the bond’s life or payment deferral period.
Because deferred and zero coupon bonds do not make interest payments for a certain period of time, they are generally purchased by a Fund at a deep discount and their value fluctuates more in response to interest rate changes than does the value of debt obligations that make current interest payments. The degree of fluctuation with interest rate changes is greater when the deferred period is longer. Therefore, when a Fund invests in zero or deferred coupon bonds, there is a risk that the value of the Fund’s shares may decline more as a result of an increase in interest rates than would be the case if the Fund did not invest in such bonds.
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Even though zero and deferred coupon bonds may not pay current interest in cash, each Fund is required to accrue interest income on such investments and to distribute such amounts to shareholders. Thus, a Fund would not be able to purchase income-producing securities to the extent cash is used to pay such distributions, and, therefore, the Fund’s current income could be less than it otherwise would have been. Instead of using cash, the Fund might liquidate investments in order to satisfy these distribution requirements.
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Derivative Investments
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Each Fund may invest in various types of derivatives, which may at times result in significant derivative exposure. A derivative is a financial instrument whose performance is derived from the performance of another asset. Each Fund may invest in derivative instruments including, but not limited to: futures contracts, put options, call options, options on future contracts, options on foreign currencies, swaps, forward contracts, structured investments, and other equity-linked derivatives.
Each Fund may use derivative instruments for hedging (to offset risks associated with an investment, currency exposure, or market conditions) or in pursuit of its investment objective(s) and policies (to seek to enhance returns). When a Fund invests in a derivative, the risks of loss of that derivative may be greater than the derivative’s cost. No Fund may use any derivative to gain exposure to an asset or class of assets that it would be prohibited by its investment restrictions from purchasing directly. In addition to other considerations, a Fund’s ability to use derivative instruments may be limited by tax considerations. (See “Dividends, Distributions and Taxes” in this SAI.)
Investments in derivatives may subject a Fund to special risks in addition to normal market fluctuations and other risks inherent in investment in securities. For example, a percentage of the Fund’s assets may be segregated to cover its obligations with respect to the derivative investment, which may make it more difficult for the Fund’s subadviser to meet redemption requests or other short-term obligations.
Investments in derivatives in general are also subject to market risks that may cause their prices to fluctuate over time. Investments in derivatives may not directly correlate with the price movements of the underlying instrument. As a result, the use of derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case.
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Commodity Interests
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Certain of the derivative investment types permitted for the Funds may be considered commodity interests for purposes of the CEA and regulations approved by the CFTC. However, each Fund intends to limit the use of such investment types as required to qualify for exclusion or exemption from being considered a “commodity pool” or otherwise as a vehicle for trading in commodity interests under such regulations. As a result, except as otherwise noted below each Fund has filed a notice of exclusion under CFTC Regulation 4.5 or exemption under CFTC Regulation 4.13(a)(3).
The CFTC recently adopted amendments to its rules that may affect the Funds’ ability to continue to claim exclusion or exemption from regulation. If a Fund’s use of these techniques would cause the Fund to be considered a “commodity pool” under the CEA, then the Adviser would be subject to registration and regulation as the Fund’s commodity pool operator, and the Fund’s subadviser may be subject to registration and regulation as the Fund’s commodity trading advisor. A Fund may incur additional expense as a result of the
​ ​ As of the date of this SAI, each Fund intends to limit the use of such investment types as required to qualify for exclusion from being considered a “commodity pool” or otherwise as a vehicle for trading in commodity interests under such regulations, and each Fund has filed a notice of exclusion under CFTC Regulation 4.5 or exemption under ​
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CFTC’s registration and regulation obligations, and the Fund’s use of these techniques and other instruments may be limited or restricted.
​ ​ CFTC Regulation 4.13(a)(3). ​
Credit-linked Notes
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Credit-linked notes are derivative instruments used to transfer credit risk. The performance of the notes is linked to the performance of the underlying reference obligation or reference portfolio (“reference entities”). The notes are usually issued by a special purpose vehicle that sells credit protection through a credit default swap agreement in return for a premium and an obligation to pay the transaction sponsor should a reference entity experience a credit event, such as bankruptcy. The special purpose vehicle invests the proceeds from the notes to cover its contingent obligation. Revenue from the investments and the money received as premium are used to pay interest to note holders. The main risk of credit linked notes is the risk of default to the reference obligation of the credit default swap. Should a default occur, the special purpose vehicle would have to pay the transaction sponsor, subordinating payments to the note holders. Credit linked notes also may not be liquid and may be subject to currency and interest rate risks as well.
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Equity-linked Derivatives
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Each Fund may invest in equity-linked derivative products, the performance of which is designed to correspond generally to the performance of a specified stock index or “basket” of stocks, or to a single stock. Investments in equity-linked derivatives involve the same risks associated with a direct investment in the types of securities such products are designed to track. There can be no assurance that the trading price of the equity-linked derivatives will equal the underlying value of the securities purchased to replicate a particular investment or that such basket will replicate the investment.
Investments in equity-linked derivatives may constitute investments in other investment companies. (See “Mutual Fund Investing” in this section of the SAI for information regarding the implications of a Fund investing in other investment companies.)
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Eurodollar Instruments
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The Funds may invest in Eurodollar instruments. Eurodollar instruments are dollar-denominated certificates of deposit and time deposits issued outside the U.S. capital markets by foreign branches of U.S. banks and by foreign banks. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might use Eurodollar instruments to hedge against changes in interest rates or to enhance returns.
Eurodollar obligations are subject to the same risks that pertain to domestic issuers, most notably income risk (and, to a lesser extent, credit risk, market risk, and liquidity risk). Additionally, Eurodollar obligations are subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of dollars, from flowing across its borders. Other risks include adverse political and economic developments, the extent and quality of government regulation of financial markets and institutions, the imposition of foreign withholding taxes, and expropriation or nationalization of foreign issuers. However, Eurodollar obligations will undergo the same type of credit analysis as domestic issuers in which a Fund invests.
​ ​ The Tax-Exempt Bond Fund may not invest in Eurodollar instruments. ​
Foreign Currency Forward Contracts, Futures and Options
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Each Fund may engage in certain derivative foreign currency exchange and option transactions involving investment risks and transaction costs to which the Fund would not be subject absent the use of these strategies. If a Fund’s subadviser’s predictions of movements in the direction of securities prices or currency exchange rates are inaccurate, the adverse consequences to the Fund may leave the Fund in a worse position than if it had not used such strategies. Risks inherent in the use of option and foreign currency
​ ​ The Tax-Exempt Bond Fund may not invest in foreign currency forward contracts, futures and options. ​
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forward and futures contracts include: (1) dependence on the Fund’s subadviser’s ability to correctly predict movements in the direction of securities prices and currency exchange rates; (2) imperfect correlation between the price of options and futures contracts and movements in the prices of the securities or currencies being hedged; (3) the fact that the skills needed to use these strategies are different from those needed to select portfolio securities; (4) the possible absence of a liquid secondary market for any particular instrument at any time; and (5) the possible need to defer closing out certain hedged positions to avoid adverse tax consequences. The Fund’s ability to enter into futures contracts is also limited by the requirements of the Code for qualification as a regulated investment company. (See the “Dividends, Distributions and Taxes” section of this SAI.)
A Fund may engage in currency exchange transactions to protect against uncertainty in the level of future currency exchange rates. In addition, a Fund may write covered put and call options on foreign currencies for the purpose of increasing its return.
A Fund may enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”) and purchase and sell foreign currency futures contracts. For certain hedging purposes, the Fund may also purchase exchange-listed and over-the-counter put and call options on foreign currency futures contracts and on foreign currencies. A put option on a futures contract gives the Fund the right to assume a short position in the futures contract until the expiration of the option. A put option on a currency gives the Fund the right to sell the currency at an exercise price until the expiration of the option. A call option on a futures contract gives the Fund the right to assume a long position in the futures contract until the expiration of the option. A call option on a currency gives the Fund the right to purchase the currency at the exercise price until the expiration of the option.
When engaging in position hedging, a Fund enters into foreign currency exchange transactions to protect against a decline in the values of the foreign currencies in which its portfolio securities are denominated (or an increase in the values of currency for securities which the Fund expects to purchase, when the Fund holds cash or short-term investments). In connection with position hedging, the Fund may purchase put or call options on foreign currency and on foreign currency futures contracts and buy or sell forward contracts and foreign currency futures contracts. (A Fund may also purchase or sell foreign currency on a spot basis, as discussed in “Foreign Currency Transactions” under “Foreign Investing” in this section of the SAI.)
The precise matching of the amounts of foreign currency exchange transactions and the value of the portfolio securities involved will not generally be possible since the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the dates the currency exchange transactions are entered into and the dates they mature. It is also impossible to forecast with precision the market value of portfolio securities at the expiration or maturity of a forward or futures contract. Accordingly, it may be necessary for a Fund to purchase additional foreign currency on the spot market (and bear the expense of such purchase) if the market value of the security or securities being hedged is less than the amount of foreign currency the Fund is obligated to deliver and a decision is made to sell the security or securities and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of the portfolio security or securities if the market value of such security or securities exceeds the amount of foreign currency the Fund is obligated to deliver.
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Hedging techniques do not eliminate fluctuations in the underlying prices of the securities which a Fund owns or intends to purchase or sell. They simply establish a rate of exchange which one can achieve at some future point in time. Additionally, although these techniques tend to minimize the risk of loss due to a decline in the value of the hedged currency, they also tend to limit any potential gain which might result from the increase in value of such currency.
A Fund may seek to increase its return or to offset some of the costs of hedging against fluctuations in currency exchange rates by writing covered put options and covered call options on foreign currencies. In that case, the Fund receives a premium from writing a put or call option, which increases the Fund’s current return if the option expires unexercised or is closed out at a net profit. A Fund may terminate an option that it has written prior to its expiration by entering into a closing purchase transaction in which it purchases an option having the same terms as the option written.
A Fund’s currency hedging transactions may call for the delivery of one foreign currency in exchange for another foreign currency and may at times not involve currencies in which its portfolio securities are then denominated. A Fund’s subadviser will engage in such “cross hedging” activities when it believes that such transactions provide significant hedging opportunities for the Fund. Cross hedging transactions by a Fund involve the risk of imperfect correlation between changes in the values of the currencies to which such transactions relate and changes in the value of the currency or other asset or liability which is the subject of the hedge.
Foreign currency forward contracts, futures and options may be traded on foreign exchanges. Such transactions may not be regulated as effectively as similar transactions in the United States; may not involve a clearing mechanism and related guarantees; and are subject to the risk of governmental actions affecting trading in, or the prices of, foreign securities. The value of such positions also could be adversely affected by (i) other complex foreign political, legal and economic factors, (ii) lesser availability than in the United States of data on which to make trading decisions, (iii) delays in the relevant Fund’s ability to act upon economic events occurring in foreign markets during non-business hours in the United States, (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States, and (v) lesser trading volume.
The types of derivative foreign currency exchange transactions most commonly employed by the Funds are discussed below, although each Fund is also permitted to engage in other similar transactions to the extent consistent with the Fund’s investment limitations and restrictions.
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Foreign Currency Forward Contracts
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A foreign currency forward contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days (“term”) from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders (usually large commercial banks) and their customers.
A Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily in an amount not less than the value of the Fund’s total assets committed to forward foreign currency exchange contracts entered into for the purchase of a foreign currency. If the value of the securities specifically designated declines, additional cash or securities will be
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added so that the specifically designated amount is not less than the amount of the Fund’s commitments with respect to such contracts.
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Foreign Currency Futures Transactions
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Each Fund may use foreign currency futures contracts and options on such futures contracts. Through the purchase or sale of such contracts, a Fund may be able to achieve many of the same objectives attainable through the use of foreign currency forward contracts, but more effectively and possibly at a lower cost.
Unlike forward foreign currency exchange contracts, foreign currency futures contracts and options on foreign currency futures contracts are standardized as to amount and delivery period and are traded on boards of trade and commodities exchanges. It is anticipated that such contracts may provide greater liquidity and lower cost than forward foreign currency exchange contracts.
Purchasers and sellers of foreign currency futures contracts are subject to the same risks that apply to the buying and selling of futures generally. In addition, there are risks associated with foreign currency futures contracts similar to those associated with options on foreign currencies. (See “Foreign Currency Options” and “Futures Contracts and Options on Futures Contracts”, each in this sub-section of the SAI.) The Fund must accept or make delivery of the underlying foreign currency, through banking arrangements, in accordance with any U.S. or foreign restrictions or regulations regarding the maintenance of foreign banking arrangements by U.S. residents and may be required to pay any fees, taxes or charges associated with such delivery which are assessed in the issuing country.
To the extent required to comply with SEC Release No. IC-10666, when entering into a futures contract or an option transaction, a Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the net amount of the Fund’s obligation. For foreign currency futures transactions, the prescribed amount will generally be the daily value of the futures contract, marked to market.
Futures contracts are designed by boards of trade which are designated “contracts markets” by the CFTC. Futures contracts trade on contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee performance of the contracts. As of the date of this SAI, the Funds may invest in futures contracts under specified conditions without being regulated as commodity pools. However, under recently amended CFTC rules the Funds’ ability to maintain the exclusions/exemptions from the definition of commodity pool may be limited. (See “Commodity Interests” in this section of the SAI.)
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Foreign Currency Options
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A foreign currency option provides the option buyer with the right to buy or sell a stated amount of foreign currency at the exercise price at a specified date or during the option period. A call option gives its owner the right, but not the obligation, to buy the currency, while a put option gives its owner the right, but not the obligation, to sell the currency. The option seller (writer) is obligated to fulfill the terms of the option sold if it is exercised. However, either seller or buyer may close its position during the option period for such options any time prior to expiration.
A call rises in value if the underlying currency appreciates. Conversely, a put rises in value if the underlying currency depreciates. While purchasing a foreign currency option can protect a Fund against an adverse movement in the value of a foreign currency, it does not limit the gain which might result from a favorable movement in the value of such currency. For example, if the Fund were holding
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securities denominated in an appreciating foreign currency and had purchased a foreign currency put to hedge against a decline in the value of the currency, it would not have to exercise its put. Similarly, if the Fund had entered into a contract to purchase a security denominated in a foreign currency and had purchased a foreign currency call to hedge against a rise in the value of the currency but instead the currency had depreciated in value between the date of purchase and the settlement date, the Fund would not have to exercise its call but could acquire in the spot market the amount of foreign currency needed for settlement.
The value of a foreign currency option depends upon the value of the underlying currency relative to the other referenced currency. As a result, the price of the option position may vary with changes in the value of either or both currencies and have no relationship to the investment merits of a foreign security, including foreign securities held in a “hedged” investment portfolio. Because foreign currency transactions occurring in the interbank market involve substantially larger amounts than those that may be involved in the use of foreign currency options, the Funds may be disadvantaged by having to deal in an odd lot market (generally consisting of transactions of less than $1 million) for the underlying foreign currencies at prices that are less favorable than for round lots.
As in the case of other kinds of options, the use of foreign currency options constitutes only a partial hedge, and a Fund could be required to purchase or sell foreign currencies at disadvantageous exchange rates, thereby incurring losses. The purchase of an option on a foreign currency may not necessarily constitute an effective hedge against fluctuations in exchange rates and, in the event of rate movements adverse to the Fund’s position, the Fund may forfeit the entire amount of the premium plus related transaction costs.
Options on foreign currencies written or purchased by a Fund may be traded on U.S. or foreign exchanges or over the counter. There is no systematic reporting of last sale information for foreign currencies traded over the counter or any regulatory requirement that quotations available through dealers or other market sources be firm or revised on a timely basis. Quotation information available is generally representative of very large transactions in the interbank market and thus may not reflect relatively smaller transactions (i.e., less than $1 million) where rates may be less favorable. The interbank market in foreign currencies is a global, around-the-clock market. To the extent that the options markets are closed while the markets for the underlying currencies remain open, significant price and rate movements may take place in the underlying markets that are not reflected in the options market.
For additional information about options transactions, see “Options” under “Derivative Investments” in this section of the SAI.
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Foreign Currency Warrants
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Foreign currency warrants such as currency exchange warrants are warrants that entitle the holder to receive from the issuer an amount of cash (generally, for warrants issued in the United States, in U.S. dollars) that is calculated pursuant to a predetermined formula and based on the exchange rate between two specified currencies as of the exercise date of the warrant. Foreign currency warrants generally are exercisable upon their issuance and expire as of a specified date and time.
Foreign currency warrants may be used to reduce the currency exchange risk assumed by purchasers of a security by, for example, providing for a supplemental payment in the event the U.S. dollar depreciates against the value of a major foreign currency such as the Japanese Yen or Euro. The formula used to determine the amount payable upon exercise of a foreign currency warrant may make the
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warrant worthless unless the applicable foreign currency exchange rate moves in a particular direction (e.g., unless the U.S. dollar appreciates or depreciates against the particular foreign currency to which the warrant is linked or indexed).
Foreign currency warrants are severable from the debt obligations with which they may be offered, and may be listed on exchanges. Foreign currency warrants may be exercisable only in certain minimum amounts, and an investor wishing to exercise warrants who possesses less than the minimum number required for exercise may be required either to sell the warrants or to purchase additional warrants, thereby incurring additional transaction costs. Upon exercise of warrants, there may be a delay between the time the holder gives instructions to exercise and the time the exchange rate relating to exercise is determined, thereby affecting both the market and cash settlement values of the warrants being exercised. The expiration date of the warrants may be accelerated if the warrants should be delisted from an exchange or if their trading should be suspended permanently, which would result in the loss of any remaining “time value” of the warrants (i.e., the difference between the current market value and the exercise value of the warrants), and, if the warrants were “out-of-the-money,” in a total loss of the purchase price of the warrants.
Warrants are generally unsecured obligations of their issuers and are not standardized foreign currency options issued by the OCC. Unlike foreign currency options issued by OCC, the terms of foreign exchange warrants generally will not be amended in the event of governmental or regulatory actions affecting exchange rates or in the event of the imposition of other regulatory controls affecting the international currency markets. The initial public offering price of foreign currency warrants could be considerably in excess of the price that a commercial user of foreign currencies might pay in the interbank market for a comparable option involving larger amounts of foreign currencies. Foreign currency warrants are subject to significant foreign exchange risk, including risks arising from complex political or economic factors.
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Performance Indexed Paper
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Performance indexed paper is commercial paper the yield of which is linked to certain currency exchange rate movements. The yield to the investor on performance indexed paper is established at maturity as a function of spot exchange rates between the designated currencies as of or about the time (generally, the index maturity two days prior to maturity). The yield to the investor will be within a range stipulated at the time of purchase of the obligation, generally with a guaranteed minimum rate of return that is below, and a potential maximum rate of return that is above, market yields on commercial paper, with both the minimum and maximum rates of return on the investment corresponding to the minimum and maximum values of the spot exchange rate two business days prior to maturity.
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Principal Exchange Rate Linked Securities (“PERLS”)
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PERLS are debt obligations the principal on which is payable at maturity in an amount that may vary based on the exchange rate between the particular currencies at or about that time. The return on “standard” principal exchange rate linked securities is enhanced if the currency to which the security is linked appreciates against the base currency, and is adversely affected by increases in the exchange value of the base currency. “Reverse” PERLS are like the “standard” securities, except that their return is enhanced by increases in the value of the base currency and adversely impacted by increases in the value of other currency. Interest payments on the securities are generally made at rates that reflect the degree of currency risk assumed or given up by the purchaser of the notes (i.e., at relatively higher interest rates if the purchaser has assumed some of the
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currency exchange risk, or relatively lower interest rates if the issuer has assumed some of the currency exchange risk, based on the expectations of the current market). PERLS may in limited cases be subject to acceleration of maturity (generally, not without the consent of the holders of the securities), which may have an adverse impact on the value of the principal payment to be made at maturity.
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Futures Contracts and Options on Futures Contracts
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Each Fund may use interest rate, foreign currency, dividend, volatility or index futures contracts. An interest rate, foreign currency, dividend, volatility or index futures contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial instrument, foreign currency, dividend basket or the cash value of an index at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Although the value of an index might be a function of the value of certain specified securities, no physical delivery of these securities is made. A public market exists in futures contracts covering several indexes as well as a number of financial instruments and foreign currencies, and it is expected that other futures contracts will be developed and traded in the future. Interest rate and volatility futures contracts currently are traded in the United States primarily on the floors of the Chicago Board of Trade and the International Monetary Market of the Chicago Mercantile Exchange. Interest rate futures also are traded on foreign exchanges such as the London International Financial Futures Exchange and the Singapore International Monetary Exchange. Interest rate futures also are traded on foreign exchanges such as the London International Financial Futures Exchange and the Singapore International Monetary Exchange. Volatility futures also are traded on foreign exchanges such as Eurex. Dividend futures are also traded on foreign exchanges such as Eurex, NYSE Euronext Liffe, London Stock Exchange and the Singapore International Monetary Exchange.
A Fund may purchase and write call and put options on futures. Futures options possess many of the same characteristics as options on securities and indexes discussed above. A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true.
Except as otherwise described in this SAI, the Funds will limit their use of futures contracts and futures options to hedging transactions and in an attempt to increase total return, in accordance with Federal regulations. The costs of, and possible losses incurred from, futures contracts and options thereon may reduce the Fund’s current income and involve a loss of principal. Any incremental return earned by the Fund resulting from these transactions would be expected to offset anticipated losses or a portion thereof.
The Funds will only enter into futures contracts and futures options which are standardized and traded on a U.S. or foreign exchange, board of trade, or similar entity, or quoted on an automated quotation system.
When a purchase or sale of a futures contract is made by a Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government securities (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified
​ ​ Each of EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund will sell index futures only if the amount resulting from the multiplication of the then-current level of the indices upon which its futures contracts which would be outstanding do not exceed one-third of the value of the Fund’s net assets. Also, these Funds may not purchase or sell index futures if, immediately thereafter, the sum of the premiums paid for unexpired options on futures contracts and margin deposits on the Fund’s outstanding futures contracts would exceed 5% of the market value of the Fund’s total assets. Each of EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund is limited to investing no more than 25% of its net assets in index futures and options on index futures. These Funds may not purchase or sell futures contracts or purchase options on futures contracts if, immediately thereafter, more than one-third of the applicable Fund’s net assets would be hedged, or the sum of the amount of margin deposits on the Fund’s existing futures contracts and premiums paid for ​
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during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract which is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Funds expect to earn interest income on their initial margin deposits. A futures contract held by a Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called “variation margin,” equal to the daily change in value of the futures contract. This process is known as “marking to market.” Variation margin does not represent a borrowing or loan by the Fund but is instead a settlement between the Fund and the broker of the amount one would owe the other if the futures contract expired. In computing daily NAV, the Fund will mark to market its open futures positions.
The Funds are also required to deposit and maintain margin with respect to put and call options on futures contracts written by them. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the relevant Fund.
To the extent required to comply with SEC Release No. IC-10666, when entering into a futures contract or an option on a futures contract, a Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the prescribed amount. Generally, for cash-settled futures contracts the prescribed amount is the net amount of the Fund’s obligation, and for non-cash-settled futures contracts the prescribed about is the notional value of the reference obligation.
Futures contracts are designed by boards of trade which are designated “contracts markets” by the CFTC. Futures contracts trade on contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee performance of the contracts. A Fund’s ability to claim an exclusion or exemption from the definition of a commodity pool may be limited when the Fund invests in futures contracts. (See “Commodity Interests” in this SAI.)
The requirements of the Code for qualification as a regulated investment company also may limit the extent to which a Fund may enter into futures, futures options or forward contracts. (See the “Dividends, Distributions and Taxes” section of this SAI.)
Although some futures contracts call for making or taking delivery of the underlying securities, generally these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sales price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. The transaction costs must also be included in these calculations.
Positions in futures contracts and related options may be closed out only on an exchange which provides a secondary market for such contracts or options. The Fund will enter into an option or futures position only if there appears to be a liquid secondary market. However, there can be no assurance that a liquid secondary market will exist for any particular option or futures contract at any specific time. Thus, it may not be possible to close out a futures or related option position. In the case of a futures position, in the event of adverse price movements the Fund would continue to be required to
​ ​ options would exceed 5% of the value of the Fund’s total assets. ​
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make daily margin payments. In this situation, if the Fund has insufficient cash to meet daily margin requirements it may have to sell portfolio securities to meet its margin obligations at a time when it may be disadvantageous to do so. In addition, the Fund may be required to take or make delivery of the securities underlying the futures contracts it holds. The inability to close out futures positions also could have an adverse impact on the Fund’s ability to hedge its portfolio effectively.
There are several risks in connection with the use of futures contracts as a hedging device. While hedging can provide protection against an adverse movement in market prices, it can also limit a hedger’s opportunity to benefit fully from a favorable market movement. In addition, investing in futures contracts and options on futures contracts will cause the Fund to incur additional brokerage commissions and may cause an increase in the Fund’s portfolio turnover rate.
The successful use of futures contracts and related options may also depend on the ability of the relevant Fund’s subadviser to forecast correctly the direction and extent of market movements, interest rates and other market factors within a given time frame. To the extent market prices remain stable during the period a futures contract or option is held by a Fund or such prices move in a direction opposite to that anticipated, the Fund may realize a loss on the transaction which is not offset by an increase in the value of its portfolio securities. Options and futures may also fail as a hedging technique in cases where the movements of the securities underlying the options and futures do not follow the price movements of the hedged portfolio securities. As a result, the Fund’s total return for the period may be less than if it had not engaged in the hedging transaction. The loss from investing in futures transactions is potentially unlimited.
Utilization of futures contracts by a Fund involves the risk of imperfect correlation in movements in the price of futures contracts and movements in the price of the securities which are being hedged. If the price of the futures contract moves more or less than the price of the securities being hedged, the Fund will experience a gain or loss which will not be completely offset by movements in the price of the securities. It is possible that, where a Fund has sold futures contracts to hedge its portfolio against a decline in the market, the market may advance and the value of securities held in the Fund’s portfolio may decline. If this occurred, the Fund would lose money on the futures contract and would also experience a decline in value in its portfolio securities. Where futures are purchased to hedge against a possible increase in the prices of securities before the Fund is able to invest its cash (or cash equivalents) in securities (or options) in an orderly fashion, it is possible that the market may decline; if the Fund then determines not to invest in securities (or options) at that time because of concern as to possible further market decline or for other reasons, the Fund will realize a loss on the futures that would not be offset by a reduction in the price of the securities purchased.
The market prices of futures contracts may be affected if participants in the futures market elect to close out their contracts through off-setting transactions rather than to meet margin deposit requirements. In such case, distortions in the normal relationship between the cash and futures markets could result. Price distortions could also result if investors in futures contracts opt to make or take delivery of the underlying securities rather than to engage in closing transactions because such action would reduce the liquidity of the futures market. In addition, from the point of view of speculators, because the deposit requirements in the futures markets are less onerous than margin requirements in the cash market, increased participation by speculators in the futures market could cause temporary price distortions. Due to the possibility of price distortions in the futures
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market and because of the imperfect correlation between movements in the prices of securities and movements in the prices of futures contracts, a correct forecast of market trends may still not result in a successful hedging transaction.
Compared to the purchase or sale of futures contracts, the purchase of put or call options on futures contracts involves less potential risk for the Fund because the maximum amount at risk is the premium paid for the options plus transaction costs. However, there may be circumstances when the purchase of an option on a futures contract would result in a loss to the Fund while the purchase or sale of the futures contract would not have resulted in a loss, such as when there is no movement in the price of the underlying securities.
For additional information about options transactions, see “Options” under “Derivative Investments” in this section of the SAI.
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Mortgage-Related and Other Asset-Backed Securities
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Each Fund may purchase mortgage-related and other asset-backed securities, which collectively are securities backed by mortgages, installment contracts, credit card receivables or other financial assets. Asset-backed securities represent interests in “pools” of assets in which payments of both interest and principal on the securities are made periodically, thus in effect “passing through” such payments made by the individual borrowers on the assets that underlie the securities, net of any fees paid to the issuer or guarantor of the securities. The average life of asset-backed securities varies with the maturities of the underlying instruments, and the average life of a mortgage-backed instrument, in particular, is likely to be less than the original maturity of the mortgage pools underlying the securities as a result of mortgage prepayments, where applicable. For this and other reasons, an asset-backed security’s stated maturity may be different, and the security’s total return may be difficult to predict precisely.
If an asset-backed security is purchased at a premium, a prepayment rate that is faster than expected will reduce yield to maturity, while a prepayment rate that is slower than expected will have the opposite effect of increasing yield to maturity. Conversely, if an asset-backed security is purchased at a discount, faster than expected prepayments will increase yield to maturity, while slower than expected prepayments will decrease yield to maturity.
Prepayments of principal of mortgage-related securities by mortgagors or mortgage foreclosures affect the average life of the mortgage-related securities in the Fund’s portfolio. Mortgage prepayments are affected by the level of interest rates and other factors, including general economic conditions and the underlying location and age of the mortgage. In periods of rising interest rates, the prepayment rate tends to decrease, lengthening the average life of a pool of mortgage-related securities. The longer the remaining maturity of a security the greater the effect of interest rate changes will be. Changes in the ability of an issuer to make payments of interest and principal and in the market’s perception of its creditworthiness also affect the market value of that issuer’s debt securities.
In periods of falling interest rates, the prepayment rate tends to increase, shortening the average life of a pool. Because prepayments of principal generally occur when interest rates are declining, it is likely that the Fund, to the extent that it retains the same percentage of debt securities, may have to reinvest the proceeds of prepayments at lower interest rates than those of its previous investments. If this occurs, that Fund’s yield will correspondingly decline. Thus, mortgage-related securities may have less potential for capital appreciation in periods of falling interest rates than other fixed income securities of comparable duration, although they may have a comparable risk of decline in market value in periods of rising interest rates. To the extent that the Fund purchases mortgage-related securities at a premium,
​ ​ The Tax-Exempt Bond Fund may not invest in mortgage-backed securities. ​
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unscheduled prepayments, which are made at par, result in a loss equal to any unamortized premium.
Duration is one of the fundamental tools used by a Fund's subadviser in managing interest rate risks including prepayment risks. Traditionally, a debt security’s “term to maturity” characterizes a security’s sensitivity to changes in interest rates. “Term to maturity,” however, measures only the time until a debt security provides its final payment, taking no account of prematurity payments. Most debt securities provide interest (“coupon”) payments in addition to a final (“par”) payment at maturity, and some securities have call provisions allowing the issuer to repay the instrument in full before maturity date, each of which affect the security’s response to interest rate changes. “Duration” therefore is generally considered a more precise measure of interest rate risk than “term to maturity.” Determining duration may involve a subadviser’s estimates of future economic parameters, which may vary from actual future values. Generally, fixed income securities with longer effective durations are more responsive to interest rate fluctuations than those with shorter effective durations. For example, if interest rates rise by 1%, the value of securities having an effective duration of three years will generally decrease by approximately 3%.
Descriptions of some of the different types of mortgage-related and other asset-backed securities most commonly acquired by the Funds are provided below. In addition to those shown, other types of mortgage-related and asset-backed investments are, or may become, available for investment by the Funds.
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Collateralized Mortgage Obligations (“CMOs”)
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CMOs are hybrid instruments with characteristics of both mortgage-backed and mortgage pass-through securities. Interest and prepaid principal on a CMO are paid, in most cases, monthly. CMOs may be collateralized by whole mortgage loans but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA, and their income streams.
CMOs are typically structured in multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes typically receive principal only after the first class has been retired. An investor may be partially guarded against a sooner than desired return of principal because of the sequential payments.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates and are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. The amount of principal payable on each monthly payment date is determined in accordance with FHLMC’s mandatory sinking fund schedule. Sinking fund payments in the CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payments of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC’s minimum sinking fund obligation for any payment date are paid to the holders of the CMOs as additional sinking-fund payments. Because of the “pass-through” nature of all principal payments received on the collateral pool in excess of FHLMC’s minimum sinking fund requirement, the rate at which principal of the CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its
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scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC’s minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
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CMO Residuals
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CMO residuals are derivative mortgage securities issued by agencies or instrumentalities of the U.S. Government or by private originators of, or investors in, mortgage loans. As described above, the cash flow generated by the mortgage assets underlying a series of CMOs is applied first to make required payments of principal and interest on the CMOs and second to pay the related administrative expenses of the issuer. The “residual” in a CMO structure generally represents the interest in any excess cash flow remaining after making the foregoing payments. Each payment of such excess cash flow to a holder of the related CMO residual represents income and/or a return of capital. The amount of residual cash flow resulting from a CMO will depend on, among other things, the characteristics of the mortgage assets, the coupon rate of each class of CMO, prevailing interest rates, the amount of administrative expenses and, in particular, the prepayment experience on the mortgage assets. In addition, if a series of a CMO includes a class that bears interest at an adjustable rate, the yield to maturity on the related CMO residual will also be extremely sensitive to changes in the level of the index upon which interest rate adjustments are based. In certain circumstances a Fund may fail to recoup fully its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers. The CMO residual market currently may not have the liquidity of other more established securities trading in other markets. CMO residuals may be subject to certain restrictions on transferability, may be deemed illiquid and therefore subject to the Funds’ limitations on investment in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.)
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Mortgage Pass-through Securities
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Mortgage pass-through securities are interests in pools of mortgage loans, assembled and issued by various governmental, government-related, and private organizations. Unlike other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates, these securities provide a monthly payment consisting of both interest and principal payments. In effect, these payments are a “pass-through” of the monthly payments made by the individual borrowers on their residential or commercial mortgage loans, net of any fees paid to the issuer or guarantor of such securities. Additional payments are caused by repayments of principal resulting from the sale of the underlying property, refinancing or foreclosure, net of fees or costs. “Modified pass-through” securities (such as securities issued by GNMA) entitle the holder to receive all interest and principal payments owed on the mortgage pool, net of certain fees, at the scheduled payment dates regardless of whether or not the mortgagor actually makes the payment.
The principal governmental guarantor of U.S. mortgage-related securities is GNMA. GNMA is authorized to guarantee, with the full faith and credit of the United States Government, the timely payment of principal and interest on securities issued by institutions approved by GNMA (such as savings and loan institutions, commercial banks and mortgage bankers) and backed by pools of Federal Housing Administration insured or Veterans Administration guaranteed mortgages. Government-related guarantors whose obligations are not backed by the full faith and credit of the United States Government include FNMA and FHLMC. FNMA purchases conventional (i.e., not
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insured or guaranteed by any government agency) residential mortgages from a list of approved seller/servicers which include state and federally chartered savings and loan associations, mutual savings banks, commercial banks and credit unions and mortgage bankers. FHLMC issues Participation Certificates that represent interests in conventional mortgages from FHLMC’s national portfolio. FNMA and FHLMC guarantee the timely payment of interest and ultimate collection of principal on securities they issue, but the securities they issue are neither issued nor guaranteed by the United States Government.
Commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers also create pass-through pools of conventional residential mortgage loans. Such issuers may, in addition, be the originators and/ or servicers of the underlying mortgage loans as well as the guarantors of the mortgage-related securities. Pools created by such non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government or agency guarantees of payments for such securities. However, timely payment of interest and principal of these pools may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. Such insurance and guarantees and the creditworthiness of the issuers thereof will be considered in determining whether a mortgage-related security meets a Fund’s investment quality standards. There can be no assurance that the private insurers or guarantors can meet their obligations under the insurance policies or guarantee arrangements. A Fund may buy mortgage-related securities without insurance or guarantees if, through an examination of the loan experience and practices of the originator/servicers and poolers, the Fund’s subadviser determines that the securities meet the Fund’s quality standards. Securities issued by certain private organizations may not be readily marketable and may therefore be subject to the Funds’ limitations on investments in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.)
Mortgage-backed securities that are issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are not subject to the Funds’ industry concentration restrictions set forth in the “Investment Restrictions” section of this SAI by virtue of the exclusion from the test available to all U.S. Government securities. The Funds will take the position that privately-issued, mortgage-related securities, and other asset-backed securities, do not represent interests in any particular “industry” or group of industries. The assets underlying such securities may be represented by a portfolio of first lien residential mortgages (including both whole mortgage loans and mortgage participation interests) or portfolios of mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC. Mortgage loans underlying a mortgage-related security may in turn be insured or guaranteed by the Federal Housing Administration or the Department of Veterans Affairs. In the case of private issue mortgage-related securities whose underlying assets are neither U.S. Government securities nor U.S. Government-insured mortgages, to the extent that real properties securing such assets may be located in the same geographical region, the security may be subject to a greater risk of default than other comparable securities in the event of adverse economic, political or business developments that may affect such region and, ultimately, the ability of residential homeowners to make payments of principal and interest on the underlying mortgages.
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It is possible that the availability and the marketability (that is, liquidity) of the securities discussed in this section could be adversely affected by the actions of the U.S. Government to tighten the availability of its credit. On September 7, 2008, the FHFA, an agency of the U.S. Government, placed FNMA and FHLMC into conservatorship, a statutory process with the objective of returning the entities to normal business operations. FHFA will act as the conservator to operate FNMA and FHLMC until they are stabilized. The conservatorship is still in effect as of the date of this SAI and has no specified termination date. There can be no assurance as to when or how the conservatorship will be terminated or whether FNMA or FHLMC will continue to exist following the conservatorship or what their respective business structures will be during or following the conservatorship. FHFA, as conservator, has the power to repudiate any contract entered into by FNMA or FHLMC prior to its appointment if it determines that performance of the contract is burdensome and repudiation of the contract promotes the orderly administration of FNMA’s or FHLMC’s affairs. Furthermore, FHFA has the right to transfer or sell any asset or liability of FNMA or FHLMC without any approval, assignment or consent. If FHFA were to transfer any such guarantee obligation to another party, holders of FNMA or FHLMC mortgage-backed securities would have to rely on that party for satisfaction of the guarantee obligation and would be exposed to the credit risk of that party.
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Other Asset-Backed Securities
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Through trusts and other special purpose entities, various types of securities based on financial assets other than mortgage loans are increasingly available, in both pass-through structures similar to mortgage pass-through securities described above and in other structures more like CMOs. As with mortgage-related securities, these asset-backed securities are often backed by a pool of financial assets representing the obligations of a number of different parties. They often include credit-enhancement features similar to mortgage-related securities.
Financial assets on which these securities are based include automobile receivables; credit card receivables; loans to finance boats, recreational vehicles, and mobile homes; computer, copier, railcar, and medical equipment leases; and trade, healthcare, and franchise receivables. In general, the obligations supporting these asset-backed securities are of shorter maturities than mortgage loans and are less likely to experience substantial prepayments. However, obligations such as credit card receivables are generally unsecured and the obligors are often entitled to protection under a number of consumer credit laws granting, among other things, rights to set off certain amounts owed on the credit cards, thus reducing the balance due. Other obligations that are secured, such as automobile receivables, may present issuers with difficulties in perfecting and executing on the security interests, particularly where the issuer allows the servicers of the receivables to retain possession of the underlying obligations, thus increasing the risk that recoveries on defaulted obligations may not be adequate to support payments on the securities.
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Stripped Mortgage-backed Securities (“SMBS”)
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SMBS are derivative multi-class mortgage securities. They may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will
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receive all of the interest (the interest-only or “IO” class), while the other class will receive all of the principal (the principal-only or “PO” class). The yield to maturity on an IO class security is extremely sensitive to the rate of principal payments (including prepayments) on the related underlying mortgage assets, and a rapid rate of principal payments may have a material adverse effect on a Fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to recoup fully its initial investment in these securities even if the security is in one of the highest rating categories. The market value of the PO class generally is unusually volatile in response to changes in interest rates.
Although SMBS are purchased and sold by institutional investors through several investment banking firms acting as brokers or dealers, these securities were only recently developed. As a result, established trading markets have not yet developed and, accordingly, these securities may be deemed illiquid and therefore subject to the Funds’ limitations on investment in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.)
Each Fund may invest in other mortgage-related securities with features similar to those described above, to the extent consistent with the relevant Fund’s investment objectives and policies.
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Options
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Each Fund may purchase or sell put and call options on securities, indices and other financial instruments. Options may relate to particular securities, foreign and domestic securities indices, financial instruments, volatility, credit default, foreign currencies or the yield differential between two securities. Such options may or may not be listed on a domestic or foreign securities exchange and may or may not be issued by the OCC.
A call option for a particular security gives the purchaser of the option the right to buy, and a writer the obligation to sell, the underlying security at the stated exercise price before the expiration of the option, regardless of the market price of the security. A premium is paid to the writer by the purchaser in consideration for undertaking the obligation under the option contract. A put option for a particular security gives the purchaser the right to sell and a writer the obligation to buy the security at the stated exercise price before the expiration date of the option, regardless of the market price of the security.
To the extent required to comply with SEC Release No. IC-10666, options written by a Fund will be covered and will remain covered as long as the Fund is obligated as a writer. A call option is “covered” if the Fund owns the underlying security or its equivalent covered by the call or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional cash consideration if such cash is segregated) upon conversion or exchange of other securities held in its portfolio. A call option is also covered if the Fund holds on a share-for-share or equal principal amount basis a call on the same security as the call written where the exercise price of the call held is equal to or less than the exercise price of the call written or greater than the exercise price of the call written if appropriate liquid assets representing the difference are segregated by the Fund. A put option is “covered” if the Fund maintains appropriate liquid securities with a value equal to the exercise price, or owns on a share-for-share or equal principal amount basis a put on the same security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written.
A Fund’s obligation to sell an instrument subject to a covered call option written by it, or to purchase an instrument subject to a secured put option written by it, may be terminated before the expiration of the
​ ​ Options written by the Low Volatility Fund will not be required to be covered as described herein, except to the extent required to comply with SEC Release No. IC-10666. ​
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option by the Fund’s execution of a closing purchase transaction. This means that a Fund buys an option of the same series (i.e., same underlying instrument, exercise price and expiration date) as the option previously written. Such a purchase does not result in the ownership of an option. A closing purchase transaction will ordinarily be effected to realize a profit on an outstanding option, to prevent an underlying instrument from being called, to permit the sale of the underlying instrument or to permit the writing of a new option containing different terms on such underlying instrument. The cost of such a closing purchase plus related transaction costs may be greater than the premium received upon the original option, in which event the Fund will experience a loss. There is no assurance that a liquid secondary market will exist for any particular option. A Fund that has written an option and is unable to effect a closing purchase transaction will not be able to sell the underlying instrument (in the case of a covered call option) or liquidate the segregated assets (in the case of a secured put option) until the option expires or the optioned instrument is delivered upon exercise. The Fund will be subject to the risk of market decline or appreciation in the instrument during such period.
To the extent required to comply with SEC Release No. IC-10666, when entering into an option transaction, a Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily equal to the prescribed amount. For options transactions, the prescribed amount will generally be the market value of the underlying instrument but will not be less than the exercise price.
Options purchased are recorded as an asset and written options are recorded as liabilities to the extent of premiums paid or received. The amount of this asset or liability will be subsequently marked-to-market to reflect the current value of the option purchased or written. The current value of the traded option is the last sale price or, in the absence of a sale, the current bid price. If an option purchased by a Fund expires unexercised, the Fund will realize a loss equal to the premium paid. If a Fund enters into a closing sale transaction on an option purchased by it, the Fund will realize a gain if the premium received by the Fund on the closing transaction is more than the premium paid to purchase the option, or a loss if it is less. If an option written by a Fund expires on the stipulated expiration date or if a Fund enters into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing purchase transaction exceeds the net premium received when the option is sold), and the liability related to such option will be eliminated. If an option written by a Fund is exercised, the proceeds of the sale will be increased by the net premium originally received and the Fund will realize a gain or loss.
Options trading is a highly specialized activity that entails more complex and potentially greater than ordinary investment risk. Options may be more volatile than the underlying instruments and, therefore, on a percentage basis, an investment in options may be subject to greater fluctuation than an investment in the underlying instruments themselves.
There are several other risks associated with options. For example, there are significant differences among the securities, currency, volatility, credit default and options markets that could result in an imperfect correlation among these markets, causing a given transaction not to achieve its objectives. In addition, a liquid secondary market for particular options, whether traded over-the-counter or on an exchange, may be absent for reasons that include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by an exchange on opening
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transactions or closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities or currencies; unusual or unforeseen circumstances may interrupt normal operations on an exchange; the facilities of an exchange or the OCC may not at all times be adequate to handle current trading value; or one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by the OCC as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
The staff of the SEC currently takes the position that options not traded on registered domestic securities exchanges and the assets used to cover the amount of the Fund’s obligation pursuant to such options are illiquid, and are therefore subject to each Fund’s limitation on investments in illiquid securities. However, for options written with “primary dealers” in U.S. Government securities pursuant to an agreement requiring a closing transaction at the formula price, the amount considered to be illiquid may be calculated by reference to a formula price. (See “Illiquid and Restricted Securities” in this section of the SAI.)
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Options on Indexes and “Yield Curve” Options
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Each Fund may enter into options on indexes or options on the “spread,” or yield differential, between two fixed income securities, in transactions referred to as “yield curve” options. Options on indexes and yield curve options provide the holder with the right to make or receive a cash settlement upon exercise of the option. With respect to options on indexes, the amount of the settlement will equal the difference between the closing price of the index at the time of exercise and the exercise price of the option expressed in dollars, times a specified multiple. With respect to yield curve options, the amount of the settlement will equal the difference between the yields of designated securities.
With respect to yield curve options, a call or put option is covered if a Fund holds another call or put, respectively, on the spread between the same two securities and maintains in a segregated account liquid assets sufficient to cover the Fund’s net liability under the two options. Therefore, the Fund’s liability for such a covered option is generally limited to the difference between the amount of the Fund’s liability under the option it wrote less the value of the option it holds. A Fund may also cover yield curve options in such other manner as may be in accordance with the requirements of the counterparty with which the option is traded and applicable laws and regulations.
The trading of these types of options is subject to all of the risks associated with the trading of other types of options. In addition, however, yield curve options present risk of loss even if the yield of one of the underlying securities remains constant, if the spread moves in a direction or to an extent which was not anticipated.
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Reset Options
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In certain instances, a Fund may purchase or write options on U.S. Treasury securities, which provide for periodic adjustment of the strike price and may also provide for the periodic adjustment of the premium during the term of each such option. Like other types of options, these transactions, which may be referred to as “reset” options or “adjustable strike” options grant the purchaser the right to purchase (in the case of a call) or sell (in the case of a put), a specified type of U.S. Treasury security at any time up to a stated expiration date (or, in certain instances, on such date). In contrast to other types of options, however, the price at which the underlying security may be purchased
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or sold under a “reset” option is determined at various intervals during the term of the option, and such price fluctuates from interval to interval based on changes in the market value of the underlying security. As a result, the strike price of a “reset” option, at the time of exercise, may be less advantageous than if the strike price had been fixed at the initiation of the option. In addition, the premium paid for the purchase of the option may be determined at the termination, rather than the initiation, of the option. If the premium for a reset option written by a Fund is paid at termination, the Fund assumes the risk that (i) the premium may be less than the premium which would otherwise have been received at the initiation of the option because of such factors as the volatility in yield of the underlying Treasury security over the term of the option and adjustments made to the strike price of the option, and (ii) the option purchaser may default on its obligation to pay the premium at the termination of the option. Conversely, where a Fund purchases a reset option, it could be required to pay a higher premium than would have been the case at the initiation of the option.
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Swaptions
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A Fund may enter into swaption contracts, which give the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date. Over-the-counter swaptions, although providing greater flexibility, may involve greater credit risk than exchange-traded options as they are not backed by the clearing organization of the exchanges where they are traded, and as such, there is a risk that the seller will not settle as agreed. A Fund’s financial liability associated with swaptions is linked to the marked-to-market value of the notional underlying investments. Purchased swaption contracts are exposed to a maximum loss equal to the price paid for the option/swaption (the premium) and no further liability. Written swaptions, however, give the right of potential exercise to a third party, and the maximum loss to the Fund in the case of an uncovered swaption is unlimited.
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Swap Agreements
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Each Fund may enter into swap agreements on, among other things, interest rates, indices, securities and currency exchange rates. A Fund’s subadviser may use swaps in an attempt to obtain for the Fund a particular desired return at a lower cost to the Fund than if the Fund had invested directly in an instrument that yielded that desired return. Swap agreements are two-party contracts entered into primarily by institutional investors for periods typically ranging from a few weeks to more than one year. In a standard “swap” transaction, two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a “notional amount,” i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate, in a particular foreign currency, or in a “basket” of securities representing a particular index. The “notional amount” of the swap agreement is only a fictive basis on which to calculate the obligations the parties to a swap agreement have agreed to exchange. A Fund’s obligations (or rights) under a swap agreement will generally be equal only to the amount to be paid or received under the agreement based on the relative values of the positions held by each party to the agreement (the “net amount”). A Fund’s obligations under a swap agreement will be accrued daily on the Fund’s accounting records (offset against any amounts owing to the Fund) and any accrued but unpaid net amounts owed to a swap counterparty will be covered by specifically designating on the accounting records of the Fund liquid assets to avoid leveraging of the Fund’s portfolio.
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Because swap agreements are two-party contracts and may have terms of greater than seven days, they may be considered to be illiquid and therefore subject to the Funds’ limitations on investment in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.) Moreover, the Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. A Fund’s subadviser will cause the Fund to enter into swap agreements only with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Funds’ repurchase agreement guidelines. (See “Repurchase Agreements” in this section of the SAI.) Certain restrictions imposed on the Funds by the Code may limit the Funds’ ability to use swap agreements. (See the “Dividends, Distributions and Taxes” section of this SAI.) The swaps market is a relatively new market and is largely unregulated. It is possible that developments in the swaps market, including potential government regulation, could adversely affect a Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.
Certain swap agreements are exempt from most provisions of the CEA and, therefore, are not regulated as futures or commodity option transactions under the CEA, pursuant to regulations of the CFTC. To qualify for this exemption, a swap agreement must be entered into by eligible participants and must meet certain conditions (each pursuant to the CEA and regulations of the CFTC). However, recent CFTC rule amendments dictate that certain swap agreements be considered commodity interests for purposes of the CEA. (See “Commodity Interests” in this section of the SAI for additional information regarding the implications of investments being considered commodity interests under the CEA.)
Recently, the SEC and the CFTC have developed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act to create a new, comprehensive regulatory framework for swap transactions. Under the new regulations, certain swap transactions will be required to be executed on a regulated trading platform and cleared through a derivatives clearing organization. Additionally, the new regulations impose other requirements on the parties entering into swap transactions, including requirements relating to posting margin, and reporting and documenting swap transactions. A Fund engaging in swap transactions may incur additional expenses as a result of these new regulatory requirements. The Adviser is continuing to monitor the implementation of the new regulations and to assess their impact on the Funds.
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Credit Default Swap Agreements
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Each Fund may enter into credit default swap agreements. A credit default swap is a bilateral financial contract in which one party (the protection buyer) pays a periodic fee in return for a contingent payment by the protection seller following a credit event of a reference issuer. The protection buyer must either sell particular obligations issued by the reference issuer for its par value (or some other designated reference or strike price) when a credit event occurs or receive a cash settlement based on the difference between the market price and such reference price. A credit event is commonly defined as bankruptcy, insolvency, receivership, material adverse restructuring of debt, or failure to meet payment obligations when due. A Fund may be either the buyer or seller in the transaction. If a Fund is a buyer and no event of default occurs, the Fund loses its investment and recovers nothing; however, if an event of default occurs, the Fund receives full notional value for a reference obligation that may have little or no value. As a seller, a Fund receives a periodic fee throughout the term of the contract, provided there is no default event; if an event of default occurs, the Fund must pay the buyer the full notional value of the
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reference obligation. The value of the reference obligation received by the Fund as a seller, coupled with the periodic payments previously received, may be less than the full notional value the Fund pays to the buyer, resulting in a loss of value to the Fund.
As with other swaps, when a Fund enters into a credit default swap agreement, to the extent required by applicable law and regulation the Fund will specifically designate on its accounting records any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily, equal to the Fund’s net exposure under the swap (the “Segregated Assets”). Generally, the minimum cover amount for a swap agreement is the amount owed by the Fund, if any, on a daily mark-to-market basis. With respect to swap contracts that provide for the netting of payments, the net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each swap contract will be accrued on a daily basis and an amount of Segregated Assets having an aggregate market value at least equal to the accrued excess will be maintained to cover the transactions in accordance with SEC positions. With respect to swap contracts that do not provide for the netting of payments by the counterparties, the full notional amount for which the Fund is obligated under the swap contract with respect to each swap contract will be accrued on a daily basis and an amount of Segregated Assets having an aggregate market value at least equal to the accrued full notional value will be maintained to cover the transactions in accordance with SEC positions. When the Fund sells protection on an individual credit default swap, upon a credit event, the Fund may be obligated to pay the cash equivalent value of the asset. Therefore, the cover amount will be the notional value of the underlying credit. With regard to selling protection on an index (CDX), as a practical matter, the Fund would not be required to pay the full notional amount of the index; therefore, only the amount owed by the Fund, if any, on a daily mark-to-market basis is required as cover.
Credit default swaps involve greater risks than if the Fund had invested in the reference obligation directly. In addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risks. A Fund will enter into swap agreements only with counterparties deemed creditworthy by the Fund’s subadviser.
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Dividend Swap Agreements
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A dividend swap agreement is a financial instrument where two parties contract to exchange a set of future cash flows at set dates in the future. One party agrees to pay the other the future dividend flow on a stock or basket of stocks in an index, in return for which the other party gives the first call options. Dividend swaps generally are traded over the counter rather than on an exchange.
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Inflation Swap Agreements
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Inflation swap agreements are contracts in which one party agrees to pay the cumulative percentage increase in a price index (e.g., the Consumer Price Index with respect to CPI swaps) over the term of the swap (with some lag on the inflation index), while the other pays a compounded fixed rate. Inflation swap agreements may be used by a Fund to hedge the inflation risk associated with non-inflation indexed investments, thereby creating “synthetic” inflation-indexed investments. One factor that may lead to changes in the values of inflation swap agreements is a change in real interest rates, which are tied to the relationship between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than inflation, real interest rates may rise, which may lead to a decrease in value of an inflation swap agreement.
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Total Return Swap Agreements
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“Total return swap” is the generic name for any non-traditional swap where one party agrees to pay the other the “total return” of a defined underlying asset, usually in return for receiving a stream of cash flows based upon an agreed rate. A total return swap may be applied to any underlying asset but is most commonly used with equity indices, single stocks, bonds and defined portfolios of loans and mortgages. A total return swap is a mechanism for the user to accept the economic benefits of asset ownership without utilizing the balance sheet. The other leg of the swap, which is often LIBOR, is spread to reflect the non-balance sheet nature of the product. Total return swaps can be designed with any underlying asset agreed between the two parties. No notional amounts are exchanged with total return swaps.
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Variance and Correlation Swap Agreements
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Variance swap agreements are contracts in which two parties agree to exchange cash payments based on the difference between the stated level of variance and the actual variance realized on an underlying asset or index. “Actual variance” as used here is defined as the sum of the square of the returns on the reference asset or index (which in effect is a measure of its “volatility”) over the length of the contract term. In other words, the parties to a variance swap can be said to exchange actual volatility for a contractually stated rate of volatility. Correlation swap agreements are contracts in which two parties agree to exchange cash payments based on the differences between the stated and the actual correlation realized on the underlying equity securities within a given equity index. “Correlation” as used here is defined as the weighted average of the correlations between the daily returns of each pair of securities within a given equity index. If two assets are said to be closely correlated, it means that their daily returns vary in similar proportions or along similar trajectories. A Fund may enter into variance or correlation swaps in an attempt to hedge equity market risk or adjust exposure to the equity markets.
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Equity Securities
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The Funds may invest in equity securities. Equity securities include common stocks, preferred stocks and preference stocks; securities such as bonds, warrants or rights that are convertible into stocks; and depositary receipts for those securities.
Common stockholders are the owners of the company issuing the stock and, accordingly, usually have the right to vote on various corporate governance matters such as mergers. They are not creditors of the company, but rather, in the event of liquidation of the company, would be entitled to their pro rata shares of the company’s assets after creditors (including fixed income security holders) and, if applicable, preferred stockholders are paid. Preferred stock is a class of stock having a preference over common stock as to dividends or upon liquidation. A preferred stockholder is a shareholder in the company and not a creditor of the company as is a holder of the company’s fixed income securities. Dividends paid to common and preferred stockholders are distributions of the earnings or other surplus of the company and not interest payments, which are expenses of the company. Equity securities owned by the Fund may be traded in the over-the-counter market or on a securities exchange and may not be traded every day or in the volume typical of securities traded on a major U.S. national securities exchange. As a result, disposition by the Fund of a portfolio security to meet redemptions by shareholders or otherwise may require the Fund to sell the security at less than the reported value of the security, to sell during periods when disposition is not desirable, or to make many small sales over a lengthy period of time. The market value of all securities, including equity securities, is based upon the market’s perception of value and not necessarily the book value of an issuer or other objective measure of a company’s worth.
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Stock values may fluctuate in response to the activities of an individual company or in response to general market and/or economic conditions. Historically, common stocks have provided greater long-term returns and have entailed greater short-term risks than other types of securities. Smaller or newer issuers may be more likely to realize more substantial growth or suffer more significant losses. Investments in these companies can be both more volatile and more speculative. Fluctuations in the value of equity securities in which a Fund invests will cause the NAV of the Fund to fluctuate.
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Securities of Small and Mid Capitalization Companies
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While small and medium-sized issuers in which a Fund invests may offer greater opportunities for capital appreciation than larger market capitalization issuers, investments in such companies may involve greater risks and thus may be considered speculative. For example, smaller companies may have limited product lines, markets or financial resources, or they may be dependent on a limited management group. In addition, many small and mid-capitalization company stocks trade less frequently and in smaller volume, and may be subject to more abrupt or erratic price movements, than stocks of larger companies. The securities of small and mid-capitalization companies may also be more sensitive to market changes than the securities of larger companies. When a Fund invests in small or mid-capitalization companies, these factors may result in above-average fluctuations in the NAV of the Fund’s shares. Therefore, a Fund investing in such securities should be considered as a long-term investment and not as a vehicle for seeking short-term profits. Similarly, an investment in a Fund solely investing in such securities should not be considered a complete investment program.
Market capitalizations of companies in which the Funds invest are determined at the time of purchase.
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Unseasoned Companies
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As a matter of operating policy, each Fund may invest to a limited extent in securities of unseasoned companies and new issues. The Adviser regards a company as unseasoned when, for example, it is relatively new to, or not yet well established in, its primary line of business. Such companies generally are smaller and younger than companies whose shares are traded on the major stock exchanges. Accordingly, their shares are often traded over-the-counter and their share prices may be more volatile than those of larger, exchange-listed companies. Generally a Fund will not invest more than 5% of its total assets in securities of any one company with a record of fewer than three years’ continuous operation (including that of predecessors).
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Foreign Investing
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The Funds may invest in a broad range of securities of foreign issuers, including equity, debt and convertible securities and foreign government securities. The Funds may purchase the securities of issuers from various countries, including countries commonly referred to as “emerging markets.” The Funds may also invest in domestic securities denominated in foreign currencies.
Investing in the securities of foreign companies involves special risks and considerations not typically associated with investing in U.S. companies. These include differences in accounting, auditing and financial reporting standards, generally higher commission rates on foreign portfolio transactions, the possibility of expropriation or confiscatory taxation, adverse changes in investment or exchange control regulations, political instability which could affect U.S. investments in foreign countries, and potential restrictions on the flow of international capital. Foreign issuers may become subject to sanctions imposed by the United States or another country, which could result in the immediate freeze of the foreign issuers’ assets or securities. The imposition of such sanctions could impair the market
​ ​ The Emerging Markets Opportunities Fund may invest up to 10% of its total assets in dollar-denominated foreign equity and debt securities. The Low Duration Income Fund (with respect to 20% of its total assets) may invest in non-convertible and convertible debt of foreign banks, foreign corporations and foreign governments which obligations are denominated in and ​
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value of the securities of such foreign issuers and limit a Fund’s ability to buy, sell, receive or deliver the securities. Additionally, dividends payable on foreign securities may be subject to foreign taxes withheld prior to distribution. Foreign securities often trade with less frequency and volume than domestic securities and therefore may exhibit greater price volatility. Changes in foreign exchange rates will affect the value of those securities which are denominated or quoted in currencies other than the U.S. dollar. Many of the foreign securities held by a Fund will not be registered with, nor will the issuers thereof be subject to the reporting requirements of, the SEC. Accordingly, there may be less publicly available information about the securities and about the foreign company or government issuing them than is available about a domestic company or government entity. Moreover, individual foreign economies may differ favorably or unfavorably from the United States economy in such respects as growth of Gross National Product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payment positions. Finally, the Funds may encounter difficulty in obtaining and enforcing judgments against issuers of foreign securities.
Securities of U.S. issuers denominated in foreign currencies may be less liquid and their prices more volatile than securities issued by domestic issuers and denominated in U.S. dollars. In addition, investing in securities denominated in foreign currencies often entails costs not associated with investment in U.S. dollar-denominated securities of U.S. issuers, such as the cost of converting foreign currency to U.S. dollars, higher brokerage commissions, custodial expenses and other fees. Non-U.S. dollar denominated securities may be subject to certain withholding and other taxes of the relevant jurisdiction, which may reduce the yield on the securities to the Funds and which may not be recoverable by the Funds or their investors.
The Trust may use an eligible foreign custodian in connection with its purchases of foreign securities and may maintain cash and cash equivalents in the care of a foreign custodian. The amount of cash or cash equivalents maintained in the care of eligible foreign custodians will be limited to an amount reasonably necessary to effect the Trust’s foreign securities transactions. The use of a foreign custodian invokes considerations which are not ordinarily associated with domestic custodians. These considerations include the possibility of expropriations, restricted access to books and records of the foreign custodian, inability to recover assets that are lost while under the control of the foreign custodian, and the impact of political, social or diplomatic developments.
Settlement procedures relating to the Funds’ investments in foreign securities and to the Funds’ foreign currency exchange transactions may be more complex than settlements with respect to investments in debt or equity securities of U.S. issuers, and may involve certain risks not present in the Funds’ domestic investments. For example, settlement of transactions involving foreign securities or foreign currency may occur within a foreign country, and a Fund may be required to accept or make delivery of the underlying securities or currency in conformity with any applicable U.S. or foreign restrictions or regulations, and may be required to pay any fees, taxes or charges associated with such delivery. Such investments may also involve the risk that an entity involved in the settlement may not meet its obligations. Settlement procedures in many foreign countries are less established than those in the United States, and some foreign country settlement periods can be significantly longer than those in the United States.
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Depositary Receipts
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Each Fund permitted to hold foreign securities may also hold ADRs, ADSs, GDRs and EDRs. ADRs and ADSs typically are issued by an American bank or trust company and evidence ownership of
​ ​ The Tax-Exempt Bond Fund may not invest in Depositary Receipts. ​
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underlying securities issued by a foreign corporation. EDRs, which are sometimes referred to as CDRs, are issued in Europe typically by foreign banks and trust companies and evidence ownership of either foreign or domestic securities. GDRs are similar to EDRs and are designed for use in several international financial markets. Generally, ADRs and ADSs in registered form are designed for use in United States securities markets and EDRs in bearer form are designed for use in European securities markets. For purposes of a Fund’s investment policies, its investments in ADRs, ADSs, GDRs and EDRs will be deemed to be investments in the underlying foreign securities.
Depositary Receipts may be issued pursuant to sponsored or unsponsored programs. In sponsored programs, an issuer has made arrangements to have its securities traded in the form of Depositary Receipts. In unsponsored programs, the issuer may not be directly involved in the creation of the program. Although regulatory requirements with respect to sponsored and unsponsored programs are generally similar, in some cases it may be easier to obtain financial information from an issuer that has participated in the creation of a sponsored program. Accordingly, there may be less information available regarding issuers of securities underlying unsponsored programs and there may not be a correlation between such information and the market value of the Depositary Receipts. For purposes of the Fund’s investment policies, investments in Depositary Receipts will be deemed to be investments in the underlying securities. Thus, a Depositary Receipt representing ownership of common stock will be treated as common stock.
Depositary Receipts are generally subject to the same sort of risks as direct investments in a foreign country, such as currency risk, political and economic risk, and market risk, because their values generally depend on the performance of a foreign security denominated in its home currency. (The risks of foreign investing are addressed above in this section of the SAI under the heading “Foreign Investing.”) In addition to risks associated with the underlying portfolio of securities, receipt holders also must consider credit standings of the custodians and broker/dealer sponsors. The receipts are not registered with the SEC and qualify as Rule 144A securities which may make them more difficult and costly to sell. (For information about Rule 144A securities, see “Illiquid and Restricted Securities” in this section of the SAI.)
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Emerging Market Securities
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The Funds may invest in countries or regions with relatively low gross national product per capita compared to the world’s major economies, and in countries or regions with the potential for rapid economic growth (emerging markets). Emerging markets will include any country: (i) having an “emerging stock market” as defined by the International Finance Corporation; (ii) with low-to-middle-income economies according to the World Bank; (iii) listed in World Bank publications as developing; or (iv) determined by the adviser to be an emerging market as defined above.
Certain emerging market countries are either comparatively underdeveloped or are in the process of becoming developed and may consequently be economically dependent on a relatively few or closely interdependent industries. A high proportion of the securities of many emerging market issuers may also be held by a limited number of large investors trading significant blocks of securities. While a Fund’s subadviser will strive to be sensitive to publicized reversals of economic conditions, political unrest and adverse changes in trading status, unanticipated political and social developments may affect the values of the Fund’s investments in such countries and the availability of additional investments in such countries.
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The risks of investing in foreign securities may be intensified in the case of investments in emerging markets. Securities of many issuers in emerging markets may be less liquid and more volatile than securities of comparable domestic issuers. Emerging markets also have different clearance and settlement procedures, and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. Delays in settlement could result in temporary periods when a portion of the assets of a Fund is uninvested and no return is earned thereon. The inability of a Fund to make intended security purchases due to settlement problems could cause the Fund to miss attractive investment opportunities. Inability to dispose of portfolio securities due to settlement problems could result either in losses to the Fund due to subsequent declines in value of portfolio securities or, if a Fund has entered into a contract to sell the security, in possible liability to the purchaser. Securities prices in emerging markets can be significantly more volatile than in the more developed nations of the world, reflecting the greater uncertainties of investing in less established markets and economies. In particular, countries with emerging markets may have relatively unstable governments, present the risk of nationalization of businesses, restrictions on foreign ownership, or prohibitions of repatriation of assets, and may have less protection of property rights than more developed countries.
Certain emerging markets may require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, a country could impose temporary restrictions on foreign capital remittances, whether because deterioration occurs in an emerging market’s balance of payments or for other reasons. The Funds could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Funds of any restrictions on investments.
Investments in certain foreign emerging market debt obligations may be restricted or controlled to varying degrees. These restrictions or controls may at times preclude investment in certain foreign emerging market debt obligations and increase the expenses of the Funds.
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Foreign Currency Transactions
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When investing in securities denominated in foreign currencies, the Funds will be subject to the additional risk of currency fluctuations. An adverse change in the value of a particular foreign currency as against the U.S. dollar, to the extent that such change is not offset by a gain in other foreign currencies, will result in a decrease in the Fund’s assets. Any such change may also have the effect of decreasing or limiting the income available for distribution. Foreign currencies may be affected by revaluation, adverse political and economic developments, and governmental restrictions. Further, no assurance can be given that currency exchange controls will not be imposed on any particular currency at a later date.
As a result of its investments in foreign securities, a Fund may receive interest or dividend payments, or the proceeds of the sale or redemption of such securities, in the foreign currencies in which such securities are denominated. In that event, the Fund may convert such currencies into dollars at the then current exchange rate. Under certain circumstances, however, such as where the Fund’s subadviser believes that the applicable rate is unfavorable at the time the currencies are received or the Fund’s subadviser anticipates, for any other reason, that the exchange rate will improve, the Fund may hold such currencies for an indefinite period of time.
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In addition, a Fund may be required to receive delivery of the foreign currency underlying forward foreign currency contracts it has entered into. This could occur, for example, if an option written by the Fund is exercised or the Fund is unable to close out a forward contract. A Fund may hold foreign currency in anticipation of purchasing foreign securities.
A Fund may also elect to take delivery of the currencies’ underlying options or forward contracts if, in the judgment of the Fund’s subadviser, it is in the best interest of the Fund to do so. In such instances as well, the Fund may convert the foreign currencies to dollars at the then current exchange rate, or may hold such currencies for an indefinite period of time.
While the holding of currencies will permit a Fund to take advantage of favorable movements in the applicable exchange rate, it also exposes the Fund to risk of loss if such rates move in a direction adverse to the Fund’s position. Such losses could reduce any profits or increase any losses sustained by the Fund from the sale or redemption of securities, and could reduce the dollar value of interest or dividend payments received. In addition, the holding of currencies could adversely affect the Fund’s profit or loss on currency options or forward contracts, as well as its hedging strategies.
When a Fund effects foreign currency exchange transactions on a spot (i.e., cash) basis at the spot rate prevailing in the foreign exchange market, the Fund incurs expenses in converting assets from one currency to another. A Fund may also effect other types of foreign currency exchange transactions, which have their own risks and costs. For information about such transactions, please see “Foreign Currency Forward Contracts, Futures and Options” under “Derivatives” in this section of the SAI.
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Foreign Investment Companies
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Some of the countries in which the Funds may invest may not permit, or may place economic restrictions on, direct investment by outside investors. Investments in such countries may be permitted only through foreign government-approved or -authorized investment vehicles, which may include other investment companies. These funds may also invest in other investment companies that invest in foreign securities. Investing through such vehicles may involve frequent or layered fees or expenses and may also be subject to limitation under the 1940 Act. As a shareholder of another investment company, the Fund would bear, along with other shareholders, its pro rata portion of the other investment company’s expenses, including advisory fees. Those expenses would be in addition to the advisory and other expenses that the Fund bears directly in connection with its own operations. For additional information, see “Mutual Fund Investing” in this section of the SAI.
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Privatizations
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The governments of some foreign countries have been engaged in programs of selling part or all of their stakes in government owned or controlled enterprises (“privatizations”). Privatizations may offer opportunities for significant capital appreciation. In certain foreign countries, the ability of foreign entities such as the Funds to participate in privatizations may be limited by local law, or the terms on which a Fund may be permitted to participate may be less advantageous than those for local investors. There can be no assurance that foreign governments will continue to sell companies currently owned or controlled by them or that privatization programs will be successful.
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Funding Agreements
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Each Fund may invest in funding agreements, which are insurance contracts between an investor and the issuing insurance company. For the issuer, they represent senior obligations under an insurance
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product. For the investor, and from a regulatory perspective, these agreements are treated as securities. These agreements, like other insurance products, are backed by claims on the general assets of the issuing entity and rank on the same priority level as other policy holder claims. Funding agreements typically are issued with a one-year final maturity and a variable interest rate, which may adjust weekly, monthly, or quarterly. Some agreements carry a seven-day put feature. A funding agreement without this feature is considered illiquid and will therefore be subject to the Funds’ limitations on investments in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.) Funding agreements are regulated by the state insurance board of the state where they are executed.
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Guaranteed Investment Contracts
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Each Fund may invest in GICs issued by U.S. and Canadian insurance companies. A GIC requires the investor to make cash contributions to a deposit fund of an insurance company’s general account. The insurance company then makes payments to the investor based on negotiated, floating or fixed interest rates. A GIC is a general obligation of the issuing insurance company and not a separate account. The purchase price paid for a GIC becomes part of the general assets of the insurance company, and the contract is paid from the insurance company’s general assets. Generally, a GIC is not assignable or transferable without the permission of the issuing insurance company, and an active secondary market in GICs does not currently exist. Therefore, these investments may be deemed to be illiquid, in which case they will be subject to the Funds’ limitations on investments in illiquid securities. (See “Illiquid and Restricted Securities” in this section of the SAI.)
​ ​ The Tax-Exempt Bond Fund may not invest in guaranteed investment contracts. ​
Illiquid and Restricted Securities
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Each Fund may invest up to 15% of its net assets in securities that are considered illiquid. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the 1933 Act (“restricted securities”), securities that are otherwise not readily marketable, such as over-the-counter options, and repurchase agreements not entitling the holder to payment of principal in seven days. Such securities may offer higher yields than comparable publicly traded securities, and they also may incur higher risks.
Repurchase agreements, reverse repurchase agreements and time deposits that do not provide for payment to the Fund within seven days after notice or which have a term greater than seven days are deemed illiquid securities for this purpose unless such securities are variable amount master demand notes with maturities of nine months or less or unless the Fund’s subadviser has determined that an adequate trading market exists for such securities or that market quotations are readily available.
The Funds may purchase Rule 144A securities sold to institutional investors without registration under the 1933 Act and commercial paper issued in reliance upon the exemption in Section 4(a)(2) of the 1933 Act, for which an institutional market has developed. Institutional investors depend on an efficient institutional market in which the unregistered security can be readily resold or on the issuer’s ability to honor a demand for repayment of the unregistered security.
Although the securities described in this section generally will be considered illiquid, a security’s contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity of the security and therefore these securities may be determined to be liquid in accordance with guidelines established by the Board. The Trustees have delegated to each Fund’s subadviser the day-to-day determination of the liquidity of such securities in the respective Fund’s portfolio, although they have retained oversight and ultimate responsibility for such determinations.
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Although no definite quality criteria are used, the Trustees have directed the subadvisers to consider such factors as (i) the nature of the market for a security (including the institutional private resale markets); (ii) the terms of these securities or other instruments allowing for the disposition to a third party or the issuer thereof (e.g. certain repurchase obligations and demand instruments); (iii) availability of market quotations; and (iv) other permissible factors. The Trustees monitor implementation of the guidelines on a periodic basis.
If illiquid securities exceed 15% of a Fund’s net assets after the time of purchase, the Fund will take steps to reduce in an orderly fashion its holdings of illiquid securities. Because illiquid securities may not be readily marketable, the relevant Fund’s subadviser may not be able to dispose of them in a timely manner. As a result, the Fund may be forced to hold illiquid securities while their price depreciates. Depreciation in the price of illiquid securities may cause the NAV of the Fund holding them to decline. A security that is determined by a Fund’s subadviser to be liquid may subsequently revert to being illiquid if not enough buyer interest exists.
Restricted securities ordinarily can be sold by the Fund in secondary market transactions to certain qualified investors pursuant to rules established by the SEC, in privately negotiated transactions to a limited number of purchasers or in a public offering made pursuant to an effective registration statement under the 1933 Act. When registration is required, the Fund may be obligated to pay all or part of the registration expenses and a considerable time may elapse between the decision to sell and the sale date. If, during such period, adverse market conditions were to develop, the Fund might obtain a less favorable price than the price which prevailed when it decided to sell.
Restricted securities will be priced at fair value as determined in good faith by the Trustees or their delegate.
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Leverage
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Each Fund may employ investment techniques that create leverage, either by using borrowed capital to increase the amount invested, or investing in instruments, including derivatives, where the investment loss can exceed the original amount invested. Certain investments or trading strategies that involve leverage can result in losses that greatly exceed the amount originally invested.
The SEC takes the position that transactions that have a leveraging effect on the capital structure of a mutual fund or are economically equivalent to borrowing can be viewed as constituting a form of borrowing by the fund for purposes of the 1940 Act. These transactions can include buying and selling certain derivatives (such as futures contracts); selling (or writing) put and call options; engaging in sale-buybacks; entering into firm-commitment and stand-by commitment agreements; engaging in when-issued, delayed-delivery, or forward-commitment transactions; and other similar trading practices (additional discussion about a number of these transactions can be found throughout this section of the SAI). As a result, when a Fund enters into such transactions the transactions may be subject to the same requirements and restrictions as borrowing. (See “Borrowing” below for additional information.)
The following are some of the Funds’ permitted investment techniques that are generally viewed as creating leverage for the Funds.
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Borrowing
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A Fund’s ability to borrow money is limited by its investment policies and limitations, by the 1940 Act, and by applicable exemptions, no-action letters, interpretations, and other pronouncements issued from time to time by the SEC and its staff or any other regulatory authority
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with jurisdiction. Under the 1940 Act, a Fund is required to maintain continuous asset coverage (that is, total assets including borrowings, less liabilities exclusive of borrowings) of 300% of the amount borrowed, with an exception for borrowings not in excess of 5% of the Fund’s total assets made for temporary or emergency purposes. Any borrowings for temporary purposes in excess of 5% of the Fund’s total assets must maintain continuous asset coverage. If the 300% asset coverage should decline as a result of market fluctuations or for other reasons, a Fund may be required to sell some of its portfolio holdings within three days (excluding Sundays and holidays) to reduce the debt and restore the 300% asset coverage, even though it may be disadvantageous from an investment standpoint to sell securities at that time.
Borrowing will tend to exaggerate the effect on net asset value of any increase or decrease in the market value of a Fund’s portfolio. Money borrowed will be subject to interest costs that may or may not be recovered by earnings on the securities purchased. A Fund also may be required to maintain minimum average balances in connection with a borrowing or to pay a commitment or other fee to maintain a line of credit; either of these requirements would increase the cost of borrowing over the stated interest rate.
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Mortgage “Dollar-Roll” Transactions
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Each Fund may enter into mortgage “dollar-roll” transactions pursuant to which it sells mortgage-backed securities for delivery in the future and simultaneously contracts to repurchase substantially similar securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the mortgage-backed securities. The Fund is compensated for the lost interest by the difference between the current sales price and the lower price for the future purchase (often referred to as the “drop”) as well as by the interest earned on, and gains from, the investment of the cash proceeds of the initial sale. The Fund may also be compensated by receipt of a commitment fee. If the income and capital gains from the Fund’s investment of the cash from the initial sale do not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the dollar roll, the use of this technique will diminish the investment performance of the Fund compared with what the performance would have been without the use of the dollar roll.
Dollar-roll transactions involve the risk that the market value of the securities the Fund is required to purchase may decline below the agreed upon repurchase price of those securities. If the broker-dealer to whom the Fund sells securities becomes insolvent, the Fund’s right to purchase or repurchase securities may be restricted. Successful use of dollar rolls may depend upon the Fund’s subadviser’s ability to correctly predict interest rates and prepayments. There is no assurance that dollar rolls can be successfully employed.
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Reverse Repurchase Agreements
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Reverse repurchase agreements are transactions in which the Fund sells a security and simultaneously commits to repurchase that security from the buyer, such as a bank or broker-dealer, at an agreed-upon price on an agreed-upon future date. The resale price in a reverse repurchase agreement reflects a market rate of interest that is not related to the coupon rate or maturity of the sold security. For certain demand agreements, there is no agreed-upon repurchase date and interest payments are calculated daily, often based upon the prevailing overnight repurchase rate.
Generally, a reverse repurchase agreement enables the Fund to recover for the term of the reverse repurchase agreement all or most of the cash invested in the portfolio securities sold and to keep the interest income associated with those portfolio securities. Such transactions are only advantageous if the interest cost to the Fund of
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the reverse repurchase transaction is less than the cost of obtaining the cash otherwise. In addition, interest costs on the money received in a reverse repurchase agreement may exceed the return received on the investments made by the Fund with those monies. Using reverse repurchase agreements to earn additional income involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction.
Because reverse repurchase agreements are considered borrowing under the 1940 Act, while a reverse repurchase agreement is outstanding, the Fund will maintain cash and appropriate liquid assets in a segregated custodial account to cover its obligation under the agreement. A Fund will enter into reverse repurchase agreements only with parties that the Fund’s subadviser deems creditworthy, but such investments are still subject to the risks of leverage discussed above.
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Master Limited Partnerships
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An investment in MLP units involves some risks that differ from an investment in the common stock of a corporation. Holders of MLP units have limited control on matters affecting the partnership. Conflicts of interest exist between common unit holders and the general partner, including those arising from incentive distribution payments. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. MLPs that concentrate in a particular industry or a particular geographic region are subject to risks associated with such industry or region. The fees that MLPs charge for transportation of oil and gas products through their pipelines are subject to government regulation, which could negatively impact the revenue stream. Investing in MLPs also involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. These include the risk of environmental incidents, terrorist attacks, demand destruction from high commodity prices, proliferation of alternative energy sources, inadequate supply of external capital, and conflicts of interest with the general partner. There are also certain tax risks associated with investment in MLPs. The benefit derived from a Fund’s investment in MLPs is somewhat dependent on the MLP being treated as a partnership for federal income tax purposes, so any change to this status would adversely affect the price of MLP units. Historically, a substantial portion of the gross taxable income of MLPs has been offset by tax losses and deductions reducing gross income received by investors, and any change to these tax rules would adversely affect the price of an MLP unit. Certain MLPs may trade less frequently than other securities, and those with limited trading volumes may display volatile or erratic price movements.
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Money Market Instruments
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Each Fund may invest in money market instruments, which are high-quality short-term investments. The types of money market instruments most commonly acquired by the Funds are discussed below, although each Fund is also permitted to invest in other types of money market instruments to the extent consistent with the Fund’s investment limitations and restrictions.
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Banker's Acceptances
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A banker's acceptance is a time draft drawn on a commercial bank by a borrower usually in connection with an international commercial transaction (to finance the import, export, transfer or storage of goods). The borrower, as well as the bank, is liable for payment, and the bank unconditionally guarantees to pay the draft at its face amount on the maturity date. Most acceptances have maturities of six months or less and are traded in secondary markets prior to maturity.
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Certificates of Deposit
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Certificates of deposit are generally short-term, interest-bearing negotiable certificates issued by banks or savings and loan associations against funds deposited in the issuing institution. They
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generally may be withdrawn on demand but may be subject to early withdrawal penalties which could reduce the Fund’s yield. Deposits subject to early withdrawal penalties or that mature in more than seven days are treated as illiquid securities if there is no readily available market for the securities.
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Commercial Paper
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Commercial paper refers to short-term, unsecured promissory notes issued by corporations to finance short-term credit needs. Commercial paper is usually sold on a discount basis and has a maturity at the time of issuance not exceeding nine months.
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Obligations of Foreign Banks and Foreign Branches of U.S. Banks
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The money market instruments in which the Funds may invest include negotiable certificates of deposit, bankers’ acceptances and time deposits of foreign branches of U.S. banks, foreign banks and their non-U.S. branches (Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and wholly-owned banking-related subsidiaries of foreign banks. For the purposes of each Fund’s investment policies with respect to money market instruments, obligations of foreign branches of U.S. banks and of foreign banks are obligations of the issuing bank and may be general obligations of the parent bank. Such obligations, however, may be limited by the terms of a specific obligation and by government regulation. As with investment in non-U.S. securities in general, investments in the obligations of foreign branches of U.S. banks and of foreign banks may subject a Fund to investment risks that are different in some respects from those of investments in obligations of domestic issuers.
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Time Deposits
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Time deposits are deposits in a bank or other financial institution for a specified period of time at a fixed interest rate for which a negotiable certificate is not received.
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U.S. Government Obligations
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Securities issued or guaranteed as to principal and interest by the United States Government include a variety of Treasury securities, which differ only in their interest rates, maturities, and times of issuance. Treasury bills have maturities of one year or less. Treasury notes have maturities of one to ten years, and Treasury bonds generally have maturities of greater than ten years.
Agencies of the United States Government which issue or guarantee obligations include, among others, Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, GNMA, Maritime Administration, Small Business Administration and The Tennessee Valley Authority. Obligations of instrumentalities of the United States Government include securities issued or guaranteed by, among others, FNMA, Federal Home Loan Banks, FHLMC, Federal Intermediate Credit Banks, Banks for Cooperatives, and the U.S. Postal Service. Some of these securities are supported by the full faith and credit of the U.S. Government, others are supported by the right of the issuer to borrow from the Treasury, while still others are supported only by the credit of the instrumentality. There is no guarantee that the U.S. Government will provide financial support to its agencies or instrumentalities, now or in the future, if it is not obligated to do so by law. Accordingly, although these securities have historically involved little risk of loss of principal if held to maturity, they may involve more risk than securities backed by the full faith and credit of the U.S. Government because the Fund must look principally to the agency or instrumentality issuing or guaranteeing the securities for repayment and may not be able to assert a claim against the United States if the agency or instrumentality does not meet its commitment.
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Mutual Fund Investing
​ ​ Each Fund is authorized to invest in the securities of other investment companies subject to the limitations contained in the 1940 Act. ​ ​ ​ ​
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Investment companies in which the Fund may invest may include ETFs. An ETF is an investment company classified as an open-end investment company or unit investment trust that is traded similarly to a publicly traded company. Most ETFs seek to achieve the same return as a particular market index. That type of ETF is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An index-based ETF will invest in all of the securities included in the index, a representative sample of the securities included in the index, or other investments expected to produce returns substantially similar to that of the index. Other types of ETFs include leveraged or inverse ETFs, which are ETFs that seek to achieve a daily return that is a multiple or an inverse multiple of the daily return of a securities index. An important characteristic of these ETFs is that they seek to achieve their stated objectives on a daily basis, and their performance over longer periods of time can differ significantly from the multiple or inverse multiple of the index performance over those longer periods of time. ETFs also include actively managed ETFs that pursue active management strategies and publish their portfolio holdings on a frequent basis.
In connection with the management of its daily cash positions, each Fund may invest in securities issued by investment companies that invest in short-term debt securities (which may include municipal obligations that are exempt from Federal income taxes) and that seek to maintain a $1.00 NAV per share.
In certain countries, investments by the Funds may only be made through investments in other investment companies that, in turn, are authorized to invest in the securities that are issued in such countries. (See “Foreign Investment Companies” under “Foreign Investing” in this section of the SAI.)
Under the 1940 Act, a Fund generally may not own more than 3% of the outstanding voting stock of an investment company, invest more than 5% of its total assets in any one investment company, or invest more than 10% of its total assets in the securities of investment companies. In some instances, a Fund may invest in an investment company in excess of these limits; for instance, with respect to investments in money market funds or investments made pursuant to exemptive rules adopted and/or orders granted by the SEC. The SEC has adopted exemptive rules to permit funds of funds to exceed these limits when complying with certain conditions, which differ depending upon whether the funds in which a fund of funds invests are affiliated or unaffiliated with the fund of funds. Many ETFs have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond the statutory limitations discussed above, subject to certain conditions. The Funds may rely on these exemptive rules and/or orders to invest in affiliated or unaffiliated mutual funds and/or unaffiliated ETFs. In addition to this, the Trust has obtained exemptive relief permitting the Funds to exceed the limitations with respect to investments in affiliated and unaffiliated funds that are not themselves funds of funds, subject to certain conditions.
The risks associated with investing in other investment companies generally reflect the risks of owning shares of the underlying securities in which those investment companies invest, although lack of liquidity in an investment company could result in its value being more volatile than the underlying portfolio of securities. For purposes of complying with investment policies requiring a Fund to invest a percentage of its assets in a certain type of investments (e.g., stocks of small capitalization companies), the Fund generally will look through an investment company in which it invests, to categorize the investment company in accordance with the types of investments the investment company holds.
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Certain investment companies in which the Funds may invest may be considered commodity pools under the CEA and applicable CFTC regulations. If a Fund invests in such an investment company, the Fund will be required to treat some or all of its holding of the investment company’s shares as a commodity interest for the purposes of determining whether the Fund is qualified to claim exclusion or exemption from regulation by the CFTC. (See “Commodity Interests” in this section of the SAI for additional information regarding the implications to the Funds of investing in commodity interests.)
Investors in each Fund should recognize that when a Fund invests in another investment company, the Fund will bear its pro rata portion of the other investment company’s expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operations.
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Real Estate Investment Trusts (REITs)
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Each Fund may invest in REITs. REITs pool investors’ funds for investment primarily in income producing commercial real estate or real estate related loans. A REIT is not taxed on income distributed to shareholders if it complies with several requirements relating to its organization, ownership, assets, and income and a requirement that it distribute to its shareholders at least 90% of its taxable income (other than net capital gains) for each taxable year.
REITs can generally be classified as follows:
•
Equity REITs, which invest the majority of their assets directly in real property and derive their income primarily from rents. Equity REITs can also realize capital gains by selling properties that have appreciated in value.
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Mortgage REITs, which invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments.
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Hybrid REITs, which combine the characteristics of both equity REITs and mortgage REITs.
REITs are structured similarly to closed-end investment companies in that they are essentially holding companies. An investor should realize that by investing in REITs indirectly through the Fund, he will bear not only his proportionate share of the expenses of the Fund, but also, indirectly, similar expenses of the underlying REITs. (See “Mutual Fund Investing” in this section of the SAI.)
Selecting REITs requires an evaluation of the merits of each type of asset a particular REIT owns, as well as regional and local economics. Due to the proliferation of REITs in recent years and the relative lack of sophistication of certain REIT managers, the quality of REIT assets has varied significantly. The risks associated with REITs are similar to those associated with the direct ownership of real estate. These include declines in the value of real estate, risks related to general and local economic conditions, dependence on management skill, cash flow dependence, possible lack of availability of long-term mortgage funds, over-building, extended vacancies of properties, decreased occupancy rates and increased competition, increases in property taxes and operating expenses, changes in neighborhood values and the appeal of the properties to tenants and changes in interest rates.
Equity REITs may be affected by changes in the value of the underlying properties they own, while mortgage REITs may be affected by the quality of any credit extended. Further, equity and mortgage REITs are dependent upon management skills and generally are not diversified. Equity and mortgage REITs are also subject to potential defaults by borrowers, self-liquidation, and the possibility of failing to qualify for tax-free status of income under the
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Code and failing to maintain exemption from the 1940 Act. In the event of a default by a borrower or lessee, the REIT may experience delays in enforcing its rights as a mortgagee or lessor and may incur substantial costs associated with protecting its investments. In addition, investment in REITs could cause the Fund to possibly fail to qualify as a regulated investment company. (See the “Dividends, Distributions and Taxes” section of the SAI.)
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Repurchase Agreements
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Each Fund may enter into repurchase agreements by which the Fund purchases portfolio securities subject to the seller’s agreement to repurchase them at a mutually agreed-upon time and price. The repurchase price may be higher than the purchase price, the difference being income to the Fund, or the purchase and repurchase price may be the same, with interest payable to the Fund at a stated rate together with the repurchase price on repurchase. In either case, the income to the Fund is unrelated to the interest rate on the security.
A repurchase agreement must be collateralized by obligations that could otherwise be purchased by the Fund (except with respect to maturity), and these must be maintained by the seller in a segregated account for the Fund. The value of such collateral will be monitored throughout the term of the repurchase agreement in an attempt to ensure that the market value of the collateral always equals or exceeds the repurchase price (including accrued interest). If the value of the collateral dips below such repurchase price, additional collateral will be requested and, when received, added to the account to maintain full collateralization.
Repurchase agreements will be entered into with commercial banks, brokers and dealers considered by the relevant Fund’s subadviser to be creditworthy. However, the use of repurchase agreements involves certain risks such as default by, or insolvency of, the other party to the transaction. The Fund also might incur disposition costs in connection with liquidating the underlying securities or enforcing its rights.
Typically, repurchase agreements are in effect for one week or less, but they may be in effect for longer periods of time.
​ ​ Repurchase agreements of more than seven days’ duration are subject to each Fund’s limitation on investments in illiquid securities, which means that no more than 15% of the market value of a Fund’s total assets may be invested in repurchase agreements with a maturity of more than seven days and in other illiquid securities. ​
Securities Lending
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Subject to certain investment restrictions, each Fund may, subject to the Trustees’ and Trust Treasurer’s approval, lend securities from its portfolio to brokers, dealers and financial institutions deemed creditworthy and receive, as collateral, cash or cash equivalents which at all times while the loan is outstanding will be maintained in amounts equal to at least 100% of the current market value of the loaned securities. Any cash collateral will be invested in short-term securities that will increase the current income of the Fund lending its securities.
A Fund will have the right to regain record ownership of loaned securities to exercise beneficial rights such as voting rights and subscription rights. While a securities loan is outstanding, the Fund is to receive an amount equal to any dividends, interest or other distributions with respect to the loaned securities. A Fund may pay reasonable fees to persons unaffiliated with the Trust for services in arranging such loans.
Even though securities lending usually does not impose market risks on the lending Fund, as with any extension of credit, there are risks of delay in recovery of the loaned securities and in some cases loss of rights in the collateral should the borrower of the securities fail financially. In addition, the value of the collateral taken as security for the securities loaned may decline in value or may be difficult to convert to cash in the event that a Fund must rely on the collateral to recover the value of the securities. Moreover, if the borrower of the securities is insolvent, under current bankruptcy law, the Fund could be ordered by a court not to liquidate the collateral for an
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indeterminate period of time. If the borrower is the subject of insolvency proceedings and the collateral held might not be liquidated, the result could be a material adverse impact on the liquidity of the lending Fund.
No Fund will lend securities having a value in excess of 33 1/3% of its assets, including collateral received for loaned securities (valued at the time of any loan).
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Short Sales
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Each Fund may sell securities short as part of its overall portfolio management strategies involving the use of derivative instruments and to offset potential declines in long positions in similar securities. A short sale is a transaction in which a Fund sells a security it does not own or have the right to acquire, or that it owns but does not wish to deliver, in anticipation that the market price of that security will decline. A short sale is “against the box” to the extent the Fund contemporaneously owns, or has the right to obtain at no added cost, securities identical to those sold short. All other short sales are commonly referred to as “naked” short sales.
When a Fund makes a short sale, the broker-dealer through which the short sale is made must borrow the security sold short and deliver it to the party purchasing the security. The Fund is required to make a margin deposit in connection with such short sales; the Fund may have to pay a fee to borrow particular securities and will often be obligated to pay over any dividends and accrued interest on borrowed securities. If the price of the security sold short increases between the time of the short sale and the time the Fund covers its short position, the Fund will incur a loss; conversely, if the price declines, the Fund will realize a capital gain. Any gain will be decreased, and any loss increased, by the transaction costs described above. The successful use of short selling may be adversely affected by imperfect correlation between movements in the price of the security sold short and the securities being hedged.
If a Fund sells securities short against the box, it may protect unrealized gains, but will lose the opportunity to profit on such securities if the price rises. If a Fund engages in naked short sales, the Fund’s risk of loss could be as much as the maximum attainable price of the security (which could be limitless) less the price paid by the Fund for the security at the time it was borrowed.
When a Fund sells securities short, to the extent required by applicable law and regulation the Fund will “cover” the short sale, which generally means that the Fund will segregate any asset, including equity securities and non-investment-grade debt so long as the asset is liquid, unencumbered and marked to market daily, equal to the market value of the securities sold short, reduced by any amount deposited as margin. Alternatively, the Fund may “cover” a short sale by (a) owning the underlying securities, (b) owning securities currently convertible into the underlying securities at an exercise price equal to or less than the current market price of the underlying securities, or (c) owning a purchased call option on the underlying securities with an exercise price equal to or less than the price at which the underlying securities were sold short.
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Special Situations
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Each Fund may invest in special situations that the Fund’s subadviser believes present opportunities for capital growth. Such situations most typically include corporate restructurings, mergers, and tender offers.
A special situation arises when, in the opinion of the Fund’s subadviser, the securities of a particular company will, within a reasonably estimable period of time, be accorded market recognition at an appreciated value solely by reason of a development particularly or uniquely applicable to that company and regardless of general business conditions or movements of the market as a whole.
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Developments creating special situations might include, among others, the following: liquidations, reorganizations, recapitalizations, mergers, or tender offers; material litigation or resolution thereof; technological breakthroughs; and new management or management policies. Although large and well-known companies may be involved, special situations often involve much greater risk than is inherent in ordinary investment securities.
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Temporary Investments
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When business or financial conditions warrant, each Fund may assume a temporary defensive position by investing in money-market instruments, including obligations of the U.S. Government and its agencies and instrumentalities, obligations of foreign sovereigns, other debt securities, commercial paper including bank obligations, certificates of deposit (including Eurodollar certificates of deposit) and repurchase agreements. (See “Money Market Instruments” in this section of the SAI for more information about these types of investments.)
For temporary defensive purposes, during periods in which a Fund’s subadviser believes adverse changes in economic, financial or political conditions make it advisable, the Fund may reduce its holdings in equity and other securities and may invest up to 100% of its assets in certain short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) debt securities and in cash (U.S. dollars, foreign currencies, or multicurrency units). The short-term and medium-term debt securities in which a Fund may invest for temporary defensive purposes will be those that the Fund’s subadviser believes to be of high quality (i.e., subject to relatively low risk of loss of interest or principal). If rated, these securities will be rated in one of the three highest rating categories by rating services such as Moody’s or S&P (i.e., rated at least A).
​ ​ In the case of the Emerging Markets Opportunities Fund, the short-term and medium-term debt securities it may employ on a temporary basis consist of  (a) obligations of governments, agencies or instrumentalities of any member state of the OECD; (b) bank deposits and bank obligations (including certificates of deposit, time deposits and bankers’ acceptances) of banks organized under the laws of any member state of the OECD, denominated in any currency; (c) floating rate securities and other instruments denominated in any currency issued by international development agencies; (d) finance company and corporate commercial paper and other short-term corporate debt obligations of corporations organized under the laws of any member state of the OECD meeting the Fund’s credit quality standards; and (e) repurchase agreements with banks and broker-dealers covering any of the foregoing securities. ​
Warrants or Rights to Purchase Securities
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Each Fund may invest in or acquire warrants or rights to purchase equity or fixed income securities at a specified price during a specific period of time. A Fund will make such investments only if the underlying securities are deemed appropriate by the Fund’s subadviser for inclusion in the Fund’s portfolio. Included are warrants
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and rights whose underlying securities are not traded on principal domestic or foreign exchanges. Warrants and stock rights are almost identical to call options in their nature, use and effect except that they are issued by the issuer of the underlying security, rather than an option writer, and they generally have longer expiration dates than call options. (See “Options” in this section of the SAI for information about call options.)
Bonds with warrants attached to purchase equity securities have many characteristics of convertible bonds and their prices may, to some degree, reflect the performance of the underlying stock. However, unlike convertible securities and preferred stocks, warrants do not pay a fixed dividend. Bonds also may be issued with warrants attached to purchase additional fixed income securities at the same coupon rate. A decline in interest rates would permit a Fund holding such warrants to buy additional bonds at the favorable rate or to sell the warrants at a profit. If interest rates rise, the warrants would generally expire with no value.
A Fund may purchase put warrants and call warrants whose values vary depending on the change in the value of one or more specified securities indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of exercise. In general, if the value of the underlying index rises above the exercise price of the index warrant, the holder of a call warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the value of the index and the exercise price of the warrant; if the value of the underlying index falls, the holder of a put warrant will be entitled to receive a cash payment from the issuer upon exercise based on the difference between the exercise price of the warrant and the value of the index. The holder of a warrant would not be entitled to any payments from the issuer at any time when, in the case of a call warrant, the exercise price is greater than the value of the underlying index or, in the case of a put warrant, the exercise price is less than the value of the underlying index. If a Fund were not to exercise an index warrant prior to its expiration, then the Fund would lose the amount of the purchase price paid by it for the warrant.
A Fund will normally use index warrants in a manner similar to its use of options on securities indices. The risks of the Fund’s use of index warrants are generally similar to those relating to its use of index options. (See “Options” in this section of the SAI for information about index options.) Unlike most index options, however, index warrants are issued in limited amounts and are not obligations of a regulated clearing agency, but are backed only by the credit of the bank or other institution which issues the warrant. Also, index warrants generally have longer terms than index options. Although a Fund will normally invest only in exchange-listed warrants, index warrants are not likely to be as liquid as certain index options backed by a recognized clearing agency. In addition, the terms of index warrants may limit a Fund’s ability to exercise the warrants at such time, or in such quantities, as the Fund would otherwise wish to do.
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When-Issued and Delayed Delivery Transactions
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Each Fund may purchase securities on a when-issued or forward commitment basis. These transactions are also known as delayed delivery transactions. (The phrase “delayed delivery” is not intended to include purchases where a delay in delivery involves only a brief period required by the selling party solely to locate appropriate certificates and prepare them for submission for clearance and settlement in the customary way.) Delayed delivery transactions involve a commitment by the Fund to purchase or sell securities at a future date (ordinarily up to 90 days later). The price of the underlying
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Investment Technique
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Description and Risks
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Fund-Specific Limitations
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securities (usually expressed in terms of yield) and the date when the securities will be delivered and paid for (the settlement date) are fixed at the time the transaction is negotiated. When-issued purchases and forward commitments are negotiated directly with the selling party.
When-issued purchases and forward commitments enable the Fund to lock in what is believed to be an attractive price or yield on a particular security for a period of time, regardless of future changes in interest rates. For example, in periods of rising interest rates and falling bond prices, the Fund might sell debt securities it owns on a forward commitment basis to limit its exposure to falling prices. In periods of falling interest rates and rising prices, the Fund might sell securities it owns and purchase the same or similar securities on a when-issued or forward commitment basis, thereby obtaining the benefit of currently higher yields. The Fund will not enter into such transactions for the purpose of leverage.
The value of securities purchased on a when-issued or forward commitment basis and any subsequent fluctuations in their value will be reflected in the Fund’s NAV starting on the first business day after the date of the agreement to purchase the securities. The Fund will be subject to the rights and risks of ownership of the securities on the agreement date. However, the Fund will not earn interest on securities it has committed to purchase until they are paid for and received. A seller’s failure to deliver securities to the Fund could prevent the Fund from realizing a price or yield considered to be advantageous and could cause the Fund to incur expenses associated with unwinding the transaction.
When a Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement will be included in the Fund’s assets. Fluctuations in the market value of the underlying securities will not be reflected in the Fund’s NAV as long as the commitment to sell remains in effect. Settlement of when-issued purchases and forward commitment transactions generally takes place up to 90 days after the date of the transaction, but the Fund may agree to a longer settlement period.
The Funds will make commitments to purchase securities on a when-issued basis or to purchase or sell securities on a forward commitment basis only with the intention of completing the transaction and actually purchasing or selling the securities. If deemed advisable as a matter of investment strategy, however, a Fund may dispose of or renegotiate a commitment after it is entered into. A Fund also may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. The Fund may realize a capital gain or loss in connection with these transactions.
When a Fund purchases securities on a when-issued or forward-commitment basis, the Fund will specifically designate on its accounting records securities having a value (determined daily) at least equal to the amount of the Fund’s purchase commitments. These procedures are designed to ensure that each Fund will maintain sufficient assets at all times to cover its obligations under when-issued purchases and forward commitments.
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CA TAX-EXEMPT BOND FUND ONLY
Special California Risk Factors
The following information as to certain State risk factors is provided to investors in view of the policy of the Fund to concentrate its investments in State and municipal issues.  Such information does not purport to be a complete description, including official statements relating to securities offerings of State and municipal issuers and periodic publications by national rating organizations. Such information, however, has not been independently verified by the Fund.
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The California Constitution and various state statutes limit the taxing and spending authority of the state of California (the “State”). This may impair the ability of State issuers to maintain debt service on their obligations, or earmark the use of tax revenues, as summarized below.
Certain of the State’s municipal securities in which the Fund may invest may be obligations of issuers that rely in whole or in part on State revenues for payment of these obligations. Property tax revenues and a portion of the State’s General Fund surplus are distributed to counties, cities and their various taxing entities and the State assumes certain obligations previously paid out of local funds. Whether and to what extent a portion of the State’s General Fund will be distributed in the future to counties, cities and various entities is unclear.
Article XIIIA, Article XIIIB, Article XIIIC, Article XIIID and Propositions 98, 111 and 39, among others, were each adopted as measures that qualified for the ballot pursuant to California’s initiative process. From time to time other initiative measures could be adopted, further affecting State revenues or the State’s ability to expend revenues. Certain legislation enacted in the State could significantly limit State agencies’, local governments’ and districts’ ability to collect sufficient funds to meet debt service on bonds and other obligations.
Article XIIIA of the California Constitution, as amended, places restrictions and limits on California taxing entities in their ability to increase real property taxes. Article XIIIB of the California Constitution imposes on State and municipal entities an annual appropriations limit with respect to certain expenditures and requires the allocation of excess revenues to State education funds. Annual appropriations limits are adjusted annually to reflect changes in consumer prices, population, and certain services provided by these entities. The California Constitution, through amendments made by Propositions 98 and 111, also requires minimum levels of funding for public school and community college districts. Articles XIIIC and XIIID of the California Constitution provide for limitations on the ability of local government agencies to impose or raise various taxes, fees, charges and assessments without voter approval. Certain “general taxes” imposed after January 1, 1995, by local government must be approved by voters in order to remain in effect, and local voters may have the right to present initiatives to reduce taxes, fees, assessments or charges imposed by the local government. In March 2004, State voters approved two ballot measures, collectively known as the Economic Recovery Bond Measures, Propositions 57 and 58. The “Balanced Budget Act” was implemented in 2004 as a result of these measures and amended in 2014 by Proposition 2.
The Balanced Budget Act includes a provision for a “Rainy Day” fund requiring that beginning in fiscal 2006-07, depending on the strength of the economy, from 1% to 3% of annual General Fund revenues must be set aside in a reserve fund, the Budget Stabilization Account (“BSA”). Additionally, the Balanced Budget Act mandates that projected expenditures cannot exceed projected revenues. In November 2010, State voters approved two more ballot measures, Propositions 25 and 26. Proposition 25 amends the State Constitution to change the legislative vote requirement necessary to pass the State budget and spending bills related to the budget from two-thirds to a simple majority, while preserving the two-thirds requirement for changes in tax rates. Proposition 26 amends the State Constitution to require a two-thirds supermajority vote in the California State Legislature to pass many fees, levies, charges and tax revenue allocations that under the state’s previous rules could be enacted by a simple majority vote.
In November 2012 State voters approved Proposition 30 to increase sales and income taxes throughout the next several fiscal years. The State’s sales tax increased to 7.5% from 7.25% for a period of four years, and State income taxes increased for a period of seven years on taxpayers earning more than $250,000 per year by amounts ranging from 1% on taxpayers earning over $250,000 but less than $300,000 per year to 3% on taxpayers earning more than $1 million per year. The Legislative Analyst’s Office (“LAO”) projected that Proposition 30 would result in an average annual State revenue gain of  $5 billion per year from fiscal years 2012-13 through 2016-17, and approximately $5.4 billion in fiscal 2017-18 and $2.2 billion in fiscal 2018-19. Smaller amounts of revenue are expected from Proposition 39, which requires multistate businesses to pay State income taxes based on sales in the State and eliminates other alternative formulas for calculating California income taxes. The LAO estimates Proposition 39 will generate $1 billion in additional revenue annually, growing over time. In November 2016 the voters of California approved Proposition 55, which extended the Proposition 30 income tax increase on incomes over $250,000 for an additional 12 years to fund education and healthcare.
The 2016 Budget Act, enacted June 27, 2016, includes a multi-year plan that is balanced through fiscal year 2018-19. Major new spending is restricted to one-time investments, such as infrastructure, affordable housing and addressing the effects of the drought. The 2016 Budget Act accelerates the growth of the Rainy Day fund by depositing an additional $2 billion into the BSA beyond current constitutional requirements. The State continues to pay down debt as required by Proposition 2, discussed below. Starting in fiscal year 2015-16, 1.5 percent of annual General Fund revenues, plus the excess of capital gains tax receipts above a certain level, not necessary to fund Proposition 98, are applied equally to funding the BSA and paying down state debts and liabilities.
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In November 2014, State voters approved Proposition 2, which amends the State Constitution by requiring the State to spend a minimum amount on debt repayment, altering the State’s requirements for the BSA, and establishing a Public School System Stabilization Account (“PSSSA”). Proposition 2 requires the State to spend at least 0.75 percent of General Fund revenues, currently approximately $900 million, each year to pay down debts for pension and retiree health benefits (in addition to funds already required under law) and specified debts to local governments and other state accounts. The State also will be required to use a portion of higher-than-average capital gains-tax related revenues to pay down additional debt. Proposition 2 also changes the amount deposited annually in the BSA, increasing the maximum size of the BSA to 10 percent of General Fund revenues, and restricting the situations in which the State can deposit a lesser amount into the BSA or withdraw money from the BSA to specified “budget emergencies.” The PSSSA established by Proposition 2 will be funded by a transfer of a portion of above-average capital gains-related tax revenues if and when generated.
Certain State municipal securities that the Fund may own may be secured in whole or in part by mortgages or real property deeds of trust, and the rights of the Fund to obtain payment from such security may be constrained by State laws addressing nonjudicial foreclosure rights and transfers of title by sale by private owner, antideficiency provisions, and limits on the ability to receive pre-payment charges on mortgage loans. These types of State statutes, among other limits imposed by State law, could affect the flow of revenues to an issuer for debt service on outstanding debt obligations.
Litigation may play a role in the future of the State’s economy, as it is a party to numerous legal proceedings, many of which normally occur in governmental operations. In addition, the State is involved in certain other legal proceedings which, if decided against the State, may require the State to make significant future expenditures or may impair future revenue sources.
On May 29, 2002, the California Court of Appeal for the Second District decided the case of Howard Jarvis Taxpayers Association, et al. v. Kathleen Connell (as Controller of the State of California). The Court of Appeal held that a final budget bill, an emergency appropriation, a self-executing authorization pursuant to state statutes (such as continuing appropriations) or the California Constitution or a federal mandate is necessary for the State Controller to disburse funds. To the extent the holding in such case would apply to payments expected to be received by an issuing state agency, the requirement that there be either a final budget bill or an emergency appropriation may result in the delay of such payments to such agency if such required legislative action is delayed, unless the payments are self-executing authorizations or are subject to a federal mandate. On May 1, 2003, the California Supreme Court upheld the holding of the Court of Appeal, stating that the Controller is not authorized under State law to disburse funds prior to the enactment of a budget or other proper appropriation, but under federal law, the Controller is required, notwithstanding a budget impasse and the limitations imposed by State law, to pay timely those State employees who are subject to the minimum wage and overtime compensation provisions of the federal Fair Labor Standards Act.
Other budget-related litigation against the State includes actions challenging (i) Cap and Trade Program activities; (ii) school financing; and (iii) statutes that reformed the California Redevelopment Law. There also are multiple tax cases challenging, among other taxes (i) the legislature’s modification of the Revenue and Taxation Code Section that double-weighs the sales factor in the State’s apportionment of income formula for the taxation of multi-state businesses; (ii) the fee imposed under Revenue and Taxation Code Section 17942 on limited liability companies; (iii) the State’s right to require interstate unitary businesses to report their income on a combined basis while allowing intrastate unitary businesses to report the income of each business entity on a separate basis; and (iv) the validity of a Board of Equalization regulation that requires sales tax on mobile telephones to be based on the full unbundled price of the telephone rather than any discounted price contingent on a service plan commitment.
California Economic Outlook
The effect that general economic conditions within the State and the effect that the State’s budgetary problems may have in the future on the ability of State issuers to meet their obligations cannot be predicted. In addition to unfunded liabilities of government pensions (see below), California faces $400 billion in unfunded liabilities and debt from public pension, retiree health care and bonds.
The 2016 Budget Act projects $1.8 billion in the Special Fund for Economic Uncertainties and $6.7 billion in the BSA (Rainy Day fund) at the end of fiscal year 2016-17.
As of July 1, 2016, the state had more than $84.7 billion of outstanding general obligation bonds and lease revenue bonds payable principally from the state’s General Fund or from lease payments paid from the operating budget of the respective lessees, which operating budgets are primarily, but not exclusively, derived from the General Fund. As of July 1, 2016, there were more than $27.6 billion of authorized and unissued long-term voter-approved general obligation
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bonds which, when issued, will be payable principally from the General Fund and approximately $3.6 billion of authorized and unissued lease revenue bonds.
General Fund revenues and transfers for fiscal year 2016-17 are projected at $120.3 billion, an increase of  $3.3 billion or 2.8 percent compared with a revised estimate of  $117.0 billion in General Fund revenues and transfers for fiscal year 2015-16. These estimates include transfers to the BSA of  $3.3 billion for fiscal year 2016-17 ($2 billion more than required by law) amd $1.8 billion for fiscal year 2015-16.
General Fund expenditures for fiscal 2016-17 are projected at $122.5 billion, an increase of $6.9 billion, or 6.0 percent, compared to a revised estimate of  $115.6 billion in General Fund expenditures for fiscal 2015-16. The projected excess of expenditures over revenues and transfers is due in part to the budgetary accounting treatment of the BSA transfer, described in the next paragraph, and to the significant amount of expenditures to pay down the State’s “wall of debt” liabilities.
In recent years the State has paid off billions of dollars of budgetary borrowings, debts and deferrals that were accumulated in order to balance budgets during the previous recession and prior years. Under Proposition 58, half this amount will remain in the BSA, and half will be transferred to a redemption account to retire Economic Recovery Bonds.
The State manages its cash flow requirements during the fiscal year primarily with a combination of external borrowing and internal borrowing by the General Fund from over 700 special funds. Since June 2008, the General Fund has typically ended each fiscal year with a net borrowing from these special funds. The State ended fiscal year 2015-16 with a net borrowing of  $646 million from special funds. The 2016-17 Budget provides for repaying loans from special funds ($454 million), repaying prior years of Proposition 98 underfunding ($218 million), repaying pre-Proposition 42 (2002) transportation loans ($173 million), prefunding state retiree health care benefits ($278 million) and helping to pay down the unfunded liability associated with the University of California’s retirement system ($171 million).
Despite the recent significant budgetary improvements, there remain a number of major risks and pressures that threaten the state’s financial condition, including the need to repay billions of dollars of obligations which were deferred to balance budgets during the economic downturn.
Combined, the total unfunded pension liabilities for all State and local government workers in California hit $241.3 billion at June 30, 2014 (the latest year for which data is available). The two main state pension funds face large unfunded future liabilities. The California Public Employees Retirement System ("CalPERS") reported an unfunded accrued liability allocable to state employees (excluding judges and elected officials) as of June 30, 2015, of $49.6 billion on a market value of assets (“MVA”) basis (an increase of $6.3 billion from the June 30, 2014 Valuation). The California State Teachers’ Retirement System (“CalSTRS”) reported the unfunded accrued liability of its Defined Benefit Plan as of June 30, 2015 at $76.2 billion on an actuarial value of assets (“AVA”) basis (an increase of $3.5 billion from the June 30, 2014 valuation), and $72.6 billion on an MVA basis (an increase of $10.8 billion from the June 30, 2014 valuation).
General Fund contributions to CalPERS and CalSTRS are estimated to be approximately $3.1 billion and $2.47 billion, respectively, for the 2016-17 fiscal year.
There can be no assurances that the state’s annual required contributions to CalPERS and CalSTRS will not significantly increase in the future. The actual amount of any increases will depend on a variety of factors, including but not limited to investment returns, actuarial assumptions, experience and retirement benefit adjustments. The Governor signed Chapter 47, Statutes of 2014 (AB 1469) on June 24, 2014, that increases statutorily required contributions to CalSTRS from the state, school districts, and teachers beginning July 1, 2014. The AB 1469 funding plan includes additional increases in contribution rates for the state, school districts, and teachers over the next several years in order to eliminate the current CalSTRS unfunded liability by 2045-46. Recent action by the CalPERS Board to revise amortization and smoothing policies is expected to result in more rapid increases in state retirement contributions commencing in fiscal year 2015-16. The Board in February 2014 also adopted staff recommendations to change mortality and other assumptions, which will result in increased contribution rates that started in fiscal year 2014-15.
The State also provides postemployment health care and dental benefits to state employees and their spouses and dependents (when applicable) and utilizes a “pay-as-you-go” funding policy. These are sometimes referred to as Other Post Employments Benefits or “OPEB.” As reported in the state’s OPEB Actuarial Valuation Report, the state has an Unfunded Actuarial Accrued Liability relating to state retirees’ other postemployment benefits of approximately $74.10 billion as of June 30, 2015.
In addition, the state’s revenues (particularly the personal income tax) can be volatile and correlate to overall economic conditions. There can be no assurance that the State will not face fiscal stress and cash pressures again, or that other impacts of the current economic situation will not materially adversely affect the financial condition of the State.
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Impact of Health Care Reform
The federal Affordable Care Act (the “ACA”) has resulted in a significant net increase in General Fund program costs in fiscal year 2013-14 and subsequent fiscal years. The net impact of the ACA on the General Fund will depend on a variety of factors, including levels of individual and employer participation, changes in insurance premiums and savings resulting from the ACA as beneficiaries in current State-only programs receive coverage through Medi-Cal or the California Health Benefit Exchange.
Since January 1, 2014, approximately 6 million Californians have obtained health insurance either through the State’s insurance exchange (Covered California) or through the two-part (mandatory and optional) expansion of Medi-Cal.
The optional extension of Medi-Cal extended eligibility to adults without children, and parent and caretaker relatives with incomes up to 138 percent of the federal poverty level. The 2016 Budget Act includes costs of  $16.2 billion ($819.5 million General Fund) in fiscal year 2016-17 for the optional expansion. The federal government has committed to pay nearly 100 percent of the costs of this expansion for the first three years. Beginning January 1, 2017, the State will begin to assume 5 percent of these costs increasing to 10 percent in fiscal 2020-21. By fiscal year 22-21 the General Fund share for the optional expansion is projected to be $2.5 billion.
Earthquake Risk
Substantially all of California is within an active geologic region subject to major seismic activity. Northern California in 1989 and Southern California in 1994 experienced major earthquakes causing billions of dollars in damages. The federal government provided more than $13 billion in aid for both earthquakes, and neither event has had any long-term negative economic impact. Any obligation in the Fund could be affected by an interruption of revenues because of damaged facilities, or, consequently, income tax deductions for casualty losses or property tax assessment reductions. Compensatory financial assistance could be constrained by the inability of  (i) an issuer to have obtained earthquake insurance coverage rates; (ii) an insurer to perform on its contracts of insurance in the event of widespread losses; or (iii) the federal or State government to appropriate sufficient funds within their respective budget limitations.
Drought
The current drought is one of the most severe in California’s history but is not expected to impact sectors of the California economy beyond the agricultural sector. The State has taken actions to address drought conditions, including encouraging water conservation, facilitating water management where possible, and providing funding for water infrastructure projects. The storms in the winter of 2015-16 provided some relief but a full recovery from the drought is expected to be slow and require much more rain and snowfall.
Bond Ratings
As of October 18, 2016, the State’s general obligation debt was rated Aa3 by Moody’s, AA- by S&P, and AA- by Fitch. Moody’s, S&P and Fitch have assigned stable outlooks for their ratings. These ratings apply to only the State’s general obligation bonds. They are not indicative of ratings assigned to bonds issued by counties, cities, districts or other local agencies.
Obligations carrying the same rating are not claimed to be of absolutely equal credit quality. In a broad sense, they are alike in position, but since there are a limited number of rating classes used in grading thousands of bonds, the symbols cannot reflect the same shadings of risk which actually exist.  See the description of  “Ratings” under the heading “More Information About Fund Investment Strategies & Related Risks” for additional information about securities ratings.
Puerto Rico
Gross national product (“GNP”) has been subdued for many years. Puerto Rico has been in a recession since fiscal year 2006-07 and suffers from chronic budget gaps, and an economy in or near recession for around ten years.
Since February of 2014, the credit ratings of the Commonwealth’s general obligation bonds and Commonwealth guaranteed bonds, as well as the ratings of most of the Commonwealth’s public corporations, have been lowered (more than once in most cases) to noninvestment grade by Moody’s, S&P, and Fitch. The most recent downgrade occurred on July 12, 2016.
In June 2015, the Governor of Puerto Rico, Alejandro García Padilla (“Governor”), announced that Puerto Rico’s debt is “unpayable” under its current terms. As such, on April 6, 2016 the Governor signed into law Act 21-2016, as amended, known as the “Puerto Rico Emergency Moratorium and Financial Rehabilitation Act”, which, among other things: authorizes the Governor to declare a state of emergency over the Commonwealth and its instrumentalities effectively suspending payments on debt obligations, enacting a stay over claims for a temporary period for the Commonwealth,
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the Government Development Bank, the Economic Development Bank for Puerto Rico, and certain additional government instrumentalities; authorizes the creation of a bridge bank, in order to facilitate the transfer of certain assets and liabilities to new entities to continue bank operations; and creates the Puerto Rico Fiscal Agency and Financial Advisory Authority to assume the role of the Commonwealth’s fiscal agent and oversee debt restructuring efforts. Several executive orders have been approved thereunder declaring a state of emergency over certain governmental instrumentalities and declaring a moratorium over some of their payment obligations. The temporary period set forth under Act No. 21 lasts until January 31, 2017, with a possible two-month extension in the Governor’s discretion.
Moreover, on June 30, 2016, the President of the United States of America, Barack Obama, signed into law the Puerto Rico Oversight Management and Economic Stability Act (“PROMESA”). Under PROMESA, a federal oversight board (“Oversight Board”) was established with broad powers over Puerto Rico’s fiscal and budget matters. As such, the Government of Puerto Rico shall submit for the Oversight Board’s approval proposed budgets in accordance with modified accrual accounting standards and expenditures not to exceed revenues for each fiscal year in order for Puerto Rico to achieve adequate access to short term and long term credit markets at reasonable interest rates to meet borrowing needs. PROMESA also imposes an automatic stay on creditors who hold liability claims (defined generally as bonds, notes and other financial debt). Thus, creditors are prevented from taking or continuing to pursue actions against Puerto Rico and its instrumentalities until March 1st, 2017 (subject to extension of up to 60 additional days by court or 75 additional days by the Board).
Additionally, PROMESA provides for a process of submission and approval of a voluntary agreement modifying bond claims, which may be proposed by the issuer of the bond or by one or more holders of the right to vote the issuer’s outstanding bonds. If proposed by the latter, the Oversight Board may accept the proposed modification on behalf of the issuer. As a second option for debt relief, PROMESA provides for the commencement of an adjustment of a debt case, where Puerto Rico or the covered instrumentality, with the approval of the Oversight Board, may file a petition with the federal district court seeking to restructure its debts. This avenue is similar but not identical to a case filed under chapter 9 of the U.S. Bankruptcy Code.
During the Oversight Board’s first official meeting on September 30, 2016, the Oversight Board called for the government’s fiscal plan to be delivered on October 14, 2016 and designated as Covered Entities the Central Government; the island’s three retirement systems (Employees Retirement System; Teachers Retirement System; Judiciary Retirement System), the University of Puerto Rico, and the following public corporations or Commonwealth’s instrumentalities: Aqueduct & Sewer Authority; Electric Power Authority; Children’s Trust; Convention Center District Authority; Economic Development Bank; Government Development Bank; Financial Advisory & Fiscal Agency Authority; Highways & Transportation Authority; Housing Financing Authority; Industrial Development Company; Infrastructure Financing Authority; Municipal Financing Authority; Ports Authority; Public Buildings Authority; Public Broadcasting Corp.; Supervision & Insurance of Cooperatives Corporation (COSSEC); Public Finance Corporation; Sales Tax Financing Corporation; State Insurance Fund Corporation; UPR Plaza Universitaria; Tourism Company, and all other entities that are affiliated with, are subsidiaries of, or succeed the above mentioned entities.
On October 14, 2016, the Commonwealth presented to the Oversight Board its Fiscal Plan. According to the Administration’s Fiscal Plan, “the austerity measures have not been enough to eliminate deficits, which led to significant deficit financing and a ballooning debt load during the period [last decade]. Economic decline has also persisted, driving emigration to the U.S. mainland, as evidenced by Puerto Rico’s population declining by 9% over the decade”. On November 23, 2016, the Oversight Board issued a letter to the Governor of Puerto Rico requesting a revised fiscal plan by December 15th, 2016, and provided guidelines and principles which should be followed for the submittal of the revised Fiscal Plan.
On November 8, 2016, General Elections were celebrated in Puerto Rico and Dr. Ricardo Rosselló-Nevares was elected Governor of Puerto Rico. Dr. Roselló-Nevarez was sworn in as Puerto Rico’s new Governor on January 2, 2017.
INVESTMENT LIMITATIONS
Fundamental Investment Limitations
Each Fund is subject to the investment limitations enumerated in this section, which may be changed with respect to a particular Fund only by a vote of the holders of a majority of such Fund’s outstanding shares. As used in this SAI and in the Prospectuses, a “majority of the outstanding shares” of a Fund means the lesser of  (a) 67% of the shares of the particular Fund represented at a meeting at which the holders of more than 50% of the outstanding shares of such Fund are present in person or by proxy, or (b) more than 50% of the outstanding shares of such Fund.
With respect to all of the Funds, except as noted, each Fund may not:
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(1)
With respect to 75% of its total assets, purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities or repurchase agreements collateralized by U.S. Government securities and other investment companies), if: (a) such purchase would, at the time, cause more than 5% of the Fund’s total assets taken at market value to be invested in the securities of such issuer; or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Fund. (This restriction does not apply to the Alternatives Diversifier Fund, EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund.)
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(2)
Purchase securities if, after giving effect to the purchase, more than 25% of its total assets would be invested in the securities of one or more issuers conducting their principal business activities in the same industry (excluding the U.S. Government or its agencies or instrumentalities), except: (a) the Global Infrastructure Fund will concentrate its assets in the public infrastructure industry which includes, but is not limited to, companies engaged in the production, transmission or distribution of electric energy or gas, or in telephone services; and (b) the Global Real Estate Fund, International Real Estate Fund and Real Estate Fund will each concentrate its assets in the real estate industry. Additionally, this prohibition shall not apply to the purchase of investment company shares by any of the Fund of Funds.
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(3)
Borrow money, except (i) in amounts not to exceed one-third of the value of the Fund’s total assets (including the amount borrowed) from banks, and (ii) up to an additional 5% of its total assets from banks or other lenders for temporary purposes. For purposes of this restriction, (a) investment techniques such as margin purchases, short sales, forward commitments, and roll transactions, (b) investments in instruments such as futures contracts, swaps, and options and (c) short-term credits extended in connection with trade clearance and settlement, shall not constitute borrowing.
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(4)
Issue “senior securities” in contravention of the 1940 Act. Activities permitted by SEC exemptive orders or staff interpretations of the SEC shall not be deemed to be prohibited by this restriction.
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(5)
Underwrite the securities issued by other persons, except to the extent that, in connection with the disposition of portfolio securities, the Fund may be deemed to be an underwriter under applicable law.
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(6)
Purchase or sell real estate, except that the Fund may (i) acquire or lease office space for its own use, (ii) invest in securities of issuers that invest in real estate or interests therein, (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein, and (iv) hold and sell real estate acquired by the Fund as a result of the ownership of securities.
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(7a)
Purchase or sell commodities or commodity contracts, except the Fund may purchase and sell derivatives (including, but not limited to, options, futures contracts and options on futures contracts) whose value is tied to the value of a financial index or a financial instrument or other asset (including, but not limited to, securities indexes, interest rates, securities, currencies and physical commodities). (This restriction applies to all Funds except Emerging Markets Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund.)
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(7b)
Purchase or sell commodities or commodity contracts, except that it may enter into (a) futures, options, and options on futures, (b) forward contracts, and (c) other financial transactions not requiring the delivery of physical commodities. (This restriction applies to the Emerging Markets Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund.)
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(8a)
Make loans, except that the Fund may (i) lend portfolio securities, (ii) enter into repurchase agreements, (iii) purchase all or a portion of an issue of debt securities, bank loan participation interests, bank certificates of deposit, bankers’ acceptances, debentures or other securities, whether or not the purchase is made upon the original issuance of the securities and (iv) participate in an interfund lending program with other registered investment companies. (This restriction applies to the Real Estate Fund and Sector Trend Fund.)
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(8b)
Lend securities or make any other loans if, as a result, more than 33 1/3% of its total assets would be lent to other parties, except that the Fund may purchase debt securities, may enter into repurchase agreements and may acquire loans, loan participations and assignments (both funded and unfunded) and other forms of debt instruments. (This restriction applies to the Alternatives Diversifier Fund, Bond Fund, CA Tax-Exempt Bond Fund, EM Debt Fund, EM Equity Income Fund, EM Small-Cap Fund, Equity Trend Fund, Essential Resources Fund, Foreign Opportunities Fund, Global Equity Trend Fund, Global Infrastructure Fund, Global Opportunities Fund, Global Real Estate Fund, Greater European Fund, Herzfeld Fund, High Yield Fund, International Equity Fund, International Real Estate Fund, International Small-Cap Fund, International Wealth Masters Fund, Low Volatility Fund, Multi-Asset Trend Fund, Multi-Sector Intermediate Bond Fund, Multi-Sector Short Term Bond Fund, Senior Floating Rate Fund and Wealth Masters Fund.)
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(8c)
Make loans, but this restriction shall not prevent the Fund from (a) investing in debt obligations, (b) investing in money market instruments or repurchase agreements, (c) participating in an interfund lending program among Funds having a common investment adviser or distributor to the extent permitted by applicable law or (d) lending its portfolio securities. The Fund will not lend securities having a value in excess of 33 1/3% of its assets, including collateral received for loaned securities (valued at the time of any loan). (This restriction applies to the Emerging Markets Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund.)
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With respect to investment limitation (2) above, when selecting investments for a Fund, the Subadviser will consider the concentration policy of any exchange-traded fund (“ETFs”), mutual funds and closed-end funds. For purposes of determining the amount of each Fund's assets invested in the securities of one or more issuers conducting their principal business activities in the same industry or group of related industries, the Funds will look through to the securities held by an affiliated mutual fund in which the Fund invests; however, as of the date of this SAI the Funds will not look through to the securities held by any ETFs, unaffiliated mutual funds and/or closed-end funds in which the Fund invests.
Except with respect to investment restriction (3) above, if any percentage restriction described above for a Fund is adhered to at the time of investment, a subsequent increase or decrease in the percentage resulting from a change in the value of the Fund's assets will not constitute a violation of the restriction. With respect to investment restriction (3), in the event that asset coverage for all borrowings shall at any time fall below 300 per centum, the Fund shall, within three days thereafter (not including Sundays and holidays) or such longer period as the SEC may prescribe by rules and regulations, reduce the amount of its borrowings to an extent that the asset coverage of such borrowings shall be at least 300 per centum.
Section 12 of the 1940 Act limits the percentage of shares of other mutual funds that a fund may purchase. The Funds have obtained exemptive relief from the SEC to permit them to invest in affiliated and unaffiliated funds, including ETFs, beyond the statutory limitations, subject to certain conditions. Many ETFs also have obtained exemptive relief from the SEC to permit unaffiliated funds to invest in the ETF’s shares beyond these statutory limitations, subject to certain conditions. Each Fund may rely on the various exemptive orders to invest in shares of other mutual funds, including ETFs as applicable.
Non-Fundamental Investment Restrictions (Foreign Opportunities Fund only)
The Board has adopted the following additional investment restrictions for the Foreign Opportunities Fund. These restrictions are operating policies of the Fund and may be changed by the Trustees without shareholder approval.
(1)
The Fund may sell securities short if it owns or has the right to obtain securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration therefore (“short sales against the box”). In addition, the Fund may engage in “naked” short sales, which involve selling a security that a Fund borrows and does not own. The total market value of all of a Fund’s naked short sale positions will not exceed 8% of its assets. Transactions in futures, options, swaps and forward contracts are not deemed to constitute selling securities short.
​
(2)
The Fund does not currently intend to purchase securities on margin, except that the Fund may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other deposits in connection with transactions in futures, options, swaps and forward contracts shall not be deemed to constitute purchasing securities on margin.
​
(3)
The Fund may not mortgage or pledge any securities owned or held by it in amounts that exceed, in the aggregate, 15% of the Fund’s NAV, provided that this limitation does not apply to reverse repurchase agreements, deposits of assets to margin, options, swaps or forward contracts, or the segregation of assets in connection with such contracts.
​
(4)
The Fund does not currently intend to purchase any security or enter into a repurchase agreement if, as a result, more than 15% of its net assets would be invested in repurchase agreements not entitling the holder to payment of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The Trustees, or the Fund’s investment adviser or subadviser acting pursuant to authority delegated by the Trustees, may determine that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the 1933 Act (“Rule 144A”), or any successor to such rule, Section 4(2) commercial paper and municipal lease obligations. Accordingly, such securities may not be subject to the foregoing limitation. The factors that may be considered when determining liquidity are described under “Illiquid Securities” in the “Investment Strategies and Related Risks” section.
​
​
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(5)
The Fund may not invest in companies for the purpose of exercising control of management.
​
Non-Fundamental Investment Limitations (Emerging Markets Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund only)
Additional investment limitations adopted by each Fund, which may be changed by the Board of Trustees without shareholder approval, are as follows:
(1)
No diversified Fund may, with respect to 75% of its assets, invest more than 5% of its assets (valued at the time of investment) in securities of any one issuer, except for securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities or repurchase agreements for such securities, and except that all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies.
​
(2)
No Fund may, with respect to 75% of its assets, acquire securities of any one issuer that at the time of investment represent more than 10% of the voting securities of the issuer, except that all or substantially all of the assets of the Fund may be invested in another registered investment company having the same investment objective and substantially similar investment policies.
​
(3)
No Fund may purchase securities on margin (except for use of short-term credits as are necessary for the clearance of transactions) or participate in a joint or on a joint or several basis in any trading account in securities.
​
(4)
No Fund may invest more than 15% of its net assets (valued at the time of investment) in illiquid securities, including repurchase agreements maturing in more than seven days.
​
(5)
No Fund may make short sales of securities unless (a) the Fund owns at least an equal amount of such securities, or owns securities that are convertible or exchangeable, without payment of further consideration, into at least an equal amount of such securities or (b) the securities sold are “when issued” or “when distributed” securities that the Fund expects to receive in a recapitalization, reorganization or other exchange for securities that it contemporaneously owns or has the right to obtain and provided that transactions in options, futures and options on futures are not treated as short sales.
​
MANAGEMENT OF THE TRUST
Trustees and Officers
The Board is responsible for the overall supervision of the Trust, including establishing the Funds’ policies and general supervision and review of their investment activities, and performs the various duties imposed on Trustees by the 1940 Act and Delaware statutory trust law. The officers, who administer the Funds’ daily operations, are appointed by the Board and generally are employees of the Administrator or one of its affiliates. The current Trustees and officers of the Trust performing a policy-making function and their affiliations and principal occupations for the past five years are set forth below. The Trust has no employees.
Unless otherwise noted, each Trustee of the Trust also serves as a Trustee of other Virtus Mutual Funds and the address of each individual is 100 Pearl Street, Hartford, CT 06103. There is no stated term of office for Trustees or officers of the Trust.
Independent Trustees*
​
Name and Year of Birth
​ ​
Length of
Time Served
​ ​
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
​ ​
Principal Occupation(s) During Past
5 Years
​ ​
Other Directorships Held by Trustee
During Past 5 Years
​
​ Brown, Thomas J. YOB: 1945 ​ ​
Served since 2016.
​ ​
65
​ ​ Retired ​ ​ Trustee (since 2016), Virtus Mutual Fund Complex (52 portfolios) and Virtus Alternative Solutions Trust (4 portfolios); Trustee (since 2011), Virtus Variable Insurance Trust (9 portfolios); Director (since 2010), D’Youville Senior Care Center; and Director (since 2005), VALIC Company Funds (49 portfolios). ​
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​
Name and Year of Birth
​ ​
Length of
Time Served
​ ​
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
​ ​
Principal Occupation(s) During Past
5 Years
​ ​
Other Directorships Held by Trustee
During Past 5 Years
​
​ Burke, Donald C. YOB: 1961 ​ ​
Served since 2016.
​ ​
69
​ ​ Retired. ​ ​ Trustee (since 2016), Virtus Mutual Fund Complex (52 portfolios), Virtus Variable Insurance Trust (9 portfolios) and Virtus Alternative Solutions Trust (4 portfolios); Director (since 2014) closed-end funds managed by Duff  & Phelps Investment Management Co. (4 funds); Director, Avista Corp. (energy company) (since 2011); Trustee, Goldman Sachs Fund Complex (2010 to 2014); and Director, BlackRock Luxembourg and Cayman Funds (2006 to 2010). ​
​ Gelfenbien, Roger A. YOB: 1943 ​ ​
Served since 2016.
​ ​
65
​ ​ Retired. ​ ​ Trustee (since 2016), Virtus Mutual Fund Complex (52 portfolios) and Virtus Alternative Solutions Trust (4 portfolios); Trustee (since 2000), Virtus Variable Insurance Trust (9 portfolios); and Director (since 1999), USAllianz Variable Insurance Product Trust (42 portfolios). ​
​ Mallin, John R. YOB: 1950 ​ ​
Served since 2016.
​ ​
65
​ ​ Partner/Attorney (since 2003), McCarter & English LLP Real Property Practice Group and Member (since 2014), Counselors of Real Estate. ​ ​ Trustee (since 2016), Virtus Mutual Fund Complex (52 portfolios) and Virtus Alternative Solutions Trust (4 portfolios); Director (since 2013), Horizon, Inc. (non-profit); and Trustee (since 1999), Virtus Variable Insurance Trust (9 portfolios). ​
​ McClellan, Hassell H. YOB: 1945 ​ ​
Served since 2015.
​ ​
65
​ ​ Retired. Professor (1984 to 2013), Wallace E. Carroll School of Management, Boston College. ​ ​ Trustee (since 2016), Virtus Alternative Solutions Trust (4 portfolios); Trustee (since 2015), Virtus Mutual Fund Complex (52 portfolios); and Director (since 2010), Barnes Group, Inc. (diversified global components manufacturer and logistical services company); Trustee, Virtus Variable Insurance Trust (9 portfolios) (since 2008); and Trustee, John Hancock Fund Complex (since 2000) (collectively, 228 portfolios). ​
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​
Name and Year of Birth
​ ​
Length of
Time Served
​ ​
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
​ ​
Principal Occupation(s) During Past
5 Years
​ ​
Other Directorships Held by Trustee
During Past 5 Years
​
​
McLoughlin, Philip
Chairman
YOB: 1946
​ ​
Served since 1999.
​ ​
74
​ ​ Retired ​ ​ Director and Chairman (since 2016), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc.; Trustee and Chairman (since 2013), Virtus Alternative Solutions Trust (4 portfolios); Trustee/Director and Chairman (since 2011), Virtus Closed-End Funds (3 funds); Chairman and Trustee (since 2003), Virtus Variable Insurance Trust (9 portfolios); Director (since 1995), closed-end funds managed by Duff  & Phelps Investment Management Co. (4 funds); Director (since 1991) and Chairman (since 2010), Lazard World Trust Fund (closed-end investment firm in Luxembourg); and Trustee (since 1989) and Chairman (since 2002), Virtus Mutual Fund Complex (52 portfolios). ​
​
McNamara, Geraldine M.
YOB: 1951
​ ​
Served since 2001.
​ ​
69
​ ​ Retired. ​ ​ Trustee (since 2016) Virtus Alternative Solutions Trust (4 portfolios); Trustee (since 2015), Virtus Variable Insurance Trust (9 portfolios); Director (since 2003), closed-end funds managed by Duff  & Phelps Investment Management Co. (4 funds); and Trustee (since 2001), Virtus Mutual Fund Complex (52 portfolios). ​
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​
Name and Year of Birth
​ ​
Length of
Time Served
​ ​
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
​ ​
Principal Occupation(s) During Past
5 Years
​ ​
Other Directorships Held by Trustee
During Past 5 Years
​
​
Oates, James M.
YOB: 1946
​ ​
Served since 2000.
​ ​
70
​ ​ Managing Director (since 1994), Wydown Group (consulting firm). ​ ​ Director (since 2016), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc.; Trustee (since 2016) Virtus Variable Insurance Trust (9 portfolios); Trustee/Director (since 2013), Virtus Closed-End Funds (3 funds); Trustee (since 2013), Virtus Alternative Solutions Trust (4 portfolios); Chairman and Trustee (since 2005), John Hancock Fund Complex (228 portfolios); Director (2002 to 2014), New Hampshire Trust Company; Chairman (since 2000), Emerson Investment Management, Inc.; Non-Executive Chairman (2000 to 2014), Hudson Castle Group, Inc. (formerly IBEX Capital Markets, Inc.) (financial services) Chairman and Director (1999 to 2014), Connecticut River Bank; Director (since 1996), Stifel Financial; and Trustee (since 1987), Virtus Mutual Fund Complex (52 portfolios). ​
​
Segerson, Richard E.
YOB: 1946
​ ​
Served since 2000.
​ ​
65
​ ​ Retired. ​ ​ Managing Director (1998 to 2013), Northway Management Company. Trustee (since 2016) Virtus Alternative Solutions Trust (4 portfolios) and Virtus Variable Insurance Trust (9 portfolios); and Trustee (since 1983), Virtus Mutual Fund Complex (52 portfolios). ​
​
Verdonck, Ferdinand L.J.
YOB: 1942
​ ​
Served since 2005.
​ ​
65
​ ​ Director (1998 to July 2015), The J.P. Morgan Continental European Investment Trust; Director (2005 to 2013), Galapagos N.V. (biotechnology); Director (1998 to 2015) Groupe SNEF; Vice Chairman (since 2014), Affirmed Therapeutics (biotechnology); and Mr. Verdonck is also a director of several non-U.S. companies. ​ ​ Trustee (since 2016) Virtus Variable Insurance Trust (9 portfolios) and Virtus Alternative Solutions Trust (4 portfolios); and Trustee (since 2002), Virtus Mutual Fund Complex (52 portfolios). ​
*Those Trustees listed as “Independent Trustees” are not “interested persons” of the Trust, as that term is defined in the 1940 Act.
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Interested Trustee
​
Name and Year of Birth
​ ​
Length of
Time Served
​ ​
Number of
Portfolios
in Fund
Complex
Overseen
by Trustee
​ ​
Principal Occupation(s) During Past
5 Years
​ ​
Other Directorships Held by Trustee
During Past 5 Years
​
​
Aylward, George R.
YOB: 1964
​ ​
Served since 2006.
​ ​
71
​ ​ Director, President and Chief Executive Officer (since 2008), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; and various senior officer positions with Virtus affiliates (since 2005). ​ ​ Chairman and Trustee (since 2015), Virtus ETF Trust II (1 fund);Trustee and President (since 2013), Virtus Alternative Solutions Trust (4 portfolios); Director (since 2013), Virtus Global Funds, PLC (2 portfolios); Trustee (since 2012) and President (since 2010), Virtus Variable Insurance Trust (9 portfolios); Trustee and President (since 2011), Virtus Closed-End Funds (3 funds); Trustee (since 2006), Virtus Mutual Funds (52 portfolios); and Director, President and Chief Executive Officer (since 2006), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc. ​
Mr. Aylward is an “interested person” as defined in the Investment Company Act of 1940, by reason of his position as President and Chief Executive Officer of Virtus, the ultimate parent company of the Adviser, and various positions with its affiliates including the Adviser
Officers of the Trust Who Are Not Trustees
​
Name, Address and Year of
Birth
​ ​
Position(s) Held with the
Trust and Length of Time
Served
​ ​
Principal Occupation(s) During Past 5 Years
​
​
Bradley, W. Patrick
YOB: 1972
​ ​ Executive Vice President (since 2016), Senior Vice President (2013 to 2016), Vice President (2011 to 2013), and Chief Financial Officer and Treasurer (since 2006), Virtus Mutual Fund Complex. ​ ​ Executive Vice President, Fund Services (since 2016), and Senior Vice President, Fund Services (2010 to 2016), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various officer positions (since 2006) with Virtus affiliates; Executive Vice President (since 2016), Senior Vice President (2013 to 2016), Vice President (2011 to 2013), and Chief Financial Officer and Treasurer (since 2004), Virtus Variable Insurance Trust; Executive Vice President (since 2016), Senior Vice President (2013 to 2016), Vice President (2012 to 2013) and Treasurer (Chief Financial Officer) (since 2007), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc.; Executive Vice President (since 2016), Senior Vice President (2013 to 2016), Vice President (2011 to 2013), and Chief Financial Officer and Treasurer (since 2011), Virtus Closed-End Funds; Vice President and Assistant Treasurer (since 2011), Duff & Phelps Global Utility Income Fund Inc.; Director (since 2013), Virtus Global Funds, PLC; and Executive Vice President (since 2016), Senior Vice President (2013 to 2016), and Chief Financial Officer and Treasurer (since 2013), Virtus Alternative Solutions Trust. ​
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​
Name, Address and Year of
Birth
​ ​
Position(s) Held with the
Trust and Length of Time
Served
​ ​
Principal Occupation(s) During Past 5 Years
​
​
Carr, Kevin J.
YOB: 1954
​ ​ Senior Vice President (since 2013), Vice President (2005 to 2013), and Chief Legal Officer, Counsel and Secretary (since 2005), Virtus Mutual Fund Complex. ​ ​ Senior Vice President (since 2009), and Vice President, Counsel and Secretary (2008 to 2009), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various senior officer positions (since 2005) with Virtus affiliates; Senior Vice President (2013 to 2014), Vice President (2012 to 2013), Assistant Secretary (since 2012), Secretary and Chief Legal Officer (2005 to 2012), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc.; Assistant Secretary (since 2013), Vice President, Chief Legal Officer, Counsel and Secretary (2010 to 2013), Virtus Variable Insurance Trust; Vice President and Assistant Secretary (since 2011), Duff  & Phelps Global Utility Income Fund Inc.; Senior Vice President and Assistant Secretary (2013 to 2014), Vice President and Assistant Secretary (2012 to 2013), and Vice President, Chief Legal Officer, Counsel and Secretary (2011 to 2012), Virtus Closed-End Funds; and Assistant Secretary (since 2013), Virtus Alternative Solutions Trust. ​
​
Engberg, Nancy J.
YOB: 1956
​ ​ Vice President and Chief Compliance Officer (since 2011), Virtus Mutual Fund Complex. ​ ​ Vice President (since 2008) and Chief Compliance Officer (2008 to 2011 and since 2016), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various officer positions (since 2003) with Virtus affiliates; Vice President (since 2010) and Chief Compliance Officer (since 2011), Virtus Variable Insurance Trust; Vice President and Chief Compliance Officer (since 2011), Virtus Closed-End Funds; Vice President and Chief Compliance Officer (since 2012), The Zweig Fund, Inc. and Virtus Global Dividend & Income Fund Inc.; Vice President and Chief Compliance Officer (since 2013), Virtus Alternative Solutions Trust; Chief Compliance Officer (since 2015), ETFis Series Trust I; and Chief Compliance Officer (since 2015), Virtus ETF Trust II. ​
​
Waltman, Francis G.
YOB: 1962
​ ​ Executive Vice President (since 2013), and Senior Vice President (2008 to 2013), Virtus Mutual Fund Complex. ​ ​ Executive Vice President, Product Development (since 2009), Virtus Investment Partners, Inc. and/or certain of its subsidiaries; various senior officer positions (since 2006) with Virtus affiliates; Executive Vice President (since 2013), and Senior Vice President (2010 to 2013), Virtus Variable Insurance Trust; Executive Vice President (since 2013), and Senior Vice President (2011 to 2013), Virtus Closed-End Funds; Director (since 2013), Virtus Global Funds PLC; and Executive Vice President (since 2013), Virtus Alternative Solutions Trust. ​
Leadership Structure and the Board of Trustees
The Board is currently composed of eleven trustees, including ten Independent Trustees. In addition to four regularly scheduled meetings per year, the Board holds special meetings either in person or via telephone to discuss specific matters that may require consideration prior to the next regular meeting. As discussed below, the Board has established several standing committees to assist the Board in performing its oversight responsibilities, and each such committee has a chairperson. The Board may also designate working groups or ad hoc committees as it deems appropriate.
The Board has appointed Mr. McLoughlin, an Independent Trustee, to serve in the role of Chairman. The Chairman’s primary role is to participate in the preparation of the agenda for meetings of the Board and the identification of information to be presented to the Board with respect to matters to be acted upon by the Board. The Chairman also presides at all meetings of the Board and between meetings generally acts as a liaison with the Trust’s service providers, officers, legal counsel, and the other Trustees. The Chairman may perform such other functions as may be requested by the Board from time to time. Except for any duties specified herein or pursuant to the Trust’s Declaration of Trust or By-laws, or as assigned by the Board, the designation of Chairman does not impose on such Independent Trustee any duties, obligations or liability that is greater than the duties, obligations or liability imposed on such person as a member of the Board, generally.
The Board believes that this leadership structure is appropriate because it allows the Board to exercise informed and independent judgment over matters under its purview, and it allocates areas of responsibility among committees or working groups of Trustees and the full Board in a manner that enhances effective oversight. Mr. McLoughlin previously served as the Chairman and Chief Executive Officer of the company that is now Virtus; however, he is now an
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Independent Trustee due to (a) the fact that Virtus is no longer affiliated with The Phoenix Companies, Inc. (which was its parent company when Mr. McLoughlin retired) and (b) the passage of time. As a result of this balance, it is believed that Mr. McLoughlin has the ability to provide independent oversight of the Trust’s operations within the context of his detailed understanding of the perspective of the Adviser and the Trust’s other service providers. The Board therefore considers leadership by Mr. McLoughlin as enhancing the Board’s ability to provide effective independent oversight of the Trust’s operations and meaningful representation of the shareholders’ interests.
The Board also believes that having a super-majority of Independent Trustees is appropriate and in the best interest of the Funds’ shareholders. Nevertheless, the Board also believes that having an interested person serve on the Board brings corporate and financial viewpoints that are, in the Board’s view, crucial elements in its decision-making process. In addition, the Board believes that Mr. Aylward, who is currently the Chairman and President of the Adviser, and the President and Chief Executive Officer of Virtus, and serves in various executive roles with other affiliates of the Adviser who provide services to the Trust, provides the Board with the Adviser’s perspective in managing and sponsoring the Virtus Mutual Funds as well as the perspective of other service providers to the Trust. The leadership structure of the Board may be changed at any time and in the discretion of the Board, including in response to changes in circumstances or the characteristics of the Trust.
The Board has established several standing committees to oversee particular aspects of the Funds’ management. The members of each Committee are set forth below:
The Audit Committee
The Audit Committee is responsible for overseeing the Funds’ accounting and auditing policies and practices. The Audit Committee reviews the Funds’ financial reporting procedures, their system of internal control, the independent audit process, and the Funds’ procedures for monitoring compliance with investment restrictions and applicable laws and regulations and with the Code of Ethics. The Audit Committee is composed entirely of Independent Trustees; its members are Thomas J. Brown, Chairperson, Donald C. Burke, Roger A. Gelfenbien, Richard E. Segerson and Ferdinand L.J. Verdonck. The Committee met four times during the Trust's last fiscal year.
The Compliance Committee
The Compliance Committee is responsible for overseeing the Funds’ compliance matters. The Compliance Committee oversees and reviews (1) information provided by the Funds’ officers, including the Funds’ CCO, the Funds’ investment adviser and other principal service providers, and others as appropriate; (2) the codes of ethics; (3) whistleblower reports; (4) cybersecurity programs; and (5) distribution programs. The Compliance Committee will be composed entirely of Independent Trustees; its members are Hassell H. McClellan, Chairperson, John R. Mallin, Geraldine M. McNamara, and James M. Oates. The Committee met two times during the Trust's last fiscal year.
The Executive Committee
The function of the Executive Committee is to serve as a delegate of the full Board, as well as act on behalf of the Board when it is not in session, subject to limitations as set by the Board. The Executive Committee is composed entirely of Independent Trustees; its members are Philip R. McLoughlin, Chairperson, Thomas J. Brown, Hassell H. McClellan and James M. Oates. The Committee did not meet during the Trust's last fiscal year.
The Governance and Nominating Committee
The Governance and Nominating Committee is responsible for developing and maintaining governance principles applicable to the Funds, for nominating individuals to serve as Trustees, including as Independent Trustees, and annually evaluating the Board and Committees. The Governance and Nominating Committee is composed entirely of Independent Trustees; its members are James M. Oates, Chairperson, Philip R. McLoughlin and Geraldine M. McNamara. The Committee met four times during the Trust's last fiscal year.
The Governance and Nominating Committee considers candidates for trusteeship and makes recommendations to the Board with respect to such candidates. There are no specific required qualifications for trusteeship. The committee considers all relevant qualifications of candidates for trusteeship, such as industry knowledge and experience, financial expertise, current employment and other board memberships, and whether the candidate would be qualified to be considered an Independent Trustee. The Board believes that having among its members a diversity of viewpoints, skills and experience and a variety of complementary skills enhances the effectiveness of the Board in its oversight role. The committee considers the qualifications of candidates for trusteeship in this context.
The Board has adopted a policy for consideration of Trustee nominees recommended by shareholders. With regards to such policy, an individual shareholder or shareholder group submitting a nomination must hold either individually or in
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the aggregate for at least one full year as of the date of nomination 5% of the shares of a series of the Trust, among other qualifications and restrictions. Shareholders or shareholder groups submitting nominees must comply with all requirements set forth in the Trust’s policy for consideration of Trustee nominees recommended by shareholders and any such submission must be in writing, directed to the Trust’s secretary. Any shareholder nominee recommendations should be sent to the attention of the committee in care of the Trust’s Secretary, and should include biographical information, including business experience for the past ten years and a description of the qualifications of the proposed nominee, along with a statement from the proposed nominee that he or she is willing to serve and meets the requirements to be an Independent Trustee, if applicable. Shareholder nominees for Trustee will be given the same consideration as any candidate provided the nominee meets certain minimum requirements.
Information about Each Trustee’s Qualification, Experience, Attributes or Skills
In addition to the information set forth above, the following provides further information about each Trustee’s specific experience, qualifications, attributes or skills. The information in this section should not be understood to mean that any of the Trustees is an “expert” within the meaning of the federal securities laws.
George R. Aylward
In addition to his positions with the Trust, Mr. Aylward is a Director and the President and Chief Executive Officer of Virtus, the ultimate parent company of the Adviser. He also holds various executive positions with the Adviser, certain Funds’ subadvisers, the Distributor and the Administrator to the Trust, and various of their affiliates, and previously held such positions with the former parent company of Virtus. He therefore has experience in all aspects of the development and management of registered investment companies, and the handling of various financial, staffing, regulatory and operational issues. Mr. Aylward is a certified public accountant and holds an MBA, and he also serves as an officer and director/trustee of several open-end and closed-end funds managed by the Adviser and its affiliates.
Thomas J. Brown
Mr. Brown, currently retired, was employed in senior business and accounting roles with financial services companies for over twenty-five years, and he has over sixteen years of experience as a director/trustee of unaffiliated funds. Mr. Brown is also a trustee of several other open-end funds managed by the Adviser.
Donald C. Burke
Mr. Burke, currently retired, has extensive experience with mutual funds, including as president and Chief Executive Officer of a major fund complex, and subsequently as an independent trustee of another major fund complex. He also has extensive knowledge of the utility industry, derived from his service on the board of a public company involved in the production, transmission and distribution of energy. He is also a director/trustee of several open-end and closed-end funds managed by the Adviser and its affiliates.
Roger A. Gelfenbien
Mr. Gelfenbien, currently retired, was employed as an accountant and consultant in the financial services sector for over thirty years, as well as having over eleven years experience with an unaffiliated fund as a director. Mr. Gelfenbien is also a trustee of several other open-end funds managed by the Adviser.
John R. Mallin
Mr. Mallin is a real estate partner and former practice group leader for the Real Property Practice Group at McCarter & English LLP. During his career, he has been involved in all aspects of real estate development and financial transactions related to real estate. Mr. Mallin also has oversight and corporate governance experience as a director, including as a chair, of non-profit entities. Mr. Mallin is also a trustee of several other open-end funds managed by the Adviser.
Hassell H. McClellan
Mr. McClellan, currently retired, has extensive business experience in advising and consulting with companies to improve the companies’ management and operations, as well as serving as a business educator at several colleges. Mr. McClellan also has over twelve years of experience as a director of unaffiliated funds. Mr. McClellan is also a trustee of several other open-end funds managed by the Adviser.
Philip R. McLoughlin
Mr. McLoughlin has an extensive legal, financial and asset management background. In 1971, he joined Phoenix Investment Partners, Ltd. (then, Phoenix Equity Planning Corp.), the predecessor of Virtus Investment Partners, Inc., as Assistant Counsel with responsibility for various compliance and legal functions. During his tenure, Mr. McLoughlin
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assumed responsibility for most functions in the firm's advisory, broker-dealer and fund management operations, and eventually ascended to the role of President. Mr. McLoughlin then served as General Counsel, and later Chief Investment Officer, of Phoenix Mutual Life Insurance Company, the parent company of Phoenix Investment Partners. Among other functions, he served as the senior management liaison to the boards of directors of the insurance company's mutual funds and closed-end funds, and had direct oversight responsibility for the funds' portfolio managers. In 1994, Mr. McLoughlin was named Chief Executive Officer of Phoenix Investment Partners, and continued in that position, as well as Chief Investment Officer of Phoenix Mutual Life Insurance Company, until his retirement in 2002.
Geraldine M. McNamara
Ms. McNamara was an executive at U.S. Trust Company of New York for 24 years, where she rose to the position of Managing Director. Her responsibilities at U.S. Trust included the oversight of U.S. Trust’s personal banking business. In addition to her managerial and banking experience, Ms. McNamara has experience in advising individuals on their personal financial management, which has given her an enhanced understanding of the goals and expectations that individual investors may have. Ms. McNamara is also a trustee of several open-end and closed-end funds managed by the Adviser and its affiliates.
James M. Oates
Mr. Oates was instrumental in the founding of a private global finance, portfolio management and administration company, and he has also served in executive and director roles for various types of financial services companies. As a senior officer and director of investment management companies, Mr. Oates has experience in investment management. He also previously served as chief executive officer of two banks, and holds an MBA. Mr. Oates also has experience as a director of other publicly traded companies and has served for a number of years as the Chairman of the Board of a large family of mutual funds unaffiliated with the Trust. Mr. Oates is also a director/trustee of several open-end and closed-end funds managed by the Adviser and its affiliates.
Richard E. Segerson
Mr. Segerson has served in financial and other executive roles with various operating companies, including serving as the Chief Financial Officer, Controller and Chief Operating Officer of such entities. These roles have provided him with an understanding of financial and operational issues, as has his experience as a public accountant. Mr. Segerson also has over 30 years of experience serving as a trustee to various mutual funds, and he holds an MBA. Mr. Segerson also has served for a number of years as the Managing Director of a family office, providing wealth management services to individuals. This experience enhances his understanding of the perspective of individual fund shareholders. Mr. Segerson is also a trustee of several other open-end funds managed by the Adviser.
Ferdinand L.J. Verdonck
Mr. Verdonck brings to the Board a broad background in finance, investments, banking and international business. His experience includes serving as the chief financial officer of the U.S. subsidiary of an international company, and as a senior vice president of a major U.S. investment firm. He also holds degrees in both law and economics. Mr. Verdonck has served for more than 25 years on the boards and audit committees of various U.S. and foreign companies. He is also a trustee of several other open-end funds managed by the Adviser.
Board Oversight of Risk Management
As a registered investment company, the Trust is subject to a variety of risks, including investment risks, financial risks, compliance risks and regulatory risks. As part of its overall activities, the Board oversees the management of the Trust’s risk management structure by the Trust’s Adviser, Administrator, Distributor, officers and others. The responsibility to manage the Funds’ risk management structure on a day-to-day basis is subsumed within the other responsibilities of these parties.
The Board considers risk management issues as part of its general oversight responsibilities throughout the year at regular meetings of the Board and its committees, and within the context of any ad hoc communications with the Trust’s service providers and officers. The Trust’s Adviser, subadvisers, Distributor, officers and legal counsel prepare regular reports to the Board that address certain investment, valuation, compliance and other matters, and the Board as a whole or its committees may also receive special written reports or presentations on a variety of risk issues at the request of the Board, a committee, the Chairman or a senior officer.
The Board receives regular written reports describing and analyzing the investment performance of the Funds. In addition, the portfolio managers of the Funds and senior management of the Funds’ subadvisers meet with the Board
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periodically to discuss portfolio performance and answer the Board’s questions with respect to portfolio strategies and risks. To the extent that a Fund changes a primary investment strategy, the Board generally is consulted in advance with respect to such change.
The Board receives regular written reports from the Trust’s Chief Financial Officer that enable the Board to monitor the number of fair valued securities in the Funds’ portfolios, the reasons for the fair valuation and the methodology used to arrive at the fair value. Such reports also include information concerning illiquid securities within the Funds’ portfolios. The Board and/or the Audit Committee may also review valuation procedures and pricing results with the Funds’ independent auditors in connection with the review of the results of the audit of the Funds’ year-end financial statements.
The Board also receives regular compliance reports prepared by the compliance staff of the Adviser and meets regularly with the Trust’s CCO to discuss compliance issues, including compliance risks. As required under applicable rules, the Independent Trustees meet regularly in executive session with the CCO, and the CCO prepares and presents an annual written compliance report to the Board. The CCO, as well as the compliance staff of the Adviser and Virtus, provide the Board with reports on their examinations of functions and processes within the Adviser and the subadvisers that affect the Funds. The Board also adopts compliance policies and procedures for the Trust and approves such procedures for the Trust’s service providers. The compliance policies and procedures are specifically designed to detect and prevent violations of the federal securities laws.
In its annual review of the Funds’ advisory, subadvisory and distribution agreements, the Board reviews information provided by the Adviser, the subadvisers and the Distributor relating to their operational capabilities, financial conditions and resources. The Board may also discuss particular risks that are not addressed in its regular reports and processes.
The Board recognizes that it is not possible to identify all of the risks that may affect the Funds or to develop processes and controls to eliminate or mitigate their occurrence or effects. The Board periodically reviews the effectiveness of its oversight of the Funds and the other funds in the Virtus Mutual Funds family, and the processes and controls in place to limit identified risks. The Board may, at any time and in its discretion, change the manner in which it conducts its risk oversight role.
Trustees’ Fund Holdings as of December 31, 2016
As of December 31, 2016, the Trustees beneficially owned shares of the Funds as set forth in the table below.
Independent Trustees
​ ​
Dollar Range of Equity Securities in a Fund of the Trust (1)
​ ​
Aggregate Dollar Range of
Trustee Ownership in all Funds
Overseen by Trustee in Family
of Investment Companies (1)
​
Thomas J Brown ​ ​
None
​ ​
None
​
Donald C. Burke ​ ​
Low Duration Income Fund – $50,001-$100,000
Multi-Sector Intermediate Bond Fund – $50,001-$100,000
Multi-Sector Short Term Bond Fund – $50,001-$100,000
​ ​
Over $100,000
​
Roger A. Gelfenbien (2) ​ ​
None
​ ​
None
​
John R. Mallin (2) ​ ​
None
​ ​
None
​
Hassell H. McClellan ​ ​
None
​ ​
None
​
Philip McLoughlin (2) ​ ​
EM Debt Fund – $10,001-$50,000
EM Equity Income Fund – $10,001-$50,000
EM Opportunities Fund – Over $100,000
Equity Trend Fund – $10,001-$50,000
Foreign Opportunities Fund – $10,001-$50,000
Global Infrastructure Fund – $50,001-$100,000
Herzfeld Fund – $10,001-$50,000
International Real Estate Fund – $1-$10,000
International Wealth Masters Fund – $10,001-$50,000
Multi-Sector Short Term Bond Fund – $10,001-$50,000
Real Estate Fund – $50,001-$100,000
Sector Trend Fund – $10,001-$50,000
Senior Floating Rate Fund – $1-$10,000
​ ​
Over $100,000
​
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Independent Trustees
​ ​
Dollar Range of Equity Securities in a Fund of the Trust (1)
​ ​
Aggregate Dollar Range of
Trustee Ownership in all Funds
Overseen by Trustee in Family
of Investment Companies (1)
​
Geraldine M. McNamara (2)
​ ​
EM Opportunities Fund – $10,001-$50,000
Foreign Opportunities Fund – $50,001-$100,000
Global Infrastructure Fund – Over $100,000
Low Duration Income Fund – Over $100,000
Multi-Sector Short Term Bond Fund – over $100,000
Real Estate Fund – $50,001-$100,000
Senior Floating Rate Fund – $10,001-$50,000
​ ​
Over $100,000
​
James M. Oates ​ ​
EM Opportunities Fund – $50,001-$100,000
Foreign Opportunities Fund – $50,001-$100,000
Global Infrastructure Fund – $10,001-$50,000
Global Opportunities Fund – $50,001-$100,000
Herzfeld Fund – Over $100,000
International Equity Fund – $10,001-$50,000
Wealth Masters Fund – $50,001-$100,000
​ ​
Over $100,000
​
Richard E. Segerson (2) ​ ​
Equity Trend Fund – $10,001-$50,000
Foreign Opportunities Fund – $10,001-$50,000
Multi-Sector Short Term Bond Fund – $10,001-$50,000
Real Estate Fund – $10,001-$50,000
​ ​
Over $100,000
​
Ferdinand L.J. Verdonck (2)
​ ​
EM Opportunities Fund $10,001-$50,000
Foreign Opportunities Fund – $10,001-$50,000
Global Infrastructure Fund – $10,001-$50,000
Multi-Sector Intermediate Bond Fund – $10,001-$50,000
Real Estate Fund – $1-$10,000
​ ​
Over $100,000
​
​ ​
(1)
Holdings exclude any exposure through the Deferred Compensation Plan, which may be counted towards the Trustee Ownership Policy but are not considered ownership for any other purpose.
​
(2)
Information as of December 31, 2015.
​
Interested Trustee
​ ​ ​ ​ ​ ​ ​
George R. Aylward * ​ ​
Alternatives Diversifier Fund – $1-$10,000
Equity Trend Fund – $10,001-$50,000
Foreign Opportunities Fund – $1-$10,000
Herzfeld Fund – $10,001-$50,000
Multi-Sector Short Term Bond Fund – Over $100,000
​ ​
Over $100,000
​
*
Information as of December 31, 2015.
​
As of January 3, 2017, the Trustees and officers as a group owned less than 1% of the then outstanding shares of any of the Funds.
Trustee Compensation
Trustees who are not employed by the Adviser or its affiliates receive an annual retainer and fees and expenses for attendance at Board and Committee meetings. Officers and employees of the Adviser of the Funds who are interested persons are compensated for their services by the Adviser of the Funds, or an affiliate of the Adviser of the Funds, and receive no compensation from the Funds. The Trust does not have any retirement plan for its Trustees.
For the Trust’s fiscal year ended September 30, 2016, the current Trustees received the following compensation:
​ ​ ​
Aggregate Compensation from Trust
​ ​
Total Compensation From Trust and Fund
Complex Paid to Trustees
​
Independent Trustees ​ ​ ​
Thomas J. Brown * ​ ​
$114,715
​ ​
$179,998 (61 funds)
​
Donald C. Burke * ​ ​
$105,519
​ ​
$204,528 (65 funds)
​
Roger A. Gelfenbien * ​ ​
$99,501
​ ​
$159,020 (61 funds)
​
John R. Mallin * ​ ​
$99,501
​ ​
$163,020 (61 funds)
​
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​ ​ ​
Aggregate Compensation from Trust
​ ​
Total Compensation From Trust and Fund
Complex Paid to Trustees
​
Hassell H. McClellan ​ ​
$241,547
​ ​
$323,515 (61 funds)
​
Philip R. McLoughlin ​ ​
$352,972
​ ​
$796,065 (74 funds)
​
Geraldine M. McNamara ​ ​
$235,916
​ ​
$391,281 (65 funds)
​
James M. Oates ​ ​
$231,865
​ ​
$472,865 (70 funds)
​
Richard E. Segerson ​ ​
$218,570
​ ​
$245,333 (61 funds)
​
Ferdinand L.J. Verdonck ​ ​
$218,570
​ ​
$245,333 (61 funds)
​
Interested Trustee ​ ​ ​
George R. Aylward ​ ​
None
​ ​
None
​
*
Became a Trustee effective May 26, 2016.
​
Sales Loads
The Trust’s Trustees are permitted to invest in Class I shares of each Fund without initial or subsequent minimum investment requirements. Class I shares do not carry a sales load.
Code of Ethics
The Trust, its Adviser, subadvisers and Distributor have each adopted a Code of Ethics pursuant to Rule 17-j1 under the 1940 Act. Personnel subject to the Codes of Ethics may purchase and sell securities for their personal accounts, including securities that may be purchased, sold or held by the Funds, subject to certain restrictions and conditions. Generally, personal securities transactions are subject to preclearance procedures, reporting requirements and holding period rules. The Codes also restrict personal securities transactions in private placements, initial public offerings and securities in which a Fund has a pending order. The Trust has also adopted a Code of Ethics for Chief Executive and Senior Financial Officers as required by Section 406 of the Sarbanes-Oxley Act of 2002.
Proxy Voting Policies
The Trust has adopted on behalf of the Funds a Policy Regarding Proxy Voting stating the Trust’s intention to exercise stock ownership rights with respect to portfolio securities in a manner that is reasonably anticipated to further the best economic interests of shareholders of the Funds. The Funds have committed to analyze and vote all proxies that are likely to have financial implications, and where appropriate, to participate in corporate governance, shareholder proposals, management communications and legal proceedings. The Funds must also identify potential or actual conflicts of interest in voting proxies and must address any such conflict of interest in accordance with the Policy.
The Policy stipulates that the Funds’ Adviser will vote proxies, or delegate such responsibility to a subadviser. The applicable voting party will vote proxies in accordance with this Policy, or its own policies and procedures, which in no event will conflict with the Trust’s Policy. The Adviser or applicable subadviser may engage a qualified, independent organization to vote proxies on its behalf  (a “delegate”). Matters that may affect substantially the rights and privileges of the holders of securities to be voted will be analyzed and voted on a case-by-case basis taking into consideration such relevant factors as enumerated in the Policy. The views of management of a portfolio company will be considered.
The Policy specifies certain factors that will be considered when analyzing and voting proxies on certain issues, including, but not limited to:
•
Corporate Governance Matters—tax and economic benefits of changes in the state of incorporation; dilution or improved accountability associated with anti-takeover provisions such as staggered boards, poison pills and supermajority provisions.
​
•
Stock Option and Other Management Compensation Issues—executive pay and spending on perquisites, particularly in conjunction with sub-par performance and employee layoffs.
​
•
Social and Corporate Responsibility Issues—the Adviser or subadviser will generally vote against shareholder social and environmental issue proposals.
​
The Funds and their delegates seek to avoid actual or perceived conflicts of interest of Fund shareholders, on the one hand, and those of the Adviser, subadviser, delegate, Distributor, or any affiliated person of the Funds, on the other hand.
Depending on the type and materiality, any conflicts of interest will be handled by (i) relying on the recommendations of an established, independent third party proxy voting vendor; (ii) voting pursuant to the recommendation of the delegate; (iii) abstaining; or (iv) where two or more delegates provide conflicting requests, voting shares in proportion to the
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assets under management of each delegate. The Policy requires each Adviser/ subadviser or delegate to notify the President of the Trust of any actual or potential conflict of interest. No Adviser/ subadviser or delegate may waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board or the President of the Trust.
The Policy further imposes certain record-keeping and reporting requirements on each Adviser/subadviser or delegate. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ending June 30 will be available free of charge by calling, toll-free, 800.243.1574, or on the SEC’s Web site at www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of January 3 2017, the persons who owned of record, or were known by the Trust to own beneficially, 5% or more of the outstanding shares of any class of the Funds included in this SAI are shown in Appendix B — Control Persons and Principal Shareholders.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
The investment adviser to each of the Funds is Virtus Investment Advisers, Inc., located at 100 Pearl Street, Hartford, Connecticut 06103. VIA, an indirect, wholly-owned subsidiary of Virtus, acts as the investment adviser for over 50 mutual funds and as adviser to institutional clients. VIA has acted as an investment adviser for over 80 years. As of September 30, 2016, VIA had approximately $26.3 billion in assets under management.
Investment Advisory Agreement and Expense Limitation Agreement
The investment advisory agreement, approved by the Board, provides that the Trust will bear all costs and expenses (other than those specifically referred to as being borne by the Adviser) incurred in the operation of the Trust. Such expenses include, but shall not be limited to, all expenses incurred in the operation of the Trust and any public offering of its shares, including, among others, interest, taxes, brokerage fees and commissions, fees of Trustees who are not employees of VIA or any of its affiliates, expenses of Trustees, and shareholders’ meetings, expenses of printing and mailing proxy soliciting material, expenses of the insurance premiums for fidelity and other coverage, expenses of the repurchase and redemption of shares, expenses of the issue and sale of shares (to the extent not borne by VP Distributors under its agreement with the Trust), association membership dues, charges of custodians, transfer agents, dividend disbursing agents and financial agents, and bookkeeping, auditing and legal expenses. The Trust will also pay the fees and bear the expense of registering and maintaining the registration of the Trust and its shares with the SEC and registering or qualifying its shares under state or other securities laws and the expense of preparing and mailing prospectuses and reports to shareholders. If authorized by the Board, the Trust will also pay for extraordinary expenses and expenses of a non-recurring nature which may include, but shall not be limited to, the reasonable cost of any reorganization or acquisition of assets and the cost of legal proceedings to which the Trust is a party.
Each Fund will pay expenses incurred in its own operation and will also pay a portion of the Trust’s general administration expenses allocated on the basis of the asset values of the respective Funds.
For managing, or directing the management of, the investments of each fund, VIA is entitled to a fee, payable monthly, at the following annual rates:
Fund
​ ​
Investment Advisory Fee
​
Alternatives Diversifier ​ ​
0.00%
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Essential Resources Fund ​ ​
1.10%
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Tax-Exempt Bond Fund ​ ​
0.45%
​ ​ ​ ​ ​ ​ ​ ​ ​ ​
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Fund
​ ​
Investment Advisory Fee
​
​ ​ ​
1 st $1 Billion
​ ​
$1+ Billion through $2
Billion
​ ​
$2+ Billion
​ ​ ​ ​ ​ ​ ​
CA Tax-Exempt Bond Fund ​ ​
0.45%
​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ 0.35 % ​ ​ ​ ​ ​ ​ ​ ​
Global Infrastructure Fund ​ ​
0.65%
​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ ​ ​
Global Opportunities Fund ​ ​
0.85%
​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ ​ ​
Global Real Estate Fund ​ ​
0.85%
​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ ​ ​
High Yield Fund ​ ​
0.65%
​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ 0.55 % ​ ​ ​ ​ ​ ​ ​ ​
International Real Estate Fund
​ ​
1.00%
​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ ​ ​
Low Duration Income Fund ​ ​
0.55%
​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ ​ ​
Multi-Sector Intermediate Bond
Fund 		​ ​
0.55%
​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ ​ ​ ​
Real Estate Fund ​ ​
0.75%
​ ​ ​ ​ 0.70 % ​ ​ ​ ​ ​ 0.65 % ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​
1 st $2 Billion
​ ​
$2+ Billion through $4
Billion
​ ​
$4+ Billion
​ ​ ​ ​ ​ ​ ​
Foreign Opportunities Fund ​ ​
0.85%
​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ ​ ​
Global Equity Trend Fund ​ ​
1.00%
​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ ​ ​
International Equity Fund ​ ​
0.85%
​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ ​ ​ ​
Low Volatility Fund ​ ​
0.95%
​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ ​ ​
Multi-Asset Trend Fund ​ ​
1.00%
​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ ​ ​ ​
Senior Floating Rate Fund ​ ​
0.45%
​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ 0.38 % ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​
1 st $1 Billion
​ ​
$1+ Billion
​ ​ ​ ​ ​ ​ ​
Bond Fund ​ ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ ​ ​ ​
EM Debt Fund ​ ​ ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ 0.70 % ​ ​ ​ ​ ​ ​ ​ ​
EM Equity Income Fund ​ ​ ​ ​ ​ ​ ​ 1.05 % ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ ​ ​ ​
EM Opportunities Fund ​ ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ ​ ​
EM Small-Cap Fund ​ ​ ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ ​ ​ ​
Greater European Fund ​ ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ ​ ​
Herzfeld Fund ​ ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ ​ ​
International Small-Cap Fund ​ ​ ​ ​ ​ ​ ​ 1.00 % ​ ​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ ​ ​
International Wealth Masters Fund ​ ​ ​ ​ ​ ​ ​ 0.90 % ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ ​ ​ ​
Sector Trend Fund ​ ​ ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ 0.40 % ​ ​ ​ ​ ​ ​ ​ ​
Wealth Masters Fund ​ ​ ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ 0.80 % ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​
1 st $4 Billion
​ ​
$4+ Billion
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Equity Trend Fund ​ ​
1.00%
​ ​ ​ ​ 0.95 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​
1 st $1 Billion
​ ​
$1+ Billion through $2
Billion
​ ​
$2+ Billion through $10 Billion
​ ​
$10+ Billion
​
Multi-Sector Short Term Bond
Fund 		​ ​
0.55%
​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ 0.45 % ​ ​ ​ ​ ​ 0.425 % ​ ​
VIA may waive any portion of its investment advisory fees or reimburse Fund expenses from time to time. VIA has contractually agreed to limit the annual operating expenses (excluding certain expenses, including dividend and interest expenses, leverage expenses, taxes, brokerage commissions, extraordinary expenses and acquired fund fees and expenses, if any) of certain of the Funds through January 31, 2018 (expressed as a percentage of daily net assets).
​ ​ ​
Class A
​ ​
Class B
​ ​
Class C
​ ​
Class I
​ ​
Class R6
​ ​
Class T
​
Bond Fund ​ ​
0.85%
​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ 0.54 % ​ ​ ​ ​ ​ N/A ​ ​
CA Tax-Exempt Bond Fund ​ ​
0.85%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
EM Debt Fund ​ ​
1.35%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.10 % ​ ​ ​ ​ ​ 1.10 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
EM Equity Income Fund ​ ​
1.60%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
EM Small-Cap Fund ​ ​
1.85%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.60 % ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Equity Trend Fund ​ ​
1.60%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ 1.26 % ​ ​ ​ ​ ​ N/A ​ ​
Essential Resources Fund ​ ​
1.65%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.40 % ​ ​ ​ ​ ​ 1.40 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Global Equity Trend Fund ​ ​
1.75%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Global Opportunities Fund ​ ​
1.55%
​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Global Real Estate Fund ​ ​
1.40%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.15 % ​ ​ ​ ​ ​ 1.15 % ​ ​ ​ ​ ​ 1.04 % ​ ​ ​ ​ ​ N/A ​ ​
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​ ​ ​
Class A
​ ​
Class B
​ ​
Class C
​ ​
Class I
​ ​
Class R6
​ ​
Class T
​
Greater European Fund ​ ​
1.45%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Herzfeld Fund ​ ​
1.60%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
High Yield Fund ​ ​
1.00%
​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ 1.75 % ​ ​ ​ ​ ​ 0.75 % ​ ​ ​ ​ ​ 0.69 % ​ ​ ​ ​ ​ N/A ​ ​
International Equity Fund ​ ​
1.50%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
International Real Estate Fund ​ ​
1.50%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ 1.25 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
International Small-Cap Fund ​ ​
1.60%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.35 % ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ 1.24 % ​ ​ ​ ​ ​ N/A ​ ​
International Wealth Masters Fund ​ ​
1.55%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Low Duration Income Fund ​ ​
0.75%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ 0.50 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Low Volatility Equity Fund ​ ​
1.55%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 1.30 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Multi-Asset Trend Fund ​ ​
1.75%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.50 % ​ ​ ​ ​ ​ 1.50 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Multi-Sector Intermediate Bond Fund ​ ​
0.99%
​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ 1.74 % ​ ​ ​ ​ ​ 0.74 % ​ ​ ​ ​ ​ 0.67 % ​ ​ ​ ​ ​ N/A ​ ​
Multi-Sector Short Term Bond Fund ​ ​
1.10%
​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ 1.35 % ​ ​ ​ ​ ​ 0.85 % ​ ​ ​ ​ ​ 0.78 % ​ ​ ​ ​ ​ 1.85 % ​ ​
Senior Floating Rate Fund (1) ​ ​
0.94%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 1.69 % ​ ​ ​ ​ ​ 0.69 % ​ ​ ​ ​ ​ 0.63 % ​ ​ ​ ​ ​ N/A ​ ​
Tax-Exempt Bond Fund ​ ​
0.85%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 1.60 % ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Wealth Masters Fund ​ ​
1.45%
​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2.20 % ​ ​ ​ ​ ​ 1.20 % ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
(1)
Excludes leverage expenses, if any.
​
Following the contractual period, if any, the Adviser may discontinue the expense caps at any time. The Adviser may recapture operating expenses reimbursed under this arrangement, for a period of three years following the fiscal year in which such reimbursement occurred, subject to certain conditions.
The Adviser also may, at its discretion, from time to time pay for other Fund expenses from its own assets, or reduce the management fee of a Fund in excess of that required. Any fee reimbursed and/or any Fund expense absorbed by the Adviser pursuant to an agreed upon expense cap shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser, provided the aggregate amount of the Fund’s current operating expense for such fiscal year does not exceed the applicable limitation on Fund expenses.
The investment advisory agreement also provides that the Adviser shall not be liable to the Trust or to any shareholder of the Trust for any error of judgment or mistake of law or for any loss suffered by the Trust or by any shareholder of the Trust in connection with the matters to which the agreement relates, except a loss resulting from willful misfeasance, bad faith, gross negligence or reckless disregard on the part of such Adviser in the performance of its duties thereunder.
Provided it has been approved by a vote of the majority of the outstanding shares of a Fund of the Trust which is subject to its terms and conditions, the investment advisory agreement continues from year to year with respect to such Fund so long as (1) such continuance is approved at least annually by the Board or by a vote of the majority of the outstanding shares of such Fund and (2) the terms and any renewal of the agreement with respect to such Fund have been approved by the vote of a majority of the Trustees who are not parties to the agreement or interested persons, as that term is defined in the 1940 Act, of the Trust or the relevant Adviser, cast in person at a meeting called for the purpose of voting on such approval. On sixty days’ written notice and without penalty the agreement may be terminated as to the Trust or as to a Fund by the Board or by the relevant Adviser and may be terminated as to a Fund by a vote of the majority of the outstanding shares of such Fund. The Agreement automatically terminates upon its assignment (within the meaning of the 1940 Act). The agreement provides that upon its termination, or at the request of the relevant Adviser, the Trust will eliminate all reference to Virtus from its name, and will not thereafter transact business in a name using the word Virtus.
Adviser Affiliates
George Aylward, Kevin Carr and Frank Waltman, each serve as an officer of the Trust and as an officer and/or director of the Adviser. The other principal executive officers and directors of the Adviser are: Michael Angerthal, Executive Vice President and Chief Financial Officer; Mark Flynn, Executive Vice President, General Counsel and Assistant Clerk; and David Fusco, Vice President and Chief Compliance Officer.
Advisory Fees
The following table shows the dollar amount of fees payable to VIA for its services with respect to each Fund, the amount of fees waived and/or expenses reimbursed by VIA, if any, and the actual fee received by VIA for the past three fiscal years.
For services to the Funds during the fiscal years ended September 30, 2014, 2015 and 2016 the Adviser received fees of $218,534,628, $161,006,705 and $142,773,457 respectively, under the investment advisory agreements in effect. Of these totals, the Adviser received fees from each Fund as follows:
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​ ​ ​
Gross Advisory Fee ($)
​ ​
Advisory Fee Waived and/or
Expenses Reimbursed ($)
​ ​
Net Advisory Fee ($)
​ ​ ​ ​
Fund
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
Alternatives Diversifier Fund ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​
Bond Fund ​ ​ ​ ​ 361,464 ​ ​ ​ ​ ​ 345,204 ​ ​ ​ ​ ​ 345,513 ​ ​ ​ ​ ​ 197,383 ​ ​ ​ ​ ​ 205,945 ​ ​ ​ ​ ​ 243,839 ​ ​ ​ ​ ​ 164,081 ​ ​ ​ ​ ​ 139,259 ​ ​ ​ ​ ​ 101,674 ​ ​ ​
CA Tax-Exempt Bond Fund ​ ​ ​ ​ 187,631 ​ ​ ​ ​ ​ 152,183 ​ ​ ​ ​ ​ 140,722 ​ ​ ​ ​ ​ 102,965 ​ ​ ​ ​ ​ 110,116 ​ ​ ​ ​ ​ 111,543 ​ ​ ​ ​ ​ 84,666 ​ ​ ​ ​ ​ 42,067 ​ ​ ​ ​ ​ 29,179 ​ ​ ​
EM Debt Fund ​ ​ ​ ​ 225,525 ​ ​ ​ ​ ​ 219,620 ​ ​ ​ ​ ​ 209,322 ​ ​ ​ ​ ​ 40,094 ​ ​ ​ ​ ​ 39,412 ​ ​ ​ ​ ​ 50,757 ​ ​ ​ ​ ​ 185,431 ​ ​ ​ ​ ​ 180,208 ​ ​ ​ ​ ​ 158,565 ​ ​ ​
EM Equity Income Fund ​ ​ ​ ​ 698,005 ​ ​ ​ ​ ​ 721,560 ​ ​ ​ ​ ​ 347,656 ​ ​ ​ ​ ​ 13,063 ​ ​ ​ ​ ​ 5,508 ​ ​ ​ ​ ​ 123,583 ​ ​ ​ ​ ​ 684,942 ​ ​ ​ ​ ​ 716,052 ​ ​ ​ ​ ​ 224,073 ​ ​ ​
EM Opportunities Fund * ​ ​ ​ ​ 76,970,315 ​ ​ ​ ​ ​ 95,289,946 ​ ​ ​ ​ ​ 57,320,648 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 76,970,315 ​ ​ ​ ​ ​ 95,289,946 ​ ​ ​ ​ ​ 57,320,648 ​ ​ ​
EM Small-Cap Fund ​ ​ ​ ​ 31,545 ​ ​ ​ ​ ​ 54,032 ​ ​ ​ ​ ​ 54,098 ​ ​ ​ ​ ​ 79,695 ​ ​ ​ ​ ​ 78,771 ​ ​ ​ ​ ​ 86,508 ​ ​ ​ ​ ​ (48,150 ) ​ ​ ​ ​ ​ (24,739 ) ​ ​ ​ ​ ​ (32,410 ) ​ ​ ​
Equity Trend Fund ​ ​ ​ ​ 80,240,592 ​ ​ ​ ​ ​ 48,366,683 ​ ​ ​ ​ ​ 13,889,228 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 1,474,804 ​ ​ ​ ​ ​ 80,240,592 ​ ​ ​ ​ ​ 48,366,683 ​ ​ ​ ​ ​ 12,414,424 ​ ​ ​
Essential Resources Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 27,213 ​ ​ ​ ​ ​ 48,566 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 113,490 ​ ​ ​ ​ ​ 120,519 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (86,277 ) ​ ​ ​ ​ ​ (71,953 ) ​ ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ 16,102,721 ​ ​ ​ ​ ​ 16,385,696 ​ ​ ​ ​ ​ 13,968,764 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 16,102,721 ​ ​ ​ ​ ​ 16,385,696 ​ ​ ​ ​ ​ 13,968,764 ​ ​ ​
Global Equity Trend ​ ​ ​ ​ 2,214,660 ​ ​ ​ ​ ​ 1,405,850 ​ ​ ​ ​ ​ 371,284 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 6,678 ​ ​ ​ ​ ​ 2,214,660 ​ ​ ​ ​ ​ 1,405,850 ​ ​ ​ ​ ​ 364,606 ​ ​ ​
Global Infrastructure Fund ​ ​ ​ ​ 929,987 ​ ​ ​ ​ ​ 1,139,495 ​ ​ ​ ​ ​ 819,765 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 929,987 ​ ​ ​ ​ ​ 1,139,495 ​ ​ ​ ​ ​ 819,765 ​ ​ ​
Global Opportunities Fund ​ ​ ​ ​ 1,005,754 ​ ​ ​ ​ ​ 1,167,887 ​ ​ ​ ​ ​ 1,391,523 ​ ​ ​ ​ ​ (24,815 ) ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 1,030,569 ​ ​ ​ ​ ​ 1,167,887 ​ ​ ​ ​ ​ 1,391,523 ​ ​ ​
Global Real Estate Fund ​ ​ ​ ​ 398,371 ​ ​ ​ ​ ​ 644,721 ​ ​ ​ ​ ​ 1,090,714 ​ ​ ​ ​ ​ 79,379 ​ ​ ​ ​ ​ 78,920 ​ ​ ​ ​ ​ 164,390 ​ ​ ​ ​ ​ 318,992 ​ ​ ​ ​ ​ 565,801 ​ ​ ​ ​ ​ 926,324 ​ ​ ​
Greater European Fund ​ ​ ​ ​ 432,063 ​ ​ ​ ​ ​ 164,705 ​ ​ ​ ​ ​ 225,027 ​ ​ ​ ​ ​ 79,818 ​ ​ ​ ​ ​ 84,670 ​ ​ ​ ​ ​ 91,619 ​ ​ ​ ​ ​ 352,245 ​ ​ ​ ​ ​ 80,035 ​ ​ ​ ​ ​ 133,408 ​ ​ ​
Herzfeld Fund ​ ​ ​ ​ 161,708 ​ ​ ​ ​ ​ 318,937 ​ ​ ​ ​ ​ 446,151 ​ ​ ​ ​ ​ 55,653 ​ ​ ​ ​ ​ 39,709 ​ ​ ​ ​ ​ 55,302 ​ ​ ​ ​ ​ 106,055 ​ ​ ​ ​ ​ 279,228 ​ ​ ​ ​ ​ 390,849 ​ ​ ​
High Yield Fund ​ ​ ​ ​ 589,524 ​ ​ ​ ​ ​ 570,902 ​ ​ ​ ​ ​ 464,365 ​ ​ ​ ​ ​ 149,806 ​ ​ ​ ​ ​ 147,710 ​ ​ ​ ​ ​ 183,134 ​ ​ ​ ​ ​ 439,718 ​ ​ ​ ​ ​ 423,192 ​ ​ ​ ​ ​ 281,231 ​ ​ ​
International Equity Fund ​ ​ ​ ​ 68,067 ​ ​ ​ ​ ​ 77,987 ​ ​ ​ ​ ​ 54,515 ​ ​ ​ ​ ​ 74,200 ​ ​ ​ ​ ​ 72,176 ​ ​ ​ ​ ​ 96,484 ​ ​ ​ ​ ​ (6,133 ) ​ ​ ​ ​ ​ 5,811 ​ ​ ​ ​ ​ (41,969 ) ​ ​ ​
International Real Estate Fund ​ ​ ​ ​ 436,457 ​ ​ ​ ​ ​ 422,074 ​ ​ ​ ​ ​ 368,836 ​ ​ ​ ​ ​ 99,999 ​ ​ ​ ​ ​ 114,355 ​ ​ ​ ​ ​ 151,904 ​ ​ ​ ​ ​ 336,458 ​ ​ ​ ​ ​ 307,719 ​ ​ ​ ​ ​ 216,932 ​ ​ ​
International Small-Cap Fund ​ ​ ​ ​ 432,063 ​ ​ ​ ​ ​ 494,889 ​ ​ ​ ​ ​ 411,690 ​ ​ ​ ​ ​ 60,034 ​ ​ ​ ​ ​ 67,372 ​ ​ ​ ​ ​ 107,852 ​ ​ ​ ​ ​ 372,029 ​ ​ ​ ​ ​ 427,517 ​ ​ ​ ​ ​ 303,838 ​ ​ ​
International Wealth Masters Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 40,306 ​ ​ ​ ​ ​ 45,755 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 101,091 ​ ​ ​ ​ ​ 99,169 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (60,785 ) ​ ​ ​ ​ ​ (53,414 ) ​ ​ ​
Low Duration Income Fund * ​ ​ ​ ​ 808,266 ​ ​ ​ ​ ​ 1,173,193 ​ ​ ​ ​ ​ 1,407,931 ​ ​ ​ ​ ​ 276,082 ​ ​ ​ ​ ​ 782,734 ​ ​ ​ ​ ​ 905,847 ​ ​ ​ ​ ​ 532,184 ​ ​ ​ ​ ​ 390,459 ​ ​ ​ ​ ​ 502,084 ​ ​ ​
Low Volatility Fund ​ ​ ​ ​ 18,636 ​ ​ ​ ​ ​ 43,369 ​ ​ ​ ​ ​ 44,935 ​ ​ ​ ​ ​ 81,438 ​ ​ ​ ​ ​ 55,457 ​ ​ ​ ​ ​ 66,609 ​ ​ ​ ​ ​ (62,802 ) ​ ​ ​ ​ ​ (12,088 ) ​ ​ ​ ​ ​ (21,674 ) ​ ​ ​
Multi-Asset Trend Fund ​ ​ ​ ​ 7,913,586 ​ ​ ​ ​ ​ 5,544,092 ​ ​ ​ ​ ​ 1,874,985 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 7,913,586 ​ ​ ​ ​ ​ 5,544,092 ​ ​ ​ ​ ​ 1,874,985 ​ ​ ​
Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ 2,001,508 ​ ​ ​ ​ ​ 1,985,853 ​ ​ ​ ​ ​ 1,660,371 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 15,651 ​ ​ ​ ​ ​ 49,880 ​ ​ ​ ​ ​ 2,001,508 ​ ​ ​ ​ ​ 1,970,202 ​ ​ ​ ​ ​ 1,610,491 ​ ​ ​
Multi-Sector Short Term Bond Fund ​ ​ ​ ​ 40,406,445 ​ ​ ​ ​ ​ 39,612,385 ​ ​ ​ ​ ​ 34,063,856 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 95,780 ​ ​ ​ ​ ​ 305,251 ​ ​ ​ ​ ​ 40,406,445 ​ ​ ​ ​ ​ 39,516,605 ​ ​ ​ ​ ​ 33,758,605 ​ ​ ​
Real Estate Fund ​ ​ ​ ​ 10,618,109 ​ ​ ​ ​ ​ 11,537,537 ​ ​ ​ ​ ​ 9,560,943 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 10,618,109 ​ ​ ​ ​ ​ 11,537,537 ​ ​ ​ ​ ​ 9,560,943 ​ ​ ​
Sector Trend Fund ​ ​ ​ ​ 3,671,100 ​ ​ ​ ​ ​ 3,603,337 ​ ​ ​ ​ ​ 1,952,995 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 3,671,100 ​ ​ ​ ​ ​ 3,603,337 ​ ​ ​ ​ ​ 1,952,995 ​ ​ ​
Senior Floating Rate Fund ​ ​ ​ ​ 6,085,858 ​ ​ ​ ​ ​ 4,688,491 ​ ​ ​ ​ ​ 3,559,694 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 14,140 ​ ​ ​ ​ ​ 37,817 ​ ​ ​ ​ ​ 6,085,858 ​ ​ ​ ​ ​ 4,674,351 ​ ​ ​ ​ ​ 3,521,877 ​ ​ ​
Tax-Exempt Bond Fund * ​ ​ ​ ​ 877,332 ​ ​ ​ ​ ​ 877,668 ​ ​ ​ ​ ​ 675,266 ​ ​ ​ ​ ​ 268,741 ​ ​ ​ ​ ​ 289,795 ​ ​ ​ ​ ​ 241,668 ​ ​ ​ ​ ​ 608,591 ​ ​ ​ ​ ​ 587,873 ​ ​ ​ ​ ​ 433,598 ​ ​ ​
Wealth Masters Fund ​ ​ ​ ​ 902,867 ​ ​ ​ ​ ​ 1,248,952 ​ ​ ​ ​ ​ 807,794 ​ ​ ​ ​ ​ 8,041 ​ ​ ​ ​ ​ 13,526 ​ ​ ​ ​ ​ 74,298 ​ ​ ​ ​ ​ 894,826 ​ ​ ​ ​ ​ 1,235,426 ​ ​ ​ ​ ​ 733,496 ​ ​ ​
​ ​ ​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the fees paid to the Adviser for those funds in 2016 reflect the fees paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The fees paid to the Adviser for those funds in 2014 and 2015 reflect the fees paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
Subadvisers and Subadvisory Agreements
VIA has entered into subadvisory agreements with respect to certain Funds. Each subadvisory agreement provides that VIA will delegate to the respective subadviser the performance of certain of its investment management services under the Investment Advisory Agreement with respect to each of the Funds for which that subadviser provides subadvisory services. Each subadviser furnishes at its own expense the office facilities and personnel necessary to perform such services. VIA remains responsible for the supervision and oversight of each subadviser’s performance. Each subadvisory agreement will continue in effect from year to year if specifically approved by the Trustees, including a majority of the Independent Trustees. The subadvisory fees are paid by VIA out of its advisory fees from the Funds.
Duff  & Phelps Investment Management Co. — Global Infrastructure Fund, Global Real Estate Fund, International Equity Fund, International Real Estate Fund and Real Estate Fund
Duff  & Phelps is located at 200 S. Wacker Drive, Suite 500, Chicago, IL 60606, is an indirect, wholly-owned subsidiary of Virtus and an affiliate of VIA. Duff  & Phelps acts as adviser and subadviser to open- and closed-end funds and as investment adviser to institutions and individuals. As of September 30, 2016, Duff  & Phelps had approximately $10.6 billion in assets under management.
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For its services as subadviser, VIA pays Duff  & Phelps a fee at the rate of 50% of the net advisory fee paid by each Fund for which Duff  & Phelps acts as subadviser.
Thomas J. Herzfeld Advisors, Inc. — Herzfeld Fund
Herzfeld is located at 119 Washington Avenue, Suite 504, Miami, FL 33139. Herzfeld has specialized in the closed-end fund industry since its founding in 1984. As of September 30, 2016, Herzfeld had $305 million in assets under management.
For its services as subadviser, VIA pays Herzfeld a fee at the rate of 50% of the net advisory fee paid by Herzfeld Fund.
Horizon Asset Management LLC — International Wealth Masters Fund and Wealth Masters Fund
Horizon is located at 470 Park Avenue South, New York, NY 10016 and has been an investment adviser since 1994. Horizon is owned by Horizon Kinetics LLC (“Horizon Kinetics”), an independently owned and operated firm formed in May 2011. As of September 30, 2016, Horizon Kinetics had approximately $5.9 billion in assets under management.
For its services as subadviser, VIA pays Horizon a fee at the rate of 50% of the net advisory fee paid by each fund for which Horizon acts as a subadviser.
Kayne Anderson Rudnick Investment Management, LLC — EM Small-Cap Fund and International Small-Cap Fund
Kayne Anderson Rudnick is located at 1800 Avenue of the Stars, 2 nd Floor, Los Angeles, CA 90067 and is a wholly-owned indirect subsidiary of Virtus and an affiliate of VIA. Kayne Anderson Rudnick also serves as subadviser for other mutual funds. As of September 30, 2016, Kayne Anderson Rudnick had approximately $12 billion in assets under management.
For its service as a subadviser, VIA pays Kayne Anderson Rudnick a fee at the rate of 50% of the net advisory fee paid by each fund for which Kayne Anderson Rudnick acts as subadviser.
KBI Global Investors (North America) Ltd. — EM Equity Income Fund and Essential Resources Fund
KBIGI (North America) is located at 3 rd Floor, 2 Harbourmaster Place, IFSC, Dublin 1, Ireland, and with a registered office at One Rockefeller Plaza, 32nd Floor, New York, NY 10020. As of September 30, 2016, KBIGI (North America) and KBI Global Investors Ltd. had $9.6 billion in combined assets under management.
For its services as subadviser, VIA pays KBIGI (North America) a fee at the rate of 50% of the net advisory fee paid by each fund for which KBIGI (North America) acts as subadviser.
Newfleet Asset Management, LLC — Bond Fund, CA Tax-Exempt Bond Fund, EM Debt Fund, High Yield Fund, Low Duration Income Fund, Multi-Sector Intermediate Bond Fund, Multi-Sector Short Term Bond Fund, Senior Floating Rate Fund and Tax-Exempt Bond Fund
Newfleet is located at 100 Pearl Street, Hartford, CT and is an indirect, wholly-owned subsidiary of Virtus and an affiliate of VIA. Newfleet acts as subadviser to open- and closed-end funds and as investment adviser to institutions and individuals. As of September 30, 2016, Newfleet had approximately $11.9 billion in assets under management.
For its services as a subadviser, VIA pays Newfleet a fee at the rate of 50% of the net advisory fee paid by each Fund for which Newfleet acts as subadviser.
Rampart Investment Management Company, LLC — Low Volatility Fund
Rampart is located at One International Place, 14 th Floor, Boston, MA 02110 and is an indirect wholly-owned subsidiary of Virtus and an affiliate of VIA. Rampart has been an investment adviser since 1983 and provides investment management services to mutual funds, institutions and high net worth investors. As of September 30, 2016, Rampart had approximately $682 million in assets under management.
For its services as subadviser, VIA pays Rampart a fee at the rate of 50% of the net advisory fee paid by Low Volatility Fund.
Vontobel Asset Management, Inc. — EM Opportunities Fund, Foreign Opportunities Fund, Global Opportunities Fund and Greater European Fund
Vontobel is located at 1540 Broadway, 38 th Floor, New York, NY 10036 and is a wholly-owned subsidiary of Vontobel Holding AG, a Swiss bank holding company which is traded on the Swiss Stock Exchange. As of September 30, 2016, Vontobel had in excess of $37 billion in assets under management.
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For its services as a subadviser, VIA pays Vontobel a fee at the rate of 50% of the net advisory fee paid by each Fund for which Vontobel acts as a subadviser.
Subadvisory Fees
The following table shows the dollar amount of fees payable to each subadviser for managing the applicable Fund(s), the amount of expenses reimbursed by the subadviser, and the actual fee received by the subadviser for the fiscal years ended September 30, 2014, 2015 and 2016.
​ ​ ​
Gross Subadvisory Fee ($)
​ ​
Subadvisory Fee and/or Expenses
Reimbursed ($)
​ ​
Net Subadvisory Fee ($)
​ ​ ​ ​
Fund
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​ ​ ​
Alternatives Diversifier Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​
Bond Fund ​ ​ ​ ​ 180,732 ​ ​ ​ ​ ​ 172,602 ​ ​ ​ ​ ​ 172,757 ​ ​ ​ ​ ​ 98,691 ​ ​ ​ ​ ​ 102,972 ​ ​ ​ ​ ​ 121,919 ​ ​ ​ ​ ​ 82,041 ​ ​ ​ ​ ​ 69,630 ​ ​ ​ ​ ​ 50,837 ​ ​ ​ ​ ​
CA Tax-Exempt Bond Fund ​ ​ ​ ​ 93,816 ​ ​ ​ ​ ​ 76,092 ​ ​ ​ ​ ​ 70,361 ​ ​ ​ ​ ​ 51,483 ​ ​ ​ ​ ​ 55,058 ​ ​ ​ ​ ​ 55,772 ​ ​ ​ ​ ​ 42,333 ​ ​ ​ ​ ​ 21,034 ​ ​ ​ ​ ​ 14,589 ​ ​ ​ ​ ​
EM Debt Fund ​ ​ ​ ​ 112,762 ​ ​ ​ ​ ​ 109,810 ​ ​ ​ ​ ​ 104,661 ​ ​ ​ ​ ​ 20,047 ​ ​ ​ ​ ​ 19,706 ​ ​ ​ ​ ​ 24,746 ​ ​ ​ ​ ​ 92,716 ​ ​ ​ ​ ​ 90,104 ​ ​ ​ ​ ​ 79,916 ​ ​ ​ ​ ​
EM Equity Income Fund ​ ​ ​ ​ 349,002 ​ ​ ​ ​ ​ 360,780 ​ ​ ​ ​ ​ 173,828 ​ ​ ​ ​ ​ 6,531 ​ ​ ​ ​ ​ 7,420 ​ ​ ​ ​ ​ 61,791 ​ ​ ​ ​ ​ 342,471 ​ ​ ​ ​ ​ 353,360 ​ ​ ​ ​ ​ 112,037 ​ ​ ​ ​ ​
EM Opportunities Fund * ​ ​ ​ ​ 38,485,158 ​ ​ ​ ​ ​ 47,644,973 ​ ​ ​ ​ ​ 40,685,279 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 38,485,158 ​ ​ ​ ​ ​ 47,644,973 ​ ​ ​ ​ ​ 40,685,279 ​ ​ ​ ​ ​
EM Small-Cap Fund ​ ​ ​ ​ 15,658 ​ ​ ​ ​ ​ 27,017 ​ ​ ​ ​ ​ 27,049 ​ ​ ​ ​ ​ 39,847 ​ ​ ​ ​ ​ 39,386 ​ ​ ​ ​ ​ 43,254 ​ ​ ​ ​ ​ (24,189 ) ​ ​ ​ ​ ​ (12,369 ) ​ ​ ​ ​ ​ (16,205 ) ​ ​ ​ ​ ​
Equity Trend Fund ​ ​ ​ ​ 56,168,415 ​ ​ ​ ​ ​ 28,978,934 ​ ​ ​ ​ ​ 2,647,782 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 296,343 ​ ​ ​ ​ ​ 56,168,415 ​ ​ ​ ​ ​ 28,978,934 ​ ​ ​ ​ ​ 2,351,439 ​ ​ ​ ​ ​
Essential Resources Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 13,607 ​ ​ ​ ​ ​ 24,283 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 56,745 ​ ​ ​ ​ ​ 60,259 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (43,139 ) ​ ​ ​ ​ ​ (35,976 ) ​ ​ ​ ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ 8,051,360 ​ ​ ​ ​ ​ 8,192,849 ​ ​ ​ ​ ​ 6,984,382 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 8,051,360 ​ ​ ​ ​ ​ 8,192,849 ​ ​ ​ ​ ​ 6,984,382 ​ ​ ​ ​ ​
Global Equity Trend Fund ​ ​ ​ ​ 1,550,262 ​ ​ ​ ​ ​ 835,002 ​ ​ ​ ​ ​ 70,980 ​ ​ ​ ​ ​ (22,766 ) ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 1,316 ​ ​ ​ ​ ​ 1,573,028 ​ ​ ​ ​ ​ 835,002 ​ ​ ​ ​ ​ 69,664 ​ ​ ​ ​ ​
Global Infrastructure Fund ​ ​ ​ ​ 464,994 ​ ​ ​ ​ ​ 569,748 ​ ​ ​ ​ ​ 409,883 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 464,994 ​ ​ ​ ​ ​ 569,748 ​ ​ ​ ​ ​ 409,883 ​ ​ ​ ​ ​
Global Opportunities Fund ​ ​ ​ ​ 502,877 ​ ​ ​ ​ ​ 583,943 ​ ​ ​ ​ ​ 695,762 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 502,877 ​ ​ ​ ​ ​ 583,943 ​ ​ ​ ​ ​ 695,762 ​ ​ ​ ​ ​
Global Real Estate Fund ​ ​ ​ ​ 199,186 ​ ​ ​ ​ ​ 322,361 ​ ​ ​ ​ ​ 545,357 ​ ​ ​ ​ ​ 39,689 ​ ​ ​ ​ ​ 39,460 ​ ​ ​ ​ ​ 82,195 ​ ​ ​ ​ ​ 159,496 ​ ​ ​ ​ ​ 282,901 ​ ​ ​ ​ ​ 463,162 ​ ​ ​ ​ ​
Greater European Fund ​ ​ ​ ​ 72,668 ​ ​ ​ ​ ​ 82,353 ​ ​ ​ ​ ​ 112,513 ​ ​ ​ ​ ​ 39,908 ​ ​ ​ ​ ​ 42,335 ​ ​ ​ ​ ​ 45,565 ​ ​ ​ ​ ​ 32,760 ​ ​ ​ ​ ​ 40,018 ​ ​ ​ ​ ​ 66,948 ​ ​ ​ ​ ​
Herzfeld Fund ​ ​ ​ ​ 80,854 ​ ​ ​ ​ ​ 159,469 ​ ​ ​ ​ ​ 223,075 ​ ​ ​ ​ ​ 27,826 ​ ​ ​ ​ ​ 19,855 ​ ​ ​ ​ ​ 27,651 ​ ​ ​ ​ ​ 53,028 ​ ​ ​ ​ ​ 139,614 ​ ​ ​ ​ ​ 195,424 ​ ​ ​ ​ ​
High Yield Fund ​ ​ ​ ​ 294,762 ​ ​ ​ ​ ​ 285,451 ​ ​ ​ ​ ​ 232,183 ​ ​ ​ ​ ​ 74,903 ​ ​ ​ ​ ​ 73,856 ​ ​ ​ ​ ​ 92,696 ​ ​ ​ ​ ​ 219,859 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 139,487 ​ ​ ​ ​ ​
International Equity Fund ​ ​ ​ ​ 34,033 ​ ​ ​ ​ ​ 38,994 ​ ​ ​ ​ ​ 27,258 ​ ​ ​ ​ ​ 37,100 ​ ​ ​ ​ ​ 36,088 ​ ​ ​ ​ ​ 47,639 ​ ​ ​ ​ ​ (3,067 ) ​ ​ ​ ​ ​ 2,906 ​ ​ ​ ​ ​ (20,381 ) ​ ​ ​ ​ ​
International Real Estate Fund ​ ​ ​ ​ 218,229 ​ ​ ​ ​ ​ 211,037 ​ ​ ​ ​ ​ 184,418 ​ ​ ​ ​ ​ 50,000 ​ ​ ​ ​ ​ 57,178 ​ ​ ​ ​ ​ 67,630 ​ ​ ​ ​ ​ 168,229 ​ ​ ​ ​ ​ 153,860 ​ ​ ​ ​ ​ 116,788 ​ ​ ​ ​ ​
International Small-Cap Fund ​ ​ ​ ​ 216,038 ​ ​ ​ ​ ​ 247,445 ​ ​ ​ ​ ​ 205,845 ​ ​ ​ ​ ​ 30,017 ​ ​ ​ ​ ​ 33,681 ​ ​ ​ ​ ​ 53,926 ​ ​ ​ ​ ​ 186,021 ​ ​ ​ ​ ​ 213,764 ​ ​ ​ ​ ​ 151,919 ​ ​ ​ ​ ​
International Wealth Masters Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 20,154 ​ ​ ​ ​ ​ 22,877 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 50,546 ​ ​ ​ ​ ​ 49,585 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ (30,392 ) ​ ​ ​ ​ ​ (26,707 ) ​ ​ ​ ​ ​
Low Duration Income Fund * ​ ​ ​ ​ 404,132 ​ ​ ​ ​ ​ 586,597 ​ ​ ​ ​ ​ 873,022 ​ ​ ​ ​ ​ 138,041 ​ ​ ​ ​ ​ 391,367 ​ ​ ​ ​ ​ 569,734 ​ ​ ​ ​ ​ 266,091 ​ ​ ​ ​ ​ 195,230 ​ ​ ​ ​ ​ 303,288 ​ ​ ​ ​ ​
Low Volatility Equity Fund ​ ​ ​ ​ 9,318 ​ ​ ​ ​ ​ 21,685 ​ ​ ​ ​ ​ 22,467 ​ ​ ​ ​ ​ 40,719 ​ ​ ​ ​ ​ 27,729 ​ ​ ​ ​ ​ 33,305 ​ ​ ​ ​ ​ (31,401 ) ​ ​ ​ ​ ​ (6,044 ) ​ ​ ​ ​ ​ (10,837 ) ​ ​ ​ ​ ​
Multi-Asset Trend Fund ​ ​ ​ ​ 5,539,510 ​ ​ ​ ​ ​ 3,221,251 ​ ​ ​ ​ ​ 356,185 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 5,539,510 ​ ​ ​ ​ ​ 3,221,251 ​ ​ ​ ​ ​ 356,185 ​ ​ ​ ​ ​
Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ 1,000,754 ​ ​ ​ ​ ​ 992,926 ​ ​ ​ ​ ​ 830,185 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 7,825 ​ ​ ​ ​ ​ 24,940 ​ ​ ​ ​ ​ 1,000,754 ​ ​ ​ ​ ​ 985,101 ​ ​ ​ ​ ​ 805,245 ​ ​ ​ ​ ​
Multi-Sector Short Term Bond Fund ​ ​ ​ ​ 20,203,222 ​ ​ ​ ​ ​ 19,806,192 ​ ​ ​ ​ ​ 17,031,928 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 47,889 ​ ​ ​ ​ ​ 152,625 ​ ​ ​ ​ ​ 20,203,222 ​ ​ ​ ​ ​ 19,758,303 ​ ​ ​ ​ ​ 16,879,302 ​ ​ ​ ​ ​
Real Estate Fund ​ ​ ​ ​ 5,309,054 ​ ​ ​ ​ ​ 5,768.769 ​ ​ ​ ​ ​ 4,780,471 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 5,309,054 ​ ​ ​ ​ ​ 5,768,769 ​ ​ ​ ​ ​ 4,780,471 ​ ​ ​ ​ ​
Sector Trend Fund ​ ​ ​ ​ 2,365,820 ​ ​ ​ ​ ​ 1,829,321 ​ ​ ​ ​ ​ 366,638 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 2,365,820 ​ ​ ​ ​ ​ 1,829,321 ​ ​ ​ ​ ​ 366,638 ​ ​ ​ ​ ​
Senior Floating Rate Fund ​ ​ ​ ​ 3,042,929 ​ ​ ​ ​ ​ 2,344,246 ​ ​ ​ ​ ​ 1,779,847 ​ ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 7,070 ​ ​ ​ ​ ​ 18,909 ​ ​ ​ ​ ​ 3,042,929 ​ ​ ​ ​ ​ 2,337,176 ​ ​ ​ ​ ​ 1,760,938 ​ ​ ​ ​ ​
Tax-Exempt Bond Fund * ​ ​ ​ ​ 438,666 ​ ​ ​ ​ ​ 438,834 ​ ​ ​ ​ ​ 446,340 ​ ​ ​ ​ ​ 134,371 ​ ​ ​ ​ ​ 144,897 ​ ​ ​ ​ ​ 159,142 ​ ​ ​ ​ ​ 304,295 ​ ​ ​ ​ ​ 293,937 ​ ​ ​ ​ ​ 287,199 ​ ​ ​ ​ ​
Wealth Masters Fund ​ ​ ​ ​ 451,433 ​ ​ ​ ​ ​ 624,477 ​ ​ ​ ​ ​ 403,897 ​ ​ ​ ​ ​ 4,021 ​ ​ ​ ​ ​ 8,617 ​ ​ ​ ​ ​ 37,149 ​ ​ ​ ​ ​ 447,413 ​ ​ ​ ​ ​ 615,860 ​ ​ ​ ​ ​ 366,748 ​ ​ ​ ​ ​
​ ​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the fees paid to the subadvisers for those funds in 2016 reflect the fees paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The fees paid to the subadvisers for those funds in 2014 and 2015 reflect the fees paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
Administrator
Virtus Fund Services, LLC ("VFS") is the administrator of the Trust. VFS is an indirect, wholly-owned subsidiary of Virtus and an affiliate of the Adviser. For its services as administrator, VFS received an administration fee based upon the average net assets across all series of the Virtus Mutual Funds at the following annual rates:
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​ First $15 billion ​ ​ 0.10% ​
​ $15+ billion to $30 billion ​ ​ 0.095% ​
​ $30+ billion to $50 billion ​ ​ 0.09% ​
​ Greater than $50 billion ​ ​ 0.085% ​
For the purposes of applying the fee breakpoints, the Virtus Mutual Funds’ average net assets may be aggregated with the average net assets of the series of VVIT.
The following table shows the dollar amount of fees paid to the Administrator for the fiscal years ended September 30, 2014, 2015 and 2016 for its administrative services with respect to each Fund.
​ ​ ​
Administration Fee ($)
​ ​
Fund
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
Alternatives Diversified Fund ​ ​ ​ ​ 154,925 ​ ​ ​ ​ ​ 105,386 ​ ​ ​ ​ ​ 62,548 ​ ​ ​
Bond Fund ​ ​ ​ ​ 70,412 ​ ​ ​ ​ ​ 73,310 ​ ​ ​ ​ ​ 75,466 ​ ​ ​
CA Tax-Exempt Bond Fund ​ ​ ​ ​ 33,441 ​ ​ ​ ​ ​ 32,098 ​ ​ ​ ​ ​ 30,968 ​ ​ ​
EM Debt Fund ​ ​ ​ ​ 22,321 ​ ​ ​ ​ ​ 27,772 ​ ​ ​ ​ ​ 27,681 ​ ​ ​
EM Equity Income Fund ​ ​ ​ ​ 57,181 ​ ​ ​ ​ ​ 65,532 ​ ​ ​ ​ ​ 32,757 ​ ​ ​
EM Opportunities Fund * ​ ​ ​ ​ 7,709,972 ​ ​ ​ ​ ​ 9,580,713 ​ ​ ​ ​ ​ 5,864,269 ​ ​ ​
EM Small-Cap Fund ​ ​ ​ ​ (591 ) ​ ​ ​ ​ ​ 4,161 ​ ​ ​ ​ ​ 5,017 ​ ​ ​
Equity Trend Fund ​ ​ ​ ​ 6,974,654 ​ ​ ​ ​ ​ 4,290,328 ​ ​ ​ ​ ​ 1,356,785 ​ ​ ​
Essential Resources ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 2,410 ​ ​ ​ ​ ​ 4,300 ​ ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ 1,806,480 ​ ​ ​ ​ ​ 1,852,234 ​ ​ ​ ​ ​ 1,606,974 ​ ​ ​
Global Equity Trend ​ ​ ​ ​ 186,233 ​ ​ ​ ​ ​ 124,414 ​ ​ ​ ​ ​ 36,681 ​ ​ ​
Global Infrastructure Fund ​ ​ ​ ​ 130,463 ​ ​ ​ ​ ​ 168,180 ​ ​ ​ ​ ​ 123,686 ​ ​ ​
Global Opportunities Fund ​ ​ ​ ​ 106,779 ​ ​ ​ ​ ​ 131,719 ​ ​ ​ ​ ​ 160,462 ​ ​ ​
Global Real Estate Fund ​ ​ ​ ​ 38,396 ​ ​ ​ ​ ​ 72,577 ​ ​ ​ ​ ​ 125,889 ​ ​ ​
Greater European Fund ​ ​ ​ ​ 9,907 ​ ​ ​ ​ ​ 18,240 ​ ​ ​ ​ ​ 26,283 ​ ​ ​
Herzfeld Fund ​ ​ ​ ​ 9,021 ​ ​ ​ ​ ​ 30,311 ​ ​ ​ ​ ​ 44,016 ​ ​ ​
High Yield Fund ​ ​ ​ ​ 80,337 ​ ​ ​ ​ ​ 84,003 ​ ​ ​ ​ ​ 70,240 ​ ​ ​
International Equity Fund ​ ​ ​ ​ 1,209 ​ ​ ​ ​ ​ 8,413 ​ ​ ​ ​ ​ 6,663 ​ ​ ​
International Real Estate Fund ​ ​ ​ ​ 35,313 ​ ​ ​ ​ ​ 40,160 ​ ​ ​ ​ ​ 36,451 ​ ​ ​
International Small-Cap Fund ​ ​ ​ ​ 34,900 ​ ​ ​ ​ ​ 47,172 ​ ​ ​ ​ ​ 40,640 ​ ​ ​
International Wealth Masters Fund ​ ​ ​ ​ 0 ​ ​ ​ ​ ​ 4,464 ​ ​ ​ ​ ​ 5,364 ​ ​ ​
Low Duration Income Fund * ​ ​ ​ ​ 141,370 ​ ​ ​ ​ ​ 206,212 ​ ​ ​ ​ ​ 250,455 ​ ​ ​
Low Volatility Equity Fund ​ ​ ​ ​ (4,578 ) ​ ​ ​ ​ ​ 4,002 ​ ​ ​ ​ ​ 5,017 ​ ​ ​
Multi-Asset Trend Fund ​ ​ ​ ​ 682,046 ​ ​ ​ ​ ​ 493,743 ​ ​ ​ ​ ​ 183,667 ​ ​ ​
Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ 341,791 ​ ​ ​ ​ ​ 346,478 ​ ​ ​ ​ ​ 295,528 ​ ​ ​
Multi-Sector Short Term Bond Fund ​ ​ ​ ​ 8,267,518 ​ ​ ​ ​ ​ 8,133,657 ​ ​ ​ ​ ​ 7,075,215 ​ ​ ​
Real Estate Fund ​ ​ ​ ​ 1,376,862 ​ ​ ​ ​ ​ 1,514,317 ​ ​ ​ ​ ​ 1,265,932 ​ ​ ​
Sector Trend Fund ​ ​ ​ ​ 774,285 ​ ​ ​ ​ ​ 767,942 ​ ​ ​ ​ ​ 424,667 ​ ​ ​
Senior Floating Rate Fund ​ ​ ​ ​ 966,314 ​ ​ ​ ​ ​ 749,743 ​ ​ ​ ​ ​ 580,397 ​ ​ ​
Tax-Exempt Bond Fund * ​ ​ ​ ​ 186,640 ​ ​ ​ ​ ​ 188,468 ​ ​ ​ ​ ​ 146,814 ​ ​ ​
Wealth Masters Fund ​ ​ ​ ​ 95,211 ​ ​ ​ ​ ​ 140,837 ​ ​ ​ ​ ​ 93,288 ​ ​ ​
​ ​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the fees paid to the Administrator for those funds in 2016 reflect the fees paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The fees paid to the Administrator for those funds in 2014 and 2015 reflect the fees paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
Sub-administrative and Accounting Agent
The Trust has entered into an agreement with BNY Mellon, 301 Bellevue Parkway, Wilmington, DE 19809, pursuant to which BNY Mellon acts as sub-administrative and accounting agent of the Trust. For its services in this capacity, BNY Mellon receives a fee based on the average net assets across all series within the Virtus Mutual Funds at the following incremental rates:
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​ First $15 billion ​ ​ 0.0325% ​
​ $15+ billion to $30 billion ​ ​ 0.0225% ​
​ $30+ billion to $50 billion ​ ​ 0.0075% ​
​ Greater than $50 billion ​ ​ 0.005% ​
For the purposes of applying the fee breakpoints, the Virtus Mutual Funds’ average net assets may be aggregated with the average net assets of an affiliated fund complex for which Virtus Fund Services acts as administrator.
Distributor
VP Distributors, a broker-dealer registered with FINRA and which is an indirect, wholly-owned subsidiary of Virtus and an affiliate of the Adviser and certain subadvisers, serves as distributor of the Funds’ shares. Fund shares are offered on a continuous basis. The principal office of VP Distributors is located at 100 Pearl Street, Hartford, Connecticut 06103. George R. Aylward, Kevin J. Carr and Nancy J. Engberg, each serve as an officer of the Trust and as an officer for the Distributor.
The Trust and VP Distributors have entered into an underwriting agreement under which VP Distributors has agreed to use its best efforts to find purchasers for Trust shares and the Trust has granted to VP Distributors the exclusive right to purchase from the Funds and resell, as principal, shares needed to fill unconditional orders for Fund shares. VP Distributors may sell Fund shares through its registered representatives or through securities dealers with whom it has sales agreements. VP Distributors may also sell Fund shares pursuant to sales agreements entered into with bank-affiliated securities brokers who, acting as agent for their customers, place orders for Fund shares with VP Distributors. It is not anticipated that termination of sales agreements with banks and bank affiliated securities brokers would result in a loss to their customers or a change in the NAV per share of a Fund of the Trust.
For its services under the underwriting agreement, VP Distributors receives sales charges on transactions in Fund shares and retains such charges less the portion thereof allowed to its registered representatives and to securities dealers and securities brokers with whom it has sales agreements. In addition, VP Distributors may receive payments from the Trust pursuant to the Distribution Plans described below.
During the fiscal years ended September 30, 2014, 2015 and 2016, purchasers of shares of the Funds paid aggregate sales charges of $18,679,151, $7,422,956 and $2,303,147 respectively, of which the Distributor received net commissions of $3,407,086, $2,395,878 and $599,559 respectively, for its services, the balance being paid to dealers. For the fiscal year ended September 30, 2016, the Distributor received net commissions of $204,113 for Class A Shares and deferred sales charges of $179,458 for Class A Shares, $0 for Class B Shares, $193,976 for Class C Shares and $22,012 for Class T Shares.
The distribution agreement/underwriting agreement may be terminated at any time by 60 days written notice, without payment of a penalty, by the Distributor, by vote of a majority of the appropriate Class of outstanding voting securities of the Funds, or by vote of a majority of the Trust’s Trustees who are not parties to the distribution agreement/underwriting agreement or “interested persons” of any party and who have no direct or indirect financial interest in the operation of the Distribution Plans or in any related agreements. The distribution agreement/underwriting agreement will terminate automatically in the event of its “assignment,” as defined in Section 2(a)(4) of the 1940 Act.
The following table shows the dollar amount of sales charges paid to VP Distributors for the fiscal years ended September 30, 2014, 2015 and 2016, with respect to sales of Class A Shares of each Fund and the amount of sales charges retained by the distributor and not reallowed to other persons.
​ ​ ​
Aggregate Underwriting
Commissions($)
​ ​
Amount Retained by the
Distributors($)
​ ​
Amount Reallowed($)
​
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
Alternatives Diversifier Fund ​ ​ ​ ​ 201,493 ​ ​ ​ ​ ​ 2,901 ​ ​ ​ ​ ​ 4,863 ​ ​ ​ ​ ​ 4,494 ​ ​ ​ ​ ​ 519 ​ ​ ​ ​ ​ 547 ​ ​ ​ ​ ​ 196,999 ​ ​ ​ ​ ​ 2,382 ​ ​ ​ ​ ​ 4,316 ​ ​ ​
Bond Fund ​ ​ ​ ​ 323,276 ​ ​ ​ ​ ​ 29,835 ​ ​ ​ ​ ​ 11,654 ​ ​ ​ ​ ​ 6,669 ​ ​ ​ ​ ​ 3,882 ​ ​ ​ ​ ​ 2,051 ​ ​ ​ ​ ​ 316,607 ​ ​ ​ ​ ​ 25,953 ​ ​ ​ ​ ​ 9,603 ​ ​ ​
CA Tax-Exempt Bond Fund ​ ​ ​ ​ 25,766 ​ ​ ​ ​ ​ 5,342 ​ ​ ​ ​ ​ 2,733 ​ ​ ​ ​ ​ 158 ​ ​ ​ ​ ​ 1,012 ​ ​ ​ ​ ​ 613 ​ ​ ​ ​ ​ 25,608 ​ ​ ​ ​ ​ 4,330 ​ ​ ​ ​ ​ 2,120 ​ ​ ​
EM Debt Fund ​ ​ ​ ​ 55,746 ​ ​ ​ ​ ​ 276,847 ​ ​ ​ ​ ​ 127 ​ ​ ​ ​ ​ 1,211 ​ ​ ​ ​ ​ 120 ​ ​ ​ ​ ​ 17 ​ ​ ​ ​ ​ 54,535 ​ ​ ​ ​ ​ 276,727 ​ ​ ​ ​ ​ 110 ​ ​ ​
EM Equity Fund ​ ​ ​ ​ 38,326 ​ ​ ​ ​ ​ 2,198 ​ ​ ​ ​ ​ 4,504 ​ ​ ​ ​ ​ 827 ​ ​ ​ ​ ​ 244 ​ ​ ​ ​ ​ 530 ​ ​ ​ ​ ​ 37,499 ​ ​ ​ ​ ​ 1,954 ​ ​ ​ ​ ​ 3,974 ​ ​ ​
EM Opportunities Fund * ​ ​ ​ ​ 1,306,007 ​ ​ ​ ​ ​ 1,323,601 ​ ​ ​ ​ ​ 586,964 ​ ​ ​ ​ ​ 164,634 ​ ​ ​ ​ ​ 164,302 ​ ​ ​ ​ ​ 50,759 ​ ​ ​ ​ ​ 1,141,373 ​ ​ ​ ​ ​ 1,159,299 ​ ​ ​ ​ ​ 536,205 ​ ​ ​
EM Small-Cap Fund ​ ​ ​ ​ 3.508 ​ ​ ​ ​ ​ 8,925 ​ ​ ​ ​ ​ 100 ​ ​ ​ ​ ​ 472 ​ ​ ​ ​ ​ 1,432 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,036 ​ ​ ​ ​ ​ 7,493 ​ ​ ​ ​ ​ 100 ​ ​ ​
Equity Trend Fund ​ ​ ​ ​ 1,688,404 ​ ​ ​ ​ ​ 1,950,241 ​ ​ ​ ​ ​ 101,392 ​ ​ ​ ​ ​ 1,655,594 ​ ​ ​ ​ ​ 220,097 ​ ​ ​ ​ ​ 12,825 ​ ​ ​ ​ ​ 32,810 ​ ​ ​ ​ ​ 1,730,144 ​ ​ ​ ​ ​ 88,567 ​ ​ ​
Essential Resources Fund ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,096 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 321 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1,775 ​ ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ 8,953,742 ​ ​ ​ ​ ​ 217,102 ​ ​ ​ ​ ​ 138,533 ​ ​ ​ ​ ​ 75,881 ​ ​ ​ ​ ​ 21,309 ​ ​ ​ ​ ​ 16,485 ​ ​ ​ ​ ​ 8,877,861 ​ ​ ​ ​ ​ 195,793 ​ ​ ​ ​ ​ 122,048 ​ ​ ​
Global Equity Trend Fund ​ ​ ​ ​ 47,748 ​ ​ ​ ​ ​ 17,703 ​ ​ ​ ​ ​ 7,498 ​ ​ ​ ​ ​ 38,912 ​ ​ ​ ​ ​ 2,078 ​ ​ ​ ​ ​ 1,001 ​ ​ ​ ​ ​ 8,836 ​ ​ ​ ​ ​ 15,625 ​ ​ ​ ​ ​ 6,497 ​ ​ ​
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​ ​ ​
Aggregate Underwriting
Commissions($)
​ ​
Amount Retained by the
Distributors($)
​ ​
Amount Reallowed($)
​ ​
​ ​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​
2014
​ ​
2015
​ ​
2016
​ ​ ​
Global Infrastructure Fund ​ ​ ​ ​ 34,511 ​ ​ ​ ​ ​ 291,179 ​ ​ ​ ​ ​ 51,383 ​ ​ ​ ​ ​ 33,365 ​ ​ ​ ​ ​ 31,907 ​ ​ ​ ​ ​ 6,590 ​ ​ ​ ​ ​ 1,146 ​ ​ ​ ​ ​ 259,272 ​ ​ ​ ​ ​ 44,793 ​ ​ ​ ​
Global Opportunities Fund ​ ​ ​ ​ 11,736 ​ ​ ​ ​ ​ 60,678 ​ ​ ​ ​ ​ 90,720 ​ ​ ​ ​ ​ 6,586 ​ ​ ​ ​ ​ 4,662 ​ ​ ​ ​ ​ 11,818 ​ ​ ​ ​ ​ 5,150 ​ ​ ​ ​ ​ 56,016 ​ ​ ​ ​ ​ 78,902 ​ ​ ​ ​
Global Real Estate Fund ​ ​ ​ ​ 31,894 ​ ​ ​ ​ ​ 75,556 ​ ​ ​ ​ ​ 84,691 ​ ​ ​ ​ ​ 8,981 ​ ​ ​ ​ ​ 8,492 ​ ​ ​ ​ ​ 10,253 ​ ​ ​ ​ ​ 22,913 ​ ​ ​ ​ ​ 67,064 ​ ​ ​ ​ ​ 74,438 ​ ​ ​ ​
Greater European Fund ​ ​ ​ ​ 15,676 ​ ​ ​ ​ ​ 28,693 ​ ​ ​ ​ ​ 13,726 ​ ​ ​ ​ ​ 5,539 ​ ​ ​ ​ ​ 3,145 ​ ​ ​ ​ ​ 1,656 ​ ​ ​ ​ ​ 10,137 ​ ​ ​ ​ ​ 25,548 ​ ​ ​ ​ ​ 12,070 ​ ​ ​ ​
Herzfeld Fund ​ ​ ​ ​ 1,212,423 ​ ​ ​ ​ ​ 82,180 ​ ​ ​ ​ ​ 12,283 ​ ​ ​ ​ ​ 5,257 ​ ​ ​ ​ ​ 9,876 ​ ​ ​ ​ ​ 1,613 ​ ​ ​ ​ ​ 1,207,166 ​ ​ ​ ​ ​ 72,304 ​ ​ ​ ​ ​ 10,670 ​ ​ ​ ​
High Yield Fund ​ ​ ​ ​ 223,588 ​ ​ ​ ​ ​ 39,964 ​ ​ ​ ​ ​ 29,108 ​ ​ ​ ​ ​ 12,768 ​ ​ ​ ​ ​ 4,971 ​ ​ ​ ​ ​ 4,714 ​ ​ ​ ​ ​ 210,820 ​ ​ ​ ​ ​ 34,993 ​ ​ ​ ​ ​ 24,394 ​ ​ ​ ​
International Equity Fund ​ ​ ​ ​ 2,388 ​ ​ ​ ​ ​ 10,612 ​ ​ ​ ​ ​ 2,943 ​ ​ ​ ​ ​ 2,226 ​ ​ ​ ​ ​ 611 ​ ​ ​ ​ ​ 376 ​ ​ ​ ​ ​ 162 ​ ​ ​ ​ ​ 10,001 ​ ​ ​ ​ ​ 2,567 ​ ​ ​ ​
International Real Estate Fund ​ ​ ​ ​ 3,803 ​ ​ ​ ​ ​ 6,143 ​ ​ ​ ​ ​ 1,039 ​ ​ ​ ​ ​ 2,959 ​ ​ ​ ​ ​ 1,223 ​ ​ ​ ​ ​ 126 ​ ​ ​ ​ ​ 844 ​ ​ ​ ​ ​ 4,920 ​ ​ ​ ​ ​ 913 ​ ​ ​ ​
International Small-Cap Fund ​ ​ ​ ​ 4,642 ​ ​ ​ ​ ​ 4,436 ​ ​ ​ ​ ​ 4,362 ​ ​ ​ ​ ​ 1,620 ​ ​ ​ ​ ​ 492 ​ ​ ​ ​ ​ 571 ​ ​ ​ ​ ​ 3,022 ​ ​ ​ ​ ​ 3,944 ​ ​ ​ ​ ​ 3,791 ​ ​ ​ ​
International Wealth Masters Fund ​ ​ ​ ​ — ​ ​ ​ ​ ​ 24 ​ ​ ​ ​ ​ 53 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3 ​ ​ ​ ​ ​ 7 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 21 ​ ​ ​ ​ ​ 46 ​ ​ ​ ​
Low Duration Income Fund * ​ ​ ​ ​ 44,281 ​ ​ ​ ​ ​ 43,613 ​ ​ ​ ​ ​ 45,076 ​ ​ ​ ​ ​ 1,830 ​ ​ ​ ​ ​ 12,225 ​ ​ ​ ​ ​ 5,252 ​ ​ ​ ​ ​ 42,451 ​ ​ ​ ​ ​ 31,388 ​ ​ ​ ​ ​ 39,824 ​ ​ ​ ​
Low Volatility Equity Fund ​ ​ ​ ​ 7,753 ​ ​ ​ ​ ​ 4,276 ​ ​ ​ ​ ​ 38 ​ ​ ​ ​ ​ 995 ​ ​ ​ ​ ​ 485 ​ ​ ​ ​ ​ 5 ​ ​ ​ ​ ​ 6,758 ​ ​ ​ ​ ​ 3,791 ​ ​ ​ ​ ​ 33 ​ ​ ​ ​
Multi-Asset Trend Fund ​ ​ ​ ​ 2,991,013 ​ ​ ​ ​ ​ 237,118 ​ ​ ​ ​ ​ 29,190 ​ ​ ​ ​ ​ 251,776 ​ ​ ​ ​ ​ 27,143 ​ ​ ​ ​ ​ 3,815 ​ ​ ​ ​ ​ 2,739,237 ​ ​ ​ ​ ​ 209,975 ​ ​ ​ ​ ​ 25,375 ​ ​ ​ ​
Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ 33,116 ​ ​ ​ ​ ​ 125,243 ​ ​ ​ ​ ​ 45,572 ​ ​ ​ ​ ​ 30,080 ​ ​ ​ ​ ​ 15,069 ​ ​ ​ ​ ​ 5,975 ​ ​ ​ ​ ​ 3,036 ​ ​ ​ ​ ​ 110,174 ​ ​ ​ ​ ​ 39,597 ​ ​ ​ ​
Multi-Sector Short Term Bond Fund ​ ​ ​ ​ 253,339 ​ ​ ​ ​ ​ 576,370 ​ ​ ​ ​ ​ 278,144 ​ ​ ​ ​ ​ 213,538 ​ ​ ​ ​ ​ 37,671 ​ ​ ​ ​ ​ 20,955 ​ ​ ​ ​ ​ 39,810 ​ ​ ​ ​ ​ 529,699 ​ ​ ​ ​ ​ 257,189 ​ ​ ​ ​
Real Estate Fund ​ ​ ​ ​ 57,086 ​ ​ ​ ​ ​ 200,218 ​ ​ ​ ​ ​ 132,358 ​ ​ ​ ​ ​ 31.413 ​ ​ ​ ​ ​ 22,922 ​ ​ ​ ​ ​ 16,174 ​ ​ ​ ​ ​ 25,673 ​ ​ ​ ​ ​ 177,296 ​ ​ ​ ​ ​ 116,184 ​ ​ ​ ​
Sector Trend Fund ​ ​ ​ ​ 1,227,951 ​ ​ ​ ​ ​ 442,740 ​ ​ ​ ​ ​ 140,304 ​ ​ ​ ​ ​ 190,110 ​ ​ ​ ​ ​ 50,583 ​ ​ ​ ​ ​ 17,627 ​ ​ ​ ​ ​ 1,037,841 ​ ​ ​ ​ ​ 392,157 ​ ​ ​ ​ ​ 122,677 ​ ​ ​ ​
Senior Floating Rate Fund ​ ​ ​ ​ 136,440 ​ ​ ​ ​ ​ 54,929 ​ ​ ​ ​ ​ 25,551 ​ ​ ​ ​ ​ 135,986 ​ ​ ​ ​ ​ 4,839 ​ ​ ​ ​ ​ 3,548 ​ ​ ​ ​ ​ 454 ​ ​ ​ ​ ​ 50,090 ​ ​ ​ ​ ​ 22,003 ​ ​ ​ ​
Tax-Exempt Bond Fund * ​ ​ ​ ​ 18,932 ​ ​ ​ ​ ​ 19,910 ​ ​ ​ ​ ​ 17,671 ​ ​ ​ ​ ​ 1,944 ​ ​ ​ ​ ​ 2,734 ​ ​ ​ ​ ​ 2,440 ​ ​ ​ ​ ​ 16,988 ​ ​ ​ ​ ​ 17,176 ​ ​ ​ ​ ​ 15,231 ​ ​ ​ ​
Wealth Masters Fund ​ ​ ​ ​ 218,367 ​ ​ ​ ​ ​ 271,923 ​ ​ ​ ​ ​ 43,026 ​ ​ ​ ​ ​ 115,724 ​ ​ ​ ​ ​ 30,546 ​ ​ ​ ​ ​ 5,449 ​ ​ ​ ​ ​ 102,643 ​ ​ ​ ​ ​ 241,377 ​ ​ ​ ​ ​ 37,577 ​ ​ ​ ​
​ ​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the fees paid to VP Distributors for those funds in 2016 reflect the fees paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The fees paid to VP Distributors for those funds in 2014 and 2015 reflect the fees paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
Dealer Concessions
Class A Shares, Class B Shares, Class C Shares, Class I Shares and Class T Shares Only
Multi-Sector Short Term Bond Fund and Low Duration Income Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge
as Percentage
of Offering
Price
​ ​
Sales Charge
as Percentage
of Net Amount
Invested
​ ​
Dealer Discount
as Percentage of
Offering Price
​
Less than $100,000 ​ ​ ​ ​ 2.25 % ​ ​ ​ ​ ​ 2.30 % ​ ​ ​ ​ ​ 2.00 % ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
Greater than $250,000 ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
CA Tax-Exempt Bond Fund, Senior Floating Rate Fund and Tax-Exempt Bond Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge
as Percentage
of Offering
Price
​ ​
Sales Charge
as Percentage
of Amount
Invested
​ ​
Dealer Discount
or Agency Fee
as Percentage of
Offering Price
​
Under $50,000 ​ ​ ​ ​ 2.75 % ​ ​ ​ ​ ​ 2.83 % ​ ​ ​ ​ ​ 2.25 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.00 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 1.25 ​ ​ ​ ​ ​ 1.27 ​ ​ ​ ​ ​ 1.00 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.00 ​ ​ ​ ​ ​ 1.01 ​ ​ ​ ​ ​ 1.00 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Bond Fund, EM Debt Fund, High Yield Fund and Virtus Multi-Sector Intermediate Bond Fund
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Amount of Transaction at Offering Price
​ ​
Sales Charge
as Percentage
of Offering
Price
​ ​
Sales Charge
as Percentage
of Amount
Invested
​ ​
Dealer Discount
or Agency Fee
as Percentage of
Offering Price
​
Under $50,000 ​ ​ ​ ​ 3.75 % ​ ​ ​ ​ ​ 3.90 % ​ ​ ​ ​ ​ 3.25 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 3.50 ​ ​ ​ ​ ​ 3.63 ​ ​ ​ ​ ​ 3.00 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.25 ​ ​ ​ ​ ​ 3.36 ​ ​ ​ ​ ​ 2.75 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.25 ​ ​ ​ ​ ​ 2.30 ​ ​ ​ ​ ​ 2.00 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 1.75 ​ ​ ​ ​ ​ 1.78 ​ ​ ​ ​ ​ 1.50 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
Equity Funds, Trend Funds and Alternative Diversifier Fund
Amount of Transaction at Offering Price
​ ​
Sales Charge
as Percentage
of Offering
Price
​ ​
Sales Charge
as Percentage
of Amount
Invested
​ ​
Dealer Discount
or Agency Fee
as Percentage of
Offering Price
​
Under $50,000 ​ ​ ​ ​ 5.75 % ​ ​ ​ ​ ​ 6.10 % ​ ​ ​ ​ ​ 5.00 % ​ ​
$50,000 but under $100,000 ​ ​ ​ ​ 4.75 ​ ​ ​ ​ ​ 4.99 ​ ​ ​ ​ ​ 4.25 ​ ​
$100,000 but under $250,000 ​ ​ ​ ​ 3.75 ​ ​ ​ ​ ​ 3.90 ​ ​ ​ ​ ​ 3.25 ​ ​
$250,000 but under $500,000 ​ ​ ​ ​ 2.75 ​ ​ ​ ​ ​ 2.83 ​ ​ ​ ​ ​ 2.25 ​ ​
$500,000 but under $1,000,000 ​ ​ ​ ​ 2.00 ​ ​ ​ ​ ​ 2.04 ​ ​ ​ ​ ​ 1.75 ​ ​
$1,000,000 or more ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​ ​ ​ ​ None ​ ​
With respect to Class C Shares, the Distributor intends to pay investment dealers a sales commission of 1% of the sale price of Class C Shares sold by such dealers. With respect to Class C Shares and Class T Shares of the Short Term Bond Fund, the Distributor does not pay a sales commission on Class C Shares and intends to pay investment dealers a sales commission of 1% of the sale price of Class T Shares sold by such dealers. Your broker, dealer or financial advisor may also charge you additional commissions or fees for their services in selling shares to you provided they notify the Distributor of their intention to do so.
Dealers and other entities that enter into special arrangements with the Distributor may receive compensation for the sale and promotion of shares of the Funds. Such fees are in addition to the sales commissions referenced above and may be based upon the amount of sales of fund shares by a dealer; the provision of assistance in marketing of Fund shares; access to sales personnel and information dissemination services; and other criteria as established by the Distributor. Depending on the nature of the services, these fees may be paid either from the funds through distribution fees, service fees or in some cases, the Distributor may pay certain fees from its own profits and resources.
Dealers and other entities that enter into special arrangements with the Distributor or the Transfer Agent may receive compensation from or on behalf of the funds for providing certain recordkeeping and related services to the funds or their shareholders. These fees may also be referred to as shareholder accounting fees, administrative services fees, sub-transfer agent fees or networking fees. They are not for the sale, promotion or marketing of Fund shares.
From its own profits and resources, the Distributor may, from time to time, make payments to qualified wholesalers, registered financial institutions and third party marketers for marketing support services and/or retention of assets. These payments are sometimes referred to as “revenue sharing.” Among others, the Distributor has agreed to make such payments for marketing support services to AXA Advisors, LLC. Additionally, for Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 0.50% of eligible Class A Share purchases from $250,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. For all other Virtus fixed income funds and Virtus Sector Trend Fund, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 0.50% of eligible Class A Share purchases from $1,000,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. For all other Virtus Mutual Funds, the Distributor may pay broker-dealers a finder’s fee in an amount equal to 1.00% of eligible Class A Share purchases from $1,000,000 to $3,000,000, 0.50% on amounts of  $3,000,001 to $10,000,000, and 0.25% on amounts greater than $10,000,000. Purchases of Class A Shares by an account in the name of a qualified employee benefit plan are eligible for a finder’s fee only if such plan has at least 100 eligible employees. A CDSC may be imposed on certain redemptions of such Class A investments. For Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the CDSC may be imposed on redemptions within 12 months of a finder’s fee being paid; for all other funds, the CDSC may be imposed on redemptions within 18 months of a finder’s fee being paid. For all Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. For purposes of determining the applicability of the CDSC, the 12- or 18-month period, as applicable, begins on the last day of the month preceding the month in which the purchase was made. The Distributor will also pay broker-dealers a service fee
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of 0.25% beginning in the thirteenth month following purchase of Class A Shares on which a finder’s fee has been paid. VP Distributors reserves the right to discontinue or alter such fee payment plans at any time.
From its own resources or pursuant to the distribution and shareholder servicing plans, and subject to the dealers’ prior approval, the Distributor may provide additional compensation to registered representatives of dealers in the form of travel expenses, meals, and lodging associated with training and educational meetings sponsored by the Distributor. The Distributor may also provide gifts amounting in value to less than $100, and occasional meals or entertainment, to registered representatives of dealers. Any such travel expenses, meals, lodging, gifts or entertainment paid will not be preconditioned upon the registered representatives’ or dealers’ achievement of a sales target. The Distributor may, from time to time, reallow the entire portion of the sales charge on Class A Shares which it normally retains to individual selling dealers. However, such additional reallowance generally will be made only when the selling dealer commits to substantial marketing support such as internal wholesaling through dedicated personnel, internal communications and mass mailings.
The Distributor has also agreed to pay fees to certain distributors for preferred marketing opportunities. These arrangements may be viewed as creating a conflict of interest between these distributors and investors. Investors should make due inquiry of their selling agents to ensure that they are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.
The categories of payments the Distributor and/or the Transfer Agent may make to other parties are not mutually exclusive, and such parties may receive payments under more than one or all categories. These payments could be significant to a party receiving them, creating a conflict of interest for such party in making investment recommendations to investors. Investors should make due inquiry of any party recommending the funds for purchase to ensure that such investors are receiving the requisite point of sale disclosures and suitable recommendations free of any influence by reason of these arrangements.
A document containing information about sales charges, including breakpoint (volume) discounts, is available free of charge on the Internet at virtus.com . In the Individual Investors section, go to the tab “Investors Knowledge Base” and click on the link for Breakpoint (Volume) Discounts.
Class R6 Shares Only
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.
Custodian
JPMorgan Chase Bank, N.A., One Chase Manhattan Plaza, 19 th Floor, New York, NY 10005, serves as the custodian (the “Custodian”) of the Funds’ assets. The Custodian designated by the Board holds the securities in the Funds’ portfolios and other assets for safe keeping. The Custodian does not and will not participate in making investment decisions for the Funds. The Trust has authorized the Custodian to appoint one or more sub-custodians for the assets of the Funds held outside the United States. The securities and other assets of each Fund are held by its Custodian or any sub-custodian separate from the securities and assets of each other Fund.
Transfer Agent and Sub-Transfer Agent
Virtus Fund Services acts as transfer agent for the Trust. Pursuant to a Transfer Agent and Service Agreement, Virtus Fund Services receives a fee, based on the average net assets at an annual rate ranging from 0.045% to 0.0025%, depending on asset class. Virtus Fund Services is authorized to engage subagents to perform certain shareholder servicing functions from time to time for which such agents shall be paid a fee by Virtus Fund Services or the Funds. Pursuant to an agreement among the Trust, Virtus Fund Services and BNY Mellon, BNY Mellon serves as sub-transfer agent to perform certain shareholder servicing functions for the Funds. For performing such services, BNY Mellon receives a monthly fee from the Funds. Fees paid by the Funds, in addition to the fee paid to Virtus Fund Services, will be reviewed and approved by the Board.
Legal Counsel to the Trust and the Independent Trustees
Sullivan & Worcester, LLP, 1666 K Street, NW, Washington, DC 20006, acts as legal counsel to the Trust and its Independent Trustees and reviews certain legal matters for the Trust in connection with the shares offered by the Prospectus.
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Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLP serves as the independent registered public accounting firm for the Trust. PwC audits the Trust’s annual financial statements and expresses an opinion thereon. The independent registered public accounting firm also provides other accounting and tax-related services as requested by the Trust from time to time. PwC's business address is Two Commerce Square, Suite 1800, 2001 Market Street, Philadelphia, PA 19103.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares (except Class I Shares and Class R6 Shares) (i.e., a plan for the Class A Shares, a plan for the Class B Shares, a plan for the Class C Shares and a plan for the Class T Shares; collectively, the “Plans”) in accordance with Rule 12b-1 under the 1940 Act, to compensate the Distributor for the services it provides and for the expenses it bears under the underwriting agreement. Each class of shares pays a service fee at a rate of 0.25% per annum of the average daily net assets of such class of the Fund and a distribution fee based on average daily net assets at a rate of 0.75% per annum for Class B Shares (0.55% for the Multi-Sector Short Term Bond Fund), at a rate of 0.75% per annum for Class C Shares (0.25% for the Multi-Sector Short Term Bond Fund), and at a rate of 0.75% per annum for Class T Shares.
Expenditures under the Plans may consist of: (i) commissions to sales personnel for selling shares of the Fund (including underwriting fees and financing expenses incurred in connection with the payment of commissions); (ii) compensation, sales incentives and payments to sales, marketing and service personnel; (iii) payments to broker-dealers and other financial institutions which have entered into agreements with the Distributor in the form of the Dealer Agreement for Virtus Mutual Funds for services rendered in connection with the sale and distribution of shares of the Fund; (iv) payment of expenses incurred in sales and promotional activities, including advertising expenditures related to the Fund; (v) the costs of preparing and distributing promotional materials; (vi) the cost of printing the Fund’s Prospectuses and SAI for distribution to potential investors; (vii) expenses related to the cost of financing or providing such financing from the Distributor’s or an affiliate’s resources in connection with the Distributor’s payment of such distribution expenses; and (viii) such other similar services that the Trustees determine are reasonably calculated to result in the sale of shares of the Fund. From the fees received, the Distributor expects to pay a quarterly fee to qualifying broker-dealer firms, as compensation for providing personal services and/or the maintenance of shareholder accounts, with respect to shares sold by such firms. In the case of shares of the Funds being sold to an affiliated fund of funds, fees payable under the Plans shall be paid to the distributor of the fund of funds. This fee will not exceed on an annual basis 0.25% of the average annual NAV of such shares, and will be in addition to sales charges on Fund shares which are re-allowed to such firms. To the extent that the entire amount of the fees received is not paid to such firms, the balance will serve as compensation for personal and account maintenance services furnished by the Distributor. The Distributor also pays to dealers an additional compensation with respect to Class C Shares at the rate of 0.75% of the average annual NAV of that class.
In order to receive payments under the Plans, participants must meet such qualifications to be established in the sole discretion of the Distributor, such as providing services to the Funds’ shareholders; or providing the Funds with more efficient methods of offering shares to coherent groups of clients, members or prospects of a participant; or providing services permitting bulking of purchases or sales, or transmission of such purchases or sales by computerized tape or other electronic equipment; or providing other processing. Dealers must have an aggregate value of  $50,000 or more per Fund CUSIP to qualify for payment in that Fund class.
On a quarterly basis, the Funds’ Board reviews a report on expenditures under the Plans and the purposes for which expenditures were made. The Trustees conduct an additional, more extensive review annually in determining whether the Plans will be continued. By its terms, continuation of the Plans from year to year is contingent on annual approval by a majority of the Funds’ Trustees and by a majority of the Trustees who are not “interested persons” (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plans or any related agreements (the “Plan Trustees”). The Plans provide that they may not be amended to increase materially the costs which the Funds may bear pursuant to the Plans without approval of the shareholders of that class of the Funds and that other material amendments to the Plans must be approved by a majority of the Plan Trustees by vote cast in person at a meeting called for the purpose of considering such amendments. The Plans further provide that while they are in effect, the selection and nomination of Trustees who are not “interested persons” shall be committed to the discretion of the Trustees who are not “interested persons.” The Plans may be terminated at any time by vote of the Plan Trustees or a majority of the outstanding shares of the relevant class of the Funds.
Rule 12b-1 Fees Paid
The following table shows Rule 12b-1 Fees paid by the Funds to VP Distributors with respect to Class A Shares, Class B Shares, Class C Shares and Class T Shares of each Fund for which such fees were paid for the period ending September 30, 2016. The Rule 12b-1 Fees were primarily used to compensate broker dealers and financial institutions for services that they provided.
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Fund
​ ​
Rule 12b-1 Fees Paid ($)
​ ​
Rule 12b-1 Fees Waived ($)
​
Alternatives Diversifier Fund ​ ​
103,631
​ ​
N/A
​
Bond Fund ​ ​
78,293
​ ​
N/A
​
CA Tax-Exempt Bond Fund ​ ​
49,596
​ ​
N/A
​
EM Debt Fund ​ ​
2,911
​ ​
N/A
​
EM Equity Income Fund ​ ​
3,776
​ ​
N/A
​
EM Opportunities Fund * ​ ​
1,950,276
​ ​
N/A
​
EM Small-Cap Fund ​ ​
1,084
​ ​
N/A
​
Equity Trend Fund ​ ​
2,401,545
​ ​
N/A
​
Essential Resources Fund ​ ​
544
​ ​
N/A
​
Foreign Opportunities Fund ​ ​
1,299,064
​ ​
N/A
​
Global Equity Trend Fund ​ ​
70,509
​ ​
N/A
​
Global Infrastructure Fund ​ ​
217,872
​ ​
N/A
​
Global Opportunities Fund ​ ​
296,812
​ ​
N/A
​
Global Real Estate Fund ​ ​
151,894
​ ​
N/A
​
Greater European Fund ​ ​
38,426
​ ​
N/A
​
Herzfeld Fund ​ ​
57,642
​ ​
N/A
​
High Yield Fund ​ ​
158,987
​ ​
N/A
​
International Equity Fund ​ ​
7,463
​ ​
N/A
​
International Real Estate Fund ​ ​
32,129
​ ​
N/A
​
International Small-Cap Fund ​ ​
8,102
​ ​
N/A
​
International Wealth Masters Fund ​ ​
667
​ ​
N/A
​
Low Duration Income Fund * ​ ​
229,227
​ ​
N/A
​
Low Volatility Equity Fund ​ ​
7,862
​ ​
N/A
​
Multi-Asset Trend Fund ​ ​
361,076
​ ​
N/A
​
Multi-Sector Intermediate Bond Fund ​ ​
450,543
​ ​
N/A
​
Multi-Sector Short Term Bond Fund ​ ​
8,242,502
​ ​
N/A
​
Real Estate Fund ​ ​
1,631,388
​ ​
N/A
​
Sector Trend Fund ​ ​
779,632
​ ​
N/A
​
Senior Floating Rate Fund ​ ​
896,357
​ ​
N/A
​
Tax-Exempt Bond Fund * ​ ​
183,936
​ ​
N/A
​
Wealth Masters Fund ​ ​
177,912
​ ​
N/A
​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the 12b-1 fees paid to VP Distributors for those funds in 2016 reflect the fees paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The 12b-1 fees paid to VP Distributors for those funds in 2014 and 2015 reflect the fees paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
For the fiscal year ended September 30, 2016, the Funds paid Rule 12b-1 fees in the amount of $39,535,651, of which the Distributor received $31,979,504 and unaffiliated broker-dealers received $7,556,147. The Rule 12b-1 payments were used for (1) compensation to dealers, $35,943,871; (2) compensation to sales personnel, $16,376,619; (3) advertising, $2,155,643; (4) printing and mailing of prospectuses to other than current shareholders, $250,086; and (5) other, $486,441.
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since the date of this SAI; therefore no 12b-1 fees were paid for those funds for the fiscal year indicated.
No interested person of the Funds other than the Distributor and no Trustee who is not an interested person of the Funds, as that term is defined in the 1940 Act, has had any direct or indirect financial interest in the operation of the Plans or related agreements.
FINRA regards certain distribution fees as asset-based sales charges subject to FINRA sales load limits. FINRA’s maximum sales charge rule may require the Board to suspend distribution fees or amend the Plans. In order to address this issue, the Distributor has contractually agreed with respect to the Rule 12b-1 Plan applicable to Class C Shares of the Low Volatility Fund and the Trend Funds to waive its fees to the extent that such funds’ investments in underlying ETFs with their own 12b-1 fees would otherwise cause the funds to exceed the applicable limits.
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PORTFOLIO MANAGERS
Other Accounts Managed by Portfolio Managers and Potential Conflicts of Interest
As described in each Fund’s prospectus, the portfolio manager(s) who are responsible for the Funds are:
Fund
​ ​
Portfolio Manager(s)
​
Alternatives Diversifier Fund ​ ​ Warun Kumar ​
Bond Fund ​ ​
David L. Albrycht
Christopher J. Kelleher
​
CA Tax-Exempt Bond Fund ​ ​ Timothy M. Heaney ​
EM Debt Fund ​ ​
David L. Albrycht
Stephen H. Hooker
Daniel P. Senecal
​
EM Equity Income Fund ​ ​
James Collery
David Hogarty
John Looby
Ian Madden
Gareth Maher
Massimiliano Tondi
​
EM Opportunities Fund ​ ​
Brian Bandsma
Matthew Benkendorf
Jin Zhang
​
EM Small-Cap Fund ​ ​ Craig Thrasher ​
Equity Trend Fund ​ ​
Michael Davis
Brendan R. Finneran
Robert F. Hofeman, Jr.
Warun Kumar
​
Essential Resources Fund ​ ​
Andros Florides
Colm O'Connor
Noel O'Halloran
​
Foreign Opportunities Fund ​ ​
Matthew Benkendorf
Daniel Kranson
David Souccar
​
Global Equity Trend Fund ​ ​
Michael Davis
Brendan R. Finneran
Robert F. Hofeman, Jr.
Warun Kumar
​
Global Infrastructure Fund ​ ​
Connie M. Luecke
Randle L. Smith
​
Global Opportunities Fund ​ ​
Matthew Benkendorf
Ramiz Chelat
​
Global Real Estate Fund ​ ​
Geoffrey P. Dybas
Frank J. Haggerty
​
Greater European Fund ​ ​ Daniel Kranson ​
Herzfeld Fund ​ ​
Erik M. Herzfeld
Thomas J. Herzfeld
​
High Yield Fund ​ ​
David L. Albrycht
Kyle A. Jennings
Francesco Ossino
Jonathan R. Stanley
​
International Equity Fund ​ ​ Frederick A. Brimberg ​
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Fund
​ ​
Portfolio Manager(s)
​
International Real Estate Securities Fund ​ ​
Geoffrey P. Dybas
Frank J. Haggerty
​
International Small-Cap Fund ​ ​
Craig Stone
Craig Thrasher
​
International Wealth Masters Fund ​ ​
Matthew Houk
Murray Stahl
​
Low Duration Income Fund ​ ​
David L. Albrycht
Lisa M. Baribault
Benjamin Caron
Christopher J. Kelleher
​
Low Volatility Fund ​ ​
Michael Davis
Brendan R. Finneran
Robert F. Hofeman, Jr.
Warun Kumar
​
Multi-Asset Trend Fund ​ ​
Michael Davis
Brendan R. Finneran
Robert F. Hofeman, Jr.
Warun Kumar
​
Multi-Sector Intermediate Bond Fund ​ ​ David L. Albrycht ​
Multi-Sector Short Term Bond Fund ​ ​ David L. Albrycht ​
Real Estate Fund ​ ​
Geoffrey P. Dybas
Frank J. Haggerty
​
Sector Trend Fund ​ ​
Michael Davis
Brendan R. Finneran
Robert F. Hofeman, Jr.
Warun Kumar
​
Senior Floating Rate Fund ​ ​
David L. Albrycht
Kyle A. Jennings
Francesco Ossino
​
Virtus Tax-Exempt Bond Fund ​ ​
Timothy M. Heaney
Lisa H. Leonard
​
Wealth Masters Fund ​ ​
Matthew Houk
Murray Stahl
​
There may be certain inherent conflicts of interest that arise in connection with the portfolio managers’ management of a Fund’s investments and the investments of any other accounts they manage. Such conflicts could include the aggregation of orders for all accounts managed by a particular portfolio manager, the allocation of purchases across all such accounts, the allocation of IPOs and any soft dollar arrangements that the relevant subadviser may have in place that could benefit the Funds and/or such other accounts. The Board has adopted on behalf of the Funds policies and procedures designed to address any such conflicts of interest to ensure that all transactions are executed in the best interest of the Funds’ shareholders. Each subadviser is required to certify its compliance with these procedures to the Board on a quarterly basis. There have been no material compliance issues with respect to any of these policies and procedures during the Funds’ most recent fiscal year. Additionally, any conflicts of interest between the investment strategies of a Fund and the investment strategies of other accounts managed by portfolio managers are not expected to be material since portfolio managers generally manage funds and other accounts having similar investment strategies.
The following table provides information as of September 30, 2016, regarding all accounts managed by the portfolio managers and portfolio management team members for each of the funds as named in the prospectus. In the table, Registered Investment Companies include all open and closed-end mutual funds. Pooled Investment Vehicles (PIVs) include, but are not limited to, securities of issuers exempt from registration under Section 3(c) of the Investment Company Act, such as private placements and hedge funds. Other accounts would include, but are not limited to, individual managed accounts, separate accounts, institutional accounts, pension funds, collateralized bond obligations
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and collateralized debt obligations. The portfolio managers managing the Funds may also manage or be members of management teams for other Virtus Mutual Funds or other similar accounts.
Other Accounts Managed (No Performance-Based Fees)
​ ​ ​
Registered Investment Companies
​ ​
Other Pooled Investment Vehicles
(PIVs)
​ ​
Other Accounts
​
Portfolio Manager
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​
David L. Albrycht ​ ​
20
​ ​
$10.5 billion
​ ​
1
​ ​
$42 million
​ ​
0
​ ​
$0
​
Brian Bandsma ​ ​
1
​ ​
$13.1 million
​ ​
7
​ ​
$8.2 billion
​ ​
15
​ ​
$4.5 billion
​
Lisa M. Baribault ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Matthew Benkendorf ​ ​
6
​ ​
$848 million
​ ​
24
​ ​
$14.9 billion
​ ​
36
​ ​
$10.9 billion
​
Frederick Brimberg ​ ​
4
​ ​
$307 million
​ ​
0
​ ​
$0
​ ​
439
​ ​
$109 million
​
Benjamin Caron ​ ​
2
​ ​
$666 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Ramiz Chelat ​ ​
1
​ ​
$32.6 million
​ ​
10
​ ​
$4.4 billion
​ ​
20
​ ​
$3.8 billion
​
James Collery ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Michael Davis ​ ​
9
​ ​
$1.84 billion
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Geoffrey Dybas ​ ​
1
​ ​
$86.6 million
​ ​
1
​ ​
$28.4 million
​ ​
14
​ ​
$961 million
​
Brendan R. Finneran ​ ​
9
​ ​
$1.84 billion
​ ​
0
​ ​
$0
​ ​
130
​ ​
$422 million
​
Andros Florides ​ ​
1
​ ​
$4.8 million
​ ​
3
​ ​
$94.5 million
​ ​
2
​ ​
$27.8 million
​
Frank J. Haggerty, Jr. ​ ​
1
​ ​
$86.6 million
​ ​
1
​ ​
$28.4 million
​ ​
14
​ ​
$961 million
​
Timothy M. Heaney ​ ​
2
​ ​
$231 million
​ ​
0
​ ​
$0
​ ​
18
​ ​
$208 million
​
Erik Herzfeld ​ ​
1
​ ​
$43 million
​ ​
0
​ ​
$0
​ ​
277
​ ​
$215 million
​
Thomas J. Herzfeld ​ ​
1
​ ​
$43 million
​ ​
0
​ ​
$0
​ ​
277
​ ​
$215 million
​
Robert F. Hofeman, Jr. ​ ​
9
​ ​
$1.84 billion
​ ​
0
​ ​
$0
​ ​
130
​ ​
$422 million
​
David Hogarty ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Stephen H. Hooker ​ ​
1
​ ​
$30.3 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Matthew Houk ​ ​
4
​ ​
$401 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Kyle A. Jennings ​ ​
3
​ ​
$886 million
​ ​
1
​ ​
$351 million
​ ​
0
​ ​
$0
​
Christopher J. Kelleher ​ ​
6
​ ​
$1.1 billion
​ ​
0
​ ​
$0
​ ​
5
​ ​
$181 million
​
Daniel Kranson ​ ​
4
​ ​
$802 million
​ ​
7
​ ​
$2.5 billion
​ ​
3
​ ​
$735 million
​
Warun Kumar ​ ​
9
​ ​
$1.84 billion
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Lisa H. Leonard ​ ​
1
​ ​
$200 million
​ ​
0
​ ​
$0
​ ​
18
​ ​
$208 million
​
John Looby ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Connie M. Luecke ​ ​
2
​ ​
$295 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Ian Madden ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Gareth Maher ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Colm O'Connor ​ ​
2
​ ​
$99.8 million
​ ​
3
​ ​
$129 million
​ ​
2
​ ​
$32 million
​
Noel O'Halloran ​ ​
1
​ ​
$72 million
​ ​
2
​ ​
$452 million
​ ​
0
​ ​
$0
​
Francesco Ossino ​ ​
4
​ ​
$986 million
​ ​
1
​ ​
$351 million
​ ​
0
​ ​
$0
​
Daniel Senecal ​ ​
2
​ ​
$296 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Randle L. Smith ​ ​
2
​ ​
$295 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
David Souccar ​ ​
4
​ ​
$802 million
​ ​
5
​ ​
$1.4 billion
​ ​
3
​ ​
$735 million
​
Murray Stahl ​ ​
9
​ ​
$1.3 billion
​ ​
1
​ ​
$72.3 million
​ ​
930
​ ​
$1.3 billion
​
Jonathan R. Stanley ​ ​
5
​ ​
$880 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
Craig Stone ​ ​
6
​ ​
$676 million
​ ​
0
​ ​
$0
​ ​
444
​ ​
$2.4 billion
​
Craig Thrasher ​ ​
2
​ ​
$49 million
​ ​
0
​ ​
$0
​ ​
1
​ ​
$4.0 million
​
Massimiliano Tondi ​ ​
4
​ ​
$736 million
​ ​
14
​ ​
$5.1 billion
​ ​
13
​ ​
$2.4 billion
​
Jin Zhang ​ ​
1
​ ​
$13.1 million
​ ​
6
​ ​
$7.4 billion
​ ​
15
​ ​
$4.5 billion
​
Other Accounts Managed (With Performance-Based Fees)
​ ​ ​
Registered Investment Companies
​ ​
Other Pooled Investment Vehicles
(PIVs)
​ ​
Other Accounts
​
Portfolio Manager
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​
David Albrycht ​ ​
2
​ ​
$157 million
​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​
James Collery ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
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​ ​ ​
Registered Investment Companies
​ ​
Other Pooled Investment Vehicles
(PIVs)
​ ​
Other Accounts
​
Portfolio Manager
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​ ​
Number of
Accounts
​ ​
Total Assets
​
David Hogarty ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
Kyle A. Jennings ​ ​
1
​ ​
$101 million
​ ​
1
​ ​
$62,800
​ ​
0
​ ​
$0
​
John Looby ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
Ian Madden ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
Gareth Maher ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
Francesco Ossino ​ ​
1
​ ​
$101 million
​ ​
1
​ ​
$62,800
​ ​
0
​ ​
$0
​
Murray Stahl ​ ​
0
​ ​
$0
​ ​
18
​ ​
$325 million
​ ​
3
​ ​
$203 million
​
Massimiliano Tondi ​ ​
0
​ ​
$0
​ ​
0
​ ​
$0
​ ​
4
​ ​
$288 million
​
Portfolio Manager Compensation
VIA, Duff  & Phelps, Kayne, Newfleet and Rampart
Virtus and certain of its affiliated investment management firms (collectively, “Virtus”) believe that the firm’s compensation program is adequate and competitive to attract and retain high-caliber investment professionals. Investment professionals at Virtus receive a competitive base salary, an incentive bonus opportunity and a benefits package. Certain professionals who supervise and manage others also participate in a management incentive program reflecting their personal contribution and team performance. Certain key individuals also have the opportunity to take advantage of a long-term incentive compensation program, including potential awards of Virtus restricted stock units (“Virtus RSUs”) with multi-year vesting, subject to Virtus board of directors’ approval. Following is a more detailed description of Virtus’ compensation structure.
Base Salary . Each portfolio manager is paid a fixed base salary, which is designed to be competitive in light of the individual’s experience and responsibilities. Base salary is determined using compensation survey results of investment industry compensation conducted by an independent third party in evaluating competitive market compensation for its investment management professionals.
Incentive Bonus . Annual incentive payments are based on targeted compensation levels, adjusted based on profitability, investment performance factors and a subjective assessment of contribution to the team effort. The short-term incentive payment is generally paid in cash, but a portion may be made in Virtus RSUs. Individual payments are assessed using comparisons of actual investment performance with specific peer group or index measures. (Current benchmarks and/or peer groups are indicated in the table below.) Performance of the Funds managed is generally measured over one-, three- and five year periods and an individual manager’s participation is based on the performance of each Fund/account managed.
Fund
​ ​
Benchmark(s) and/or Peer Group
​
Bond Fund ​ ​ Barclays U.S. Aggregate Bond Index ​
CA Tax-Exempt Bond Fund ​ ​ Lipper California Municipal Debt Universe ​
EM Debt Fund ​ ​ Lipper Emerging Markets Debt ​
Global Infrastructure Fund ​ ​ MSCI World Infrastructure Sector Capped Index ​
Global Real Estate Fund ​ ​ FTSE EPRA NAREIT Developed Rental Index ​
High Yield Fund ​ ​ Barclays Capital U.S. High-Yield 2% Issuer Capped Bond Index ​
International Real Estate Fund ​ ​ FTSE Global Rental x U.S. Index ​
International Small-Cap Fund ​ ​ MSCI ACWI ex U.S. Small Cap Index ​
Low Duration Income Fund ​ ​ Lipper Short-Intermediate Investment Grade Funds ​
Low Volatility Equity Fund ​ ​ Strategic Insights Alternative US Option Hedge Strategy Fund ​
Multi-Sector Intermediate Bond Fund ​ ​ Lipper Multi-Sector Income Funds ​
Multi-Sector Short Term Bond Fund ​ ​ Lipper Short Investment Grade Debt Funds ​
Real Estate Fund ​ ​ FTSE NAREIT Equity REITs Index ​
Senior Floating Rate Fund ​ ​ Lipper Loan Participation Funds ​
Tax-Exempt Bond Fund ​ ​ Lipper General Municipal Debt Funds ​
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While portfolio manager compensation contains a performance component, this component is adjusted to reward investment personnel for managing within the stated framework and for not taking unnecessary risk. This approach ensures that investment management personnel remain focused on managing and acquiring securities that correspond to a Fund’s mandate and risk profile and are discouraged from taking on more risk and unnecessary exposure to chase performance for personal gain. Virtus believes it has appropriate controls in place to handle any potential conflicts that may result from a substantial portion of portfolio manager compensation being tied to performance.
Other benefits. Portfolio managers are also eligible to participate in broad-based plans offered generally to employees of Virtus and its affiliates, including 401(k), health and other employee benefit plans.
Herzfeld
Thomas J. Herzfeld has an employment contract with Thomas J. Herzfeld Advisors, Inc. at a fixed salary plus bonus based on the profitability of the firm. No specific formula is indicated in the contract. Thomas J. Herzfeld Advisors, Inc. is majority owned by Thomas J. Herzfeld therefore his compensation is directly related to the profitability of the firm.
The compensation of all other employees is at management’s discretion and based on annual year-end reviews or more frequent reviews if requested by the employee. All key personnel are paid by salary and year-end bonus based on the profitability of the firm and the discretion of management.
Employees are paid in cash.
At present, portfolio managers provide input related to their own compensation. There are currently no specific incentives related to specific portfolio performance, but rather to performance of the firm as a whole.
Horizon
Compensation for professional and supervisory personnel for the Fund consists of a salary and discretionary bonus. Salary is typically a function of the skill and experience of the particular individual, and discretionary bonuses are based on the overall contribution to the Firm, but are not tied directly to performance. Additionally, shareholders of the Firm, some of whom are team members that will be responsible for management of the Fund, derive benefits normally associated with the ownership of a profitable corporation such as distributions of profits.
KBI Global Investors (North America) Ltd.
KBI Global Investors’ key personnel are passionate about what they do and determined to succeed. From a remuneration perspective, we conduct regular surveys of industry practice, in terms of variable and fixed pay to ensure that key value generators are retained and incentivised. As part of this process, the firm also takes into account local legislation and guidelines relating to remuneration to prevent excessive risk-taking which has been incorporated into the firm’s Remuneration policy.
The portfolio managers are high conviction investors with have a number of different components to compensation and these components are set out below: 
Base Salary: Benchmarked to industry. 
Annual Bonus: For portfolio managers, the bonus amount paid is based predominantly on relative investment performance for the relevant strategies/funds assessed over 1, 2 and 3 year rolling numbers. This ensures a longer term investment perspective rather than a year by year focus. Key employees are obliged to take a proportion of the annual bonus in parent company equity which is then locked in for three years. If the executives cease employment with the firm, a portion of this equity is forfeited.
Profit Share: The overall pool for profit share is determined by the profitability of KBI Global Investors Ltd. 30% of Profit before Tax is set aside to fund the Annual Bonus and Profit Share. Any funds remaining after annual bonus awards are distributed among selected key employees. Payments under the profit sharing scheme are through a combination of cash, parent company equity and units in KBI GIobal Investors funds. Equity and fund holdings are held in trust for a three year period. If the executives cease employment with the firm, a portion of this equity is forfeited.
Equity Participation: Following completion of the acquisition of the majority shareholding in KBI Global Investors Ltd by Amundi, key employees hold a 12.5% equity stake in the business. If the employee shareholders were to leave within five years of completion this holding is subject to forfeiture provisions. After year five there are put and call structures in place to enable employees to sell the holding on a phased basis over a multi year period.
Vontobel Asset Management
Portfolio managers are paid a competitive base salary by Vontobel. Their incentive compensation is tied to the investment fees generated by the strategies they manage or co-manage. Such incentive compensation accrues over and above specific threshold amounts of investment management fee generation of each strategy. Incentive
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compensation is paid quarterly in arrears. A portion of such incentive compensation is subject to three-year deferrals. All amounts deferred must be invested in publicly traded mutual funds or non-registered commingled funds managed or subadvised by Vontobel. The portfolio manager does not receive any compensation directly from the Fund or the Adviser.
Portfolio Manager Fund Ownership
The following chart sets forth the dollar range of equity securities beneficially owned by each portfolio manager in each fund described in the funds’ prospectuses that he or she managed as of September 30, 2016:
Portfolio Manager
​ ​
Dollar Range of Equity Securities Beneficially Owned in Fund Managed
​
David L. Albrycht ​ ​ Bond Fund ​ ​
None
​
​ ​ ​ EM Debt Fund ​ ​
None
​
​ ​ ​ High Yield Fund ​ ​
None
​
​ ​ ​ Multi-Sector Intermediate Bond Fund ​ ​
$10,001 - $50,000
​
​ ​ ​
Multi-Sector Short Term Bond Fund
​ ​
$10,001 - $50,000
​
​ ​ ​ Senior Floating Rate Fund ​ ​
None
​
Brian Bandsma ​ ​ EM Opportunities Fund ​ ​
None
​
Lisa M. Baribault ​ ​ Low Duration Income Fund ​ ​
None
​
Matthew Benkendorf ​ ​ EM Opportunities Fund ​ ​
None
​
​ ​ ​ Foreign Opportunities Fund ​ ​
$500,001 - $1,000,00
​
​ ​ ​ Global Opportunities Fund ​ ​
$500,001 - $1,000,000
​
Frederick A. Brimberg ​ ​ International Equity Fund ​ ​
$100,001 - $500,000
​
Benjamin Caron ​ ​ Low Duration Income Fund ​ ​
None
​
Ramiz Chelat ​ ​ EM Opportunities Fund ​ ​
None
​
James Collery ​ ​ EM Equity Income Fund ​ ​
None
​
Michael Davis ​ ​
Equity Trend Fund
Global Equity Trend Fund
Low Volatility Fund
Multi-Asset Trend Fund
Sector Trend Fund
​ ​
None
None
None
None
None
​
Geoffrey Dybas ​ ​ Global Real Estate Fund ​ ​
$100,001 - $500,000
​
​ ​ ​ International Real Estate Fund ​ ​
$10,001 - $50,000
​
​ ​ ​ Real Estate Fund ​ ​
$100,001- $500,000
​
Brendan R. Finneran ​ ​
Equity Trend Fund
Global Equity Trend Fund
Low Volatility Fund
Multi-Asset Trend Fund
Sector Trend Fund
​ ​
None
None
$50,001 - $100,000
$1 - $10,000
None
​
Andros Florides ​ ​ Essential Resources Fund ​ ​
None
​
Frank J. Haggerty, Jr. ​ ​ Global Real Estate Fund ​ ​
None
​
​ ​ ​ International Real Estate Fund ​ ​
$10,001 - $50,000
​
​ ​ ​ Real Estate Fund ​ ​
None
​
Timothy M. Heaney ​ ​ CA Tax-Exempt Bond Fund ​ ​
None
​
​ ​ ​ Tax-Exempt Bond Fund ​ ​
None
​
Erik M. Herzfeld ​ ​ Herzfeld Fund ​ ​
Over $1,000,000
​
Thomas J. Herzfeld ​ ​ Herzfeld Fund ​ ​
$500,001 - $1,000,000
​
Robert F. Hofeman, Jr. ​ ​
Equity Trend Fund
Global Equity Trend Fund
Low Volatility Fund
Multi-Asset Trend Fund
Sector Trend Fund
​ ​
None
None
$10,001 - $50,000
None
None
​
David Hogarty ​ ​ EM Equity Income Fund ​ ​
None
​
Stephen H. Hooker ​ ​ EM Debt Fund ​ ​
None
​
Matthew Houk ​ ​ International Wealth Masters Fund ​ ​
None
​
​ ​ ​ Wealth Masters Fund ​ ​
$1 - $10,000
​
Kyle A. Jennings ​ ​ High Yield Fund ​ ​
None
​
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Portfolio Manager
​ ​
Dollar Range of Equity Securities Beneficially Owned in Fund Managed
​
​ ​ ​ Senior Floating Rate Fund ​ ​
None
​
Christopher J. Kelleher ​ ​ Bond Fund ​ ​
None
​
​ ​ ​ Low Duration Income Fund ​ ​
None
​
Daniel Kranson, CFA ​ ​
Foreign Opportunities Fund
Greater European Fund
​ ​
None
None
​
Warun Kumar ​ ​
Alternatives Diversifier Fund
Equity Trend Fund
Global Equity Trend Fund
Low Volatility Fund
Multi-Asset Trend Fund
Sector Trend Fund
​ ​
None
None
None
None
None
None
​
Lisa H. Leonard ​ ​ Tax-Exempt Bond Fund ​ ​
None
​
John Looby ​ ​ EM Equity Income Fund ​ ​
None
​
Connie M. Luecke ​ ​ Global Infrastructure Fund ​ ​
$500,001 - $1,000,000
​
Ian Madden ​ ​ EM Equity Income Fund ​ ​
None
​
Gareth Maher ​ ​ EM Equity Income Fund ​ ​
None
​
Colm O'Connor ​ ​ Essential Resources Fund ​ ​
None
​
Noel O'Halloran ​ ​ Essential Resources Fund ​ ​
None
​
Francesco Ossino ​ ​ High Yield Fund ​ ​
None
​
​ ​ ​ Senior Floating Rate Fund ​ ​
$100,001 - $500,000
​
Daniel P. Senecal ​ ​ EM Debt Fund ​ ​
None
​
Randle L. Smith ​ ​ Global Infrastructure Fund ​ ​
$100,001 - $500,000
​
Murray Stahl ​ ​ International Wealth Masters Fund ​ ​
None
​
​ ​ ​ Wealth Masters Fund ​ ​
None
​
David Souccar ​ ​ Foreign Opportunities Fund ​ ​
None
​
Jonathan R. Stanley ​ ​ High Yield Fund ​ ​
None
​
Craig Stone ​ ​ International Small-Cap Fund ​ ​
$100,001 - $500,000
​
Craig Thrasher ​ ​ International Small-Cap Fund ​ ​
$100,001 - $500,000
​
​ ​ ​ EM Small-Cap Fund ​ ​
None
​
Massimiliano Tondi ​ ​ EM Equity Income Fund ​ ​
None
​
Jin Zhang ​ ​ EM Opportunities Fund ​ ​
None
​
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Funds of Funds generally do not invest directly in securities, but rather invest in ETFs and shares of underlying mutual funds. The shares of the underlying affiliated mutual funds are purchased at NAV of the shares of that fund without payment of a brokerage commission or a sales charge. The shares of ETFs are purchased through broker-dealers in transactions on a securities exchange, and the Funds will pay customary brokerage commissions for each purchase and sale.
The adviser or subadvisers to the underlying mutual funds execute the portfolio transactions for their respective fund. In allocating portfolio transactions, each underlying fund’s adviser must comply with the brokerage and allocation procedures adopted by the board of trustees of the underlying mutual fund. The following is a discussion of the portfolio transactions and brokerage procedures of those underlying mutual funds that are affiliated with the Funds, with the exception of the Funds of Funds.
In effecting transactions for the Funds, the applicable subadviser (throughout this section, “Subadviser”) adheres to the Trust’s policy of seeking best execution and price, determined as described below, except to the extent it is permitted to pay higher brokerage commissions for “brokerage and research services” as defined herein. The determination of what may constitute best execution and price in the execution of a securities transaction by a broker involves a number of considerations including, without limitation, the overall direct net economic result to the Funds (involving both price paid or received and any commissions and other costs paid), the efficiency with which the transaction is effected, the ability to effect the transaction at all where a large block is involved, availability of the broker to stand ready to execute possibly difficult transactions in the future and the financial strength and stability of the broker. Such considerations are judgmental and are weighed by the Subadviser in determining the overall reasonableness of brokerage commissions paid by the Funds.
The Subadviser may cause a Fund to pay a broker an amount of commission for effecting a securities transaction in excess of the amount of commission which another broker or dealer would have charged for effecting that transaction if
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the Subadviser determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by such broker. As provided in Section 28(e) of the Securities Exchange Act of 1934, “brokerage and research services” include advising as to the value of securities, the advisability of investing in, purchasing or selling securities, the availability of securities or purchasers or sellers of securities; furnishing analyses and reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts, and effecting securities transactions and performing functions incidental thereto (such as clearance and settlement). Brokerage and research services provided by brokers to the Funds are considered to be in addition to and not in lieu of services required to be performed by each Subadviser under its contract with the Trust and may benefit both the Funds and other accounts of the Subadviser. Conversely, brokerage and research services provided by brokers to other accounts of the Subadviser may benefit the Funds.
If the securities in which a particular Fund invests are traded primarily in the over-the-counter market, where possible the Fund will deal directly with the dealers who make a market in the securities involved unless better prices and executions are available elsewhere. Such securities may be purchased directly from the issuer. Bonds and money market instruments are generally traded on a net basis and do not normally involve either brokerage commissions or transfer taxes.
Some fund transactions are, subject to the Conduct Rules of the FINRA and to obtaining best prices and executions, effected through dealers (excluding VP Distributors) who sell shares of the Funds.
The Trust has implemented, and the Board has approved, policies and procedures reasonably designed to prevent (i) the Subadvisers’ personnel responsible for the selection of broker-dealers to effect fund portfolio securities transactions from taking into account, in making those decisions, a broker-dealer’s promotion or sales efforts, and (ii) the Trust, its Adviser, Subadvisers and Distributor from entering into any agreement or other understanding under which the Funds direct brokerage transactions or revenue generated by those transactions to a broker-dealer to pay for distribution of Fund shares. These policies and procedures are designed to prevent the Trust from entering into informal arrangements to direct portfolio securities transactions to a particular broker.
The Trust has adopted a policy and procedures governing the execution of aggregated advisory client orders (“bunching procedures”) in an attempt to lower commission costs on a per-share and per-dollar basis. According to the bunching procedures, a Subadviser shall aggregate transactions unless it believes in its sole discretion that such aggregation is inconsistent with its duty to seek best execution (which shall include the duty to seek best price) for the Funds. No advisory account of the Subadviser is to be favored over any other account and each account that participates in an aggregated order is expected to participate at the average share price for all transactions of the Subadviser in that security on a given business day, with all transaction costs share pro rata based on the Fund’s participation in the transaction. If the aggregated order is filled in its entirety, it shall be allocated among the Subadviser’s accounts in accordance with the allocation order, and if the order is partially filled, it shall be allocated pro rata based on the allocation order. Notwithstanding the foregoing, the order may be allocated on a basis different from that specified in the allocation order if all accounts of the Subadviser whose orders are allocated receive fair and equitable treatment and the reason for such different allocation is explained in writing and is approved in writing by the Subadviser’s compliance officer in accordance with applicable policies and procedures. If an aggregated order is partially filled and allocated on a basis different from that specified in the allocation order, no account that is benefited by such different allocation may intentionally and knowingly effect any purchase or sale for a reasonable period following the execution of the aggregated order that would result in it receiving or selling more shares than the amount of shares it would have received or sold had the aggregated order been completely filled. The Board will review these procedures from time to time as they deem appropriate.
The following table shows aggregate amount of brokerage commissions paid by each Fund. This information is for the past three fiscal years.
​ ​ ​
Aggregate Amount of Brokerage Commissions ($)
​
Fund
​ ​
2014
​ ​
2015
​ ​
2016
​
Alternatives Diversifier Fund ​ ​ ​ ​ 11,270 ​ ​ ​ ​ ​ 13,236 ​ ​ ​ ​ ​ 11,968 ​ ​
Bond Fund ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 34 ​ ​
CA Tax-Exempt Bond Fund ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
EM Debt Fund ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 53 ​ ​ ​ ​ ​ 54 ​ ​
EM Equity Income Fund ​ ​ ​ ​ 74,774 ​ ​ ​ ​ ​ 59,583 ​ ​ ​ ​ ​ 32,069 ​ ​
EM Opportunities Fund * ​ ​ ​ ​ 6,049,519 ​ ​ ​ ​ ​ 9,482,123 ​ ​ ​ ​ ​ 10,654,334 ​ ​
EM Small Cap Fund ​ ​ ​ ​ 10,679 ​ ​ ​ ​ ​ 8,475 ​ ​ ​ ​ ​ 6,080 ​ ​
Equity Trend Fund ​ ​ ​ ​ 2,889,384 ​ ​ ​ ​ ​ 3,924,639 ​ ​ ​ ​ ​ 511,775 ​ ​
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​ ​ ​
Aggregate Amount of Brokerage Commissions ($)
​
Fund
​ ​
2014
​ ​
2015
​ ​
2016
​
Essential Resources ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 5,7605,671 ​ ​ ​ ​ ​ 5,671 ​ ​
Foreign Opportunities Fund ​ ​ ​ ​ 891,751 ​ ​ ​ ​ ​ 842,609 ​ ​ ​ ​ ​ 919,180 ​ ​
Global Equity Trend Fund ​ ​ ​ ​ 110,452 ​ ​ ​ ​ ​ 176,400 ​ ​ ​ ​ ​ 22,909 ​ ​
Global Infrastructure Fund ​ ​ ​ ​ 40,777 ​ ​ ​ ​ ​ 53,947 ​ ​ ​ ​ ​ 47,661 ​ ​
Global Opportunities Fund ​ ​ ​ ​ 51,842 ​ ​ ​ ​ ​ 53,540 ​ ​ ​ ​ ​ 55,629 ​ ​
Global Real Estate Fund ​ ​ ​ ​ 19,218 ​ ​ ​ ​ ​ 32,660 ​ ​ ​ ​ ​ 784,036 ​ ​
Greater European Fund ​ ​ ​ ​ 12,960 ​ ​ ​ ​ ​ 11,731 ​ ​ ​ ​ ​ 13,139 ​ ​
Herzfeld Fund ​ ​ ​ ​ 12,362 ​ ​ ​ ​ ​ 26,360 ​ ​ ​ ​ ​ 17,902 ​ ​
High Yield Fund ​ ​ ​ ​ 970 ​ ​ ​ ​ ​ 1,970 ​ ​ ​ ​ ​ 4,310 ​ ​
International Equity Fund ​ ​ ​ ​ 18,477 ​ ​ ​ ​ ​ 17,112 ​ ​ ​ ​ ​ 10,898 ​ ​
International Real Estate Fund ​ ​ ​ ​ 21,160 ​ ​ ​ ​ ​ 16,014 ​ ​ ​ ​ ​ 22,162 ​ ​
International Small-Cap Fund ​ ​ ​ ​ 78,348 ​ ​ ​ ​ ​ 100,236 ​ ​ ​ ​ ​ 67,363 ​ ​
International Wealth Masters Fund ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 5,612 ​ ​ ​ ​ ​ 2,469 ​ ​
Low Duration Income Fund * ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 301 ​ ​
Low Volatility Equity Fund ​ ​ ​ ​ 743 ​ ​ ​ ​ ​ 562 ​ ​ ​ ​ ​ 2,993 ​ ​
Multi-Asset Trend Fund ​ ​ ​ ​ 380,978 ​ ​ ​ ​ ​ 461,360 ​ ​ ​ ​ ​ 82,647 ​ ​
Multi-Sector Intermediate Bond Fund ​ ​ ​ ​ 697 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 2,143 ​ ​
Multi-Sector Short Term Bond Fund ​ ​ ​ ​ 570 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ 40,287 ​ ​
Real Estate Fund ​ ​ ​ ​ 449,837 ​ ​ ​ ​ ​ 408,884 ​ ​ ​ ​ ​ 416,596 ​ ​
Sector Trend Fund ​ ​ ​ ​ 198,890 ​ ​ ​ ​ ​ 509,691 ​ ​ ​ ​ ​ 227,698 ​ ​
Senior Floating Rate Fund ​ ​ ​ ​ 2,010 ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Tax-Exempt Bond Fund * ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​ ​ ​ ​ N/A ​ ​
Wealth Masters Fund ​ ​ ​ ​ 69,382 ​ ​ ​ ​ ​ 8,475 ​ ​ ​ ​ ​ 59,691 ​ ​
*
EM Opportunities Fund, Low Duration Income Fund and Tax-Exempt Bond Fund have been in existence only since September 23, 2016; therefore the brokerage commissions paid for those funds in 2016 reflect the brokerage commissions paid by their respective predecessor fund for the fiscal period ended September 30, 2016. The brokerage commissions paid for those funds in 2014 and 2015 reflect the brokerage commissions paid by their respective predecessor fund for the fiscal years ended December 31, 2014 and December 31, 2015.
​
In fiscal years 2014, 2015 and 2016, no brokerage commissions were paid by the funds to any affiliate of the Funds, the Adviser or the Distributor, or to any affiliate of any affiliate of the Funds, the Adviser or the Distributor. Brokerage commissions of $14,021,999 paid during the fiscal year ended September 30, 2016, were paid on portfolio transactions aggregating $27,288,704,095 executed by brokers who provided research and other statistical information.
Investment decisions for the Trust are made independently from those of the other investment companies or accounts advised by the Subadvisers. It may frequently happen that the same security is held in the portfolio of more than one fund or account. Simultaneous transactions are inevitable when several funds or accounts are managed by the same investment adviser, particularly when the same security is suited for the investment objectives of more than one fund or account. When two or more funds or accounts advised by a Subadviser are simultaneously engaged in the purchase or sale of the same security, the transactions are allocated among the funds or accounts in a manner equitable to each fund or account. It is recognized that in some cases this system could have a detrimental effect on the price or volume of the security as far as the Funds are concerned. In other cases, however, it is believed that the ability of the Funds to participate in volume transactions will produce better executions for the Funds. It is the opinion of the Board of the Trust that the desirability of utilizing each Subadviser as an investment adviser to the Funds outweighs the disadvantages that may be said to exist from simultaneous transactions.
During the fiscal year ended September 30, 2016 the Funds had no directed brokerage transactions to brokers for proprietary and third party research services.
Securities of Regular Broker-Dealers
The Funds are required to identify the securities of their regular brokers or dealers (as defined in Rule 10b-1 under the 1940 Act) or their parent companies held by the Funds as of the close of their most recent fiscal year. During the fiscal year ended September 30, 2016, the Funds acquired securities of certain of the Funds’ regular broker dealers or the parents of such firms. The aggregate holdings of the Funds of those brokers or dealers as of September 30, 2016 (amounts in thousands, except shares) were as follows:
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​
Fund
​ ​
Broker/Dealer
​ ​
Value ($)
​
​ Bond Fund ​ ​ Bank of America LLC ​ ​ ​ ​ 1,529 ​ ​
​ ​ ​ ​ Barclays Bank PLC ​ ​ ​ ​ 261 ​ ​
​ ​ ​ ​ Citicorp Securities Services Inc. ​ ​ ​ ​ 1,001 ​ ​
​ ​ ​ ​ Credit Suisse First Boston Corp. ​ ​ ​ ​ 90 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 580 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 2,182 ​ ​
​ ​ ​ ​ Morgan Stanley ​ ​ ​ ​ 3,781 ​ ​
​ ​ ​ ​ UBS AG ​ ​ ​ ​ 582 ​ ​
​ ​ ​ ​ Wells Fargo & Co. ​ ​ ​ ​ 784 ​ ​
​ Foreign Opportunities Fund ​ ​ UBS AG ​ ​ ​ ​ 13,749 ​ ​
​ High Yield Fund ​ ​ Citicorp Securities Services Inc. ​ ​ ​ ​ 309 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 218 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 319 ​ ​
​ Global Opportunities Fund ​ ​ Wells Fargo & Co. ​ ​ ​ ​ 6,536 ​ ​
​ Greater European Opportunities Fund ​ ​ UBS AG ​ ​ ​ ​ 338 ​ ​
​ Low Duration Income Fund ​ ​ Bank of America LLC ​ ​ ​ ​ 8,105 ​ ​
​ ​ ​ ​ Barclays Bank PLC ​ ​ ​ ​ 5,543 ​ ​
​ ​ ​ ​ Citicorp Securities Services Inc. ​ ​ ​ ​ 10,220 ​ ​
​ ​ ​ ​ Credit Suisse First Boston Corp. ​ ​ ​ ​ 2,482 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 4,691 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 30,947 ​ ​
​ ​ ​ ​ Morgan Stanley ​ ​ ​ ​ 9,463 ​ ​
​ ​ ​ ​ Wells Fargo & Co. ​ ​ ​ ​ 6,836 ​ ​
​
Multi-Sector Intermediate
Bond Fund
​ ​ Bank of America LLC ​ ​ ​ ​ 5,095 ​ ​
​ ​ ​ ​ Barclays Bank PLC ​ ​ ​ ​ 553 ​ ​
​ ​ ​ ​ Citicorp Securities Services Inc. ​ ​ ​ ​ 4,034 ​ ​
​ ​ ​ ​ Credit Suisse First Boston Corp. ​ ​ ​ ​ 1,267 ​ ​
​ ​ ​ ​ Deutsche Bank Securities, Inc. ​ ​ ​ ​ 902 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 618 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 3,167 ​ ​
​ ​ ​ ​ Morgan Stanley ​ ​ ​ ​ 2,941 ​ ​
​ ​ ​ ​ Wells Fargo & Co. ​ ​ ​ ​ 2,631 ​ ​
​
Multi-Sector Short-Term Bond
Fund
​ ​ Bank of America LLC ​ ​ ​ ​ 106,357 ​ ​
​ ​ ​ ​ Barclays Bank PLC ​ ​ ​ ​ 54,335 ​ ​
​ ​ ​ ​ Citicorp Securities Services Inc. ​ ​ ​ ​ 131,012 ​ ​
​ ​ ​ ​ Credit Suisse First Boston Corp. ​ ​ ​ ​ 67,269 ​ ​
​ ​ ​ ​ Deutsche Bank Securities, Inc. ​ ​ ​ ​ 6,613 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 57,024 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 345,417 ​ ​
​ ​ ​ ​ Morgan Stanley ​ ​ ​ ​ 103,906 ​ ​
​ ​ ​ ​ UBS AG ​ ​ ​ ​ 8,458 ​ ​
​ ​ ​ Wells Fargo & Co ​ ​ ​ ​ 139,395 ​ ​
​ Sector Trend Fund ​ ​ Bank of America LLC ​ ​ ​ ​ 1,308 ​ ​
​ ​ ​ ​ Citicorp Global Markets Inc. ​ ​ ​ ​ 1,132 ​ ​
​ ​ ​ ​ Goldman Sachs & Co. ​ ​ ​ ​ 501 ​ ​
​ ​ ​ ​ JPMorgan Chase & Co. ​ ​ ​ ​ 1,985 ​ ​
​ ​ ​ ​ Morgan Stanley ​ ​ ​ ​ 388 ​ ​
​ ​ ​ ​ Wells Fargo & Co. ​ ​ ​ ​ 1,663 ​ ​
During the fiscal year ended September 30, 2016 the Funds had no directed brokerage transactions to brokers for proprietary and third party research services.
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PURCHASE, REDEMPTION AND PRICING OF SHARES
How to Buy Shares
For Class A Shares, Class C Shares and Class T Shares, the minimum initial investment is $2,500 and the minimum subsequent investment is $100. However, both the initial and subsequent minimum investment amounts are $100 for investments pursuant to the “Systematic Purchase” plan, a bank draft investing program administered by the Transfer Agent, or pursuant to the Systematic Exchange privilege or for an IRA. In addition, there are no subsequent minimum investment amounts in connection with the reinvestment of dividend or capital gain distributions. For Class I Shares, the minimum initial investment is $100,000 and there is no subsequent minimum investment. For purchases of Class I Shares (i) by private clients of the adviser, subadviser and their affiliates, (ii) through certain programs and defined contribution plans with which the Distributor or Transfer Agent has an arrangement or (iii) by Trustees of the funds and directors, officers and employees of Virtus and its affiliates, the minimum initial investment is waived. Completed applications for the purchase of shares should be mailed to: Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074.
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. If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to open an account and buy Class R6 Shares.
The Trust has authorized one or more brokers to accept on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order. Customer orders will be priced at the Funds’ NAVs next computed after they are received in good order by an authorized broker or the broker’s authorized designee.
Alternative Purchase Arrangements
Shares may be purchased from investment dealers at a price equal to their NAV per share, plus a sales charge which, at the election of the purchaser, may be imposed either (i) at the time of the purchase (the “initial sales charge alternative”) or (ii) on a contingent deferred basis (the “deferred sales charge alternative”). Certain Funds also offers Class I Shares that may be purchased by certain institutional investors at a price equal to their NAV per share. Orders received by dealers prior to the close of trading on the NYSE are confirmed at the offering price effective at that time, provided the order is received by an authorized broker or broker’s authorized designee prior to its close of business.
The alternative purchase arrangements permit an investor to choose the method of purchasing shares that is more beneficial given the amount of the purchase, the length of time the investor expects to hold the shares, whether the investor wishes to receive distributions in cash or to reinvest them in additional shares of the Funds, and other circumstances. Investors should consider whether, during the anticipated life of their investment in the Fund, the accumulated continuing distribution and services fees and CDSC on Class C Shares or Class T Shares would be less than the initial sales charge and accumulated distribution services fee on Class A Shares purchased at the same time.
Investors should understand that the purpose and function of the CDSC and ongoing distribution and services fees with respect to the Class C and Class T Shares are the same as those of the initial sales charge and ongoing distribution and services fees with respect to the Class A Shares.
The distribution expenses incurred by the Distributor in connection with the sale of the shares will be paid, in the case of Class A Shares, from the proceeds of the initial sales charge and the ongoing distribution and services fee. In the case of Class B Shares, distribution expenses incurred by the Distributor in connection with the sale of the shares will be paid from the proceeds of the ongoing distribution and services fee and the CDSC incurred upon redemption within five years of purchase for the Fixed Income Fund and within three years of purchase for the Short Term Bond Fund. For Class C Shares, the ongoing distribution and services fee will be used to pay for the distribution expenses incurred by the Distributor. In the case of Class T Shares, distribution expenses incurred by the Distributor in connection with the sale of the shares will be paid from the proceeds of the ongoing distribution and services fee and the CDSC incurred upon redemption within one year of purchase. Sales personnel of broker-dealers distributing the Funds’ shares may receive differing compensation for selling Class A Shares, Class C Shares or Class T Shares.
Dividends paid by the Fund, if any, with respect to each class of shares will be calculated in the same manner at the same time on the same day, except that fees such as higher distribution and services fees and any incremental transfer agency costs relating to each class of shares will be borne exclusively by that class. (See “Dividends, Distributions and Taxes” in this SAI.)
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Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the benefit of not being subject to any sales charge when they are redeemed, except that a CDSC may apply on certain redemptions on which a finder's fee has been paid. For Virtus Low Duration Income Fund and Virtus Multi-Sector Short Term Bond Fund, the CDSC may be imposed on redemptions within 12 months of a finder’s fee being paid; for all other funds, the CDSC may be imposed on redemptions within 18 months of a finder’s fee being paid. For Virtus fixed income fund and Virtus Sector Trend Fund the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charges may be waived under certain conditions as determined by the Distributor. Class A Shares are subject to ongoing distribution and services fees at an annual rate of 0.25% of the Fund’s aggregate average daily net assets attributable to the Class A Shares. In addition, certain purchases of Class A Shares qualify for reduced initial sales charges.
Class B Shares
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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 Funds’ prospectuses).
Class B Shares do not incur a sales charge when they are purchased, but they are subject to a sales charge if they are redeemed within five years of purchase. Class B Shares of the Short Term Bond Fund do not incur a sales charge when they are purchased, but they are subject to a sales charge if they are redeemed within three years of purchase. The deferred sales charge may be waived in connection with certain qualifying redemptions. (See “Class A Shares, Class B Shares, Class C Shares and Class T Shares—Waiver of Deferred Sales Charges” in this SAI.)
Class B Shares are subject to ongoing distribution and service fees at an annual rate of up to 1.00% of each Fund’s aggregate average daily net assets attributable to the Class B Shares. Class B Shares enjoy the benefit of permitting all of the investor’s dollars to work from the time the investment is made. The higher ongoing distribution and service fees paid by Class B Shares will cause such shares to have a higher expense ratio and to pay lower dividends, to the extent any dividends are paid, than those related to Class A Shares. Class B Shares will automatically convert to Class A Shares eight years after the end of the calendar month in which the shareholder’s order to purchase was accepted. Class B Shares of the Short Term Bond Fund convert to Class A Shares six years after the end of the calendar month in which the shareholder’s order to purchase was accepted. The purpose of the conversion feature is to relieve the holders of the Class B Shares that have been outstanding for a period of time sufficient for the Distributor to have been compensated for distribution expenses related to the Class B Shares from most of the burden of such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales charge alternative which have been outstanding for less than the period ending eight years after the end of the month in which the shares were issued. Class B Shares of the Short Term Bond Fund include all shares purchased pursuant to the deferred sales charge alternative which have been outstanding for less than the period ending six years after the end of the month in which the shares were issued. At the end of this period, Class B Shares will automatically convert to Class A Shares and will no longer be subject to the higher distribution and service fees. Such conversion will be on the basis of the relative NAV of the two classes without the imposition of any sales load, fee or other charge.
For purposes of conversion to Class A Shares, shares purchased through the reinvestment of dividends and distributions paid in respect of Class B Shares in a shareholder’s account will be considered to be held in a separate subaccount. Each time any Class B Shares in the shareholder’s account (other than those in the subaccount) convert to Class A Shares, a pro rata portion of the Class B Shares in the subaccount will also convert to Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are subject to a deferred sales charge if redeemed within one year of purchase. Class C Shares of the Multi-Sector Short Term Bond Fund are not subject to a sales charge when redeemed. The deferred sales charge may be waived in connection with certain qualifying redemptions. Shares issued in conjunction with the automatic reinvestment of income distributions and capital gain distributions are not subject to any sales charges. Class C Shares are subject to ongoing distribution and services fees of up to 1.00% of each Fund’s aggregate average daily net assets attributable to Class C Shares. Class C Shares of the Multi-Sector Short Term Bond Fund are subject to ongoing distribution and service fees of up to 0.50% of the Funds’ aggregate average daily net assets attributable to Class C Shares. Class C Shares enjoy the benefit of permitting all of the investor’s dollars to work from the time the investment is made. The higher ongoing distribution and services fee paid by Class C Shares will cause such shares to have a higher expense ratio and to pay lower dividends, to the extent any
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dividends are paid, than those related to Class A Shares. Class C Shares do not convert to another class of shares and long term investors may therefore pay more through accumulated distribution fees than the economic equivalent of any applicable sales charge and accumulated distribution fees in the other classes.
Class T Shares (Short Term Bond Fund Only)
Class T Shares do not incur a sales charge when they are purchased, but they are subject to a sales charge if they are redeemed within the first year of purchase. The deferred sales charge may be waived in connection with certain qualifying redemptions. (See “Class A Shares, Class B Shares, Class C Shares and Class T Shares—Waiver of Deferred Sales Charges” in this SAI.) Class T Shares are subject to an ongoing distribution and services fee at an annual rate of 1.00% of the Short Term Bond Fund’s aggregate average daily net assets attributable to the Class T Shares. Class T Shares enjoy the benefit of permitting all of the investor’s dollars to work from the time the investment is made. The higher ongoing distribution and services fee paid by Class T Shares will cause such shares to have a higher expense ratio and to pay lower dividends, to the extent any dividends are paid, than those related to Class A Shares. Class T Shares of the Short Term Bond Fund do not convert to another class of shares and long term investors may therefore pay more through accumulated distribution fees than the economic equivalent of any applicable sales charge and accumulated distribution fees in the other classes. Class T shares can be exchanged for Class C Shares of any Virtus Mutual Fund.
Class I Shares
Class I Shares are offered primarily to clients of financial intermediaries that (i) charge such clients an ongoing fee for advisory, investment, consulting, or similar services; or (ii) have entered into an agreement with the Distributor to offer Class I Shares through a no-load network or platform. Such clients may include pension and profit sharing plans, other employee benefit trusts, endowments, foundations and corporations. Class I Shares are also offered to private and institutional clients of, or referred by, the Adviser, the subadvisers, their affiliates, and to Trustees of the funds and trustees/directors of affiliated open- and closed-end funds, and directors, officers and employees of Virtus and its affiliates.
Class R6 Shares
Class R6 Shares are available only to employer sponsored retirement plans, including profit-sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans, and plans described in Section 401(k), 403(b) and 457 of the Internal Revenue Code, where the employer, administrator, sponsor or related person has entered into an agreement with the fund’s Transfer Agent to make Class R6 Shares available to plan participants where plan level or omnibus accounts are held on the books of the fund. Class R6 Shares are not available to traditional or Roth IRAs, Coverdell Savings Accounts, Keoghs, SEPs, SARSEPs, or Simple IRAs and are not available through retail, advisory fee-based wrap platforms. Individual shareholders who purchase Class R6 Shares through retirement platforms or other intermediaries are not eligible to hold Class R6 Shares outside of their respective plan or intermediary platform. If you are eligible to purchase and do purchase Class R6 Shares, you will pay no sales charge at any time. There are no distribution and service fees applicable to Class R6 Shares.
Class A Shares — Reduced Initial Sales Charges
Investors choosing Class A Shares may be entitled to reduced inital sales charges. The ways in which initial sales charges may be avoided or reduced are described below. Investors buying Class A Shares on which a finder's fee has been paid may incur a CDSC if they redeem their shares within 18 months of purchase. For all Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. The CDSC period begins on the last day of the month preceding the month in which the purchase was made. Such deferred sales charge may be waived under certain conditions as determined by the Distributor or Transfer Agent.
Qualified Purchasers
If you fall within any one of the following categories, you will not have to pay a sales charge on your purchase of Class A Shares, provided that such purchase is made upon the written assurance of the purchaser that the purchase is made for investment purposes and that the shares so acquired will not be resold except to the Fund:
(1) trustee, director or officer of any Virtus Mutual Fund, or any other mutual fund advised, subadvised or distributed by the Adviser, Distributor or any of their corporate affiliates;
(2) any director or officer, or any full-time employee or sales representative (for at least 90 days), of the applicable Fund’s Adviser, subadviser or Distributor;
(3) any private client of an Adviser or subadviser to any Virtus Mutual Fund;
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(4) registered representatives and employees of securities dealers with whom the Distributor has sales agreements;
(5) any qualified retirement plan exclusively for persons described above;
(6) any officer, director or employee of a corporate affiliate of the Adviser, a subadviser or the Distributor;
(7) any spouse or domestic partner, child, parent, grandparent, brother or sister of any person named in (1), (2), (4) or (6) above;
(8) employee benefit plans for employees of the Adviser, Distributor and/or their corporate affiliates;
(9) any employee or agent who retires from the Distributor and/or their corporate affiliates or from PNX, as long as, with respect to PNX employees or agents, such individual was employed by PNX prior to December 31, 2008;
(10) any Virtus direct account held in the name of a qualified employee benefit plan, endowment fund or foundation if, on the date of the initial investment, the plan, fund or foundation has assets of  $10,000,000 or more or at least 100 eligible employees;
(11) any person with a direct rollover transfer of shares from an established Virtus Mutual Fund or Virtus qualified plan;
(12) any state, county, city, department, authority or similar agency prohibited by law from paying a sales charge;
(13) any unallocated account held by a third party administrator, registered investment adviser, trust company, or bank trust department which exercises discretionary authority and holds the account in a fiduciary, agency, custodial or similar capacity, if in the aggregate such accounts held by such entity equal or exceed $1,000,000;
(14) any deferred compensation plan established for the benefit of any trustee or director of Virtus, any Virtus Mutual Fund, or any open-or closed-end fund advised, subadvised or distributed by the Adviser, the Distributor or any of their corporate affiliates.
If you fall within any one of the following categories, you also will not have to pay a sales charge on your purchase of Class A Shares:
(15) individuals purchasing through an account with an unaffiliated brokerage firm having an agreement with the Distributor to waive sales charges for its clients;
(16) purchasers of Class A Shares bought through investment advisers and financial planners who charge an advisory, consulting or other fee for their services and buy shares for their own accounts or the accounts of their clients;
(17) retirement plans and deferred compensation plans and trusts used to fund those plans (including, for example, certain plans qualified or created under Sections 401(a), 403(b) or 457 of the Code), and “rabbi trusts” that buy shares for their own accounts, in each case if those purchases are made through a broker or agent or other financial intermediary that has made special arrangements with the Distributor for such purchases; or
(18) clients of investment advisors or financial planners who buy shares for their own accounts but only if their accounts are linked to a master account of their investment advisor or financial planner on the books and records of the broker, agent or financial intermediary with which the Distributor has made such special arrangements. Each of the investors described in (15) through (18) may be charged a fee by the broker, agent or financial intermediary for purchasing shares.
Combination Purchase Privilege
Your purchase of any class of shares of these Funds or any other Virtus Mutual Fund, if made at the same time by the same person, will be added together with any existing Virtus Mutual Fund account values to determine whether the combined sum entitles you to an immediate reduction in sales charges. A “person” is defined in this and the following sections as either:
(a) any individual, his or her spouse or domestic partner, children and minor grandchildren purchasing shares for his, her or their own account (including an IRA account) including his, her or their own sole proprietorship or trust where any of the above is the named beneficiary;
(b) a trustee or other fiduciary purchasing for a single trust, estate or single fiduciary account (even though more than one beneficiary may exist);
(c) multiple accounts (up to 200) under a qualified employee benefit plan or administered by a third party administrator; or
(d) trust companies, bank trust departments, registered investment advisers, and similar entities placing orders or providing administrative services with respect to accounts over which they exercise discretionary investment authority
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and which are held in a fiduciary, agency, custodial or similar capacity, provided all shares are held of record in the name, or nominee name, of the entity placing the order.
Right of Accumulation
The value of your account(s) in any class of shares of these Funds or any other Virtus Mutual Fund may be added together at the time of each purchase to determine whether the combined sum entitles you to a prospective reduction in sales charges. You must provide certain account information to the Funds and their agents at the time of purchase to exercise this right.
Gifting of Shares
If you make a gift of shares of a Virtus Mutual Fund, upon your request you may combine purchases, if made at the same time, of any class of shares of these Funds or any other Virtus Mutual Fund at the sales charge discount allowed for the combined purchase. The receiver of the gift may also be entitled to a prospective reduction in sales charges in accordance with the funds’ right of accumulation or other provisions. You or the receiver of the gift must provide certain account information to Virtus Mutual Funds or their agents at the time of purchase to exercise this right.
Associations
Certain groups or associations may be treated as a “person” and qualify for reduced Class A Share sales charges. The group or association must: (1) have been in existence for at least six months; (2) have a legitimate purpose other than to purchase mutual fund shares at a reduced sales charge; (3) work through an investment dealer; and (4) not be a group whose sole reason for existing is to consist of members who are credit card holders of a particular company, policyholders of an insurance company, customers of a bank or a broker-dealer or clients of an investment adviser.
Letter of Intent
If you sign a Letter of Intent, your purchase of any class of shares of these Funds or any other Virtus Mutual Fund, if made by the same person within a 13-month period, will be added together to determine whether you are entitled to an immediate reduction in sales charges. Sales charges are reduced based on the overall amount you indicate that you will buy under the Letter of Intent. The Letter of Intent is a mutually non-binding commitment. Since the Funds and their agents do not know whether you will ultimately fulfill the Letter of Intent, shares worth 5% of the Letter of Intent amount will be set aside until you fulfill the Letter of Intent. When you buy enough shares to fulfill the Letter of Intent, these shares will no longer be restricted. If, on the other hand, you do not satisfy the Letter of Intent, or otherwise wish to sell any restricted shares, you will be given the choice of either buying enough shares to fulfill the Letter of Intent or paying the difference between any sales charge you previously paid and the otherwise applicable sales charge. You will be given 20 days to make this decision. If you do not exercise either election, the Transfer Agent will automatically redeem the number of your restricted shares needed to make up the deficiency in sales charges received. The Transfer Agent will redeem restricted Class A Shares before Class B Shares, Class C Shares or Class T Shares, respectively. Oldest shares will be redeemed before selling newer shares. Any remaining shares will then be deposited to your account.
Waiver of Deferred Sales Charges
The CDSC is waived on the redemption (sale) of Class A Shares, Class B Shares, Class C Shares and Class T Shares if the redemption is made
(a) within one year of death,
(i) of the sole shareholder on an individual account,
(ii) of a joint tenant where the surviving joint tenant is the deceased’s spouse or domestic partner,
(iii) of the beneficiary of a Uniform Gifts to Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or     other custodial account, or
(iv) of the “grantor” on a trust account;
(b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under certain retirement plans qualified under Code Sections 401, 408 or 403(b) or resulting from the tax-free return of an excess contribution to an IRA;
(d) by 401(k) plans using an approved participant tracking system for participant hardships, death, disability or normal retirement, and loans which are subsequently repaid;
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(e) based on the exercise of exchange privileges among Class A Shares, Class B Shares, Class C Shares and Class T Shares of these Funds or other Virtus Mutual Fund;
(f) based on any direct rollover transfer of shares from an established Virtus Mutual Fund qualified plan into a Virtus Mutual Fund IRA by participants terminating from the qualified plan; and
(g) based on the systematic withdrawal program, provided such withdrawals do not exceed more than 1% monthly or 3% quarterly of the aggregate net investments. (See "Systematic Withdrawal Program" in this SAI for additional information about these restrictions.)
If, as described in condition (a) above, an account is transferred to an account registered in the name of a deceased’s estate, the CDSC will be waived on any redemption from the estate account occurring within one year of the death. If the Class B Shares are not redeemed within one year of the death, they will remain subject to the applicable CDSC.
How to Redeem Shares
Customer orders will be priced at the Funds’ NAVs next computed after they are received in good order by the Funds’ Transfer Agent, an authorized broker or the broker’s authorized designee.
Under the 1940 Act, payment for shares redeemed must ordinarily be made within seven days after tender. The right to redeem shares may be suspended and payment postponed during periods when the NYSE is closed, other than customary weekend and holiday closings, or if permitted by rules of the SEC, during periods when trading on the NYSE is restricted or during any emergency which makes it impracticable for a Fund to dispose of its securities or to determine fairly the value of its net assets or during any other period permitted by order of the SEC for the protection of investors. Furthermore, the Transfer Agent will not mail redemption proceeds until checks received for shares purchased have cleared, which may take up to 15 days or more.
Class A Shares, Class B Shares, Class C Shares, Class I Shares and Class T Shares Only
The Trust has authorized one or more brokers to receive on its behalf purchase and redemption orders. Such brokers are authorized to designate other intermediaries to accept purchase and redemption orders on the Trust’s behalf. The Trust will be deemed to have received a purchase or redemption order when an authorized broker or, if applicable, a broker’s authorized designee, accepts the order.
Redemptions by Class A, Class B, Class C and Class T shareholders will be subject to the applicable deferred sales charge, if any. A shareholder should contact his/her broker-dealer if he/she wishes to transfer shares from an existing broker-dealer street name account to a street name account with another broker-dealer. The Funds have no specific procedures governing such account transfers.
Class R6 Shares Only
If you are participating in an employer sponsored retirement plan, such as a 401(k) plan, profit-sharing plan, defined benefit plan or other employer-directed plan, your company will provide you with the information you need to sell Class R6 Shares.
Redemptions by Mail
Shareholders may redeem shares by making written request, executed in the full name of the account, directly to Virtus Mutual Funds, P.O. Box 9874, Providence, RI 02940-8074. (See the Funds’ current Prospectuses for more information.)
Redemptions by Telephone
Generally, shareholders may redeem by telephone up to $50,000 worth of their shares held in book-entry form. (See the Funds’ current Prospectuses for more information.) Corporations that have completed a Corporate Authorized Trader form may redeem more than $50,000 worth of shares in most instances.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at least one year and which has a value of less than $200, due to redemption activity may be redeemed upon the giving of not less than 60 days written notice to the shareholder mailed to the account address of record. During the 60-day period following such notice, the shareholder has the right to add to the account to bring its value to $200 or more. (See the Funds’ current Prospectuses for more information.)
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Redemptions by Check (Certain Fixed Income Funds only)
Any shareholder of a Fixed Income Fund may elect to redeem shares held in his account by check. Please call us at 800-243-1574 for a listing of funds offering this feature. Checks will be sent to an investor upon receipt by the Transfer Agent of a completed application and signature card (attached to the application). If the signature card accompanies an individual’s initial account application, the signature guarantee section of the form may be disregarded. However, the Trust reserves the right to require that all signatures be guaranteed prior to the establishment of a check writing service account. When an authorization form is submitted after receipt of the initial account application, all signatures must be guaranteed regardless of account value.
Checks may be drawn payable to any person in an amount of not less than $250, provided that immediately after the payment of the redemption proceeds the balance in the shareholder’s account is $250 or more.
When a check is presented to the Transfer Agent for payment, a sufficient number of full and fractional shares in the shareholder’s account will be redeemed to cover the amount of the check. The number of shares to be redeemed will be determined on the date the check is received by the Transfer Agent. Presently there is no charge to the shareholder for the check writing service, but this may be changed or modified in the future upon two weeks written notice to shareholders. Checks drawn from Class A and Class C accounts are subject to the applicable deferred sales charge, if any.
The check writing procedure for redemption enables a shareholder to receive income accruing on the shares to be redeemed until such time as the check is presented to the Transfer Agent for payment. Inasmuch as canceled checks are returned to shareholders monthly, no confirmation statement is issued at the time of redemption.
Shareholders utilizing withdrawal checks will be subject to the Transfer Agent’s rules governing checking accounts. A shareholder should make sure that there are sufficient shares in his or her account to cover the amount of any check drawn. If insufficient shares are in the account and the check is presented to the Transfer Agent on a banking day on which the Trust does not redeem shares (for example, a day on which the NYSE is closed), or if the check is presented against redemption proceeds of an investment made by check which has not been in the account for at least fifteen calendar days, the check may be returned marked “Non-sufficient Funds” and no shares will be redeemed. A shareholder may not close his or her account by a withdrawal check because the exact value of the account will not be known until after the check is received by the Transfer Agent.
Redemptions in Kind
To the extent consistent with state and federal law, each Virtus Mutual Fund may make payment of the redemption price either in cash or in kind. However, the Funds have elected to pay in cash all requests for redemption by any shareholder of record, limited in respect to each shareholder during any 90-day period to the lesser of  $250,000 or 1% of the NAV of the Fund at the beginning of such period. This election has been made pursuant to Rule 18f-1 under the 1940 Act and is irrevocable while the Rule is in effect unless the SEC, by order, permits the withdrawal thereof. In case of a redemption in kind, securities delivered in payment for shares would generally represent the shareholder’s proportionate share of the Fund’s current net assets and be valued at the same value assigned to them in computing the NAV per share of the Fund. A shareholder receiving such securities would incur brokerage costs when selling the securities.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the time they redeemed have a privilege of reinvestment of their investment at NAV. (See the Funds’ current Prospectuses for more information.)
Returned/Uncashed Checks Policy
For the protection of Fund shareholders, if you have elected to receive dividends and other distributions in cash, and the check is returned to the Fund as undeliverable or you do not respond to mailings from Virtus with regard to uncashed distribution checks, we may take any of the following actions:
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The distribution option on your account(s) will be changed to reinvest and all subsequent payments will be reinvested in additional shares of the Fund.
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Any systematic withdrawal plan will be stopped immediately.
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If a check is not presented for payment within six months, the Fund reserves the right to reinvest the check proceeds.
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If reinvested, distributions will be reinvested in the Fund at the earliest date practicable after the waiting period at the then-current NAV of such Fund.
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No interest will accrue on amounts represented by uncashed dividend, distribution or redemption checks.
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This policy may not apply to certain retirement or qualified accounts, closed accounts or accounts under the applicable Fund’s required minimum threshold.
Reinvestment of future distributions will continue until you notify us of your election to reinstate cash payment of the dividends and other distributions. You will also be required to confirm your current address and daytime telephone number.
Pricing of Shares
The NAV per share of each class of each Fund generally is determined as of the close of regular trading (normally 4:00 PM eastern time) on days when the NYSE is open for trading. A Fund will not calculate its NAV per share class on days when the NYSE is closed for trading.
The NYSE will be closed on the following observed national holidays: New Year’s Day, Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Since the Funds do not price securities on weekends or United States national holidays, the NAV of a Fund’s foreign assets may be significantly affected on days when the investor may not be able to purchase or sell shares of the Funds. The NAV per share of a Fund is determined by adding the values of all securities and other assets of the Fund, subtracting liabilities, and dividing by the total number of outstanding shares of the Fund. Assets and liabilities are determined in accordance with generally accepted accounting principles and applicable rules and regulations of the SEC. The total liability allocated to a class, plus that class’s distribution fee and any other expenses allocated solely to that class, are deducted from the proportionate interest of such class in the assets of the Fund, and the resulting amount of each is divided by the number of shares of that class outstanding to produce the NAV per share.
A security that is listed or traded on more than one exchange generally is valued at the official closing price on the exchange representing the principal exchange for such security. Because of the need to obtain prices as of the close of trading on various exchanges throughout the world, the calculation of NAV may not take place for any Fund which invests in foreign securities contemporaneously with the determination of the prices of the majority of the portfolio securities of such Fund. The foreign currency exchange rate used to price the currency in which foreign securities are denominated is generally the 4 p.m. Eastern Time spot rate. If at any time a Fund has investments where market quotations are not readily available or are determined not to be reliable indicators of the value of the securities priced, such investments are valued at the fair value thereof as determined in good faith in accordance with policies and procedures approved by the Board.
Security valuation procedures for each Fund, which include nightly price variance as well as back-testing such as bi-weekly unchanged price, monthly secondary source and transaction analysis, have been approved by the Board. All internally fair valued securities are approved by a valuation committee (the “Valuation Committee”) appointed by the Board. The Valuation Committee is comprised of the treasurer and assistant treasurer of the Trust, along with two appointees of the Adviser and two appointees of the Administrator who are identified to the Board. All internally fair valued securities, referred to below, are updated daily and reviewed in detail by the Valuation Committee monthly unless changes occur within the period. The Valuation Committee reviews the validity of any model inputs and any changes to the model when applicable. Internal fair valuations are reviewed by the Board at least quarterly.
Each Fund utilizes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.
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Level 1 – quoted prices in active markets for identical securities
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Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
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Level 3 – prices determined using significant unobservable inputs (including the valuation committee’s own assumptions in determining the fair value of investments)
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The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
A description of the valuation techniques applied to a Fund’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows:
Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or if no closing price is available, at the last bid price and are categorized as Level 1 in the hierarchy.
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Restricted equity securities and private placements that are not widely traded, are illiquid or are internally fair valued by the valuation committee, are generally categorized as Level 3 in the hierarchy.
Certain non-U.S. securities may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that non-U.S. markets close (where the security is principally traded) and the time that a Fund calculates its NAV that may impact the value of securities traded in these non-U.S. markets. In such cases the Funds fair value non-U.S. securities using an independent pricing service which considers the correlation of the trading patterns of the non-U.S. security to the intraday trading in the U.S. markets for investments such as ADRs, financial futures, exchange traded funds, and certain indexes as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy. Because the frequency of significant events is not predictable, fair valuation of certain non-U.S. common stocks may occur on a frequent basis.
Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For most bond types, the pricing service utilizes matrix pricing which considers one or more of the following factors: yield or price of bonds of comparable quality, coupon, maturity, current cash flows, type, and current day trade information, as well as dealer supplied prices. These valuations are generally categorized as Level 2 in the hierarchy. Structured debt instruments such as mortgage-backed and asset-backed securities may also incorporate collateral analysis and utilize cash flow models for valuation and are generally categorized as Level 2 in the hierarchy. Pricing services do not provide pricing for all securities and therefore indicative bids from dealers are utilized which are based on pricing models used by market makers in the security and are generally categorized as Level 2 in the hierarchy. Debt securities that are not widely traded, are illiquid, or are internally fair valued by the valuation committee are generally categorized as Level 3 in the hierarchy.
Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized as Level 1 in the hierarchy.
Over-the-counter (OTC) derivative contracts, which include forward currency contracts and equity linked instruments, do not require material subjectivity as pricing inputs are observed from actively quoted markets and are categorized as Level 2 in the hierarchy.
Investments in open-end mutual funds are valued at their closing NAV each business day and are categorized as Level 1 in the hierarchy.
Short-term notes having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market, and are generally categorized as Level 2 in the hierarchy.
INVESTOR ACCOUNT SERVICES AND POLICIES
The Funds offer accumulation plans, withdrawal plans and reinvestment and exchange privileges. Certain privileges may not be available in connection with all classes. In most cases, changes to account services may be accomplished over the phone. Inquiries regarding policies and procedures relating to shareholder account services should be directed to the Transfer Agent at 800.243.1574. Broker-dealers may impose their own restrictions and limits on accounts held through the broker-dealer. Please consult with your broker-dealer for account restrictions and limit information. The Funds and their agents reserve the right to modify or terminate these services upon reasonable notice.
Exchanges
Under certain circumstances, shares of any Virtus Mutual Fund may be exchanged for shares of the same class of another Virtus Mutual Fund on the basis of the relative NAVs per share at the time of the exchange. Class C Shares are also exchangeable for Class T Shares of those Virtus Mutual Funds offering them. Exchanges are subject to the minimum initial investment requirement of the designated Fund, except if made in connection with the Systematic Exchange privilege described below. Shareholders may exchange shares held in book-entry form for an equivalent number (value) of the same class of shares of any other Virtus Mutual Fund, if currently offered. Exchanges will be based upon each Fund’s NAV per share next computed following receipt of a properly executed exchange request without sales charge. For all Virtus fixed income funds and Virtus Sector Trend Fund, the CDSC is 0.50%; for all other Virtus Mutual Funds, the CDSC is 1.00%. On exchanges with share classes that carry a CDSC, the CDSC schedule of the original shares purchased continues to apply. The exchange of shares is treated as a sale and purchase for federal income tax purposes. (See also “Dividends, Distributions and Taxes” in this SAI.) Exchange privileges may not be available for all Virtus Mutual Funds, and may be rejected or suspended.
In certain circumstances, a Fund, the Distributor or the Transfer Agent may enter into an agreement with a financial intermediary to permit exchanges from one class of a Fund into another class of the same Fund, subject to certain
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conditions. Such exchanges will only be permitted if, among other things, the financial intermediary agrees to follow procedures established by the Fund, the Distributor or the Transfer Agent, which generally will require that the exchanges be carried out (i) within accounts maintained and controlled by the intermediary, (ii) on behalf of all or a particular segment of beneficial owners holding shares of the affected Fund within those accounts, and (iii) all at once or within a given time period, or as agreed upon in writing by the Fund, the Distributor or the Transfer Agent, and the financial intermediary. A shareholder’s ability to make this type of exchange may be limited by operational or other limitations of his or her financial intermediary or the Fund. Under the Code, generally if a shareholder exchanges shares from one class of a Fund into another class of the same Fund, the transaction should not be subject to U.S. federal income taxes; however, each shareholder should consult both the relevant financial intermediary and the shareholder’s tax advisor regarding the treatment of any specific exchange carried out under the terms of this paragraph.
Systematic Exchanges
If the conditions above have been met, you or your broker may, by telephone or written notice, elect to have shares exchanged for the same class of shares of another Virtus Mutual Fund automatically on a monthly, quarterly, semiannual or annual basis or may cancel this privilege at any time. If you maintain an account balance of at least $5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the basis of the NAV of the shares held in a single account), you may direct that shares be automatically exchanged at predetermined intervals for shares of the same class of another Virtus Mutual Fund. Systematic exchanges will be executed upon the close of business on the 10 th day of each month or the next succeeding business day. Exchanges will be based upon each Fund’s NAV per share next computed after the close of business on the 10 th day of each month (or next succeeding business day), without sales charge. Systematic exchange forms are available from the Transfer Agent.
Dividend Reinvestment Across Accounts
If you maintain an account balance of at least $5,000, or $2,000 for tax qualified retirement benefit plans (calculated on the basis of the NAV of the shares held in a single account), you may direct that any dividends and distributions paid with respect to shares in that account be automatically reinvested in a single account of one of the other Virtus Mutual Funds at NAV. You should obtain a current prospectus and consider the objectives and policies of each Virtus Mutual Fund carefully before directing dividends and distributions to another Virtus Mutual Fund. Reinvestment election forms and prospectuses are available from the Transfer Agent. Distributions may also be mailed to a second payee and/or address. Requests for directing distributions to an alternate payee must be made in writing with a signature guarantee of the registered owner(s). To be effective with respect to a particular dividend or distribution, notification of the new distribution option must be received by the Transfer Agent at least three days prior to the record date of such dividend or distribution. If all shares in your account are repurchased or redeemed or transferred between the record date and the payment date of a dividend or distribution, you will receive cash for the dividend or distribution regardless of the distribution option selected.
Invest-by-Phone
This expedited investment service allows a shareholder to make an investment in an account by requesting a transfer of funds from the balance of the shareholder’s bank account. Once a request is phoned in, the Transfer Agent or its subagent will initiate the transaction by wiring a request for monies to the shareholder’s commercial bank, savings bank or credit union via ACH. The shareholder’s bank, which must be an ACH member, will in turn forward the monies to the Transfer Agent or its subagent for credit to the shareholder’s account. ACH is a computer based clearing and settlement operation established for the exchange of electronic transactions among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and attach a voided check if applicable. Upon acceptance of the authorization form (usually within two weeks) shareholders may call toll free 800.367.5877 prior to 3:00 p.m. (Eastern Time) to place their purchase request. Instructions as to the account number and amount to be invested must be communicated to the Transfer Agent. The Transfer Agent or its subagent will then contact the shareholder’s bank via ACH with appropriate instructions. The purchase is normally credited to the shareholder’s account the day following receipt of the verbal instructions. The Fund may delay the mailing of a check for redemption proceeds of Fund shares purchased with a check or via Invest-by-Phone service until the Fund has assured itself that good payment has been collected for the purchase of the shares, which may take up to 15 days. The Trust and the Transfer Agent reserve the right to modify or terminate the Invest-by-Phone service for any reason or to institute charges for maintaining an Invest-by-Phone account.
Systematic Withdrawal Program
The Systematic Withdrawal Program allows you to periodically redeem a portion of your account on a predetermined monthly, quarterly, semiannual or annual basis. A sufficient number of full and fractional shares will be redeemed so that the designated payment is made on or about the 20 th day of the month. Shares are tendered for redemption by the
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Transfer Agent, as agent for the shareowner, on or about the 15 th of the month at the closing NAV on the date of redemption. The Program also provides for redemptions with proceeds to be directed through ACH to your bank account. For ACH payments, you may select the day of the month for the payments to be made; if no date is specified, the payments will occur on the 15 th of the month. In addition to the limitations stated below, withdrawals may not be less than $25 and minimum account balance requirements shall continue to apply.
Shareholders participating in the Program must own shares of a Fund worth $5,000 or more, as determined by the then current NAV per share, and elect to have all dividends reinvested. The purchase of shares while participating in the Program will ordinarily be disadvantageous to the Class A Shares investor since a sales charge will be paid by the investor on the purchase of Class A Shares at the same time as other shares are being redeemed. For this reason, investors in Class A Shares may not participate in an automatic investment program while participating in the Program.
Through the Program, Class B, Class C and Class T shareholders may withdraw up to 1% of their aggregate net investments (purchases, at initial value, to date net of non-Program redemptions) each month or up to 3% of their aggregate net investments each quarter without incurring otherwise applicable CDSCs. Class B, Class C and Class T shareholders redeeming more shares than the percentage permitted by the Program will be subject to any applicable CDSC on all shares redeemed. Accordingly, the purchase of share classes on which a CDSC may be payable will generally not be suitable for an investor who anticipates withdrawing sums in excess of the above limits shortly after purchase.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Qualification as a Regulated Investment Company
Each Fund within the Trust is separate for investment and accounting purposes and is treated as a separate corporation for United States federal income tax purposes. Each Fund has elected to qualify and intends to qualify as a RIC under Subchapter M of the Code. In each taxable year that a Fund qualifies as a RIC and distributes to its shareholders as dividends (not including “capital gains dividends,” discussed below) at least 90% of its ordinary investment income and short-term capital gains, with certain modifications, it (but not its shareholders) will be relieved of United States federal income tax on that portion of its net investment income and net capital gains that are currently distributed (or deemed distributed) to its shareholders. To the extent that a Fund fails to distribute all of its taxable income, it will be subject to corporate income tax (currently at a maximum rate of 35%) on any retained ordinary investment income or short-term capital gains and undistributed long-term capital gains.
Each Fund intends to make timely distributions, if necessary, sufficient in amount to avoid the non-deductible 4% excise tax that is imposed on a RIC to the extent that it fails to distribute, with respect to each calendar year, at least 98% of its ordinary income (not including tax-exempt interest) for such calendar year and 98.2% of its capital gain net income as determined for a one-year period ending on October 31 of such calendar year (or as determined on a fiscal year basis if the Fund’s fiscal year ends on November 30 or December 31, if the Fund so elects). In addition, an amount equal to any undistributed investment company taxable income or capital gain net income from the previous calendar year must also be distributed to avoid the excise tax. The excise tax is imposed on the amount by which the RIC does not meet the foregoing distribution requirements. If a Fund has taxable income that would be subject to the excise tax, the Fund intends to distribute such income so as to avoid payment of the excise tax. Notwithstanding the foregoing, there may be certain circumstances under which it would be appropriate for a Fund to pay the excise tax.
Each Fund must satisfy the following tests each year in order to qualify as a RIC: (a) derive in each taxable year at least 90% of its gross income from dividends, interest and gains from the sale or other disposition of securities and certain other investment income; and (b) meet specified diversification requirements at the end of each quarter of each taxable year. Each Fund intends to satisfy these requirements. With respect to the diversification requirement, each Fund must also diversify its holdings so that, at the close of each quarter of its taxable year, at least 50% of the value of its total assets consists of cash, cash items, United States government securities and securities of other RICs, and other securities limited generally with respect to any one issuer to not more than 5% of the total assets of that Fund and not more than 10% of the outstanding voting securities of such issuer, and not more than 25% of the value of its assets is invested in the securities of any one issuer (other than United States government securities or the securities of other RICs). In addition, the Fund may not hold more than 25% of the securities (other than of other RICs) of two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses or 25% of the securities of one or more qualified publicly traded partnerships. Each Fund intends to comply with all of the foregoing criteria for qualification as a RIC; however, there can be no assurance that each Fund will so qualify and continue to maintain its status as a RIC. If in any taxable year a Fund does not qualify as a RIC or fails to distribute at least 90% of the Fund’s investment company taxable income, all of its taxable income will be taxed at corporate rates, the Fund would not be entitled to deduct distributions to shareholders, and any capital gain dividend would not retain its character
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in the hands of the shareholder for tax purposes. The Code provides relief for certain de minimis failures to meet the asset or income tests or for certain failures due to reasonable cause. These relief provisions may prevent a Fund from being disqualified as a RIC and/or reduce the amount of tax on the Fund’s income as a result of the failure to meet certain tests.
Taxation of Debt Securities
Certain debt securities can be originally issued or acquired at a discount. Special rules apply under the Code to the recognition of income with respect to such debt securities. Under the special rules, a Fund may recognize income for tax purposes without a corresponding current receipt of cash. In addition, gain on a disposition of a debt security subject to the special rules may be treated wholly or partially as ordinary income, not capital gain.
A Fund may invest in certain investments that may cause it to realize income prior to the receipt of cash distributions, including securities bearing original issue discount. The level of such investments is not expected to affect a Fund’s ability to distribute adequate income to qualify as a RIC.
Taxation of Derivatives and Foreign Currency Transactions
Many futures contracts and foreign currency contracts entered into by a Fund and all listed non-equity options written or purchased by a Fund (including options on debt securities, options on futures contracts, options on securities indices and options on broad-based stock indices) are governed by Section 1256 of the Code. Absent a tax election to the contrary, gain or loss attributable to the lapse, exercise or closing out of any such position is treated as 60% long-term and 40% short-term capital gain or loss, and on the last trading day of a Fund’s taxable year (and, generally on October 31 for purposes of the 4% excise tax), all outstanding Section 1256 positions are marked-to-market (i.e., treated as if such positions were closed out at their closing price on such day), and any resulting gain or loss is treated as 60% long-term and 40% short-term capital gain or loss. Under certain circumstances, entry into a futures contract to sell a security may constitute a short sale for United States federal income tax purposes, causing an adjustment in the holding period of the underlying security or a substantially identical security in a Fund’s portfolio.
Equity options written by a Fund (covered call options on portfolio stock) will be subject to the provisions under Section 1234 of the Code. If a Fund writes a call option, no gain is recognized upon its receipt of a premium. If such an option lapses or is closed out, any gain or loss is treated as a short-term capital gain or loss. If such an option is exercised, any resulting gain or loss is a short-term or long-term capital gain or loss depending on the holding period of the underlying stock.
Positions of a Fund which consist of at least one stock and at least one stock option or other position with respect to a related security which substantially diminishes the Fund’s risk of loss with respect to such stock could be treated as a “straddle” that is governed by Section 1092 of the Code, the operation of which may cause deferral of losses, adjustments in the holding periods of stock or securities and conversion of short-term capital losses into long-term capital losses. An exception to these straddle rules exists for any “qualified covered call options” on stock options written by a Fund.
Positions of a Fund which consist of at least one debt security not governed by Section 1256 of the Code and at least one futures or currency contract or listed non-equity option governed by Section 1256 of the Code which substantially diminishes the Fund’s risk of loss with respect to such debt security are treated as a “mixed straddle.” Although mixed straddles are subject to the straddle rules of Section 1092 of the Code, certain tax elections exist for them that reduce or eliminate the operation of these rules. Each Fund will monitor these transactions and may make certain tax elections in order to mitigate the operation of these rules and prevent disqualification of the Fund as a RIC for United States federal income tax purposes.
Under the Code, gains or losses attributable to fluctuations in exchange rates which occur between the time a Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time it actually collects such receivables or pays such liabilities generally are treated as ordinary income or loss. Similarly, on disposition of debt securities denominated in a foreign currency and on disposition of certain futures contracts, forward contracts and options, gains or losses attributable to fluctuations in the value of the foreign currency between the date of acquisition of the security or contract and the date of disposition also are treated as ordinary income or loss. Generally, these gains and losses, referred to under the Code as Section 988 gains or losses, may increase or decrease the amount of each Fund’s investment company taxable income to be distributed to its shareholders as ordinary income.
These special tax rules applicable to options, futures and currency transactions could affect the amount, timing and character of a Fund’s income or loss and hence of its distributions to shareholders by causing holding period adjustments, converting short-term capital losses into long-term capital losses, and accelerating a Fund’s income or deferring its losses.
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The IRS has not provided guidance on the tax consequences of certain investments and other activities that the Funds may make or undertake. While the Funds will endeavor to treat the tax items arising from these transactions in a manner believed to be appropriate, guarantees cannot be given that the IRS or a court will concur with the Funds’ treatment and that adverse tax consequences will not ensue.
Taxation of Foreign Investments
If a Fund invests in stock of certain passive foreign investment companies, the Fund may be subject to special United States federal income taxation rules applicable to any “excess distribution” with respect to such stock or gain from the disposition of such stock treated as an “excess distribution.” The tax would be determined by allocating such distribution or gain ratably to each day of the Fund’s holding period for the stock. The distributions or gain so allocated to any taxable year of the Fund, other than the taxable year of the excess distribution or disposition, would be taxed to the Fund at the highest ordinary income rate in effect for such year, and the tax would be further increased by an interest charge to reflect the value of the tax deferral deemed to have resulted from the ownership of the foreign company’s stock. Any amount of distribution or gain allocated to the taxable year of the distribution or disposition would be included in the Fund’s investment company taxable income and, accordingly, would not be taxable to the Fund to the extent distributed by the Fund as a dividend to its shareholders. The Fund may elect to mark-to-market (i.e., treat as if sold at their closing market price on the same day) its investments in certain passive foreign investment companies and avoid any tax and/or interest charge on excess distributions.
The Funds may be subject to tax on dividend or interest income received from securities of non-United States issuers withheld by a foreign country at the source. The United States has entered into tax treaties with many foreign countries that entitle a Fund to a reduced rate of tax or exemption from tax on income. It is impossible to determine the effective rate of foreign tax in advance since the amount of a Fund’s assets to be invested within various countries is not known. Each Fund intends to operate so as to qualify for tax treaty benefits where applicable. If more than 50% of the value of a Fund’s total assets at the close of its taxable year is comprised of stock or securities issued by foreign corporations, the Fund may elect to “pass through” to the Fund’s shareholders the amount of foreign income taxes paid by the Fund. If a Fund does elect to “pass through,” each shareholder will receive a written statement from the Fund identifying the amount of such shareholder’s pro rata share of  (i) the foreign taxes paid and (ii) the Fund’s gross income from foreign sources. In addition, if at least 50% of the value of a Fund’s assets at the close of each quarter of the tax year is represented by interests in other RICs, then such Fund may “pass through” foreign income taxes paid without regard to whether more than 50% of the Fund’s total assets at the close of the tax year consisted of stock and securities issued by foreign corporations. If a Fund passes through foreign taxes, each shareholder will be required to include the amount of such shareholder’s pro rata share of such taxes in gross income (in addition to dividends actually received), and the shareholder will be entitled to deduct such foreign taxes (if the shareholder itemizes deductions) in computing taxable income or claim a credit against U.S. federal income tax liability, subject to limitations.
United States Federal and California Taxation of Distributions—CA Tax-Exempt Bond Fund
If at least 50% of the value of a Fund’s assets at the close of each quarter of the tax year is comprised of tax-exempt state and local bonds, then such Fund is qualified to pay exempt-interest dividends for United States federal income tax purposes to the Fund’s shareholders. The CA Tax-Exempt Bond Fund intends to comply with this standard because at least 80% of the assets of the Fund will normally be invested in California municipal securities, and the Fund will provide shareholders with a written statement identifying each shareholder’s amount of exempt-interest dividends. Exempt-interest dividends received by a shareholder are treated as items of tax-exempt interest to the shareholder.
In addition, distributions or parts thereof derived from interest received on state and local issues and United States government obligations held by the CA Tax-Exempt Bond Fund will be exempt from California personal income taxes in ratable proportion of income of the California investments and United States government obligations of the CA Tax-Exempt Bond Fund, provided that the Fund has complied with the requirement that at least 50% of its assets be invested in State and local issues and United States government issues at the end of each fiscal quarter. The CA Tax-Exempt Bond Fund intends to comply with this standard because at least 80% of the assets of the Fund will normally be invested in California municipal securities. Distributions derived from other earnings will be subject to California personal income tax for California residents and other persons subject to California income tax.
Taxation of Distributions to Shareholders
Certain qualified dividend income and long-term capital gains are taxed at a lower federal income tax rate (maximum 20%) for individual shareholders. The reduced rate for qualified dividend income applies to dividends from domestic corporations and certain qualified foreign corporations subject to various requirements and a minimum holding period applicable to both a Fund and its shareholders. Ordinary distributions made by a Fund to its shareholders are eligible
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for the reduced rate to the extent the underlying income in the Fund is qualified dividend income. An additional 3.8% tax will generally apply to the lesser of  (i) an individual’s net investment income or (ii) the excess of modified adjusted gross income over $200,000 (in the case of single filers) or $250,000 (in the case of a joint return).
Distributions made by a Fund from ordinary investment income and net short-term capital gains will be taxed to such Fund’s shareholders as ordinary dividend income to the extent of the earnings and profits of the Fund. Ordinary income dividends received by corporate shareholders of a Fund will qualify for the 70% dividends-received deduction to the extent the Fund designates such amounts as qualifying dividend distributions; however, the portion that may be so designated is subject to certain limitations. Distributions by a Fund that are reported by the Fund as capital gain dividends in written statements furnished to its shareholders (e.g., Form 1099) will be taxed to the shareholders as long-term capital gain, and will not be eligible for the corporate dividends-received deduction.
Dividends declared by a Fund to shareholders of record in October, November or December will be taxable to such shareholders in the year that the dividend is declared, even if it is not paid until the following year (so long as it is actually paid by the Fund in January of such following year). Also, shareholders will be taxable on amounts reported by a Fund in written statements to shareholders as capital gain dividends, even if such amounts are not actually distributed to them. Shareholders will be entitled to claim a credit against their own United States federal income tax liability for taxes paid by each Fund on such undistributed capital gains, if any.
Dividends and capital gain distributions will be taxable to shareholders as described above whether received in cash or in shares under a Fund’s distribution reinvestment plan. With respect to distributions received in cash or reinvested in shares purchased on the open market, the amount of the distribution for tax purposes will be the amount of cash distributed or allocated to the shareholder.
Shareholders should be aware that the price of shares of a Fund that are purchased prior to a dividend or distribution by the Fund may reflect the amount of the forthcoming dividend or distribution. Such dividend or distribution, when made, would be taxable to shareholders under the principles discussed above even though the dividend or distribution may reduce the NAV of shares below a shareholder’s cost and thus represent a return of a shareholder’s investment in an economic sense.
A high portfolio turnover rate may result in the realization of larger amounts of short-term gains, which are taxable to shareholders as ordinary income.
Each Fund intends to accrue dividend income for United States federal income tax purposes in accordance with the rules applicable to RICs. In some cases, these rules may have the effect of accelerating (in comparison to other recipients of the dividend) the time at which the dividend is taken into account by the Fund as taxable income.
Shareholders should consult their own tax advisors about their tax situations.
Income and capital gain distributions are determined in accordance with rules set forth in the Code and the Regulations that may differ from United States Generally Accepted Accounting Principles.
Sale or Exchange of Fund Shares
Gain or loss will be recognized by a shareholder upon the sale of his or her shares in a Fund or upon an exchange of his or her shares in a Fund for shares in another Fund. Provided that the shareholder is not a dealer in such shares, such gain or loss will generally be treated as capital gain or loss, measured by the difference between the adjusted basis of the shares and the amount realized from the sale. Under current law, capital gains (whether long-term or short-term) of individuals and corporations are fully includable in taxable income. Capital losses (whether long-term or short-term) may offset capital gains plus (for non-corporate taxpayers only) up to $3,000 per year of ordinary income.
Redemptions, including exchanges, of shares may give rise to recognized gains or losses. All or a portion of a loss realized upon the redemption, including exchanges, of shares may be disallowed under “wash sale” rules to the extent shares are purchased (including shares acquired by means of reinvested dividends) within a 61-day period beginning 30 days before and ending 30 days after such redemption. Any loss realized upon a shareholder’s sale, redemption or other disposition of shares with a tax holding period of six months or less will be treated as a long-term capital loss to the extent of any capital gain dividend distributed with respect to such shares. The “wash sale” restrictions also apply to an investor who holds a security both within a tax-deferred account and in a taxable account; sales and repurchases between two accounts will be considered as wash sales.
Under certain circumstances, the sales charge incurred in acquiring shares of a Fund may not be taken into account in determining the gain or loss on the disposition of those shares. This rule applies where shares of a Fund are disposed of within 90 days after the date on which they were acquired and new shares of a RIC are acquired without a sales
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charge or at a reduced sales charge prior to January 31 of the calendar year following the calendar year of the disposition. In that case, the gain or loss realized on the disposition will be determined by excluding from the tax basis of the shares disposed of all or a portion of the sales charge incurred in acquiring those shares. This exclusion applies to the extent that the otherwise applicable sales charge with respect to the newly acquired shares is reduced as a result of the shareholder having incurred a sales charge initially. The portion of the sales charge affected by this rule will be treated as a sales charge paid for the new shares.
For shares of a Fund acquired on or after January 1, 2012, each shareholder’s Form 1099 will report the cost basis of any such shares that were redeemed, sold, or exchanged during the year, and the form will report whether the gain or loss is treated as short-term or long-term. This information will be reported to the IRS. Each shareholder should inform the Fund of such shareholder’s cost selection for tax reporting purposes at the time of the sale or exchange of Fund shares or provide in advance a standing cost basis method for the shareholder’s account. If a shareholder does not provide cost basis instructions, the Fund’s default method will be used.
Tax Information Notices
Written notices will be sent to shareholders (by United States mail and/or electronic delivery, as applicable) regarding the tax status of all distributions made (or deemed to have been made) during each taxable year, including the amount of qualified dividend income for individuals, the amount qualifying for the corporate dividends-received deduction (if applicable) and the amount of capital gain dividends, undistributed capital gains (if any), tax credits (if applicable), and cumulative return of capital (if any).
Important Notice Regarding Taxpayer IRS Certification and Backup Withholding
Pursuant to the Code and Regulations, the Funds may be required to withhold a percentage of all reportable payments, including any taxable dividends, capital gains distributions or share redemption proceeds, at the specified rate in effect when such payments are made, for an account which does not have a taxpayer identification number and certain required certifications. The Funds reserve the right to refuse to open an account for any person failing to provide a taxpayer identification number along with the required certifications. The Funds will furnish shareholders, within 31 days after the end of the calendar year, with the information that is required by the IRS for preparing income tax returns. The Fund will also provide this same information to the IRS in the manner required by the IRS. Depending on your state of residence, the information may also be filed with your state taxing authority.
Some shareholders may be subject to withholding of United States federal income tax on dividends and redemption payments from the Funds (“backup withholding”) at the specified rate in effect when such payments are made. Corporate shareholders and certain other shareholders specified in the Code generally are exempt from such backup withholding. Generally, shareholders subject to backup withholding will be (i) those for whom a certified taxpayer identification number is not on file with the Fund, (ii) those about whom notification has been received (either by the shareholder or the Fund) from the IRS that they are subject to backup withholding or (iii) those who, to the Fund’s knowledge, have furnished an incorrect taxpayer identification number. Generally, to avoid backup withholding, a shareholder must, at the time an account is opened, certify under penalties of perjury that the social security number or taxpayer identification number furnished is correct and that he or she is not subject to backup withholding. From time to time, the shareholder may also be requested to provide certification of the validity of their taxpayer identification number.
Foreign Shareholders
Dividends paid by any of the Funds from net investment income and net realized short-term capital gains to a shareholder who is a nonresident alien individual, a foreign trust or estate, a foreign corporation or a foreign partnership (a “foreign shareholder”) will be subject to United States withholding tax at a rate of 30% unless a reduced rate of withholding or a withholding exemption is provided under an applicable tax treaty. Foreign shareholders are urged to consult their own tax advisors concerning the applicability of the United States withholding tax and any foreign taxes.
Other Tax Consequences
In addition to the United States federal income tax consequences described above, there may be other foreign, United States federal, state or local tax considerations and estate tax considerations applicable to the circumstances of a particular investor. The foregoing discussion is based upon the Code, judicial decisions and administrative regulations, rulings and practices in effect as of December 2016, all of which are subject to change and which, if changed, may be applied retroactively to a Fund, its shareholders and/or its assets. No rulings have been sought from the IRS or any other tax authority with respect to any of the tax matters discussed above.
From time to time, proposals are introduced before the United States Congress that if enacted would affect the foregoing discussion with respect to taxes and could also affect the availability of certain investments to a Fund.
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The information included in the Prospectus with respect to taxes, including this section entitled Dividends, Distributions and Taxes, is a general and abbreviated summary of applicable provisions of the Code and Regulations as interpreted by the courts and the IRS as of December 2016 and is not intended as tax advice to any person. The Code and Regulations, as well as the current interpretations thereof, may be changed at any time by legislative, judicial, or administrative action. Accordingly, prospective purchasers are urged to consult their own tax advisors with specific reference to their own tax situations, including the potential application of United States federal, state, local and foreign tax laws.
Except as expressly set forth above, the foregoing discussion of United States federal income tax law relates solely to the application of that law to United States persons, i.e., United States citizens and residents and United States corporations, partnerships, trusts and estates. Each shareholder who is not a United States person should consider the United States and foreign tax consequences of ownership of shares of a Fund, including the possibility that such a shareholder may be subject to a United States withholding tax at a rate of 30% (or at a lower rate under an applicable tax treaty) on amounts constituting ordinary income received by him or her, where such amounts are treated as income from United States sources under the Code. The foregoing discussion does not address the special tax rules applicable to certain classes of investors, such as dealers in securities or currencies, traders in securities, banks, tax-exempt entities, life insurance companies, persons holding an interest in a Fund as a hedge or as part of a straddle or conversion transaction, or holders whose functional currency is not the United States dollar.
Tax Sheltered Retirement Plans
Shares of the Funds are offered in connection with the following retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA, 401(k), Profit-Sharing, Money Purchase Pension Plans and certain 403(b) Retirement Plans. Write or call the Distributor at 800.243.4361 for further information about the plans.
PERFORMANCE INFORMATION
Performance information for the Funds (and any class of the Funds) may be included in advertisements, sales literature or reports to shareholders or prospective investors. Performance information in advertisements and sales literature may be expressed as a yield of a class of shares and as a total return of a class of shares.
The Funds may from time to time include in advertisements containing total return the ranking of those performance figures relative to such figures for groups of mutual funds having similar investment objectives as categorized by ranking services such as Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Weisenberger Financial Services, Inc. and Morningstar, Inc. Additionally, each Fund may compare its performance results to other investment or savings vehicles (such as certificates of deposit) and may refer to results published in various publications such as Changing Times , Forbes , Fortune , Money , Barrons , Business Week and Investor’s Business Daily , Stanger’s Mutual Fund Monitor , The Stanger Register , Stanger’s Investment Adviser , The Wall Street Journal , The New York Times , Consumer Reports , Registered Representative , Financial Planning , Financial Services Weekly , Financial World , U.S. News and World Report , Standard & Poor’s The Outlook and Personal Investor . The Funds may from time to time illustrate the benefits of tax deferral by comparing taxable investments to investments made through tax-deferred retirement plans. The total return may also be used to compare the performance of each Fund against certain widely acknowledged outside standards or indices for stock and bond market performance, such as the S&P 500 ® Index, Dow Jones Industrial Average, Barclays Capital U.S. Aggregate Bond Index, Russell Midcap ® Growth Index, MSCI EAFE Index ® (Europe Australia Far East), Consumer Price Index, Barclays Capital California Municipal Bond Index, Barclays Capital U.S. High-Yield 2% Issuer Capped Bond Index, BofA Merrill Lynch 1-3 Year A-BBB US Corporate Index, MSCI World Index, FTSE EPRA/NAREIT Developed Rental ex-U.S. Index, Citigroup 90-Day Treasury Bill Index and FTSE NAREIT U.S. Real Estate Index.
Advertisements, sales literature and other communications may contain information about the Funds’ and their subadvisers’ current investment strategies and management style. Current strategies and style may change to allow the Funds to respond quickly to changing market and economic conditions. From time to time the Funds may include specific portfolio holdings or industries in such communications. To illustrate components of overall performance, each Fund may separate its cumulative and average annual returns into income and capital gains components.
Performance information reflects only the performance of a hypothetical investment in each class during the particular time period on which the calculations are based. Performance information should be considered in light of a Fund’s investment objectives and policies, characteristics and quality of the portfolio, and the market condition during the given time period, and should not be considered as a representation of what may be achieved in the future.
Total Return
Standardized quotations of average annual total return for each class of shares will be expressed in terms of the average annual compounded rate of return for a hypothetical investment in such class of shares over periods of 1, 5 and 10 years or up to the life of the class of shares, calculated for each class separately pursuant to the following
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formula: P((1+T)(n)) = ERV (where P = a hypothetical initial payment of  $1,000, T = the average annual total return, n = the number of years, and ERV = the ending redeemable value of a hypothetical $1,000 payment made at the beginning of the period). All total return figures reflect the deduction of a proportional share of each class’s expenses (on an annual basis), deduction of the maximum initial sales load in the case of Class A Shares and the maximum CDSC applicable to a complete redemption of the investment in the case of Class B Shares, Class C Shares and Class T Shares, and assume that all dividends and distributions on each class of shares are reinvested when paid.
For average “after-tax” total return, the SEC rules mandate several assumptions, including that the calculations use the historical highest individual federal marginal income tax rates at the time of reinvestment, and that the calculations do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. These returns, for instance, assume that an investor has sufficient capital gains of the same character from other investments to offset any capital losses from the redemption. As a result, returns after taxes on distributions and sale of Fund shares may exceed returns after taxes on distributions (but before sale of Fund shares). These returns are not relevant to investors who hold their Fund shares through tax-deferred arrangements.
The Funds may also compute cumulative total return for specified periods based on a hypothetical account with an assumed initial investment of  $10,000. The cumulative total return is determined by dividing the NAV of this account at the end of the specified period by the value of the initial investment and is expressed as a percentage. Calculation of cumulative total return reflects payment of the Class A Share’s maximum sales charge of 5.75% and assumes reinvestment of all income dividends and capital gain distributions during the period.
The Funds also may quote annual, average annual and annualized total return and cumulative total return performance data, for any class of shares of the Funds, both as a percentage and as a dollar amount based on a hypothetical $10,000 investment for various periods other than those noted above. Such data will be computed as described above, except that (1) the rates of return calculated will not be average annual rates, but rather, actual annual, annualized or cumulative rates of return and (2) the maximum applicable sales charge will not be included with respect to annual, annualized or cumulative rate of return calculations.
Yield
The 30-day yield quotation as to a class of shares may be computed by dividing the net investment income for the period as to shares of that class by the maximum offering price of each share of that class on the last day of the period, according to the following formula:
[MISSING IMAGE: M8ORD8C3E5VQ6PRSRFOVC1NRJD7B.JPG]
Where:
a = dividends and interest earned during the period.
b = net expenses accrued for the period.
c = the average daily number of shares of the class outstanding during the period that were entitled to receive dividends.
d = the maximum offering price per share of the class on the last day of the period.
A standardized “tax-equivalent yield” may be quoted for the Tax-Exempt Bond Fund, which is computed by: (a) dividing the portion of the Fund’s yield that is exempt from federal income tax by one minus a stated federal income rate; and (b) adding the figure resulting from (a) above to that portion, if any, of the yield that is not exempt from federal income tax.
FINANCIAL STATEMENTS
The fiscal year of the Trust ends on September 30. The Trust will send financial statements to its shareholders at least semiannually. An annual report containing financial statements audited by the Trust’s independent registered public accounting firm, PricewaterhouseCoopers LLP, will be sent to shareholders each year and is available without charge upon request.
The Funds’ financial statements for the Trust’s fiscal year ended September 30, 2016, appearing in the Funds’ 2016 Annual Report to Shareholders, are incorporated herein by reference.
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APPENDIX A — DESCRIPTION OF RATINGS
A-1 and P-1 Commercial Paper Ratings
The Trust will only invest in commercial paper which at the date of investment is rated A-1 by Standard & Poor’s Corporation or P-1 by Moody’s Investors Services, Inc. (Moody’s), or, if not rated, is issued or guaranteed by companies which at the date of investment have an outstanding debt issue rated AA or higher by Standard & Poor’s or Aa or higher by Moody’s.
Commercial paper rated A-1 by Standard & Poor’s Corporation (“S&P”) has the following characteristics: Liquidity ratios are adequate to meet cash requirements. Long-term senior debt is rated “A” or better. The issuer has access to at least two additional channels of borrowing. Basic earnings and cash flow have an upward trend with allowance made for unusual circumstances. Typically, the issuer’s industry is well established and the issuer has a strong position within the industry. The reliability and quality of management are unquestioned.
The rating P-1 is the highest commercial paper rating assigned by Moody’s. Among the factors considered by Moody’s in assigning ratings are the following: (1) evaluation of the management of the issuer; (2) economic evaluation of the issuer’s industry or industries and an appraisal of speculative-type risks which may be inherent in certain areas; (3) evaluation of the issuer’s products in relation to competition and customer acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over a period of ten years; (7) financial strength of a parent company and the relationship which exists with the issuer; and (8) recognition by the management of obligations which may be present or may arise as a result of public interest questions and preparations to meet such obligations.
Moody’s Investors Service, Inc.
Aaa — Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt-edge.” Interest payments are protected by a large or exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues.
Aa — Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group, they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuations of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in Aaa securities.
A — Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate, but elements may be present which suggest a susceptibility to impairment sometime in the future.
Baa — Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well.
Moody’s also provides credit ratings for preferred stocks. Preferred stock occupies a junior position to bonds within a particular capital structure.
aaa — An issue which is rated “aaa” is considered to be a top-quality preferred stock. This rating indicates good asset protection and the least risk of dividend impairment within the universe of preferred stocks.
aa — An issue which is rated “aa” is considered a high-grade preferred stock. This rating indicates that there is a reasonable assurance that earnings and asset protection will remain relatively well maintained in the foreseeable future.
a — An issue which is rated “a” is considered to be an upper-medium grade preferred stock. While risks are judged to be somewhat greater than in the “aaa” and “aa” classifications, earnings and asset protections are, nevertheless, expected to be maintained at adequate levels.
baa — An issue which is rated “baa” is considered to be a medium grade preferred stock, neither highly protected nor poorly secured. Earnings and asset protection appear adequate at present but may be questionable over any great length of time.
Moody’s ratings for municipal notes and other short-term loans are designated Moody’s Investment Grade (MIG). This distinction is in recognition of the differences between short-term and long-term credit risk. Loans bearing the designation MIG 1 are of the best quality, enjoying strong protection by establishing cash flows of funds for their
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servicing or by established and broad-based access to the market for refinancing, or both. Loans bearing the designation MIG 2 are of high quality, with margins of protection ample although not so large as in the preceding group. A short term issue having a demand feature (i.e., payment relying on external liquidity and usually payable on demand rather than fixed maturity dates) is differentiated by Moody’s with the use of the Symbol VMIG, instead of MIG.
The Moody’s Prime-2 rating and above indicates a strong capacity for repayment of short-term promissory obligations.
Standard and Poor’s Corporation Corporate Bond Ratings
AAA —
Bonds rated AAA have the highest rating assigned by Standard & Poor’s Corporation. Capacity to pay interest and repay principal is extremely strong.
AA —
Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from AAA issues only in small degree.
A — Bonds rated A have a very strong capacity to pay interest and repay principal, although they are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than bonds in higher rated categories.
BBB — Bonds rated BBB are regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for bonds in this category than in higher rated categories.
S&P’s top ratings for municipal notes issued after July 29, 1984 are SP-1 and SP-2. The designation SP-1 indicates a very strong capacity to pay principal and interest. A “+” is added for those issues determined to possess overwhelming safety characteristics. An “SP-2” designation indicates a satisfactory capacity to pay principal and interest.
Commercial paper rated A-2 or better by S&P is described as having a very strong degree of safety regarding timeliness and capacity to repay. Additionally, as a precondition for receiving an S&P commercial paper rating, a bank credit line and/or liquid assets must be present to cover the amount of commercial paper outstanding at all times.
Fitch
Rated entities in a number of sectors, including financial and non-financial corporations, sovereigns and insurance companies, are generally assigned Issuer Default Ratings (IDRs). IDRs opine on an entity's relative vulnerability to default on financial obligations. The "threshold" default risk addressed by the IDR is generally that of the financial obligations whose non-payment would best reflect the uncured failure of that entity. As such, IDRs also address relative vulnerability to bankruptcy, administrative receivership or similar concepts, although the agency recognizes that issuers may also make pre-emptive and therefore voluntary use of such mechanisms.
In aggregate, IDRs provide an ordinal ranking of issuers based on the agency's view of their relative vulnerability to default, rather than a prediction of a specific percentage likelihood of default. For historical information on the default experience of Fitch-rated issuers, please consult the transition and default performance studies available from the Fitch Ratings website.
AAA: Highest credit quality. 'AAA' ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.
AA: Very high credit quality. 'AA' ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.
A: High credit quality. 'A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.
BBB: Good credit quality. 'BBB' ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate but adverse business or economic conditions are more likely to impair this capacity.
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APPENDIX B — CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS

 

The following table sets forth information as of January 3, 2017, with respect to each person who owns of record or is known by the Trust to own of record or beneficially own 5% or more of any class of any Fund’s outstanding securities (Principal Shareholders) and the name of each person who has beneficial ownership, either directly or through one or more controlled companies, of more than 25% of the voting securities of a Fund (Control Person), as noted below.

 

*These entities are omnibus accounts for many individual shareholder accounts. The Funds are not aware of the size or identity of the underlying individual accounts.

 

CONTROL PERSON
NAME AND ADDRESS 		FUND PERCENTAGE
(%) OF FUND
OUTSTANDING
AMERICAN ENTERPRISE INVESTMENT SVC *
FBO #XXXX9970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405 		VIRTUS GREATER EUROPEAN OPPORTUNITIES  FUND 25.54%
MORGAN STANLEY SMITH BARNEY *
HARBORSIDE FINANCIAL CTR PLZ 2 FL 3
JERSEY CITY NJ 07311 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND 30.33%
VIRTUS HERZFELD FUND
  		26.08%
NATIONAL FINANCIAL SERVICES LLC *
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
499 WASHINGTON BLVD
JERSEY CITY NJ  07310 		VIRTUS EMERGING MARKETS SMALL-CAP FUND 37.20%
VIRTUS INTERNATIONAL SMALL-CAP FUND


    		70.26%
UBS WM USA *
XXX XXXXX 6100
OMNI ACCOUNT M/F
ATTN DEPARTMENT MANAGER
1000 HARBOR BLVD FL 5
WEEHAWKEN NJ 07086-6761 		VIRTUS HERZFELD FUND 29.86%
VIRTUS SENIOR FLOATING RATE FUND



  		38.59%
VIRTUS PARTNERS INC
100 PEARL ST 8TH FL
HARTFORD CT  06103-4500 		VIRTUS EMERGING MARKETS DEBT FUND 87.10%
VIRTUS EMERGING MARKETS SMALL-CAP FUND 53.84%
VIRTUS ESSENTIAL RESOURCES FUND 93.07%
VIRTUS INTERNATIONAL EQUITY FUND 27.26%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND 97.13%
VIRTUS LOW VOLATILITY EQUITY FUND 74.72%
WELLS FARGO CLEARING SVCS LLC *
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET STREET
ST LOUIS MO  63103 		VIRTUS MULTI-ASSET TREND FUND 35.04%

 

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PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
ALAN KIRCHDOERFER  
DRUMS PA 18222 		VIRTUS LOW VOLATILITY EQUITY FUND-CLASS C 7.85%
AMERICAN ENTERPRISE INVESTMENT SVC *
FBO #XXXX9970
707 2ND AVE S
MINNEAPOLIS MN 55402-2405 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 16.03%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 6.13%
VIRTUS BOND FUND-CLASS A 6.17%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS A 10.13%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS C 7.23%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS A 32.63%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS C 20.02%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS A 7.31%
VIRTUS EQUITY TREND FUND-CLASS A 15.83%
VIRTUS EQUITY TREND FUND-CLASS C 8.24%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 23.67%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 12.91%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS A 13.69%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 31.70%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS A 30.26%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 14.92%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS A 12.98%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 25.34%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS A 57.82%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 20.95%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS A 45.65%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS C 19.88%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS I 13.25%
VIRTUS HERZFELD FUND-CLASS A 14.48%
VIRTUS HIGH YIELD FUND-CLASS B 18.46%
VIRTUS HIGH YIELD FUND-CLASS C 5.21%
VIRTUS INTER REAL ESTATE SECURITIES FUND-CLASS A 9.92%
VIRTUS INTER REAL ESTATE SECURITIES FUND-CLASS C 8.73%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS A 32.80%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS A 30.05%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 24.54%
VIRTUS LOW DURATION INCOME FUND-CLASS A 16.11%
VIRTUS LOW DURATION INCOME FUND-CLASS C 9.40%
VIRTUS LOW DURATION INCOME FUND-CLASS I 14.88%
VIRTUS MULTI-ASSET TREND FUND-CLASS A 13.64%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 12.77%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 14.85%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 28.95%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS C 8.43%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 9.38%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS B 44.58%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 5.14%
VIRTUS SECTOR TREND FUND-CLASS A 14.59%
VIRTUS SECTOR TREND FUND-CLASS C 13.12%
VIRTUS SENIOR FLOATING RATE FUND-CLASS A 7.09%
VIRTUS SENIOR FLOATING RATE FUND-CLASS C 7.07%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 16.11%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 7.57%
VIRTUS WEALTH MASTERS FUND-CLASS A 41.31%
VIRTUS WEALTH MASTERS FUND-CLASS C 15.93%
BNYM I S TRUST CO
CUST FOR THE NON-DFI SIMPLE IRA OF DARIN B HILL
BAILEYVILLE ME 04694-0000 		VIRTUS MULTI-SECTOR SHORT TERM BOND FUND - CLASS B 13.93%
BNYM I S TRUST CO
CUST FOR THE IRA OF KUO HUA HUNG
QUINCY MA 02170-1429 		VIRTUS HIGH YIELD FUND - CLASS B 10.24%

 

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PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
BNYM I S TRUST CO
CUST FOR THE SEP IRA OF DENIS L LABARRE
WEST SUFFIELD CT 06093-3502 		VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS A 6.77%
BNYM I S TRUST CO
CUST FOR THE IRA ROLLOVER OF ALEXANDER LILEIKA
VALHALLA NY 10595-1401 		VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS B 7.32%
BNYM I S TRUST CO
CUST FOR THE SEP IRA OF ROBERT G WELCH
AUSTIN TX 78731-1158 		VIRTUS INTERNATIONAL EQUITY FUND - CLASS A 10.45%
CHARLES SCHWAB & CO *
SPECIAL CUSTODY ACCT FBO CUSTOMERS
ATTN MUTUAL FUNDS
211 MAIN STREET
SAN FRANCISCO CA  94105-1905 		VIRTUS REAL ESTATE SECURITIES FUND-CLASS R6 52.61%
CHARLES SCHWAB & CO INC *
SPECIAL CUSTODY ACCOUNT FOR   
THE EXCLUSIVE BENEFIT OF CUSTOMERS
101 MONTGOMERY ST
SAN FRANCISCO CA 94104-4122 		VIRTUS CA TAX-EXEMPT BOND FUND-CLASS A 5.67%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS A 8.84%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS A 32.41%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS I 10.11%
VIRTUS EQUITY TREND FUND-CLASS A 5.96%
  VIRTUS EQUITY TREND FUND-CLASS C 5.42%
  VIRTUS EQUITY TREND FUND-CLASS I 5.13%
  VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 7.22%
  VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS I 10.45%
  VIRTUS GLOBAL EQUITY TREND FUND-CLASS A 5.94%
  VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 6.52%
  VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 14.01%
  VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 7.57%
  VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS I 14.08%
  VIRTUS HIGH YIELD FUND-CLASS B 11.80%
  VIRTUS INTERNATIONAL EQUITY FUND-CLASS I 6.26%
  VIRTUS MULTI-ASSET TREND FUND-CLASS A 5.72%
  VIRTUS MULTI-ASSET TREND FUND-CLASS I 10.84%
  VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I 5.90%
  VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS C 7.64%
  VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 12.24%
  VIRTUS REAL ESTATE SECURITIES FUND-CLASS I 13.54%
  VIRTUS TAX-EXEMPT BOND FUND-CLASS A 5.17%
  VIRTUS TAX-EXEMPT BOND FUND-CLASS I 9.61%
  VIRTUS WEALTH MASTERS FUND-CLASS A 8.48%
  VIRTUS WEALTH MASTERS FUND-CLASS C 10.99%
  VIRTUS WEALTH MASTERS FUND-CLASS I 7.66%
DANIEL REICHMAN
TENAFLY NJ 07670-1102 		VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS B 5.29%
DCGT AS TTEE AND/OR CUST
FBO PLIC VARIOUS RETIREMENT PLANS OMNIBUS
ATTN NPIO TRADE DESK  
711 HIGH STREET         
DES MOINES, IA 50392 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 5.04%
EDWARD D. JONES AND CO *
FOR THE BENEFIT OF CUSTOMERS
12555 MANCHESTER ROAD
ST LOUIS MO 63131-3710 		VIRTUS REAL ESTATE SECURITIES FUND - CLASS I 22.31%
FIFTH THIRD BANK TTEE *
VARIOUS FASCORE LLC RECORDKEPT PLAN
C/O FASCORE LLC   
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 6.77%

 

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PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
GREAT-WEST TRUST COMPANY LLC TTEE FOR
EMPLOYEE BENEFITS CLIENTS 401K   
8515 E ORCHARD RD 2T2
GREENWOOD VILLAGE CO 80111 		VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 5.37%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS R6


5.72%
JUDY L KELLY TTEE
JUDY LITTON KELLY REV TRUST
COLUMBIA MO 65203 		VIRTUS LOW VOLATILITY EQUITY FUND-CLASS C 5.95%
LPL FINANCIAL *
OMNIBUS CUSTOMER ACCOUNT
ATTN LINDSAY OTOOLE
4707 EXECUTIVE DRIVE
SAN DIEGO CA  92121 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 15.59%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 10.05%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS A 76.36%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS C 12.39%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 5.64%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS I 7.83%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 6.16%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 6.30%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 6.53%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS A 6.00%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS C 6.01%
VIRTUS HIGH YIELD FUND-CLASS C 9.72%
VIRTUS HIGH YIELD FUND-CLASS I 18.69%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS A 8.76%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS C 6.55%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS I 17.38%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 17.66%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 7.19%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS A 8.14%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS B 71.66%
VIRTUS SECTOR TREND FUND-CLASS A 6.32%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 6.95%
VIRTUS TAX-EXEMPT BOND FUND-CLASS I 15.02%
MG TRUST COMPANY *
CUST. FBO BUSINESS INFORMATION SOLUTIONS, INC
717 17TH STREET SUITE 1300
DENVER CO 80202 		VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 6.91%
MG TRUST COMPANY TRUSTEE *
ROCKBRIDGE WEALTH MANAGEMENT
717 17TH STREET SUITE 1300
DENVER CO 80202 		VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 5.40%
MIAMI UNIVERSITY FOUNDATION
ATTN BRUCE GUIOT
107 ROUDEBUSH HALL
OXFORD OH  45056 		VIRTUS GLOBAL OPPORTUNITIES FUND - CLASS I 57.43%
MID ATLANTIC TRUST COMPANY *
FBO CCI LIMITED PARTNERSHIP RETIREMENT
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH, PA 15222 		VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS R6 14.70%
MID ATLANTIC TRUST COMPANY
FBO PACIFIC TRADE INTERNATIONAL 401(K)
1251 WATERFRONT PLACE SUITE 525
PITTSBURGH, PA 15222 		VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS A 7.43%
MILDRED S GOODMAN
GALE G WARREN JT WROS
JAMESVILLE NY 13078-9519 		VIRTUS HIGH YIELD FUND - CLASS B 5.87%

 

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PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
MLPF&S *
FOR THE SOLE BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMINISTRATION
4800 DEER LAKE DR E 3RD FL
JACKSONVILLE FL 32246-6484 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 5.39%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 17.32%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 9.60%
VIRTUS BOND FUND-CLASS A 5.72%
VIRTUS BOND FUND-CLASS C 13.97%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS A 7.53%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS C 8.38%
VIRTUS EQUITY TREND FUND-CLASS A 6.29%
VIRTUS EQUITY TREND FUND-CLASS C 13.12%
VIRTUS EQUITY TREND FUND-CLASS I 11.31%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 6.06%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 9.03%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS R6 32.25%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 13.84%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 13.77%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 6.36%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS I 5.60%
VIRTUS HIGH YIELD FUND-CLASS B 24.32%
VIRTUS INTER REAL ESTATE SECURITIES FUND-CLASS C 7.48%
VIRTUS LOW DURATION INCOME FUND-CLASS A 7.89%
VIRTUS LOW DURATION INCOME FUND-CLASS C 14.09%
VIRTUS LOW DURATION INCOME FUND-CLASS I 10.87%
VIRTUS MULTI-ASSET TREND FUND-CLASS I 7.21%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 7.13%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS C 20.59%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I 27.01%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 7.15%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS I 12.35%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS T 34.63%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS B 16.34%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 7.50%
VIRTUS SECTOR TREND FUND-CLASS A 11.85%
VIRTUS SECTOR TREND FUND-CLASS C 20.47%
VIRTUS SECTOR TREND FUND-CLASS I 13.36%
VIRTUS SENIOR FLOATING RATE FUND-CLASS A 5.61%
VIRTUS SENIOR FLOATING RATE FUND-CLASS C 12.99%
VIRTUS SENIOR FLOATING RATE FUND-CLASS I 23.40%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 14.14%
VIRTUS WEALTH MASTERS FUND-CLASS C 17.14%
VIRTUS WEALTH MASTERS FUND-CLASS I 7.41%

 

  133  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
MORGAN STANLEY SMITH BARNEY *
HARBORSIDE FINANCIAL CTR PLZ 2 FL 3
JERSEY CITY NJ 07311 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 8.12%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 35.97%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 26.48%
VIRTUS BOND FUND-CLASS C 5.83%
VIRTUS CA TAX-EXEMPT BOND FUND-CLASS A 8.79%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS A 13.47%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS C 35.20%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS I 33.46%
VIRTUS EQUITY TREND FUND-CLASS A 8.50%
VIRTUS EQUITY TREND FUND-CLASS C 19.99%
VIRTUS EQUITY TREND FUND-CLASS I 15.05%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 21.69%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS I 34.96%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 18.68%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 6.68%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS A 10.90%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 15.16%
VIRTUS HERZFELD FUND-CLASS A 10.50%
VIRTUS HERZFELD FUND-CLASS C 38.45%
VIRTUS HERZFELD FUND-CLASS I 24.15%
VIRTUS HIGH YIELD FUND-CLASS C 18.27%
VIRTUS INTER REAL ESTATE SECURITIES FUND-CLASS C 23.97%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 36.69%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS I 7.62%
VIRTUS LOW DURATION INCOME FUND-CLASS A 5.40%
VIRTUS LOW DURATION INCOME FUND-CLASS C 24.86%
VIRTUS LOW DURATION INCOME FUND-CLASS I 9.18%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 6.36%
VIRTUS MULTI-ASSET TREND FUND-CLASS I 8.63%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 7.62%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS C 16.50%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I 21.75%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 9.09%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS C 23.05%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS I 29.73%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS T 19.75%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 13.34%
VIRTUS SECTOR TREND FUND-CLASS A 5.05%
VIRTUS SECTOR TREND FUND-CLASS C 14.36%
VIRTUS SECTOR TREND FUND-CLASS I 35.82%
VIRTUS SENIOR FLOATING RATE FUND-CLASS C 22.68%
VIRTUS SENIOR FLOATING RATE FUND-CLASS I 21.08%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 11.60%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 17.88%
VIRTUS TAX-EXEMPT BOND FUND-CLASS I 11.19%
VIRTUS WEALTH MASTERS FUND-CLASS A 7.93%
VIRTUS WEALTH MASTERS FUND-CLASS C 15.52%
VIRTUS WEALTH MASTERS FUND-CLASS I 8.11%

 

  134  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
NATIONAL FINANCIAL SERVICES LLC *
FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
499 WASHINGTON BLVD
JERSEY CITY NJ  07310 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 11.05%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 5.83%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 15.20%
VIRTUS BOND FUND-CLASS B 75.70%
VIRTUS BOND FUND-CLASS I 34.16%
VIRTUS CA TAX-EXEMPT BOND FUND-CLASS I 85.91%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS A 8.91%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS I 8.64%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS A 22.74%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS I 39.73%
VIRTUS EQUITY TREND FUND-CLASS A 6.37%
VIRTUS EQUITY TREND FUND-CLASS I 6.91%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 9.30%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 19.11%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS I 15.30%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS A 5.46%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 14.77%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 16.27%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS A 5.91%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 5.20%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 12.27%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS A 5.89%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS I 5.92%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 7.32%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS I 16.35%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS A 13.35%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS I 7.08%
VIRTUS HERZFELD FUND-CLASS I 7.04%
VIRTUS HIGH YIELD FUND-CLASS A 5.62%
VIRTUS HIGH YIELD FUND-CLASS B 27.51%
VIRTUS HIGH YIELD FUND-CLASS C 22.02%
VIRTUS HIGH YIELD FUND-CLASS I 25.77%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS A 8.69%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS C 6.93%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS I 27.10%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS A 21.89%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 6.75%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS I 19.83%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS A 9.19%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS I 76.29%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND-CLASS A 44.03%
VIRTUS LOW DURATION INCOME FUND-CLASS A 8.92%
VIRTUS LOW DURATION INCOME FUND-CLASS I 10.47%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS A 54.00%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS C 12.19%
VIRTUS MULTI-ASSET TREND FUND-CLASS A 11.80%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 7.59%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS B 5.83%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 10.84%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 25.02%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 16.91%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS I 12.81%
VIRTUS SECTOR TREND FUND-CLASS I 7.61%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 8.45%
VIRTUS TAX-EXEMPT BOND FUND-CLASS I 9.74%
VIRTUS WEALTH MASTERS FUND-CLASS A 7.61%
VIRTUS WEALTH MASTERS FUND-CLASS I 18.54%

 

  135  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
NFS LLC FEBO
ASC TRUST CORPORATION    
ATTN GABY BAMBA    
120 FATHER DUENAS AVE STE 110  
CAPITOL PLAZA BLDG
HAGATNA, GU 96910-5058
COVINGTON KY 41015 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 14.59%
NFS LLC FEBO *
FIIOC AS AGENT FOR
QUALIFIED EMPLOYEE BENEFIT PLANS
(401K) FINOPS-IC FUNDS
100 MAGELLAN WAY # KW1C
COVINGTON KY 41015 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 18.82%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS R6 47.69%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND-CLASS R6 89.33%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS R6


37.75%
NFS LLC FEBO *
THE NORTHERN TRUST COMPANY
FBO A/C - XXXXX34
PO BOX 92956
CHICAGO IL 60675-2956 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 9.40%
PERSHING LLC *
1 PERSHING PLAZA
JERSEY CITY NJ  07399-0002 		VIRTUS BOND FUND-CLASS A 5.41%
VIRTUS BOND FUND-CLASS C 15.61%
VIRTUS CA TAX-EXEMPT BOND FUND-CLASS A 6.80%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS C 17.55%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS A 22.29%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS C 27.63%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS A 18.63%
VIRTUS EQUITY TREND FUND-CLASS A 8.33%
VIRTUS EQUITY TREND FUND-CLASS C 5.16%
VIRTUS ESSENTIAL RESOURCES FUND-CLASS A 45.41%
VIRTUS ESSENTIAL RESOURCES FUND-CLASS C 29.05%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS A 19.73%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 12.62%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS A 10.29%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 6.64%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 8.22%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS A 9.28%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 8.45%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS A 12.91%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 12.18%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS A 17.54%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS C 9.31%
VIRTUS HERZFELD FUND-CLASS A 45.22%
VIRTUS HERZFELD FUND-CLASS C 38.48%
VIRTUS HIGH YIELD FUND-CLASS C 8.97%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS A 21.87%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS C 11.17%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS I 9.07%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS A 7.13%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 25.53%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS I 19.21%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS A 7.26%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 5.05%
VIRTUS LOW DURATION INCOME FUND-CLASS A 7.98%
VIRTUS MULTI-ASSET TREND FUND-CLASS A 8.14%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 5.74%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 12.81%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS B 87.61%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS C 8.41%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 6.81%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 8.47%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS B 9.45%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 6.41%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS I 9.26%
VIRTUS SECTOR TREND FUND-CLASS C 7.71%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 5.81%

 

  136  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
  VIRTUS TAX-EXEMPT BOND FUND-CLASS C 7.94%
VIRTUS WEALTH MASTERS FUND-CLASS C 6.07%
VIRTUS WEALTH MASTERS FUND-CLASS I 9.24%
PIMS/PRUDENTIAL RETIREMENT *
AS NOMINEE FOR THE TTEE/CUST PL 767
DAWN FOODS RETIREMENT SAVINGS  
3333 SARGENT ROAD
JACKSON MI 492018847 		VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS R6 8.36%
RAYMOND JAMES *
OMNIBUS FOR MUTUAL FUNDS
HOUSE ACCT FIRM XXXXX015
ATTN COURTNEY WALLER
880 CARILLON PARKWAY ST PETERSBURG FL  33716 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 10.12%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 8.39%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS C 19.72%
VIRTUS EQUITY TREND FUND-CLASS A 5.34%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 6.79%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 17.63%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 6.88%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS I 6.33%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 5.79%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS I 12.62%
VIRTUS GREATER EUROPEAN OPPS FUND-CLASS C 53.70%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 16.72%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS A 5.94%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 13.32%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 9.92%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS A 5.45%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 25.73%
VIRTUS SENIOR FLOATING RATE FUND-CLASS A 9.79%
VIRTUS WEALTH MASTERS FUND-CLASS C 5.23%
RBC CAPITAL MARKETS LLC *
MUTUAL FUND OMNIBUS PROCESSING
OMNIBUS ATTN MUTUAL FUND OPS MANAGER
60 S 6TH ST
MINNEAPOLIS MN  55402-4400 		VIRTUS GREATER EUROPEAN OPPS FUND-CLASS I 23.63%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND-CLASS A 7.61%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I

  		6.32%
ROBERT M HEMPHILL
ELLEN ROSE HEMPHILL JT WROS
EUGENE OR 97401-4167 		VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS A 11.48%
SEYMOUR FREIDBERG
ARLENE FREIDBERG JT WROS TOD
BOYNTON BEACH FL 33437-8411 		VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS B 11.77%
STATE STREET BANK CUSTODIAN *
(FBO) CUSTODIAN ADP ACCESS
LARGE MARKET 401K  
1 LINCOLN ST
BOSTON MA 02111-2901 		VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS A 5.85%
STIFEL NICOLAUS & CO INC
A/C XXXX-X173
KATHERINE L SMITH SEP IRA
ST LOUIS  MO  63102 		VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 6.06%
SUSANNE E BONN  
ELLINGTON CT  06029-2412 		VIRTUS EMERGING MARKETS DEBT FUND-CLASS C 5.71%
TD AMERITRADE
FBO KIMBERLY HOFEMAN SEP IRA
TD AMERITRADE CLEARING, CUSTODIAN  
HANOVER MA 02339-1500 		VIRTUS LOW VOLATILITY EQUITY FUND-CLASS C 11.35%
TD AMERITRADE INC *
FOR THE EXCLUSIVE BENEFIT OF OUR CLIENTS
PO BOX 2226
OMAHA NE 68103-2226 		VIRTUS GREATER EUROPEAN OPPS FUND-CLASS I 45.37%

 

  137  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING

UBS WM USA *

XXX XXXXX 6100

SPEC CDY A/C EXL BEN CUSTOMERS OF UBSFSI

1000 HARBOR BLVD

WEEHAWKEN NJ 07086

VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 8.02%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 17.07%
VIRTUS BOND FUND-CLASS C 26.66%
VIRTUS BOND FUND-CLASS I 40.69%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS C 22.65%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS C 11.62%
VIRTUS EQUITY TREND FUND-CLASS A 5.99%
VIRTUS EQUITY TREND FUND-CLASS C 5.86%
VIRTUS EQUITY TREND FUND-CLASS I 21.77%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 9.47%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS I 5.39%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS A 8.11%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 5.29%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 5.85%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 14.55%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 9.34%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 10.21%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS I 10.55%
VIRTUS HERZFELD FUND-CLASS A 6.31%
VIRTUS HERZFELD FUND-CLASS C 10.62%
VIRTUS HERZFELD FUND-CLASS I 51.02%
VIRTUS HIGH YIELD FUND-CLASS I 5.08%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS A 5.40%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS C 14.73%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS C 11.12%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS I 6.03%
VIRTUS LOW DURATION INCOME FUND-CLASS A 11.42%
VIRTUS LOW DURATION INCOME FUND-CLASS C 11.87%
VIRTUS LOW DURATION INCOME FUND-CLASS I 16.29%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 7.98%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS C 20.31%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I 18.82%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND-CLASS R6 5.15%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 12.32%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS C 20.02%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS I 25.68%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS T 12.73%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS I 5.98%
VIRTUS SECTOR TREND FUND-CLASS C 5.71%
VIRTUS SECTOR TREND FUND-CLASS I 13.22%
VIRTUS SENIOR FLOATING RATE FUND-CLASS A 58.76%
VIRTUS SENIOR FLOATING RATE FUND-CLASS C 19.00%
VIRTUS SENIOR FLOATING RATE FUND-CLASS I 28.02%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 5.23%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 17.87%
VIRTUS TAX-EXEMPT BOND FUND-CLASS I 20.85%
VIRTUS WEALTH MASTERS FUND-CLASS C 7.25%
VIRTUS WEALTH MASTERS FUND-CLASS I 17.24%
VIRTUS DIVERSIFIER FUND VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 24.69%
ATTN AMY ROBINSON
C/O VIRTUS INVESTMENT PARTNERS
100 PEARL ST
HARTFORD CT 06103-4506 		VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS I 23.22%

 

  138  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING

VIRTUS PARTNERS INC

100 PEARL ST 8TH FL

HARTFORD CT 06103-4500

VIRTUS BOND FUND-CLASS R6 100%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS C 27.22%
VIRTUS EMERGING MARKETS DEBT FUND-CLASS I 97.84%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS A 10.58%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS C 13.48%
VIRTUS EMERGING MARKETS EQUITY INCOME FUND-CLASS I 9.11%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS A 18.45%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS C 77.80%
VIRTUS EMERGING MARKETS SMALL-CAP FUND-CLASS I 57.12%
VIRTUS EQUITY TREND FUND-CLASS R6 100%
VIRTUS ESSENTIAL RESOURCES FUND-CLASS A 53.81%
VIRTUS ESSENTIAL RESOURCES FUND-CLASS C 68.10%
VIRTUS ESSENTIAL RESOURCES FUND-CLASS I 95.23%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS R6 100%
VIRTUS HIGH YIELD FUND-CLASS R6 100%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS A 8.49%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS C 13.18%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS I 33.44%
VIRTUS INTERNATIONAL SMALL-CAP FUND-CLASS R6 100%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND-CLASS A 46.54%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND-CLASS C 91.03%
VIRTUS INTERNATIONAL WEALTH MASTERS FUND-CLASS I 99.51%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS A 20.46%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS C 44.77%
VIRTUS LOW VOLATILITY EQUITY FUND-CLASS I 99.88%
VIRTUS MULTI-SECTOR SHORT TERM BOND-CLASS R6 100%
VIRTUS SENIOR FLOATING RATE FUND-CLASS R6 100%
VP DISTRIBUTORS LLC
ATTN CORP ACCOUNTING
100 PEARL ST
HARTFORD CT 06103-4506 		VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND - CLASS A 27.89%
WELLS FARGO CLEARING SVCS LLC *
SPECIAL CUSTODY ACCT FOR THE
EXCLUSIVE BENEFIT OF CUSTOMER
2801 MARKET STREET
ST LOUIS MO  63103 		VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS A 10.01%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS C 9.38%
VIRTUS ALTERNATIVES DIVERSIFIER FUND-CLASS I 5.97%
VIRTUS BOND FUND-CLASS C 7.95%
VIRTUS BOND FUND-CLASS I 8.15%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS C 17.60%
VIRTUS EMERGING MARKETS OPPORTUNITIES FUND-CLASS I 17.78%
VIRTUS EQUITY TREND FUND-CLASS A 18.57%
VIRTUS EQUITY TREND FUND-CLASS C 21.36%
VIRTUS EQUITY TREND FUND-CLASS I 25.57%
VIRTUS FOREIGN OPPORTUNITIES FUND-CLASS C 7.43%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS C 14.95%
VIRTUS GLOBAL EQUITY TREND FUND-CLASS I 9.85%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS A 10.54%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS C 9.64%
VIRTUS GLOBAL INFRASTRUCTURE FUND-CLASS I 13.57%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS C 11.14%
VIRTUS GLOBAL OPPORTUNITIES FUND-CLASS I 12.28%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS C 19.29%
VIRTUS GLOBAL REAL ESTATE SECURITIES FUND-CLASS I 15.83%
VIRTUS HIGH YIELD FUND-CLASS C 15.60%
VIRTUS HIGH YIELD FUND-CLASS I 41.80%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS C 6.39%
VIRTUS INTERNATIONAL REAL ESTATE SECURITIES FUND-CLASS I 6.03%
VIRTUS INTERNATIONAL EQUITY FUND-CLASS I 7.30%
VIRTUS LOW DURATION INCOME FUND-CLASS C 14.94%
VIRTUS LOW DURATION INCOME FUND-CLASS I 22.22%
VIRTUS MULTI-ASSET TREND FUND-CLASS A 23.54%
VIRTUS MULTI-ASSET TREND FUND-CLASS C 36.80%
VIRTUS MULTI-ASSET TREND FUND-CLASS I 42.83%

 

  139  

 

  

PRINCIPAL SHAREHOLDER
NAME AND ADDRESS 		FUND/CLASS PERCENTAGE
(%) OF CLASS
OUTSTANDING
  VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS A 6.41%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS C 11.57%
VIRTUS MULTI-SECTOR INTERMEDIATE BOND FUND-CLASS I 7.77%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS A 6.20%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS C 18.59%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS I 10.35%
VIRTUS MULTI-SECTOR SHORT TERM BOND FUND-CLASS T 15.18%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS B 6.56%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS C 6.53%
VIRTUS REAL ESTATE SECURITIES FUND-CLASS I 7.39%
VIRTUS SECTOR TREND FUND-CLASS A 14.49%
VIRTUS SECTOR TREND FUND-CLASS C 18.18%
VIRTUS SECTOR TREND FUND-CLASS I 14.70%
VIRTUS SENIOR FLOATING RATE FUND-CLASS C 15.34%
VIRTUS SENIOR FLOATING RATE FUND-CLASS I 9.53%
VIRTUS TAX-EXEMPT BOND FUND-CLASS A 6.66%
VIRTUS TAX-EXEMPT BOND FUND-CLASS C 12.37%
VIRTUS TAX-EXEMPT BOND FUND-CLASS I 14.45%
VIRTUS WEALTH MASTERS FUND-CLASS A 10.75%
VIRTUS WEALTH MASTERS FUND-CLASS C 8.41%
VIRTUS WEALTH MASTERS FUND-CLASS I 14.32%

 

  140  

 

 

VIRTUS OPPORTUNITIES TRUST

PART C—OTHER INFORMATION

 

Item 28. Exhibits

 

(a) Amended Declaration of Trust.
1. Amended and Restated Agreement and Declaration of Trust dated March 1, 2001, filed via EDGAR (as Exhibit a) with Post-Effective Amendment No. 12 (File No. 033-65137) on January 25, 2002, and incorporated herein by reference.

 

2. Amendment to the Declaration of Trust of Virtus Opportunities Trust (“VOT” or the “Registrant”), dated November 16, 2006, filed via EDGAR (as Exhibit a.2) with Post-Effective Amendment No. 23 (File No. 033-65137) on January 30, 2007, and incorporated herein by reference.

 

3. Amendment to the Declaration of Trust of VOT, dated August 20, 2015, filed via EDGAR (as Exhibit a.3) with Post-Effective Amendment No. 85 (File No. 033-65137) on January 27, 2016, and incorporated herein by reference.

 

4. *Amendment to the Declaration of Trust of VOT, dated November 17, 2016, filed via EDGAR (as Exhibit a.4) herewith.

 

(b) Bylaws.
1. Amended and Restated By-Laws dated November 16, 2005, filed via EDGAR (as Exhibit b.1) with Post-Effective Amendment No. 23 (File No. 033-65137) on January 30, 2007, and incorporated herein by reference.

 

2. Amendment No. 1 to the Amended and Restated By-Laws of the Registrant, dated August 23, 2006, filed via EDGAR (as Exhibit b.2) with Post-Effective Amendment No. 23 (File No. 033-65137) on January 30, 2007, and incorporated herein by reference.

 

3. Amendment No. 2 to the Amended and Restated By-Laws of the Registrant, dated August November 17, 2011, filed via EDGAR (as Exhibit b.3) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

(c) See Articles III, V, VI and VIII of Registrant’s Agreement and Declaration of Trust and Articles II and VII of Registrant’s Bylaws, each as amended.

 

(d) Investment Advisory Contracts.
1. Amended and Restated Investment Advisory Agreement between the Registrant, on behalf of Bond Fund, and Virtus Investment Advisers, Inc. (“VIA”) effective November 20, 2002, filed via EDGAR (as Exhibit d.1) with Post-Effective Amendment No. 14 (File No. 033-65137) on January 29, 2004, and incorporated herein by reference.

 

a) Amendment to Amended and Restated Investment Advisory Agreement between Registrant and VIA dated June 8, 2006, filed via EDGAR (as Exhibit d.6) with Post-Effective Amendment No. 22 (File No. 033-65137) on June 9, 2006, and incorporated herein by reference.

 

b) Second Amendment to Amended and Restated Investment Advisory Agreement between Registrant and VIA, dated June 27, 2007, on behalf of CA-Tax Exempt Bond Fund, Global Dividend Fund (formerly Global Infrastructure Fund), High Yield Fund, Market Neutral Fund, Multi-Sector Fixed Income Fund, Multi-Sector Short Term Bond Fund and Real Estate Securities Fund, filed via EDGAR (as Exhibit d.7) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

c) Third Amendment to Amended and Restated Investment Advisory Agreement between Registrant and VIA dated September 24, 2007, on behalf of Alternatives Diversifier Fund, Foreign Opportunities Fund, Global Opportunities Fund, International Real Estate Securities Fund,

 

 

 

 

AlphaSector Rotation Fund (now known as Virtus Sector Trend Fund) and AlphaSector Allocation Fund, filed via EDGAR (as Exhibit d.10) with Post-Effective Amendment No. 28 (File No. 033-65137) on November 14, 2007, and incorporated herein by reference.

 

d) Fourth Amendment to Amended and Restated Investment Advisory Agreement, between the Registrant and VIA on behalf of Senior Floating Rate Fund effective as of January 31, 2008, filed via EDGAR (as Exhibit d.13) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

e) Fifth Amendment to Amended and Restated Investment Advisory Agreement, by and between the Registrant and VIA effective as of October 1, 2008, filed via EDGAR (as Exhibit d.14) with Post-Effective Amendment No. 32 (File No. 033-65137) on January 28, 2009, and incorporated herein by reference.

 

f) Sixth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA on behalf of Global Real Estate Securities Fund, Greater Asia ex Japan Opportunities Fund and Greater European Opportunities Fund effective as of March 2, 2009, filed via EDGAR (as Exhibit d.17) with Post-Effective Amendment No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

g) Seventh Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of May 29, 2009, filed via EDGAR (as Exhibit d.18) with Post-Effective Amendment No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

h) Eighth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of September 29, 2009, filed via EDGAR (as Exhibit d.22) with Post-Effective Amendment No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

i) Ninth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of January 1, 2010, filed via EDGAR (as Exhibit d.26) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

j) Tenth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of June 30, 2010, filed via EDGAR (as Exhibit d.27) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

k) Eleventh Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of September 14, 2010, filed via EDGAR (as Exhibit d.28) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

l) Twelfth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of January 1, 2011, filed via EDGAR (as Exhibit d.29) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

m) Thirteenth Amendment to Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of March 15, 2011, filed via EDGAR (as Exhibit d.30) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

n) Fourteenth Amendment to Amended and Restated Investment Advisory Agreement between Registrant and VIA effective as of February 6, 2012, on behalf of Dynamic Trend Fund (formerly Dynamic AlphaSector Fund and Market Neutral Fund), filed via EDGAR (as Exhibit d.15) with

 

 

 

 

Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

o) Fifteenth Amendment to the Amended and Restated Investment Advisory Agreement between Registrant and VIA effective as of August 28, 2012, on behalf of Emerging Markets Debt Fund, Emerging Markets Equity Income Fund, Herzfeld Fund, International Small-Cap Fund and Wealth Masters Fund, filed via EDGAR (as Exhibit d.16) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

p) Sixteenth Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of December 18, 2012, on behalf of Disciplined Equity Style Fund, Disciplined Select Bond Fund and Disciplined Select Country Fund, filed via EDGAR (as Exhibit d.17) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

q) Seventeenth Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of June 10, 2013, on behalf of Low Volatility Equity Fund, filed via EDGAR (as Exhibit d.18) with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

r) Eighteenth Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of December 18, 2013, on behalf of Emerging Markets Small Cap Fund, filed via EDGAR (as Exhibit d.1.r) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

s) Nineteenth Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of November 13, 2014, on behalf of International Wealth Masters Fund filed via EDGAR (as Exhibit d.1.s) with Post-Effective Amendment No. 75 (File No. 033-65137) on November 12, 2014, and incorporated herein by reference.

 

t) Twentieth Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of January 6, 2015, filed via EDGAR (as Exhibit d.1.t) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

u) Twenty-First Amendment to the Amended and Restated Investment Advisory Agreement, by and between Registrant and VIA effective as of March 19, 2015, on behalf of Virtus Essential Resources Fund, filed via EDGAR (as Exhibit d.1.u) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

v) Twenty-Second Amendment to the Amended and Restated Investment Advisory Agreement, by and between the Registrant and VIA effective as of May 11, 2015, on behalf of Virtus Multi-Asset Trend Fund, Virtus Sector Trend Fund, Virtus Dynamic Trend Fund, Virtus Global Equity Trend Fund and Virtus Equity Trend Fund, filed via EDGAR (as Exhibit d.1.v) with Post-Effective Amendment No. 85 (File No. 033-65137) on January 27, 2016, and incorporated herein by reference.

 

w) Twenty-Third Amendment to the Amended and Restated Investment Advisory Agreement, by and between the Registrant and VIA effective as of February 8, 2016, on behalf of Virtus Equity Trend Fund, filed via EDGAR (as Exhibit d.1.w) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

x) *Twenty-Fourth Amendment to the Amended and Restated Investment Advisory Agreement, by and between the Registrant and VIA effective as of January 9, 2017, on behalf of Virtus Senior Floating Rate Fund, filed via EDGAR (as Exhibit d.1.x) herewith.

 

 

 

 

2. Investment Advisory Agreement between Virtus Insight Trust (“VIT”) and Virtus Investment Advisers, Inc., dated May 18, 2006, filed via EDGAR (as Exhibit d.1) with Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006, and incorporated herein by reference.

 

a) First Amendment to Investment Advisory Agreement between VIT and VIA, dated January 1, 2010, filed via EDGAR (as Exhibit d.7) with VIT’s Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010, and incorporated herein by reference.

 

3. Subadvisory Agreement between VIA and Duff & Phelps Investment Management Co. (“Duff & Phelps”), dated June 27, 2007, on behalf of Global Dividend Fund and Real Estate Securities Fund, filed via EDGAR (as Exhibit d.9) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

a) First Amendment to Subadvisory Agreement between VIA and Duff & Phelps dated September 24, 2007, on behalf of International Real Estate Securities Fund, filed via EDGAR (as Exhibit d.11) with Post-Effective Amendment No. 28 (File No. 033-65137) on November 14, 2007, and incorporated herein by reference.

 

b) Second Amendment to Subadvisory Agreement between VIA and Duff & Phelps on behalf of Global Real Estate Securities Fund dated March 2, 2009, filed via EDGAR (as Exhibit d.20) with Post-Effective Amendment No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

c) Third Amendment to Subadvisory Agreement between VIA and Duff & Phelps on behalf of Global Dividend Fund, Global Real Estate Securities Fund, International Real Estate Securities Fund and Real Estate Securities Fund dated January 1, 2010, filed via EDGAR (as Exhibit d.31) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

d) *Subadvisory Agreement between VIA and Duff & Phelps on behalf of Virtus International Equity Fund dated November 2, 2016, filed via EDGAR (as Exhibit d.3.d) herewith.

 

4. Subadvisory Agreement between VIA and Thomas J. Herzfeld Advisors, Inc. (“Herzfeld”) on behalf of Herzfeld Fund dated August 28, 2012, filed via EDGAR (as Exhibit d.32) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

5. Subadvisory Agreement between VIA and Horizon Asset Management LLC (“Horizon”) on behalf of Wealth Masters Fund dated August 28, 2012, filed via EDGAR (as Exhibit d.25) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

6. Subadvisory Agreement between VIA and Horizon on behalf of International Wealth Masters Fund dated November 13, 2014, filed via EDGAR (as Exhibit d.13) with Post-Effective Amendment No. 75 (File No. 033-65137) on November 12, 2014, and incorporated herein by reference.

 

7. Subadvisory Agreement between VIA and Kayne Anderson Rudnick Investment Management, LLC (“Kayne Anderson Rudnick”) on behalf of International Small-Cap Equity Fund dated August 28, 2012, filed via EDGAR (as Exhibit d.26) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

a) Amendment to Subadvisory Agreement between VIA and Kayne Anderson Rudnick dated December 18, 2013, on behalf of Emerging Markets Small-Cap Fund, filed via EDGAR (as Exhibit d.11.a) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

8. Subadvisory Agreement between VIA and KBI Global Investors (North America) Ltd. (fka Kleinwort Benson Investors International, Ltd.) (“KBI Global”) on behalf of Virtus Emerging Markets Equity Income Fund and Virtus Essential Resources Fund dated August 31, 2016, filed via EDGAR (as Exhibit d.12) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

 

 

 

9. Subadvisory Agreement between VIA and Newfleet Asset Management, LLC (formerly SCM Advisors LLC) (“Newfleet”) dated July 1, 1998, filed via EDGAR (as Exhibit d.2) with Post-Effective Amendment No. 15 (File No. 033-65137) on January 25, 2005, and incorporated herein by reference.

 

a) Investment Subadvisory Agreement Amendment between VIA and Newfleet effective July 1, 1998 for the purpose of amending the Subadvisory Agreement of the same date in order to correct a typographical error in such Subadvisory Agreement, filed via EDGAR (as Exhibit d.3) with Post-Effective Amendment No. 15 (File No. 033-65137) on January 25, 2005, and incorporated herein by reference.

 

b) Amendment to Subadvisory Agreement between VIA and Newfleet dated November 20, 2002, filed via EDGAR (as Exhibit d.4) with Post-Effective Amendment No. 15 (File No. 033-65137) on January 25, 2005, and incorporated herein by reference.

 

c) Third Amendment to Subadvisory Agreement between VIA and Newfleet dated September 1, 2006, filed via EDGAR (as Exhibit d.5) with Post-Effective Amendment No. 23 (File No. 033-65137) on January 30, 2007, and incorporated herein by reference.

 

d) Fourth Amendment to Subadvisory Agreement between VIA and Newfleet, on behalf of High Yield Fund, dated June 27, 2007, filed via EDGAR (as Exhibit d.9) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

e) Fifth Amendment to Subadvisory Agreement between VIA and Newfleet, on behalf of Bond Fund and High Yield Fund, dated January 1, 2010, filed via EDGAR (as Exhibit d.23) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

f) Sixth Amendment to Subadvisory Agreement between VIA and Newfleet on behalf of Multi-Sector Fixed Income Fund, Multi-Sector Short Term Bond Fund and Senior Floating Rate Fund dated June 2, 2011, filed via EDGAR (as Exhibit d.38) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

g) Seventh Amendment to Subadvisory Agreement between VIA and Newfleet on behalf of CA Tax-Exempt Bond Fund dated September 30, 2011, filed via EDGAR (as Exhibit d.39) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

10. Subadvisory Agreement between VIA and Newfleet on behalf of Low Duration Income Fund, dated May 18, 2012, filed via EDGAR (as Exhibit d.6) with VIT’s Post-Effective Amendment No. 56 (File No. 033-64915) on April 29, 2013, and incorporated herein by reference.

 

a) First Amendment to Subadvisory Agreement between VIA and Newfleet on behalf of Tax-Exempt Bond Fund, dated June 15, 2012, filed via EDGAR (as Exhibit d.7) with VIT’s Post-Effective Amendment No. 56 (File No. 033-64915) on April 29, 2013, and incorporated herein by reference.

 

11. Subadvisory Agreement between VIA and Newfleet on behalf of Emerging Markets Debt Fund dated August 28, 2012, filed via EDGAR (as Exhibit d.29) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

12. Subadvisory Agreement between VIA and Rampart Investment Management Company, LLC (“Rampart”) on behalf of Low Volatility Equity Fund dated June 10, 2013, filed via EDGAR with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

13. Subadvisory Agreement between VIA and Vontobel Asset Management, Inc. (“Vontobel”) dated September 24, 2007, on behalf of Foreign Opportunities Fund, filed via EDGAR (as Exhibit d.12) with Post-Effective Amendment No. 28 (File No. 033-65137) on November 14, 2007, and incorporated herein by reference.

 

 

 

 

a) First Amendment to Subadvisory Agreement between VIA and Vontobel dated January 1, 2009, filed via EDGAR (as Exhibit d.15) with Post-Effective Amendment No. 33 (File No. 033-65137) on March 2, 2009, and incorporated by reference.

 

b) Second Amendment to Subadvisory Agreement between VIA and Vontobel on behalf of Global Opportunities Fund dated January 28, 2009, filed via EDGAR (as Exhibit d.16) with Post-Effective Amendment No. 33 (File No. 033-65137) on March 2, 2009, and incorporated by reference.

 

c) Third Amendment to Subadvisory Agreement between VIA and Vontobel on behalf of Greater Asia ex Japan Opportunities Fund and Greater European Opportunities Fund dated April 21, 2009, filed via EDGAR (as Exhibit d.19) with Post-Effective Amendment No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

d) Fourth Amendment to Subadvisory Agreement between VIA and Vontobel on behalf of Foreign Opportunities Fund, Global Opportunities Fund, Greater Asia ex Japan Opportunities Fund and Greater European Opportunities Fund dated January 1, 2010, filed via EDGAR (as Exhibit d.24) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

14.          Subadvisory Agreement between VIA and Vontobel on behalf of Emerging Markets Opportunities Fund, dated May 18, 2006, filed via EDGAR (as Exhibit d.3) with VIT’s Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006, and incorporated herein by reference.

 

a) First Amendment to Subadvisory Agreement between VIA and Vontobel on behalf of Emerging Markets Opportunities Fund, dated January 1, 2010, filed via EDGAR (as Exhibit d.5) with Post-Effective Amendment No. 50 (File No. 033-64915) on February 25, 2010, and incorporated herein by reference.

 

(e) Underwriting Agreement.

1. Underwriting Agreement between VP Distributors, LLC (formerly VP Distributors, Inc.) (“VP Distributors”) and Registrant dated July 1, 1998 and filed via EDGAR (as Exhibit e.1) with Post-Effective Amendment No. 15 (File No. 033-65137) on January 25, 2005, and incorporated herein by reference.

 

2. Distribution Agreement between Registrant and VP Distributors, LLC, dated May 18, 2006, filed via EDGAR (as Exhibit e.1) with VIT’s Post-Effective Amendment No. 44 (File No. 033-64915) on June 2, 2006, and incorporated herein by reference.

 

3. Form of Sales Agreement between VP Distributors and dealers, effective January, 2016, filed via EDGAR (as Exhibit e.2) with Post-Effective Amendment No. 35 to the Registration Statement of Virtus Retirement Trust (“VRT”); formerly known as Virtus Institutional Trust) (File No. 033-80057) on January 8, 2016, and incorporated herein by reference.

 

a) *Amended Annex A to Form of Sales Agreement between VP Distributors and dealers effective December 2016 filed via EDGAR (as Exhibit e.3.a) herewith.

 

(f) None.

 

(g) Custodian Agreement.
1. Master Global Custody Agreement between each of Registrant, Virtus Equity Trust (“VET”) and VIT (collectively, “Virtus Mutual Funds”), and JPMorgan Chase Bank, N.A., dated March 1, 2013, filed via EDGAR (as Exhibit g.1) with Post-Effective Amendment No. 56 to the Registration Statement of VIT (File No. 033-64915) on April 29, 2013, and incorporated herein by reference.

 

a) Amendment to Master Global Custody Agreement, containing a revised Schedule A, by and among Registrant, Virtus Mutual Funds, VRT and JPMorgan Chase Bank, N.A., effective as of December 17, 2015, filed via EDGAR (as Exhibit g.1.a) with Post-Effective Amendment No. 85 to the Registration Statement of VOT (File No. 033-65137) on January 27, 2016, and incorporated herein by reference.

 

 

 

 

(h) Other Material Contracts.
1. Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services, LLC (“Virtus Fund Services”)) dated January 1, 2010, filed via EDGAR (as Exhibit h.2) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

a) Amendment to Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services) effective as of April 14, 2010, filed via EDGAR (as Exhibit h.2) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

b) Second Amendment to Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services) effective as of March 15, 2011, filed via EDGAR (as Exhibit h.3) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

c) Corrected Third Amendment to Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds, VRT and Virtus Fund Services effective as of January 1, 2013, filed via EDGAR (as Exhibit h.1.c) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

d) Fourth Amendment to Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of January 1, 2015, filed via EDGAR (as Exhibit h.1.d) with Post-Effective Amendment No. 104 to VET’s Registration Statement (File No. 002-16590) on July 28, 2015, and incorporated herein by reference.

 

e) Fifth Amendment to Amended and Restated Transfer Agency and Service Agreement between Virtus Mutual Funds, VRT, and Virtus Fund Services, dated January 8, 2016, filed via EDGAR (as Exhibit h.1.e) with Post-Effective Amendment No. 35 to the Registration Statement of VRT (File No. 033-80057) on January 8, 2016, and incorporated herein by reference.

 

2. Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon Investment Servicing (US) Inc. (“BNY Mellon”), dated April 15, 2011, filed via EDGAR (as Exhibit h.6) with Post-Effective Amendment No. 54 to the Registration Statement of VIT (File No. 033-64915) on April 27, 2012, and incorporated herein by reference.

 

a) Adoption and Amendment Agreement among Virtus Mutual Funds, Virtus Alternative Solutions Trust (“VAST”), Virtus Fund Services and BNY Mellon dated as of March 21, 2014, filed via EDGAR (as Exhibit h.2.b) with Pre-Effective Amendment No. 4 to VAST’s Registration Statement (File No. 333-191940) on April 4, 2014, and incorporated herein by reference.

 

b) Amendment to Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VAST, Virtus Fund Services and BNY Mellon dated as of March 21, 2014, filed via EDGAR (as Exhibit h.2.a) with Post-Effective Amendment No. 4 to VAST’s Registration Statement (File No. 333-191940) on September 8, 2014, and incorporated herein by reference.

 

c) *Amendment to Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VAST, Virtus Fund Services and BNY Mellon dated as of June 1, 2014, filed via EDGAR (as Exhibit h.2.c) herewith.

 

d) Amendment to Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VAST, Virtus Fund Services and BNY Mellon dated as of November 12, 2014, filed via EDGAR (as Exhibit h.2.c) with Post-Effective Amendment No. 80 (File No. 033-65137) on January 27, 2015, and incorporated herein by reference.

 

e) Amendment to Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VAST, Virtus Fund Services and BNY Mellon dated as of May 28, 2015, filed via EDGAR (as

 

 

 

 

Exhibit h.2.d) with Post-Effective Amendment No. 18 to VAST’s Registration Statement (File No. 333-191940) on June 5, 2015, and incorporated herein by reference.

 

f) Amendment to Sub-Transfer Agency and Shareholder Services Agreement among Virtus Mutual Funds, VAST, VRT, Virtus Fund Services and BNY Mellon dated as of December 10, 2015, filed via EDGAR (as Exhibit h.2.e) with Post-Effective Amendment No. 35 to the Registration Statement of VRT (File No. 033-80057) on January 8, 2016, and incorporated herein by reference.

 

3. Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of January 1, 2010, filed via EDGAR (as Exhibit h.4) with PEA No. 36 (File No. 033-65137) on January 28, 2010, and incorporated herein by reference.

 

a) First Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of April 14, 2010, filed via EDGAR (as Exhibit h.5) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

b) Second Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of June 30, 2010, filed via EDGAR (as Exhibit h.6) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

c) Third Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of September 14, 2010, filed via EDGAR (as Exhibit h.7) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

d) Fourth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of January 1, 2011, filed via EDGAR (as Exhibit h.8) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

e) Fifth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of March 15, 2011, filed via EDGAR (as Exhibit h.9) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

f) Sixth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and VP Distributors (since assigned to Virtus Fund Services), effective as of August 28, 2012, filed via EDGAR (as Exhibit h.2.f) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

g) Seventh Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and VP Distributors (since assigned to Virtus Fund Services), effective as of December 18, 2012, filed via EDGAR (as Exhibit h.2.g) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

h) Eighth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of June 10, 2013, filed via EDGAR with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

i) Ninth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of December 18, 2013, filed via EDGAR (as Exhibit h.3.i) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

 

 

 

j) Tenth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of November 13, 2014, filed via EDGAR (as Exhibit h.3.j) with Post-Effective Amendment No. 75 (File No. 033-65137) on November 12, 2014, and incorporated herein by reference.

 

k) Eleventh Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of January 1, 2015, filed via EDGAR (as Exhibit h.3.k) with Post-Effective Amendment No. 80 (File No. 033-65137) on January 27, 2015, and incorporated herein by reference.

 

l) Twelfth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds and Virtus Fund Services, effective as of March 19, 2015, filed via EDGAR (as Exhibit h.3.l) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

m) Thirteenth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and Virtus Fund Services, effective as of January 8, 2016, filed via EDGAR (as Exhibit h.3.m) with Post-Effective Amendment No. 35 to the Registration Statement of VRT (File No. 033-80057) on January 8, 2016, and incorporated herein by reference.

 

n) *Fourteenth Amendment to Amended and Restated Administration Agreement between Virtus Mutual Funds, VRT and Virtus Fund Services, effective as of December 1, 2016, filed via EDGAR (as Exhibit h.3.n) herewith.

 

4. Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of January 1, 2010, filed via EDGAR (as Exhibit h.5) with Post-Effective Amendment No. 50 to the Registration Statement of VIT (File No. 033-64915) on February 25, 2010, and incorporated herein by reference.

 

a) First Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of June 30, 2010 filed via EDGAR (as Exhibit h.13.) with Post-Effective Amendment No. 52 to the Registration Statement of VIT (File No. 033-64915) on April 28, 2011, and incorporated herein by reference.

 

b) Second Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of September 14, 2010 filed via EDGAR (as Exhibit h.14) with Post-Effective Amendment No. 52 to the Registration Statement of VIT (File No. 033-64915) on April 28, 2011, and incorporated herein by reference.

 

c) Third Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of March 15, 2011 filed via EDGAR (as Exhibit h.15.) with Post-Effective Amendment No. 52 to the Registration Statement of VIT (File No. 033-64915) on April 28, 2011, and incorporated herein by reference.

 

d) Fourth Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of August 28, 2012, filed via EDGAR (as Exhibit h.4.d) with Post-Effective Amendment No. 56 to the Registration Statement of VIT (File No. 033-64915) on April 29, 2013, and incorporated herein by reference.

 

e) Fifth Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VP Distributors (since assigned to Virtus Fund Services) and BNY Mellon, effective as of December 18, 2012, filed via EDGAR (as Exhibit h.4.e) with Post-Effective Amendment No. 56 to the Registration Statement of VIT (File No. 033-64915) on April 29, 2013, and incorporated herein by reference.

 

 

 

 

f) Sixth Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, Virtus Fund Services and BNY Mellon, effective as of June 10, 2013, filed via EDGAR (as Exhibit h.4.f) with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

g) Seventh Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, Virtus Fund Services and BNY Mellon, effective as of December 18, 2013, filed via EDGAR (as Exhibit h.4.g) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

h) Joinder Agreement and Amendment to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VAST, Virtus Variable Insurance Trust (“VVIT”), VATS Offshore Fund, Ltd. (“VATS”), Virtus Fund Services and BNY Mellon dated February 24, 2014, filed via EDGAR (as Exhibit h.4.h) with Pre-Effective Amendment No. 3 to VAST’s Registration Statement (File No. 333-191940) on March 28, 2014, and incorporated herein by reference.

 

i) Joinder Agreement to Sub-Administration and Accounting Services Agreement among Virtus Mutual Funds, VRT, VVIT, VAST, VATS, Virtus Fund Services and BNY Mellon dated December 10, 2015, filed via EDGAR (as Exhibit h.4.i) with Post-Effective Amendment No. 35 to the Registration Statement of VRT (File No. 033-80057) on January 8, 2016, and incorporated herein by reference.

 

5. *Twenty-Seventh Amended and Restated Expense Limitation Agreement between Registrant and VIA, effective as of January 1, 2017, filed via EDGAR (as Exhibit h.5) herewith.

 

6. Sixth Amended and Restated Expense Limitation Agreement between VIT and VIA, effective as of September 1, 2015, filed via EDGAR (as Exhibit h.5) with Post-Effective Amendment No. 65 to the Registration Statement of VIT (File No. 033-64915) on April 20, 2016, and incorporated herein by reference.

 

7. Second Amended and Restated Fee Waiver Agreement between Registrant and VP Distributors, dated as of March 17, 2011, filed via EDGAR (as Exhibit h.6) with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

8. First Amended Fee Waiver Agreement (Class I Shares) between VIT and VP Distributors, effective as of December 1, 2014, filed via EDGAR (as Exhibit h.8) with Post-Effective Amendment No. 63 to the Registration Statement of VIT (File No. 033-64915) on April 29, 2015, and incorporated herein by reference.

 

9. *Form of Indemnification Agreement with each Trustee, effective as of October 24, 2016, filed via EDGAR (as Exhibit h.9) herewith.

 

(i) Legal Opinion.
1. Opinion and consent of Morris, Nichols, Arsht & Tunnell, filed via EDGAR (as Exhibit e.10) with Pre-Effective Amendment No. 2 (File No. 033-65137) on February 29, 1996, and incorporated herein by reference.

 

2. Opinion of Counsel as to legality of shares dated March 13, 2015, filed via EDGAR (as Exhibit i.2) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

3. Opinion as to legality of the shares filed via EDGAR (as Exhibit i.1) with VIT’s Post-Effective Amendment No. 61 (File No. 033-64915) on November 12, 2014, and incorporated herein by reference.

 

4. Opinion of Counsel as to legality of shares dated September 23, 2016, filed via EDGAR (as Exhibit i.4) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

 

 

 

5. Opinion of Counsel as to legality of shares dated October 24, 2016, filed via EDGAR (as Exhibit i.5) with Post-Effective Amendment No. 90 to the Registration Statement (File No. 033-65137) on November 1, 2016, and incorporated herein by reference.

 

6. *Consent of Sullivan & Worcester, filed via EDGAR (as Exhibit i.6) herewith.

 

(j) Other Opinions.
1. *Consent of Independent Registered Public Accounting Firm filed via EDGAR (as Exhibit j.1) herewith.

 

(k) Not applicable.

 

(l) Initial Capital Agreements

 

1. Share Purchase Agreement (the “Share Purchase Agreement”) between Registrant and GMG/Seneca Capital Management, L.P., filed via EDGAR with Pre-Effective Amendment No. 2 (File No. 033-65137) on February 29, 1996, and incorporated herein by reference.

 

2. Form of Purchase Agreement relating to Initial Capital filed via EDGAR with VIT’s Post-Effective Amendment No. 3 (File No. 033-64915) on February 28, 1997, and incorporated herein by reference.

 

3. Subscription Agreement, dated January 14, 1999, between Registrant and FDI Distribution Services, Inc. relating to Advisor Shares filed via EDGAR with VIT’s Post-Effective Amendment No. 10 (File No. 033-64915) on March 2, 1999 and incorporated herein by reference.

 

4. Subscription Agreement, dated December 6, 2000, between Registrant and Provident Distributors, Inc. relating to B Shares filed via EDGAR with VIT’s Post-Effective Amendment No. 18 (File No. 033-64915) on December 28, 2000, and incorporated herein by reference.

 

(m) Rule 12b-1 Plans.
1. Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the Investment Company Act of 1940, as amended (the “1940 Act”), effective March 1, 2007, filed via EDGAR (as Exhibit m.1.) with Post-Effective Amendment No. 25 (File No. 033-65137) on June 27, 2007, and incorporated herein by reference.

 

a) Amendment to Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the 1940 Act, effective June 27, 2007, filed via EDGAR (as Exhibit m.4) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

b) Amendment No. 2 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective September 24, 2007, filed via EDGAR (as Exhibit m.8) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

c) Amendment No. 3 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective October 1, 2007, filed via EDGAR (as Exhibit m.11) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

d) Amendment No. 4 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective January 31, 2008, filed via EDGAR (as Exhibit m.13) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

e) Amendment No. 5 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective March 2, 2009, filed via EDGAR (as Exhibit m.15) with Post-Effective No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

 

 

 

f) Amendment No. 6 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective April 21, 2009, filed via EDGAR (as Exhibit m.16) with Post-Effective No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

g) Amendment No. 7 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 30, 2010, filed via EDGAR (as Exhibit m.19) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

h) Amendment No. 8 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective September 14, 2010, filed via EDGAR (as Exhibit m.21) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

i) Amendment No. 9 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective March 15, 2011, filed via EDGAR (as Exhibit m.23) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

j) Amendment No. 10 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective August 28, 2012, filed via EDGAR (as Exhibit m.1.j) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

k) Amendment No. 11 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective December 18, 2012, filed via EDGAR (as Exhibit m.1.k) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

l) Amendment No. 12 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 10, 2013, filed via EDGAR with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

m) Amendment No. 13 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective December 18, 2013, on behalf of Emerging Markets Small-Cap Fund, filed via EDGAR (as Exhibit m.1.m) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

n) Amendment No. 14 to Class A Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective November 13, 2014, filed via EDGAR (as Exhibit m.1.n) with Post-Effective Amendment No. 75 (File No. 033-65137) on November 12, 2014, and incorporated herein by reference.

 

o) Amendment No. 15 to Class A Shares Amended and Restated Distribution Plan Pursuant to Rule 12b-1 under the 1940 Act, effective March 19, 2015, filed via EDGAR (as Exhibit m.1.o) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

2. Class A Shares Amended and Restated Distribution Plan of VIT Pursuant to Rule 12b-1 under the 1940 Act, dated March 1, 2007, filed via EDGAR (as Exhibit m.1) with VIT’s Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007, and incorporated herein by reference.

 

3. Class A Shares Amended and Restated Shareholder Services Plan of VIT Not Pursuant to Rule 12b-1 under the 1940 Act, dated March 1, 2007, filed via EDGAR (as Exhibit m.3) with VIT’s Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007, and incorporated herein by reference.

 

 

 

 

4. Class B Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective March 1, 2007, filed via EDGAR (as Exhibit m.2) with Post-Effective Amendment No. 25 (File No. 033-65137) on June 27, 2007, and incorporated herein by reference.

 

a) Amendment to Class B Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 27, 2007, filed via EDGAR (as Exhibit m.5) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

b) Amendment No. 2 to Class B Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective September 24, 2007, filed via EDGAR (as Exhibit m.9) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

5. Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective March 1, 2007, filed via EDGAR (as Exhibit m.3) with Post-Effective Amendment No. 25 (File No. 033-65137) on June 27, 2007, and incorporated herein by reference.

 

a) Amendment to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 27, 2007, filed via EDGAR (as Exhibit m.6) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

b) Amendment No. 2 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective September 24, 2007, filed via EDGAR (as Exhibit m.10) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

c) Amendment No. 3 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective October 1, 2007, filed via EDGAR (as Exhibit m.12) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

d) Amendment No. 4 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective January 31, 2008, filed via EDGAR (as Exhibit m.14) with Post-Effective Amendment No. 29 (File No. 033-65137) on January 28, 2008, and incorporated herein by reference.

 

e) Amendment No. 5 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective March 2, 2009, filed via EDGAR (as Exhibit m.17) with Post-Effective No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

f) Amendment No. 6 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective April 21, 2009, filed via EDGAR (as Exhibit m.18) with Post-Effective No. 34 (File No. 033-65137) on October 1, 2009, and incorporated herein by reference.

 

g) Amendment No. 7 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective June 30, 2010, filed via EDGAR (as Exhibit m.20) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

h) Amendment No. 8 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective September 14, 2010, filed via EDGAR (as Exhibit m.22) with Post-Effective Amendment No. 44 (File No. 033-65137) on January 27, 2011, and incorporated herein by reference.

 

 

 

 

i) Amendment No. 9 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective March 15, 2011, filed via EDGAR (as Exhibit m.24) with Post-Effective Amendment No. 51 (File No. 033-65137) on January 27, 2012, and incorporated herein by reference.

 

j) Amendment No. 10 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective August 28, 2012, filed via EDGAR (as Exhibit m.3.j) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

k) Amendment No. 11 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act effective December 18, 2012, filed via EDGAR (as Exhibit m.3.k) with Post-Effective Amendment No. 61 (File No. 033-65137) on January 25, 2013, and incorporated herein by reference.

 

l) Amendment No. 12 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 10, 2013, filed via EDGAR (as Exhibit m.3.l) with Post-Effective Amendment No. 64 (File No. 033-65137) on June 10, 2013, and incorporated herein by reference.

 

m) Amendment No. 13 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective December 18, 2013, filed via EDGAR (as Exhibit m.3.m) with Post-Effective Amendment No. 70 (File No. 033-65137) on January 27, 2014, and incorporated herein by reference.

 

n) Amendment No. 14 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective November 13, 2014, filed via EDGAR (as Exhibit m.3.n) with Post-Effective Amendment No. 75 (File No. 033-65137) on November 12, 2014, and incorporated herein by reference.

 

o) Amendment No. 15 to Class C Shares Amended and Restated Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective March 19, 2015, filed via EDGAR (as Exhibit m.3.o) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

6. Class C Shares Amended and Restated Distribution Plan of VIT Pursuant to Rule 12b-1 under the 1940 Act, dated March 1, 2007, filed via EDGAR (as Exhibit m.2) with VIT’s Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007, and incorporated herein by reference.

 

7. I Shares Amended and Restated Shareholder Services Plan of VIT Not Pursuant to Rule 12b-1 under the 1940 Act, dated March 1, 2007, filed via EDGAR (as Exhibit m.5) with VIT’s Post-Effective Amendment No. 46 (File No. 033-64915) on April 24, 2007, and incorporated herein by reference.

 

8. Class T Shares Distribution Plan of Registrant Pursuant to Rule 12b-1 under the 1940 Act, effective June 27, 2007, filed via EDGAR (as Exhibit m.7) with Post-Effective Amendment No. 27 (File No. 033-65137) on September 24, 2007, and incorporated herein by reference.

 

(n) Rule 18f-3 Plans.
1. *Amended and Restated Plan Pursuant to Rule 18f-3 under the 1940 Act, effective as of January 6, 2017, filed via EDGAR (as Exhibit n.1) herewith.

 

(o) Reserved.

 

(p) Code of Ethics.
1. Amended and Restated Code of Ethics of the Virtus Mutual Funds effective August 2016, filed via EDGAR (as Exhibit p.1) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

 

 

 

2. Amended and Restated Code of Ethics of VIA, VP Distributors and other Virtus Affiliates dated June 30, 2016, filed via EDGAR (as Exhibit p.2) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

3. Code of Ethics of Subadviser Vontobel dated November, 2015, filed via EDGAR (as Exhibit p.3) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

4. *Amended and Restated Code of Ethics of Subadviser Herzfeld dated August 3, 2016, filed via EDGAR (as Exhibit p.4) herewith.

 

5. Code of Ethics of Subadviser Horizon dated December 2015, filed via EDGAR (as Exhibit p.5) with Post-Effective Amendment No. 88 (File No. 033-65137) on September 23, 2016, and incorporated herein by reference.

 

6. *Code of Ethics of Subadviser KBI Global dated September 2016, filed via EDGAR (as Exhibit p.6) herewith.

 

(q) Powers of Attorney

1. Power of Attorney for all Trustees, dated June 2, 2010, filed via EDGAR (as Exhibit q) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

2. Power of Attorney for Trustee Hassell H. McClellan, dated January 21, 2015, filed via EDGAR (as Exhibit r) with Post-Effective Amendment No. 82 (File No. 033-65137) on March 13, 2015, and incorporated herein by reference.

 

3. Power of Attorney for Trustees Thomas J. Brown, Donald C. Burke, Roger A. Gelfenbien and John R. Mallin, dated June 30, 2016, filed via EDGAR (as Exhibit q.3) with Post-Effective Amendment No. 87 (File No. 033-65137) on July 8, 2016, and incorporated herein by reference.

 

 

* Filed herewith

 

Item 29. Persons Controlled by or Under Common Control with the Fund

 

None.

 

Item 30. Indemnification

 

The indemnification of Registrant’s principal underwriter against certain losses is provided for in Section 18 of the Underwriting Agreement incorporated herein by reference to Exhibit e.1. Indemnification of Registrant’s Custodian is provided for in Section 7, among others, of the Master Global Custody Agreement incorporated herein by reference to Exhibit g.1. The indemnification of Registrant’s Transfer Agent is provided for in Article 6 of the Amended and Restated Transfer Agency and Service Agreement incorporated herein by reference to Exhibit h.1. The Trust has entered into Indemnification Agreements with each trustee, the form of which is incorporated herein by reference to Exhibit h.9, whereby the Registrant shall indemnify the trustee for expenses incurred in any proceeding in connection with the trustee’s service to the Registrant subject to certain limited exceptions.

 

In addition, Article VII sections 2 and 3 of the Registrant’s Agreement and Declaration of Trust incorporated herein by reference to Exhibits a.1-4, provides in relevant part as follows:

 

“A Trustee, when acting in such capacity, shall not be personally liable to any Person, other than the Trust or a Shareholder to the extent provided in this Article VII, for any act, omission or obligation of the Trust, of such Trustee or of any other Trustee. The Trustees shall not be responsible or liable in any event for any neglect or wrongdoing of any officer, agent, employee, Manager or Principal Underwriter of the Trust. The Trust (i) may indemnify an agent of the Trust or any Person who is serving or has served

 

 

 

 

at the Trust’s request as an agent of another organization in which the Trust has any interest as a shareholder, creditor or otherwise and (ii) shall indemnify each Person who is, or has been, a Trustee, officer or employee of the Trust and any Person who is serving or has served at the Trust’s request as a director, officer, trustee, or employee of another organization in which the Trust has any interest as a shareholder, creditor or otherwise, in the case of (i) and (ii), to the fullest extent consistent with the Investment Company Act of 1940, as amended (the “1940 Act”) and in the manner provided in the By-Laws; provided that such indemnification shall not be available to any of the foregoing Persons in connection with a claim, suit or other proceeding by any such Person against the Trust or a Series (or Class) thereof.

 

All persons extending credit to, contracting with or having any claim against the Trust or the Trustees shall look only to the assets of the appropriate Series (or Class thereof if the Trustees have included a Class limitation on liability in the agreement with such person as provided below), or, if the Trustees have yet to establish Series, of the Trust for payment under such credit, contract or claim; and neither the Trustees nor the Shareholders, nor any of the Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor.

 

Every note, bond, contract, instrument, certificate or undertaking and every other act or thing whatsoever executed or done by or on behalf of the Trust or the Trustees by any of them in connection with the Trust shall conclusively be deemed to have been executed or done only in or with respect to his or their capacity as Trustee or Trustees, and such Trustee or Trustees shall not be personally liable thereon. …

 

… A Trustee shall be liable to the Trust and to any Shareholder solely for her or his own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and shall not be liable for errors of judgment or mistakes of fact or law. The Trustees may take advice of counsel or other experts with respect to the meaning and operation of this Declaration of Trust, and shall be under no liability for any act or omission in accordance with such advice nor for failing to follow such advice.”

 

In addition, Article III section 7 of such Agreement and Declaration of Trust provides for the indemnification of shareholders of the Registrant as follows: “If any Shareholder or former Shareholder shall be exposed to liability by reason of a claim or demand relating to such Person being or having been a Shareholder, and not because of such Person's acts or omissions, the Shareholder or former Shareholder (or such Person's heirs, executors, administrators, or other legal representatives or in the case of a corporation or other entity, its corporate or other general successor) shall be entitled to be held harmless from and indemnified out of the assets of the Trust against all cost and expense reasonably incurred in connection with such claim or demand, but only out of the assets held with respect to the particular Series of Shares of which such Person is or was a Shareholder and from or in relation to which such liability arose. The Trust may, at its option and shall, upon request by the Shareholder, assume the defense of any claim made against the Shareholder for any act or obligation of the Trust and satisfy any judgment thereon from the assets held with respect to the particular series.”

 

Article VI Section 2 of the Registrant’s Bylaws incorporated herein by reference to Exhibits b.1-3, provides in relevant part, subject to certain exceptions and limitations, “every agent shall be indemnified by the Trust to the fullest extent permitted by law against all liabilities and against all expenses reasonably incurred or paid by him or her in connection with any proceeding in which he or she becomes involved as a party or otherwise by virtue of his or her being or having been an agent.” Such indemnification would not apply in the case of any liability to which the Registrant would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person’s duties.

 

The Investment Advisory Agreement, Subadvisory Agreements, Master Global Custody Agreement, Sub-Administration Agreement and Sub-Transfer Agency and Service Agreement, each as amended, respectively provide that the Registrant will indemnify the other party (or parties, as the case may be) to

 

 

 

 

the agreement for certain losses. Similar indemnities to those listed above may appear in other agreements to which the Registrant is a party.

 

The Registrant, in conjunction with VIA, the Registrant’s Trustees, and other registered investment management companies managed by VIA, maintains insurance on behalf of any person who is or was a Trustee, officer, employee, or agent of the Registrant, or who is or was serving at the request of the Registrant as a trustee, director, officer, employee or agent of another trust or corporation, against any liability asserted against such person and incurred by him or arising out of his position. However, in no event will Registrant maintain insurance to indemnify any such person for any act for which the Registrant itself is not permitted to indemnify him.

 

Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the “Act”), may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

Item 31. Business and Other Connections of Investment Adviser and Subadvisers

 

See “Management of the Funds” in the Prospectus and “Investment Advisory and Other Services” and “Management of the Trust” in the Statement of Additional Information which is included in this Post-Effective Amendment. For information as to the business, profession, vocation or employment of a substantial nature of directors and officers of the Adviser and Subadvisers, reference is made to the Adviser’s and each Subadviser’s current Form ADV filed under the Investment Advisers Act of 1940, and incorporated herein by reference.

 

Adviser   SEC File
No.:
VIA   801-5995
Duff & Phelps   801-14813
Herzfeld   801-20866
Horizon   801-47515
Kayne Anderson   801-24241
KBI Global   801-60358
Newfleet   801-51559
Rampart   801-77244
Vontobel   801-21953

 

Item 32. Principal Underwriter

 

(a) VP Distributors, LLC serves as the principal underwriter for the following registrants:

 

Virtus Alternative Solutions Trust, Virtus Equity Trust, Virtus Opportunities Trust, Virtus Variable Insurance Trust and Virtus Retirement Trust.

 

(b) Directors and executive officers of VP Distributors, 100 Pearl Street, Hartford, CT 06103 are as follows:

 

 

 

 

Name and Principal
Business Address 		  Positions and Offices with Distributor   Positions and Offices
with Registrant
George R. Aylward   Executive Vice President   President and Trustee
         
Kevin J. Carr   Vice President, Counsel and Secretary   Senior Vice President,  Chief Legal Officer, Counsel and Secretary
         
Nancy J. Engberg   Vice President and Assistant Secretary   Vice President and Chief Compliance Officer
         
David Hanley   Vice President and Treasurer   None
         
Barry Mandinach   President   None
         
David C. Martin   Vice President and Chief Compliance Officer   None
         
Francis G. Waltman   Executive Vice President   Executive Vice President

 

(c) To the best of the Registrant’s knowledge, no commissions or other compensation was received by any principal underwriter who is not an affiliated person of the Registrant or an affiliated person of such affiliated person, directly or indirectly, from the Registrant during the Registrant’s last fiscal year.

 

Item 33. Location of Accounts and Records

 

Persons maintaining physical possession of accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and the Rules promulgated thereunder include:

 

Secretary of the Trust: Principal Underwriter:

Kevin J. Carr, Esq.

100 Pearl Street

Hartford, CT 06103

VP Distributors, LLC

100 Pearl Street

Hartford, CT 06103

   
Investment Adviser: Custodian:

Virtus Investment Advisers, Inc.

100 Pearl Street

Hartford, CT 06103

JPMorgan Chase Bank, National Association

One Chase Manhattan Plaza, 19 th Floor

New York, NY 10005

   
Administrator & Transfer Agent:  

Virtus Fund Services, LLC

100 Pearl Street

Hartford, CT 06103

 
   
Fund Accountant, Sub-Administrator, Sub-Transfer Agent and Dividend Dispersing Agent:  

BNY Mellon Investment Servicing (US) Inc.

301 Bellevue Parkway

Wilmington, DE 19809

 
   
Subadviser to: Global Infrastructure Fund, Global Real Estate Securities Fund, International Equity Fund, International Real Estate Securities Fund and Real Estate Securities Fund  

Duff & Phelps Investment Management Co.

200 South Wacker Drive, Suite 500

Chicago, IL 60606

 

 

 

 

 

Subadviser to: Herzfeld Fund Subadviser to: International Wealth Masters Fund and Wealth Masters Fund

Thomas J. Herzfeld Advisors, Inc.

119 Washington Avenue, Suite 504

Miami Beach, FL 33139

Horizon Asset Management LLC

470 Park Avenue South

New York, NY 10016

   
Subadviser to: Emerging Markets Small-Cap Fund and International Small-Cap Fund Subadviser to: Emerging Markets Equity Income Fund and Essential Resources Fund

Kayne Anderson Rudnick Investment Management, LLC

1800 Avenue of the Stars, 2nd Floor

Los Angeles, CA 90067

KBI Global Investors (North America) Ltd 3 rd Floor,

2 Harbourmaster Place

IFSC, Dublin 1, Ireland

   
Subadviser to: CA Tax-Exempt Bond Fund, Bond Fund, Emerging Markets Debt Fund,  High Yield Fund, Low Duration Income Fund, Multi-Sector Intermediate Bond Fund, Multi-Sector Short Term Bond Fund, Senior Floating Rate Fund and Tax-Exempt Bond Fund Subadviser to: Emerging Markets Opportunities Fund, Foreign Opportunities Fund, Global Opportunities Fund, and Greater European Opportunities Fund

Newfleet Asset Management, LLC

100 Pearl Street

Hartford, CT 06103

Vontobel Asset Management, Inc.

1540 Broadway, 38th Floor

New York, NY 10036

   
Subadviser to: Low Volatility Equity Fund  

Rampart Investment Management Company, LLC

One International Place, 14th Floor

Boston, MA 02110

 

 

Item 34. Management Services

 

None.

 

Item 35. Undertakings

 

None.

 

 

 

 

Item 28. Exhibits

 

a.4 Amendment to the Declaration of Trust of VOT
   
d.1.x Twenty-Fourth Amendment to the Amended and Restated Investment Advisory Agreement
   
d.3.d Subadvisory Agreement between VIA and Duff & Phelps on behalf of Virtus International Equity Fund
   
e.3.a Amended Annex A to the Form of Sales Agreement between VP Distributors and dealers
   
h.2.c Amendment to Sub-Transfer Agency and Shareholder Services Agreement
   
h.3.n Fourteenth Amendment to Amended and Restated Administration Agreement
   
h.5 Twenty-Seventh Amended and Restated Expense Limitation Agreement
   
h.9 Form of Indemnification Agreement
   
i.6 Consent of Sullivan & Worcester
   
j.1 Consent of Independent Registered Public Accounting Firm
   
n.1 Amended and Restated Plan Pursuant to Rule 18f-3 under the 1940 Act
   
p.4 Amended and Restated Code of Ethics of Subadviser Herzfeld
   
p.6 Code of Ethics of Subadviser KBI Global

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness for this registration statement under Rule 485(b) of the Securities Act and has duly caused this amendment to the registration statement to be signed on its behalf by the undersigned, duly authorized, in the City of Hartford and the State of Connecticut on the 20th day of January 2017.

 

VIRTUS OPPORTUNITIES TRUST  
     
By: /s/ George R. Aylward  
  George R. Aylward  
  President  

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to the registration statement has been signed below by the following persons in the capacities indicated on the 20th day of January 2017.

 

Signature   Title
     
/s/ George R. Aylward    
George R. Aylward   Trustee and President (principal executive officer)
     
/s/ W. Patrick Bradley    
W. Patrick Bradley  

Chief Financial Officer and Treasurer

(principal financial and accounting officer)

     
/s/ Thomas J. Brown    
Thomas J. Brown*   Trustee
     
/s/ Donald C. Burke    
Donald C. Burke*   Trustee
     
/s/ Roger A. Gelfenbien    
Roger A. Gelfenbien*   Trustee
     
/s/ John R. Mallin    
John R. Mallin*   Trustee
     
/s/ Hassell H. McClellan    
Hassell H. McClellan*   Trustee
     
/s/ Philip R. McLoughlin    
Philip R. McLoughlin*   Trustee and Chairman
     
/s/ Geraldine M. McNamara    
Geraldine M. McNamara*   Trustee
     
/s/ James M. Oates    
James M. Oates*   Trustee
     
/s/ Richard E. Segerson    
Richard E. Segerson*   Trustee
     
/s/ Ferdinand L.J. Verdonck    
Ferdinand L.J. Verdonck*   Trustee

 

*By: /s/ George R. Aylward  
  *George R. Aylward, Attorney-in-Fact, pursuant to a power of attorney  

  

     

 

Exhibit a.4

 

VIRTUS OPPORTUNITIES TRUST

 

(the “Trust”)

 

Third Amendment dated November 17, 2016 to the Declaration of Trust

 

The following paragraph is hereby added to ARTICLE VIII, Miscellaneous

 

Section 9. Voting Powers. In connection with, and in furtherance of, Article V, Section 1 of this Declaration of Trust, each reference in this Declaration of Trust to the voting of Shares and to the Shares required to constitute a quorum or minimum for shareholder action, shall mean the voting power of such Shares rather than the number of such Shares.

 

     

 

Exhibit d.1.x

 

TWENTY-FOURTH AMENDMENT

TO AMENDED AND RESTATED

INVESTMENT ADVISORY AGREEMENT

 

THIS AMENDMENT effective as of the 9 th day of January 2017, amends that certain Amended and Restated Investment Advisory Agreement dated as of November 20, 2002, and amended as of June 8, 2006, June 27, 2007, September 24, 2007, January 31, 2008, October 1, 2008, March 2, 2009, May 29, 2009, September 29, 2009, January 1, 2010, June 30, 2010, September 14, 2010, January 1, 2011, March 15, 2011, February 6, 2012, August 28, 2012, December 18, 2012, June 10, 2013, December 18, 2013, November 13, 2014, January 6, 2015, March 19, 2015, May 11, 2015, and February 8, 2016 (the “Agreement”), by and between Virtus Opportunities Trust, a Delaware statutory trust (the “Trust”), and Virtus Investment Advisers, Inc., a Massachusetts corporation (the “Adviser”), as follows:

 

1. The revised investment advisory fees for Virtus Senior Floating Rate Fund are hereby set forth on Schedule A to the Agreement, Schedule A is hereby deleted and Schedule A attached hereto is substituted in its place to reflect such revisions.

 

2. Except as expressly amended hereby, all provisions of the Agreement shall remain in full force and effect and are unchanged in all other respects. All initial capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement, as amended.

 

3. This Agreement may be executed in any number of counterparts (including executed counterparts delivered and exchanged by facsimile transmission) with the same effect as if all signing parties had originally signed the same document, and all counterparts shall be construed together and shall constitute the same instrument. For all purposes, signatures delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

 

[signature page follows]

 

     

 

 

IN WITNESS WHEREOF, the parties hereto intending to be legally bound have caused this Agreement to be executed by their duly authorized officers of other representatives.

 

  VIRTUS OPPORTUNITIES TRUST
     
  By: /s/ W. Patrick Bradley
  Name:   W. Patrick Bradley
  Title:   Executive Vice President, Chief Financial Officer & Treasurer
     
  VIRTUS INVESTMENT ADVISERS, INC.
     
  By: /s/ Francis G. Waltman
  Name: Francis G. Waltman
  Title: Executive Vice President

 

     

 

 

SCHEDULE A

 

Series   Investment Advisory Fee  
       
Virtus Alternatives Diversifier Fund     0.00 %
Virtus Essential Resources Fund     1.10 %

 

    1 st $1 Billion    

$1+ Billion

through

$2 Billion

    $2+ Billion  
                   
Virtus CA Tax-Exempt Bond Fund     0.45 %     0.40 %     0.35 %
Virtus Global Infrastructure Fund     0.65 %     0.60 %     0.55 %
Virtus Global Opportunities Fund     0.85 %     0.80 %     0.75 %
Virtus Global Real Estate Securities Fund     0.85 %     0.80 %     0.75 %
Virtus High Yield Fund     0.65 %     0.60 %     0.55 %
Virtus International Real Estate Securities Fund     1.00 %     0.95 %     0.90 %
Virtus Multi-Sector Intermediate Bond Fund     0.55 %     0.50 %     0.45 %
Virtus Real Estate Securities Fund     0.75 %     0.70 %     0.65 %

 

    1 st $2 Billion    

$2+ Billion

through

$4 Billion

    $4+ Billion  
                   
Virtus Multi-Asset Trend Fund     1.00 %     0.95 %     0.90 %
Virtus Foreign Opportunities Fund     0.85 %     0.80 %     0.75 %
Virtus Global Equity Trend Fund     1.00 %     0.95 %     0.90 %
Virtus International Equity Fund     0.85 %     0.80 %     0.75 %
Virtus Low Volatility Equity Fund     0.95 %     0.90 %     0.85 %
Virtus Senior Floating Rate Fund     0.45 %     0.40 %     0.38 %

 

    1 st $1 Billion     $1+ Billion  
             
Virtus Sector Trend Fund     0.45 %     0.40 %
Virtus Bond Fund     0.45 %     0.40 %
Virtus Emerging Markets Debt Fund     0.75 %     0.70 %
Virtus Emerging Markets Small-Cap Fund     1.20 %     1.15 %
Virtus Emerging Markets Equity Income Fund     1.05 %     1.00 %
Virtus Greater European Opportunities Fund     0.85 %     0.80 %
Virtus Herzfeld Fund     1.00 %     0.95 %
Virtus International Small-Cap Fund     1.00 %     0.95 %
Virtus International Wealth Masters Fund     0.90 %     0.85 %
Virtus Wealth Masters Fund     0.85 %     0.80 %

 

    1st $4 Billion     $4+ Billion  
             
Virtus Equity Trend Fund     1.00 %     0.95 %

 

    1 st $1 Billion    

$1+ Billion
through

$2 Billion

    $2+ Billion
through
$10 billion 		    $10+
Billion 		 
                         
Virtus Multi-Sector Short Term Bond Fund     0.55 %     0.50 %     0.45 %     0.425 %

 

     

 

Exhibit d.3.d

 

VIRTUS OPPORTUNITIES TRUST

VIRTUS INTERNATIONAL EQUITY FUND

 

SUBADVISORY AGREEMENT

 

November 2, 2016

 

Duff & Phelps Investment Management Co.

200 S. Wacker Drive, Suite 500

Chicago, IL 60606

 

RE: Subadvisory Agreement

 

Ladies and Gentlemen:

 

Virtus Opportunities Trust (the “Fund”) is an open-end investment company of the series type registered under the Investment Company Act of 1940 (the “Act”), as amended, and is subject to the rules and regulations promulgated thereunder. The shares of the Fund are offered or may be offered in several series, including Virtus International Equity Fund (sometimes hereafter referred to as the “Series”).

 

Virtus Investment Advisers, Inc. (the “Adviser”) evaluates and recommends series advisers for the Series and is responsible for the day-to-day management of the Series.

 

1. Employment as a Subadviser . The Adviser, being duly authorized, hereby employs Duff & Phelps Investment Management Co. (the “Subadviser”) as a discretionary series adviser to invest and reinvest that discrete portion of the assets of the Series designated by the Adviser as set forth on Schedule F attached hereto (the “Designated Series”) on the terms and conditions set forth herein. The services of the Subadviser hereunder are not to be deemed exclusive; the Subadviser may render services to others and engage in other activities that do not conflict in any material manner with the Subadviser’s performance hereunder.

 

2. Acceptance of Employment; Standard of Performance . The Subadviser accepts its employment as a discretionary series adviser of the Designated Series and agrees, subject to the oversight of the Board of Trustees of the Trust (the “Trustees”) and the Adviser, to use its best professional judgment to make investment decisions for the Designated Series in accordance with the provisions of this Agreement and as set forth in Schedule D attached hereto and made a part hereof.

 

3. Services of Subadviser . In providing management services to the Designated Series, the Subadviser shall be subject to the investment objectives, policies and restrictions of the Fund as they apply to the Series and as set forth in the Fund’s then current prospectus (“Prospectus”) and statement of additional information (“Statement of Additional Information”) filed with the Securities and Exchange Commission (the “SEC”) as part of the Fund’s Registration Statement (the “Registration Statement”), as may be periodically amended and provided to the Subadviser by the Adviser, and to the investment restrictions set forth in the Act and the Rules thereunder, to the supervision and control of the Trustees, and to instructions from the Adviser. The Subadviser shall not, without the Fund’s prior written approval, effect any transactions that would cause the Designated Series at the time of the transaction to be out of compliance with any of such restrictions or policies.

 

4. Transaction Procedures . All series transactions for the Designated Series shall be consummated by payment to, or delivery by, the custodian(s) from time to time designated by the Fund (the “Custodian”), or such depositories or agents as may be designated by the Custodian in writing, of all cash and/or securities due to or from the Series. The Subadviser shall not have possession or custody of such cash and/or securities or any responsibility or liability with respect to such custody. The Subadviser shall advise the Custodian and confirm in writing to the Fund all investment orders for the Designated Series

 

     

 

 

placed by it with brokers and dealers at the time and in the manner set forth in Schedule A hereto (as amended from time to time). The Fund shall issue to the Custodian such instructions as may be appropriate in connection with the settlement of any transaction initiated by the Subadviser. The Fund shall be responsible for all custodial arrangements and the payment of all custodial charges and fees, and, upon giving proper instructions to the Custodian, the Subadviser shall have no responsibility or liability with respect to custodial arrangements or the acts, omissions or other conduct of the Custodian.

 

5. Allocation of Brokerage . The Subadviser shall have authority and discretion to select brokers and dealers to execute Designated Series transactions initiated by the Subadviser, and to select the markets on or in which the transactions will be executed.

 

A. In placing orders for the sale and purchase of Designated Series securities for the Fund, the Subadviser’s primary responsibility shall be to seek the best execution of orders at the most favorable prices. However, this responsibility shall not obligate the Subadviser to solicit competitive bids for each transaction or to seek the lowest available commission cost to the Fund, as long as the Subadviser reasonably believes that the broker or dealer selected by it can be expected to obtain a “best execution” market price on the particular transaction and determines in good faith that the commission cost is reasonable in relation to the value of the brokerage and research services (as defined in Section 28(e)(3) of the Securities Exchange Act of 1934, as amended) provided by such broker or dealer to the Subadviser, viewed in terms of either that particular transaction or of the Subadviser’s overall responsibilities with respect to its clients, including the Fund, as to which the Subadviser exercises investment discretion, notwithstanding that the Fund may not be the direct or exclusive beneficiary of any such services or that another broker may be willing to charge the Fund a lower commission on the particular transaction.

 

B. The Subadviser may manage other portfolios and expects that the Fund and other portfolios the Subadviser manages will, from time to time, purchase or sell the same securities. The Subadviser may aggregate orders for the purchase or sale of securities on behalf of the Designated Series with orders on behalf of other portfolios the Subadviser manages. Securities purchased or proceeds of securities sold through aggregated orders, as well as expenses incurred in the transaction, shall be allocated to the account of each portfolio managed by the Subadviser that bought or sold such securities in a manner considered by the Subadviser to be equitable and consistent with the Subadviser’s fiduciary obligations in respect of the Designated Series and to such other accounts.

 

C. The Subadviser shall not execute any transactions for the Designated Series with a broker or dealer that is an “affiliated person” (as defined in the Act) of (i) the Series; (ii) another series of the Fund; (iii) the Adviser; (iv) the Subadviser or any other subadviser to the Series; (v) a principal underwriter of the Fund’s shares; or (vi) any other affiliated person of the Series, in each case, unless such transactions are permitted by applicable law or regulation and carried out in compliance with any applicable policies and procedures of the Fund.

 

D. Consistent with its fiduciary obligations to the Fund in respect of the Designated Series and the requirements of best price and execution, the Subadviser may, under certain circumstances, arrange to have purchase and sale transactions effected directly between the Designated Series and another account managed by the Subadviser (“cross transactions”), provided that such transactions are carried out in accordance with applicable law or regulation and any applicable policies and procedures of the Fund. The Fund shall provide the Subadviser with applicable policies and procedures.

 

6. Proxies .

 

A. Unless the Adviser or the Fund gives the Subadviser written instructions to the contrary, the Subadviser, or a third party designee acting under the authority and supervision of the Subadviser, shall review all proxy solicitation materials and be responsible for voting and

 

  2  

 

 

handling all proxies in relation to the assets of the Designated Series. Unless the Adviser or the Fund gives the Subadviser written instructions to the contrary, provided that the Adviser has reviewed the Subadviser’s proxy voting procedures then in effect and determined them to comply with the requirements of the Fund’s proxy voting policy, the Subadviser will, in compliance with the Subadviser’s proxy voting procedures then in effect, vote or abstain from voting, all proxies solicited by or with respect to the issuers of securities in which assets of the Designated Series may be invested. The Adviser shall cause the Custodian, the Administrator or another party, to forward promptly to the Subadviser all proxies upon receipt, so as to afford the Subadviser a reasonable amount of time in which to determine how to vote such proxies. The Subadviser agrees to provide the Adviser in a timely manner with any changes to the Subadviser’s proxy voting procedures. The Subadviser further agrees to provide the Adviser in a timely manner with a record of votes cast containing all of the voting information required by Form N-PX in an electronic format to enable the enable the Fund to file Form N-PX as required by Rule 30b1-4 under the Act.

 

B. The Subadviser is authorized to deal with reorganizations, exchange offers and other voluntary corporate actions with respect to securities held in the Designated Series in such manner as the Subadviser deems advisable, unless the Fund or the Adviser otherwise specifically directs in writing. With the Adviser’s approval, the Subadviser shall also have the authority to: (i) identify, evaluate and pursue legal claims, including commencing or defending suits, affecting the securities held at any time in the Designated Series, including claims in bankruptcy, class action securities litigation and other litigation; (ii) participate in such litigation or related proceedings with respect to such securities as the Subadviser deems appropriate to preserve or enhance the value of the Designated Series, including filing proofs of claim and related documents and serving as “lead plaintiff” in class action lawsuits; (iii) exercise generally any of the powers of an owner with respect to the supervision and management of such rights or claims, including the settlement, compromise or submission to arbitration of any claims, the exercise of which the Subadviser deems to be in the best interest of the Designated Series or required by applicable law, including ERISA, and (iv) employ suitable agents, including legal counsel, and to pay their reasonable fees, expenses and related costs from the Designated Series.

 

7. Prohibited Conduct . In providing the services described in this Agreement, the Subadviser’s responsibility regarding investment advice hereunder is limited to the Designated Series, and the Subadviser will not consult with any other investment advisory firm that provides investment advisory services to the Fund or any other investment company sponsored by Virtus Investment Partners, Inc. regarding transactions for the Fund in securities or other assets. The Fund shall provide the Subadviser with a list of investment companies sponsored by Virtus Investment Partners, Inc. and the Subadviser shall be in breach of the foregoing provision only if the investment company is included in such a list provided to the Subadviser prior to such prohibited action. In addition, the Subadviser shall not, without the prior written consent of the Fund and the Adviser, delegate any obligation assumed pursuant to this Agreement to any affiliated or unaffiliated third party.

 

8. Information and Reports .

 

A. The Subadviser shall keep the Fund and the Adviser informed of developments relating to its duties as Subadviser of which the Subadviser has, or should have, knowledge that would materially affect the Designated Series. In this regard, the Subadviser shall provide the Fund, the Adviser and their respective officers with such periodic reports concerning the obligations the Subadviser has assumed under this Agreement as the Fund and the Adviser may from time to time reasonably request. In addition, prior to each meeting of the Trustees, the Subadviser shall provide the Adviser and the Trustees with reports regarding the Subadviser’s management of the Designated Series during the most recently completed quarter, which reports: (i) shall include Subadviser’s representation that its performance of its investment management duties hereunder is in compliance with the Designated Series’ investment objectives and practices, the Act and applicable rules and regulations under the Act, and the diversification and minimum

 

  3  

 

 

“good income” requirements of Subchapter M under the Internal Revenue Code of 1986, as amended, and (ii) otherwise shall be in such form as may be mutually agreed upon by the Subadviser and the Adviser.

 

B. Each of the Adviser and the Subadviser shall provide the other party with a list, to the best of the Adviser’s or the Subadviser’s respective knowledge, of each affiliated person (and any affiliated person of such an affiliated person) of the Adviser or the Subadviser, as the case may be, and each of the Adviser and Subadviser agrees promptly to update such list whenever the Adviser or the Subadviser becomes aware of any changes that should be added to or deleted from the list of affiliated persons.

 

C. The Subadviser shall also provide the Adviser with any information reasonably requested by the Adviser regarding its management of the Designated Series required for any shareholder report, amended registration statement, or Prospectus supplement to be filed by the Fund with the SEC.

 

9. Fees for Services . The compensation of the Subadviser for its services under this Agreement shall be calculated and paid by the Adviser in accordance with the attached Schedule C. Pursuant to the Investment Advisory Agreement between the Fund and the Adviser, the Adviser is solely responsible for the payment of fees to the Subadviser.

 

10. Limitation of Liability . Except as otherwise stated in this Agreement, the Subadviser shall not be liable for any action taken, omitted or suffered to be taken by it in its best professional judgment, in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement, or in accordance with specific directions or instructions from the Fund, provided, however, that such acts or omissions shall not have constituted a material breach of the investment objectives, policies and restrictions applicable to the Designated Series as defined in the Prospectus and Statement of Additional Information, or a material breach of any laws, rules, regulations or orders applicable to the Designated Series, and that such acts or omissions shall not have resulted from the Subadviser’s willful misfeasance, bad faith or gross negligence, or reckless disregard of its obligations and duties hereunder.

 

11. Confidentiality . Subject to the duty of the Subadviser and the Fund to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential all information pertaining to the Designated Series and the actions of the Subadviser and the Fund in respect thereof. Notwithstanding the foregoing, the Fund and the Adviser agree that the Subadviser may (i) disclose in marketing materials and similar communications that the Subadviser has been engaged to manage assets of the Designated Series pursuant to this Agreement, and (ii) include performance statistics regarding the Designated Series in composite performance statistics regarding one or more groups of Subadviser's clients published or included in any of the foregoing communications, provided that the Subadviser does not identify any performance statistics as relating specifically to the Series.

 

12. Assignment . This Agreement shall terminate automatically in the event of its assignment, as that term is defined in Section 2(a)(4) of the Act. The Subadviser shall notify the Fund and the Adviser in writing sufficiently in advance of any proposed change of control, as defined in Section 2(a)(9) of the Act, as will enable the Fund to consider whether an assignment as defined in Section 2(a)(4) of the Act will occur, and to take the steps necessary to enter into a new contract with the Subadviser.

 

13. Representations, Warranties and Agreements

 

A. The Subadviser represents, warrants and agrees that:

 

1. It is registered as an “investment adviser” under the Investment Advisers Act of 1940, as amended (“Advisers Act”).

 

  4  

 

 

2. It will maintain, keep current and preserve such records on behalf of the Fund, in the manner required or permitted by the Act and the Rules thereunder as are required of an investment adviser of a registered investment company (to the extent applicable). The Subadviser agrees that such records are the property of the Fund, and shall be surrendered to the Fund or to the Adviser as agent of the Fund promptly upon request of either. The Fund acknowledges that Subadviser may retain copies of all records required to meet the record retention requirements imposed by law and regulation.

 

3. It shall maintain a written code of ethics (the “Code of Ethics”) complying with the requirements of Rule 204A-1 under the Advisers Act and Rule 17j-l under the Act and shall provide the Fund and the Adviser with a copy of the Code of Ethics and evidence of its adoption. It shall institute procedures reasonably necessary to prevent Access Persons (as defined in Rule 17j-1) from violating its Code of Ethics. The Subadviser acknowledges receipt of the written code of ethics adopted by and on behalf of the Fund. Each calendar quarter while this Agreement is in effect, a duly authorized compliance officer of the Subadviser shall certify to the Fund and to the Adviser that the Subadviser has complied with the requirements of Rules 204A-1 and 17j-l during the previous calendar quarter and that there has been no material violation of its Code of Ethics, or of Rule 17j-1(b), or that any persons covered under its Code of Ethics has divulged or acted upon any material, non-public information, as such term is defined under relevant securities laws, and if such a violation has occurred or the code of ethics of the Fund, or if such a violation of its Code of Ethics has occurred, that appropriate action was taken in response to such violation. Annually, the Subadviser shall furnish to the Fund and the Adviser a written report which complies with the requirements of Rule 17j-1 concerning the Subadviser’s Code of Ethics. The Subadviser shall permit the Fund and the Adviser to examine the reports required to be made by the Subadviser under Rules 204A-1(b) and 17j-l(d)(1) and this subparagraph.

 

4. It has adopted and implemented, and throughout the term of this Agreement shall maintain in effect and implement, written policies and procedures reasonably designed to prevent violation, by it and its supervised persons, of the Advisers Act and the rules that the SEC has adopted under the Advisers Act. Throughout the term of this Agreement, the Subadviser shall provide the Adviser with any certifications, information and access to personnel and resources (including those resources that will permit testing of Subadviser’s compliance policies by the Adviser) that the Adviser may reasonably request to enable the Fund to comply with Rule 38a-1 under the Act. The Subadviser has provided the Fund with true and complete copies of its policies and procedures (or summaries thereof) and related information reasonably requested by the Fund and/or the Adviser. The Subadviser agrees to cooperate with periodic reviews by the Fund’s and/or the Adviser’s compliance personnel of the Subadviser’s policies and procedures, their operation and implementation and other compliance matters and to provide to the Fund and/or the Adviser from time to time such additional information and certifications in respect of the Subadviser’s policies and procedures, compliance by the Subadviser with federal securities laws and related matters as the Fund’s and/or the Adviser’s compliance personnel may reasonably request. The Subadviser agrees to promptly notify the Adviser of any compliance violations which affect the Designated Series.

 

5. The Subadviser will immediately notify the Fund and the Adviser of the occurrence of any event which would disqualify the Subadviser from serving as an investment adviser of an investment company pursuant to Section 9 of the Act or otherwise. The Subadviser will also immediately notify the Fund and the Adviser if it is served or otherwise receives notice of any action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, involving the affairs of the Designated Series.

 

  5  

 

 

B. The Fund represents, warrants and agrees that:

 

1. the Fund is a statutory trust established pursuant to the laws of State of Delaware;

 

2. the Fund is duly registered as an investment company under the 1940 Act;

 

3. the execution, delivery and performance of this Agreement are within the Fund’s powers, have been and remain duly authorized by all necessary action (including without limitation all necessary approvals and other actions required under the 1940 Act) and will not violate or constitute a default under any applicable law or regulation or of any decree, order, judgment, agreement or instrument binding on the Fund;

 

4. no consent of any applicable governmental authority or body is necessary, except for such consents as have been obtained and are in full force and effect, and all conditions of which have been duly complied with; and

 

5. this Agreement constitutes a legal, valid and binding obligation enforceable against the Fund in accordance with its terms.

 

C. The Adviser represents, warrants and agrees that:

 

1. The Adviser is a corporation duly established, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified to do business and is in good standing under the laws of each jurisdiction where the failure to so qualify would have a material adverse effect on its business;

 

2. Adviser is duly registered as an “investment adviser” under the Advisers Act;

 

3. Adviser has been duly appointed by the Trustees and shareholders of the Fund to provide investment services to the Fund as contemplated by the advisory contract;

 

4. the execution, delivery and performance of this Agreement are within Adviser’s powers, have been and remain duly authorized by all necessary corporate action and will not violate or constitute a default under any applicable law or regulation or of any decree, order, judgment, agreement or instrument binding on Adviser;

 

5. no consent of any applicable governmental authority or body is necessary, except for such consents as have been obtained and are in full force and effect, and all conditions of which have been duly complied with; and

 

6. this Agreement constitutes a legal, valid and binding obligation enforceable against Adviser.

 

14. No Personal Liability . Reference is hereby made to the Declaration of Trust establishing the Fund, a copy of which has been filed with the Secretary of the State of Delaware and elsewhere as required by law, and to any and all amendments thereto so filed with the Secretary of the State of Delaware and elsewhere as required by law, and to any and all amendments thereto so filed or hereafter filed. The name “Virtus Opportunities Trust” refers to the Trustees under said Declaration of Trust, as Trustees and not personally, and no Trustee, shareholder, officer, agent or employee of the Fund shall be held to any personal liability in connection with the affairs of the Fund; only the trust estate under said Declaration of Trust is liable. Without limiting the generality of the foregoing, neither the Subadviser nor any of its officers, directors, partners, shareholders or employees shall, under any circumstances, have recourse or cause or willingly permit recourse to be had directly or indirectly to any personal, statutory, or other

 

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liability of any shareholder, Trustee, officer, agent or employee of the Fund or of any successor of the Fund, whether such liability now exists or is hereafter incurred for claims against the trust estate.

 

15. Entire Agreement; Amendment . This Agreement, together with the Schedules attached hereto, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any prior written or oral agreements pertaining to the subject matter of this Agreement. This Agreement may be amended at any time, but only by written agreement among the Subadviser, the Adviser and the Fund, which amendment, other than amendments to Schedules A, B, D, E and F, is subject to the approval of the Trustees and the shareholders of the Series as and to the extent required by the Act, subject to any applicable orders of exemption issued by the SEC.

 

16. Effective Date; Term . This Agreement shall become effective on the date set forth on the first page of this Agreement, and shall continue in effect until December 31, 2017. This agreement shall continue from year to year thereafter only so long as its continuance has been specifically approved at least annually by the Trustees in accordance with Section 15(a) of the Act, and by the majority vote of the disinterested Trustees in accordance with the requirements of Section 15(c) thereof.

 

17. Termination . This Agreement may be terminated at any time without payment of any penalty (i) by the Board, or by a vote of a majority of the outstanding voting securities of the Fund (as defined in the Act), upon 30 days’ prior written notice to the Adviser and the Subadviser, (ii) by the Subadviser upon 30 days’ prior written notice to the Adviser and the Fund, or (iii) by the Adviser upon 30 days’ written notice to the Subadviser. This Agreement may also be terminated, without the payment of any penalty, by the Adviser or the Board immediately upon the material breach by the Subadviser of this Agreement or by the Subadviser immediately upon the material breach by the Adviser of this Agreement. This Agreement shall terminate automatically and immediately upon termination of the Advisory Agreement. This Agreement shall terminate automatically and immediately in the event of its assignment, as such term is defined in and interpreted under the terms of the Act and the rules promulgated thereunder. Provisions of this Agreement relating to indemnification shall survive any termination of this Agreement.

 

18. Applicable Law . To the extent that state law is not preempted by the provisions of any law of the United States heretofore or hereafter enacted, as the same may be amended from time to time, this Agreement shall be administered, construed and enforced according to the laws of the State of Delaware.

 

19. Severability . If any term or condition of this Agreement shall be invalid or unenforceable to any extent or in any application, then the remainder of this Agreement shall not be affected thereby, and each and every term and condition of this Agreement shall be valid and enforced to the fullest extent permitted by law.

 

20. Notices. Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered personally or by overnight delivery service or mailed by certified or registered mail, return receipt requested and postage prepaid, or sent by facsimile addressed to the parties at their respective addresses set forth below, or at such other address as shall be designated by any party in a written notice to the other party.

 

(a) To Virtus or the Fund at:

 

Virtus Investment Advisers, Inc.

100 Pearl Street

Hartford, Connecticut 06103

Attn: Jennifer Fromm

Telephone: (860) 263-4790

Facsimile: (860) 241-1005

E-mail: Jennifer.fromm@virtus.com

 

  7  

 

 

(b) To the Subadviser at:

 

Duff & Phelps Investment Management Co.

200 S. Wacker Drive, Suite 500

Chicago, IL 60606

Attn: Joyce Riegel, Chief Compliance Officer

Telephone: (312) 917-6541

Facsimile: (312) 876-1057

Email: Joyce.Riegel@dpimc.com

 

21. Certifications . The Subadviser hereby warrants and represents that it will provide the requisite certifications reasonably requested by the chief executive officer and chief financial officer of the Fund necessary for those named officers to fulfill their reporting and certification obligations on Form N-CSR and Form N-Q as required under the Sarbanes-Oxley Act of 2002 to the extent that such reporting and certifications relate to the Subadviser’s duties and responsibilities under this Agreement. Subadviser shall provide a quarterly certification in a form substantially similar to that attached as Schedule E.

 

22. Indemnification . The Subadviser shall indemnify and hold harmless the Adviser from and against any and all claims, losses, liabilities, or damages (including reasonable attorney’s fees and other related expenses) (collectively, “Losses”) arising from the Subadviser’s willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties under this Agreement in the performance of its obligations under this Agreement; provided, however, that the Subadviser’s obligation under this Paragraph shall be reduced to the extent that the claim against, or the loss, liability, or damage experienced by the Adviser, is caused by or is otherwise directly related to (i) any breach by the Adviser of its representations or warranties made herein, (ii) any willful misconduct, bad faith, reckless disregard or negligence of the Adviser in the performance of any of its duties or obligations hereunder, or (iii) any untrue statement of a material fact contained in the Prospectus or SAI, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund(s) or the omission to state therein a material fact known to the Adviser that was required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Subadviser or the Trust, or the omission of such information, by the Adviser for use therein.

 

The Adviser shall indemnify and hold harmless the Subadviser from and against any and all Losses arising from the Adviser’s willful misfeasance, bad faith, gross negligence, or reckless disregard of its duties under this Agreement in the performance of its obligations under this Agreement; provided, however, that the Adviser’s obligation under this Paragraph 6 shall be reduced to the extent that the claim against, or the loss, liability, or damage experienced by the Subadviser, is caused by or is otherwise directly related to (i) any breach by the Subadviser of its representations or warranties made herein, (ii) any willful misconduct, bad faith, reckless disregard or negligence of the Subadviser in the performance of any of its duties or obligations hereunder, or (iii) any untrue statement of a material fact contained in the Prospectus or SAI, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Fund(s) or the omission to state therein a material fact known to the Subadviser that was required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Adviser or the Trust, or the omission of such information, by the Subadviser for use therein.

 

A party seeking indemnification hereunder (the “Indemnified Party”) will (i) provide prompt notice to the other of any claim (“Claim”) for which it intends to seek indemnification, (ii) grant control of the defense and /or settlement of the Claim to the other party, and (iii) cooperate with the other party in the defense thereof. The Indemnified Party will have the right at its own expense to participate in the defense of any Claim, but will not have the right to control the defense, consent to judgment or agree to the settlement of any Claim without the written consent of the other party. The party providing the indemnification will not consent to the entry of any judgment or enter any settlement which (i) does not include, as an unconditional term, the release by the claimant of all liabilities for Claims against the Indemnified Party or (ii) which otherwise adversely affects the rights of the Indemnified Party.

 

  8  

 

 

No party will be liable to another party for consequential damages under any provision of this Agreement.

 

23. Relationship of Parties . By virtue of this Agreement, the Adviser, the Fund and Subadviser are not partners or joint venturers with each other and nothing in this Agreement shall be construed so as to make them partners or joint venturers or impose any liability as such on either of them. Subadviser shall perform its duties under this Agreement as an independent contractor and not as an agent of the Fund, the Trustees or the Adviser.

 

24. Receipt of Disclosure Document . The Fund and the Adviser acknowledge receipt, at least 48 hours prior to entering into this Agreement, of a copy of Part II of the Subadviser’s Form ADV containing certain information concerning the Subadviser and the nature of its business.

 

25. Counterparts; Fax Signatures . This Agreement may be executed in any number of counterparts (including executed counterparts delivered and exchanged by facsimile transmission) with the same effect as if all signing parties had originally signed the same document, and all counterparts shall be construed together and shall constitute the same instrument. For all purposes, signatures delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

 

[signature page follows]

 

  9  

 

 

  VIRTUS OPPORTUNITIES TRUST
     
  By: /s/ W. Patrick Bradley  
    Name:  W. Patrick Bradley
    Title: Executive Vice President, Chief Financial Officer & Treasurer
     
  VIRTUS INVESTMENT ADVISERS, INC.
     
  By: /s/ Francis G. Waltman  
    Name:  Francis G. Waltman
    Title: Executive Vice President

 

ACCEPTED:

 

DUFF & PHELPS INVESTMENT MANAGEMENT CO.  
     
By:           /s/ Nathan Partain  
  Name:  Nathan Partain  
  Title:  President & CIO  

 

SCHEDULES: A. Operational Procedures
  B. Record Keeping Requirements
  C. Fee Schedule
  D. Subadviser Functions
  E. Form of Sub-Certification
  F. Designated Series

 

  10  

 

 

SCHEDULE A

 

OPERATIONAL PROCEDURES

 

In order to minimize operational problems, it will be necessary for trade information to be supplied in a secure manner by the Subadviser to the Fund’s Service Providers, including: JPMorgan Chase Bank, National Association (the “Custodian”), Virtus Fund Services (the “Fund Administrator”) BNY Mellon Investment Servicing (US) Inc., (the “Sub-Accounting Agent”), any Prime Broker to the Series, and all other Counterparties/Brokers as required. The Subadviser must furnish the Fund’s service providers with required daily information as to executed trades in a format and time-frame agreed to by the Subadviser, Custodian, Fund Administrator, Sub-Accounting Agent and Prime Broker/Counterparties and designated persons of the Fund. Trade information sent to the Custodian, Fund Administrator, Sub-Accounting Agent and Prime Broker/Counterparties must include all necessary data within the required timeframes to allow such parties to perform their obligations to the Series.

 

The Sub-Accounting Agent specifically requires a daily trade blotter with a summary of all trades, in addition to trade feeds, including, if no trades are executed, a report to that effect. Daily information as to executed trades for same-day settlement and future trades must be sent to the Sub-Accounting Agent no later than 4:30 p.m. (Eastern Time) on the day of the trade each day the Fund is open for business. All other executed trades must be delivered to the Sub-Accounting Agent on Trade Date plus 1 by Noon (Eastern Time) to ensure that they are part of the Series’ NAV calculation. (The Subadviser will be responsible for reimbursement to the Fund for any loss caused by the Subadviser’s failure to comply with the requirements of this Schedule A.) On fiscal quarter ends and calendar quarter ends, all trades must be delivered to the Sub-Accounting Agent by 4:30 p.m. (Eastern Time) for inclusion in the financial statements of the Series. The data to be sent to the Sub-Accounting Agent and/or Fund Administrator will be as agreed by the Subadviser, Fund Administrator, Sub-Accounting Agent and designated persons of the Fund and shall include (without limitation) the following:

 

1. Transaction type (e.g., purchase, sale, open, close, put call);
2. Security type (e.g., equity, fixed income, swap, future, option, short, long);
3. Security name;
4. Exchange identifier (e.g., CUSIP, ISIN, Sedol, OCC Symbol) (as applicable);
5. Number of shares and par, original face, contract amount, notional amount;
6. Transaction price per share (clean if possible);
7. Strike price;
8. Aggregate principal amount;
9. Executing broker;
10. Settlement agent;
11. Trade date;
12. Settlement date;
13. Aggregate commission or if a net trade;
14. Interest purchased or sold from interest bearing security;
15. Net proceeds of the transaction;
16. Trade commission reason: best execution, soft dollar or research (to be provided quarterly);
17. Derivative terms;
18. Non-deliverable forward classification (to be provided quarterly);
19. Maturity/expiration date; and
20. Details of margin and collateral movement.

 

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SCHEDULE B

 

RECORDS TO BE MAINTAINED BY THE SUBADVISER

 

1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other series purchases and sales, given by the Subadviser on behalf of the Fund for, or in connection with, the purchase or sale of securities, whether executed or unexecuted. Such records shall include:

 

A. The name of the broker;
B. The terms and conditions of the order and of any modifications or cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.

 

2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten (10) days after the end of the quarter, showing specifically the basis or bases upon which the allocation of orders for the purchase and sale of series securities to named brokers or dealers was effected, and the division of brokerage commissions or other compensation on such purchase and sale orders. Such record:

 

A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Fund,
(b) The Adviser,
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific formula or other determinant used in arriving at such allocation of purchase and sale orders and such division of brokerage commissions or other compensation.
D. Shall show the name of the person responsible for making the determination of such allocation and such division of brokerage commissions or other compensation.

 

3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum identifying the person or persons, committees or groups authorizing the purchase or sale of series securities. Where a committee or group makes an authorization, a record shall be kept of the names of its members who participate in the authorization. There shall be retained as part of this record: any memorandum, recommendation or instruction supporting or authorizing the purchase or sale of series securities and such other information as is appropriate to support the authorization. *

 

4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to be maintained by registered investment advisers by rule adopted under Section 204 of the Advisers Act, to the extent such records are necessary or appropriate to record the Subadviser’s transactions for the Fund.

 

5. Records as necessary under Board approved Virtus Mutual Funds policies and procedures, including without limitation those related to valuation determinations.

 

 

* Such information might include: current financial information, annual and quarterly reports, press releases, reports by analysts and from brokerage firms (including their recommendations, i.e., buy, sell, hold) or any internal reports or subadviser review.

 

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SCHEDULE C

 

SUBADVISORY FEE

 

(a)          For services provided to the Fund, the Adviser will pay to the Subadviser a fee, payable monthly in arrears, at the annual rate stated below. The fee shall be prorated for any month during which this Agreement is in effect for only a portion of the month. In computing the fee to be paid to the Subadviser, the net asset value of the Designated Series shall be valued as set forth in the then current registration statement of the Fund.

 

(b)          

 

Name of Series   Proposed Subadvisory Fee to be Paid
by VIA to Duff & Phelps Investment
Management Co.
Virtus International Equity Fund   50% of the net advisory fee payable to the adviser

 

For this purpose, the “net advisory fee” means the advisory fee paid to the Adviser after accounting for any applicable fee waiver and/or expense limitation agreement, which shall not include reimbursement of the Adviser for any expenses or recapture of prior waivers.  In the event that the Adviser waives its entire fee and also assumes expenses of the Designated Series pursuant to an applicable expense limitation agreement, the Subadviser will similarly waive its entire fee and will share in the expense assumption by contributing 50% of the assumed amount.  However, because the Subadviser shares the fee waiver and/or expense assumption equally with the Adviser, if during the term of this Agreement the Adviser later recaptures some or all of the fees so waived or expenses so assumed by the Adviser and the Subadviser together, the Adviser shall pay to the Subadviser 50% of the amount recaptured.

 

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SCHEDULE D

 

SUBADVISER FUNCTIONS

 

With respect to managing the investment and reinvestment of the assets of the Designated Series, the Subadviser shall provide, at its own expense:

 

(a) An investment program for the Designated Series consistent with its investment objectives based upon the development, review and adjustment of buy/sell strategies approved from time to time by the Board of Trustees and the Adviser in paragraph 3 of this Subadvisory Agreement and implementation of that program;

 

(b) Periodic reports, on at least a quarterly basis, in form and substance acceptable to the Adviser, with respect to: i) compliance with the Code of Ethics and the Fund’s code of ethics; ii) compliance with procedures adopted from time to time by the Trustees of the Fund relative to securities eligible for resale under Rule 144A under the Securities Act of 1933, as amended; iii) diversification of assets of the Designated Series in accordance with the then prevailing Prospectus and Statement of Additional Information pertaining to the Designated Series and governing laws, regulations, rules and orders; iv) compliance with governing restrictions relating to the fair valuation of securities for which market quotations are not readily available or considered "illiquid" for the purposes of complying with the Designated Series’ limitation on acquisition of illiquid securities; v) any and all other reports reasonably requested in accordance with or described in this Agreement; and vi) the implementation of the Designated Series’ investment program, including, without limitation, analysis of Designated Series performance;

 

(c) Promptly after filing with the SEC an amendment to its Form ADV, a copy of such amendment to the Adviser and the Trustees;

 

(d) Attendance by appropriate representatives of the Subadviser at meetings requested by the Adviser or Trustees at such time(s) and location(s) as reasonably requested by the Adviser or Trustees; and

 

(e) Notice to the Trustees and the Adviser of the occurrence of any event which would disqualify the Subadviser from serving as an investment adviser of an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

 

(f) Provide reasonable assistance in the valuation of securities including the participation of appropriate representatives at fair valuation committee meetings.

 

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SCHEDULE E

 

FORM OF SUB-CERTIFICATION

 

To:

 

Re: Subadviser’s Form N-CSR and Form N-Q Certification for the [Name of Designated Series].

 

From: [Name of Subadviser]

 

Representations in support of Investment Company Act Rule 30a-2 certifications of Form N-CSR and Form N-Q.

 

[Name of Designated Series].

 

In connection with your certification responsibility under Rule 30a-2 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, I have reviewed the following information presented in the schedule of investments for the period ended [Date of Reporting Period] (the “Report”) which forms part of the N-CSR or N-Q, as applicable, for the Fund.

 

Schedule of Investments

 

Our organization has designed, implemented and maintained internal controls and procedures, designed for the purpose of ensuring the accuracy and completeness of relevant portfolio trade data transmitted to those responsible for the preparation of the Schedule of Investments. As of the date of this certification there have been no material modifications to these internal controls and procedures.

 

In addition, our organization has:

 

a. Designed such internal controls and procedures to ensure that material information is made known to the appropriate groups responsible for servicing the above-mentioned mutual fund.

 

b. Evaluated the effectiveness of our internal controls and procedures, as of a date within 90 days prior to the date of this certification and we have concluded that such controls and procedures are effective.

 

c. In addition, to the best of my knowledge, there has been no fraud, whether or not material, that involves our organization’s management or other employees who have a significant role in our organization’s control and procedures as they relate to our duties as subadviser to the Designated Series.

 

I have read the draft of the Report which I understand to be current as of [Date of Reporting Period] and based on my knowledge, such draft of the Report does not, with respect to the Designated Series, contain any untrue statement of a material fact or omit to state a material fact necessary to make the information contained therein, in light of the circumstances under which such information is presented, not misleading with respect to the period covered by such draft Report.

 

I have disclosed, based on my most recent evaluation, to the Designated Series’ Chief Accounting Officer:

 

a. All significant changes, deficiencies and material weakness, if any, in the design or operation of the Subadviser’s internal controls and procedures which could adversely affect the Registrant’s ability to record, process, summarize and report financial data with respect to the Designated Series in a timely fashion;

 

b. Any fraud, whether or not material, that involves the Subadviser’s management or other employees who have a significant role in the Subadviser’s internal controls and procedures for financial reporting.

 

  15  

 

 

I certify that to the best of my knowledge:

 

a. The Subadviser’s Portfolio Manager(s) has/have complied with the restrictions and reporting requirements of the Code of Ethics (the “Code”). The term Portfolio Manager is as defined in the Code.

 

b. The Subadviser has complied with the Prospectus and Statement of Additional Information of the Designated Series and the Policies and Procedures of the Designated Series as adopted by the Series Board of Trustees.

 

c. I have no knowledge of any compliance violations except as disclosed in writing to the Virtus Compliance Department by me or by the Subadviser’s compliance administrator.

 

d. The Subadviser has complied with the rules and regulations of the 33 Act and 40 Act, and such other regulations as may apply to the extent those rules and regulations pertain to the responsibilities of the Subadviser with respect to the Designated Series as outlined above.

 

e. Since the submission of our most recent certification there have not been any divestments of securities of issuers that conduct or have direct investments in business operations in Sudan.

 

This certification relates solely to the Designated Series named above and may not be relied upon by any other fund or entity.

 

The Subadviser does not maintain the official books and records of the above Designated Series. The Subadviser’s records are based on its own portfolio management system, a record-keeping system that is not intended to serve as the Designated Series official accounting system. The Subadviser is not responsible for the preparation of the Report.

 

       
[Name of Subadviser]   Date  
[Name of Authorized Signer]      
[Title of Authorized Signer]      

 

  16  

 

 

SCHEDULE F

 

DESIGNATED SERIES

 

Virtus International Equity Fund

 

  17  

 

 

Exhibit e.3.a

 

100 Pearl Street

Hartford, CT 06103

800.248.7971 VIRTUS.COM

 

 

Virtus Mutual Funds Sales Agreement

Amended Annex A December 2016

VP Distributors, LLC

 

 

 

Virtus Mutual Funds and Available Share Classes

 

 

 

ALTERNATIVES       FIXED INCOME    
Virtus Alternatives Diversifier Fund   A C I   Virtus Bond Fund   A C I R6
Virtus Essential Resources Fund   A C I   Virtus CA Tax-Exempt Bond Fund   A I
Virtus Global Infrastructure Fund   A C I   Virtus Credit Opportunities Fund   A C I R6
Virtus Global Real Estate Securities Fund   A C I R6   Virtus Emerging Markets Debt Fund   A C I
Virtus Herzfeld Fund   A C I   Virtus High Yield Fund   A C I R6
Virtus International Real Estate Securities Fund   A C I   Virtus Low Duration Income Fund   A C I
Virtus Multi-Strategy Target Return Fund   A C I R6   Virtus Multi-Sector Intermediate Bond Fund   A C I R6
Virtus Real Estate Securities Fund   A C I R6   Virtus Multi-Sector Short Term Bond Fund   A C I R6 T
Virtus Select MLP and Energy Fund   A C I   Virtus Senior Floating Rate Fund   A C I R6
        Virtus Strategic Income Fund   A C I
ASSET ALLOCATION       Virtus Tax-Exempt Bond Fund   A C I
Virtus Multi-Asset Trend Fund   A C I        
Virtus Strategic Allocation Fund   A C   INTERNATIONAL/GLOBAL    
Virtus Tactical Allocation Fund   A C   Virtus Emerging Markets Equity Income Fund   A C I
        Virtus Emerging Market Opportunities Fund   A C I R6
EQUITY       Virtus Emerging Markets Small-Cap Fund   A C I
Virtus Contrarian Value Fund   A C I R6   Virtus Foreign Opportunities Fund   A C I R6
Virtus Equity Trend Fund   A C I R6   Virtus Global Equity Trend Fund   A C I
Virtus Enhanced Core Equity Fund   A C I   Virtus Global Opportunities Fund   A C I
Virtus Low Volatility Equity Fund   A C I   Virtus Greater European Opportunities Fund   A C I
Virtus Mid-Cap Core Fund   A C I   Virtus International Equity Fund   A C I
Virtus Mid-Cap Growth Fund   A C I   Virtus International Small-Cap Fund   A C I R6
Virtus Quality Large-Cap Value Fund   A C I   Virtus International Wealth Masters Fund   A C I
Virtus Quality Small-Cap Fund   A C I R6        
Virtus Sector Trend Fund   A C I   TARGET DATE RETIREMENT INCOME    
Virtus Small-Cap Core Fund   A C I R6   Virtus DFA 2015 Target Date Retirement Income Fund   A I R6
Virtus Small-Cap Sustainable Growth Fund   A C I   Virtus DFA 2020 Target Date Retirement Income Fund   A I R6
Virtus Strategic Growth Fund   A C I   Virtus DFA 2025 Target Date Retirement Income Fund   A I R6
Virtus Wealth Masters Fund   A C I   Virtus DFA 2030 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2035 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2040 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2045 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2050 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2055 Target Date Retirement Income Fund   A I R6
        Virtus DFA 2060 Target Date Retirement Income Fund   A I R6

 

 

VP Distributors, LLC 100 Pearl Street, Hartford, CT 06103

 

Marketing: (800) 243-4361 Customer Service: (800) 243-1574 www.Virtus.com

 

Applicable waivers of Class A sales charges and Class B and C contingent deferred sales charges are described in the prospectus.

 

     

 

 

 

Class A Shares

 

 

    Equity, Asset Allocation,     Bond, Credit Opportunities,  
    International/Global, Alternative and     Emerging Market Debt, High Yield, Multi-Sector  
    Target Date Retirement Income Funds:     Intermediate Bond and Strategic Income Funds:  
Amount of         Dealer Discount           Dealer Discount  
Transaction   Sales Charge     or Agency Fee     Sales Charge     or Agency Fee  
Plus Applicable Rights   As Percentage of     As Percentage of     As Percentage of     As Percentage of  
of Accumulation:   Offering Price     Offering Price     Offering Price     Offering Price  
                         
Less than $50,000     5.75 %     5.00 %     3.75 %     3.25 %
$50,000 but under $100,000     4.75       4.25       3.50       3.00  
$100,000 but under $250,000     3.75       3.25       3.25       2.75  
$250,000 but under $500,000     2.75       2.25       2.25       2.00  
$500,000 but under $1,000,000     2.00       1.75       1.75       1.50  
$1,000,000 or more     None       None       None       None  

 

    Tax-Exempt Bond, CA Tax-Exempt Bond,     Multi-Sector Short Term Bond  
    and Senior Floating Rate Funds:     and Low Duration Income Funds:  
Amount of         Dealer Discount           Dealer Discount  
Transaction   Sales Charge     or Agency Fee     Sales Charge     or Agency Fee  
Plus Applicable Rights   As Percentage of     As Percentage of     As Percentage of     As Percentage of  
of Accumulation:   Offering Price     Offering Price     Offering Price     Offering Price  
                         
Less than $50,000     2.75 %     2.25 %     2.25 %     2.00 %
$50,000 but under $100,000     2.25       2.00       2.25       2.00  
$100,000 but under $250,000     1.75       1.50       1.75       1.50  
$250,000 but under $500,000     1.25       1.00       None       None  
$500,000 but under $1,000,000     1.00       1.00       None       None  
$1,000,000 or more     None       None       None       None  

 

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually. The Service Fee is based on the average daily net asset value of Class A shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more per Fund CUSIP to qualify for payment in that Fund class. The Service Fee for shares on which a Finder’s Fee has been paid will commence in the thirteenth month following purchase of Class A shares. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

 

Finder’s Fee and CDSC Applicable to Sector Trend and Fixed Income Funds (excluding Multi-Sector Short Term Bond Fund and Low Duration Income Fund): VPD may pay broker-dealers a Finder’s Fee in an amount equal to 0.50% of eligible Class A Share purchases from $1,000,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a Finder’s Fee only if such plan has at least 100 eligible employees. A contingent deferred sales charge of 0.50% may apply on certain redemptions made within 18 months following purchases of Class A shares on which a Finder’s Fee has been paid to a dealer. The 18 month period begins on the last day of the month preceding the month in which the purchase was made.

 

Finder’s Fee and CDSC Applicable to Multi-Sector Short Term Bond Fund and Low Duration Income Fund: VPD may pay broker-dealers a Finder’s Fee in an amount equal to 0.50% of eligible Class A Share purchases from $250,000 to $3,000,000 and 0.25% on amounts greater than $3,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a Finder’s Fee only if such plan has at least 100 eligible employees. A contingent deferred sales charge of 0.50% may apply on certain redemptions made within 12 months following purchases of Class A shares on which a Finder’s Fee has been paid to a dealer. The 12 month period begins on the last day of the month preceding the month in which the purchase was made.

 

Finder’s Fee and CDSC Applicable to Equity, Asset Allocation, International/Global, Alternative and Target Date Retirement Income Funds Class A Shares: (excluding Sector Trend Fund) VPD may pay broker-dealers a Finder’s Fee in an amount equal to 1.00% of eligible Class A Share purchases from $1,000,000 to $3,000,000, 0.50% on amounts of $3,000,001 to $10,000,000 and 0.25% on amounts greater than $10,000,000. Purchases by an account in the name of a qualified employee benefit plan are eligible for a Finder’s Fee only if such plan has at least 100 eligible employees. A contingent deferred sales charge of 1% may apply on certain redemptions made within 18 months following purchases of Class A shares on which a Finder’s Fee has been paid to a dealer. The 18 month period begins on the last day of the month preceding the month in which the purchase was made.

 

  2  

 

 

 

Class B Shares

 

 

As of December 1, 2009, Class B shares of the Virtus Mutual Funds are no longer available for purchase by new or existing shareholders, except for the reinvestment of dividends or capital gains distributions into existing Class B share accounts, and for exchanges from existing Class B share accounts to other Virtus Mutual Funds with Class B shares.

 

          CDSC  
    CDSC (Except Virtus     Virtus Multi-Sector  
    Multi-Sector Short Term Bond Fund)     Short Term Bond Fund  
Years since   Contingent Deferred     Contingent Deferred  
Each Purchase:   Sales Charge:     Sales Charge:  
             
First     5.0 %     2.0 %
Second     4.0       1.5  
Third     3.0       1.0  
Fourth     2.0       0.0  
Fifth     2.0       0.0  
Sixth     0.0       0.0  

 

Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified above, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to VPD.

 

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class B shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. Dealers must have an aggregate value of $50,000 or more per Fund CUSIP to qualify for payment in that Fund class. The Class B Service Fee is paid beginning in the 13 th month following each purchase. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

 

 

Class C Shares

 

 

Sales Commission: 1% for all Class C Funds except Virtus Multi-Sector Short Term Bond Fund
  0% for Virtus Multi-Sector Short Term Bond Fund
  When original purchases of the Multi-Sector Short Term Bond Fund Class C are exchanged to other Class C or T shares, the dealer will receive a 1% sales commissions.

 

CDSC: 1% for all Class C Funds, except Virtus Multi-Sector Short Term Bond Fund (no CDSC). Dealers maintaining omnibus accounts, upon redemption of a customer account within the time frames specified below, shall charge such customer account the appropriate contingent deferred sales charge as indicated and shall forward the proceeds to VPD. The CDSC on Class C shares is 1% for one year from each purchase.

 

Distribution Fee: 0.25% - 0.75% VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually for Virtus Multi-Sector Short Term Bond Fund, and 0.75% annually for all other Class C Funds, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Trail Fee is paid beginning in the 13th month following each purchase. There is no hold for the Class C Trail Fee for the Virtus Multi-Sector Short Term Bond Fund. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

 

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class C shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class C Service Fee is paid beginning in the 13 th month following each purchase. There is no hold for the Class C Service Fee for the Virtus Multi-Sector Short Term Bond Fund. See the last page of this Annex A for Terms and Conditions for Service and Distribution Fees.

 

  3  

 

 

 

Class I Shares

 

 

There is no dealer compensation payable on Class I shares.

 

 

Class R6 Shares

 

 

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. No compensation, administrative payments, sub-transfer agency payments or service payments are paid to dealers or other entities from fund assets or VPD’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 dealers or other entities to assist in, or in connection with, the sale of the fund’s shares.

 

 

Class T Shares – Virtus Multi-Sector Short Term Bond Fund only

 

 

Dealer Concession: 1%

 

CDSC: 1% for one year from the date of each purchase.

 

Service Fee: 0.25% For providing shareholder services such as responding to shareholder inquiries; processing redemptions; changing dividend options, account designations, and addresses; transmitting proxy statements, annual reports, prospectuses and other correspondence from the Funds to shareholders; and providing such other information and assistance to shareholders as may be reasonably requested by such shareholders, VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.25% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Service Fee is paid beginning in the 13 th month following each purchase. See below for Terms and Conditions for Service and Distribution Fees.

 

Distribution Fee: 0.75% VPD intends to pay a quarterly fee to qualifying dealers at the equivalent of 0.75% annually, based on the average daily net asset value of Class T shares sold by such dealers and remaining on the Funds’ books during the period in which the fee is calculated. The Class T Distribution Fee is paid beginning in the 13 th month following each purchase. See below for Terms and Conditions for Service and Distribution Fees.

 

 

Terms and Conditions for Service and Distribution Fees – All Share Classes

 

 

Applicable Service and Distribution Fees are paid pursuant to one or more distribution and/or service plans (“Plan”) adopted by certain of the Funds. Payment of these fees will automatically terminate in the event such Plan terminates or is not continued or in the event that this Agreement terminates, is assigned or ceases to remain in effect. VP Distributors shall be under no obligation to pay any fees hereunder to the extent such fees have not been paid to VP Distributors by the applicable Fund(s). In addition, these fees may be terminated at any time, without the payment of an penalty, by vote of a majority of the members of the Funds’ Board of Trustees who are not interested persons of the Funds and have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan, or by vote of a majority of the outstanding voting securities of any Fund or Funds on not more than sixty days' written notice to any other party to the Agreement.

 

VPD 80A (December 2016 rev.)

 

  4  

 

Exhibit h.2.c

 

Execution Version

 

Amendment

To

Sub-Transfer Agency And Shareholder Services Agreement

 

This Amendment To Sub-Transfer Agency And Shareholder Services Agreement, dated as of June 1, 2014 (" Amendment "), is being entered into by and between BNY Mellon Investment Servicing (US) Inc. (" BNYM "), Virtus Fund Services, LLC (" Company ") and each of Portfolios listed on Schedule B attached hereto (the " Funds ").

 

Background

 

BNYM, certain of the Funds and VP Distributors, Inc. , as transfer agent to the Funds, entered into the Sub-Transfer Agency And Shareholder Services Agreement as of April 15, 2011 (" Original Agreement "). VP Distributors, LLC, the surviving entity in a merger with VP Distributors, Inc. that was effective September 22, 2011, transferred all rights and obligations as transfer agent of the Funds under the Original Agreement to the Company pursuant to an Assignment and Assumption Agreement, effective as of January 1, 2013, among VP Distributors, LLC, the Company, certain of the Funds and BNYM (the Original Agreement as so assigned and amended being the " Assigned Agreement "). BNYM, the Company and the Funds subsequently entered into an amendment to the Assigned Agreement, dated as of March 21, 2014 (the Assigned Agreement as so amended being the " Current Agreement "). BNYM, the Funds and the Company wish to amend the Current Agreement as set forth in this Amendment.

 

Terms

 

In consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree to all statements made above and as follows:

 

1. Modifications to Current Agreement . The Current Agreement is hereby amended as follows:

 

(a) Section 13(b) shall be deleted in its entirety and replaced with the following:

 

(b)          This Agreement shall automatically renew on the final day of the Initial Term for an additional term which will continue until the third (3 rd ) anniversary of such renewal date and thereafter shall automatically renew on the final day of the first Renewal Term and the final day of each subsequent Renewal Term for an additional term which will continue until the first (1 st ) anniversary of such renewal date (each such additional term being a " Renewal Term "), unless the Company, the Fund or BNYM gives written notice to each other party of its intent not to renew and such notice is received by each other party not less than sixty (60) days prior to the expiration of the Initial Term or the then-current Renewal Term (a " Non-Renewal Notice "). In the event a party provides a Non-Renewal Notice, this Agreement shall terminate at 11:59 PM (Eastern Time) on the last day of the Renewal Term. A Non-Renewal Notice from the Company shall constitute notice of termination of the Agreement in its entirety for the Company and all Funds and a Non-Renewal Notice from a Fund shall constitute a notice of termination of the Agreement solely with respect to the Fund providing the Non-Renewal Notice.

 

(b) Section 13(d) is deleted in its entirety and replaced with the following:

 

(d)          [reserved]

 

(c) Schedule F is amended by adding a new Part II - Section 1(d) which reads in its entirety as follows:

 

  Page 1  

 

 

Execution Version

 

d)           Quality Control Review .

 

At no additional cost to the Funds or the Company, BNY Mellon will implement procedures that are reasonably designed to achieve the completion rates for Quality Control Review of Manual Transactions set forth in the following table:

 

Manual Transaction Processing
Category 		  % Completed Same
Business Day as
Processed 		    % Completed by
Business Day Following
Business Day of
Processing 		 
Purchases (excluding Unisys and Listbill)     98 %     100 %
Redemptions     98 %     100 %
Exchanges     98 %     100 %
Transfers     98 %     100 %
Transfer New Accounts     98 %     100 %
Shareholder Account Maintenances     98 %     100 %
New Accounts (until the Transition Date, as that term is defined in footnote (4) to Exhibit E)     98 %     100 %
High Risk     98 %     100 %
Adjustments     98 %     100 %

 

" Manual Transaction " means a transaction in Fund Shares with respect to which instructions are received from Fund Clients (as defined immediately below) by BNYM: (i) at the address provided by BNYM for mail through the US Postal Service, (ii) at the address provided by BNYM for delivery through UPS or Federal Express, (iii) at the telephone number provided for facsimile transmissions, or (iv) through the electronic queue established in "Image" (a component of the CRM system described in Exhibit 1 to Schedule C) for transactions received by the call center maintained by a Fund or the Company but which is not processed by that call center. " Fund Clients " means shareholders of the Fund and other persons and entities, such as financial advisors and back office personnel of the Fund, properly authorized in the reasonable judgment of BNYM to provide the particular instructions.

 

" Manual Transaction Instructions " means the instructions received from a Fund Client with respect to a Manual Transaction.

 

" Quality Control Review " means the review by a Secondary Reviewer of Manual Transaction Instructions within the BNYM System after they have been inputted into the BNYM System to verify that the Manual Transaction Instruction that encompasses the entire client request have been inputted accurately and to correct any information inaccurately inputted.

 

" Secondary Reviewer " means a member of the team responsible for processing Fund transactions other than the member who inputted information from Manual Transaction Instructions into the BNYM System.

 

(d) Schedule E is deleted in its entirety and replaced with the Schedule E attached hereto.

 

(e) Schedule B is deleted in its entirety and replaced with the Schedule B attached hereto .

 

  Page 2  

 

 

Execution Version

 

2.           Remainder of Current Agreement . Except as specifically modified by this Amendment, all terms and conditions of the Current Agreement shall remain in full force and effect.

 

3.           Governing Law . The governing law of the Current Agreement shall be the governing law of this Amendment.

 

4.           Entire Agreement . This Amendment constitutes the final, complete, exclusive and fully integrated record of the agreement of the parties with respect to the subject matter herein and the amendment of the Current Agreement.

 

5.           Facsimile Signatures; Counterparts . This Amendment may be executed in one more counterparts; such execution of counterparts may occur by manual signature, facsimile signature, manual signature transmitted by means of facsimile transmission or manual signature contained in an imaged document attached to an email transmission; and each such counterpart executed in accordance with the foregoing shall be deemed an original, with all such counterparts together constituting one and the same instrument. The exchange of executed copies of this Amendment or of executed signature pages to this Amendment by facsimile transmission or as an imaged document attached to an email transmission shall constitute effective execution and delivery hereof and may be used for all purposes in lieu of a manually executed copy of this Amendment.

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers, as of the day and year first above written.

 

BNY Mellon Investment Servicing (US) Inc. Virtus Equity Trust
  Virtus Insight Trust
  Virtus Opportunities Trust
By: /s/ William Greilich   Virtus Alternative Solutions Trust
Name: William Greilich   On behalf of each Fund in its individual and separate capacity, and not on behalf of any other Fund

 

Title: Managing Director    

 

  By: /s/ W. Patrick Bradley

 

Virtus Fund Services, LLC Name: W. Patrick Bradley

 

By: /s/ W. Patrick Bradley   Title:  CFO and Treasurer

 

Name: W. Patrick Bradley  

 

Title: SVP  

 

  Page 3  

 

 

Execution Version

 

SCHEDULE B

 

(Dated: June 1, 2014)

 

THIS SCHEDULE B is Schedule B to that certain Sub-Transfer Agency And Shareholder Services Agreement, dated as of April 15, 2011, by and among BNY Mellon Investment Servicing (US) Inc., Virtus Fund Services, LLC (under the name of its predecessor in interest, VP Distributors, Inc.) and the Virtus Mutual Funds, as further set forth below.

 

Portfolios

 

Investment Company : Virtus Alternative Solutions Trust

 

Portfolios :

Virtus Alternative Income Solution Fund A

Virtus Alternative Income Solution Fund C

Virtus Alternative Income Solution Fund I

Virtus Alternative Inflation Solution Fund A

Virtus Alternative Inflation Solution Fund C

Virtus Alternative Inflation Solution Fund I

Virtus Alternative Total Solution Fund A

Virtus Alternative Total Solution Fund C

Virtus Alternative Total Solution Fund I

 

Investment Company : Virtus Equity Trust

 

Portfolios :

Virtus Balanced Fund A

Virtus Balanced Fund B

Virtus Balanced Fund C

Virtus Growth & Income Fund A

Virtus Growth & Income Fund C

Virtus Growth & Income Fund I

Virtus Mid-Cap Core Fund A

Virtus Mid-Cap Core Fund C

Virtus Mid-Cap Core Fund I

Virtus Mid-Cap Growth Fund A

Virtus Mid-Cap Growth Fund B

Virtus Mid-Cap Growth Fund C

Virtus Mid-Cap Growth Fund I

Virtus Mid-Cap Value Fund A

Virtus Mid-Cap Value Fund C

Virtus Mid-Cap Value Fund I

Virtus Quality Large-Cap Value Fund A

Virtus Quality Large-Cap Value Fund C

Virtus Quality Large-Cap Value Fund I

Virtus Quality Small-Cap Fund A

Virtus Quality Small-Cap Fund C

Virtus Quality Small-Cap Fund I

Virtus Small-Cap Core Fund A

 

  Page 4  

 

 

Execution Version

 

Virtus Small-Cap Core Fund C

Virtus Small-Cap Core Fund I

Virtus Small-Cap Sustainable Growth Fund A

Virtus Small-Cap Sustainable Growth Fund C

Virtus Small-Cap Sustainable Growth Fund I

Virtus Strategic Growth Fund A

Virtus Strategic Growth Fund B

Virtus Strategic Growth Fund C

Virtus Strategic Growth Fund I

Virtus Tactical Allocation Fund A

Virtus Tactical Allocation Fund B

Virtus Tactical Allocation Fund C

 

Investment Company : Virtus Insight Trust

 

Portfolios :

Virtus Emerging Markets Opportunities Fund A

Virtus Emerging Markets Opportunities Fund C

Virtus Emerging Markets Opportunities Fund I

Virtus Insight Government Money Market Fund A

Virtus Insight Government Money Market Fund I

Virtus Insight Money Market Fund A

Virtus Insight Money Market Fund E

Virtus Insight Money Market Fund I

Virtus Insight Tax-Exempt Money Market Fund A

Virtus Insight Tax-Exempt Money Market Fund I

Virtus Low Duration Income Fund A

Virtus Low Duration Income Fund C

Virtus Low Duration Income Fund I

Virtus Tax-Exempt Bond Fund A

Virtus Tax-Exempt Bond Fund C

Virtus Tax-Exempt Bond Fund I

 

Investment Company : Virtus Opportunities Trust

 

Portfolios :

Virtus Allocator Premium AlphaSector Fund A

Virtus Allocator Premium AlphaSector Fund C

Virtus Allocator Premium AlphaSector Fund I

Virtus AlphaSector Rotation Fund A

Virtus AlphaSector Rotation Fund C

Virtus AlphaSector Rotation Fund I

Virtus Alternatives Diversifier Fund A

Virtus Alternatives Diversifier Fund C

Virtus Alternatives Diversifier Fund I

Virtus Bond Fund A

Virtus Bond Fund B

Virtus Bond Fund C

Virtus Bond Fund I

Virtus CA Tax-Exempt Bond Fund A

Virtus CA Tax-Exempt Bond Fund I

Virtus Disciplined Equity Style Fund A

 

  Page 5  

 

 

Execution Version

 

Virtus Disciplined Equity Style Fund C

Virtus Disciplined Equity Style Fund I

Virtus Disciplined Select Bond Fund A

Virtus Disciplined Select Bond Fund C

Virtus Disciplined Select Bond Fund I

Virtus Disciplined Select Country Fund A

Virtus Disciplined Select Country Fund C

Virtus Disciplined Select Country Fund I

Virtus Dynamic AlphaSector Fund A

Virtus Dynamic AlphaSector Fund B

Virtus Dynamic AlphaSector Fund C

Virtus Dynamic AlphaSector Fund I

Virtus Emerging Markets Debt Fund A

Virtus Emerging Markets Debt Fund C

Virtus Emerging Markets Debt Fund I

Virtus Emerging Markets Equity Income Fund A

Virtus Emerging Markets Equity Income Fund C

Virtus Emerging Markets Equity Income Fund I

Virtus Emerging Markets Small-Cap Fund A

Virtus Emerging Markets Small-Cap Fund C

Virtus Emerging Markets Small-Cap Fund I

Virtus Foreign Opportunities Fund A

Virtus Foreign Opportunities Fund C

Virtus Foreign Opportunities Fund I

Virtus Global Commodities Stock Fund A

Virtus Global Commodities Stock Fund C

Virtus Global Commodities Stock Fund I

Virtus Global Dividend Fund A

Virtus Global Dividend Fund C

Virtus Global Dividend Fund I

Virtus Global Opportunities Fund A

Virtus Global Opportunities Fund B

Virtus Global Opportunities Fund C

Virtus Global Opportunities Fund I

Virtus Global Premium AlphaSector Fund A

Virtus Global Premium AlphaSector Fund C

Virtus Global Premium AlphaSector Fund I

Virtus Global Real Estate Securities Fund A

Virtus Global Real Estate Securities Fund C

Virtus Global Real Estate Securities Fund I

Virtus Greater Asia ex Japan Opportunities Fund A

Virtus Greater Asia ex Japan Opportunities Fund C

Virtus Greater Asia ex Japan Opportunities Fund I

Virtus Greater European Opportunities Fund A

Virtus Greater European Opportunities Fund C

Virtus Greater European Opportunities Fund I

Virtus Herzfeld Fund A

Virtus Herzfeld Fund C

Virtus Herzfeld Fund I

Virtus High Yield Fund A

Virtus High Yield Fund B

Virtus High Yield Fund C

 

  Page 6  

 

 

Execution Version

 

Virtus High Yield Fund I

Virtus International Equity Fund A

Virtus International Equity Fund C

Virtus International Equity Fund I

Virtus International Real Estate Securities Fund A

Virtus International Real Estate Securities Fund C

Virtus International Real Estate Securities Fund I

Virtus International Small-Cap Fund A

Virtus International Small-Cap Fund C

Virtus International Small-Cap Fund I

Virtus Low Volatility Equity Fund A

Virtus Low Volatility Equity Fund C

Virtus Low Volatility Equity Fund I

Virtus Multi-Sector Intermediate Bond Fund A

Virtus Multi-Sector Intermediate Bond Fund B

Virtus Multi-Sector Intermediate Bond Fund C

Virtus Multi-Sector Intermediate Bond Fund I

Virtus Multi-Sector Short Term Bond Fund A

Virtus Multi-Sector Short Term Bond Fund B

Virtus Multi-Sector Short Term Bond Fund C

Virtus Multi-Sector Short Term Bond Fund I

Virtus Multi-Sector Short Term Bond Fund T

Virtus Premium AlphaSector Fund A

Virtus Premium AlphaSector Fund C

Virtus Premium AlphaSector Fund I

Virtus Real Estate Securities Fund A

Virtus Real Estate Securities Fund B

Virtus Real Estate Securities Fund C

Virtus Real Estate Securities Fund I

Virtus Senior Floating Rate Fund A

Virtus Senior Floating Rate Fund C

Virtus Senior Floating Rate Fund I

Virtus Wealth Masters Fund A

Virtus Wealth Masters Fund C

Virtus Wealth Masters Fund I

 

  Page 7  

 

 

Execution Version

 

SCHEDULE E

Division of Services

As of June 1, 2014

 

Function   Company
(Transfer
Agent) 		  BNYM
(Sub-Transfer Agent)
Transaction Processing        
Remittance Cash Processing       X
Offline Cash Deposits       X
Remittance Cash Processing - Items not in good order   X(1)    
Remittance Cash Processing QA       X
Check Imaging       X
Plan Allocation Group Purchase Lists/Transmissions       X
Prepare Cash Estimates       X
ACH Payroll       X
ACH Payroll QC       X
Federal Fund Wire Purchases       X
Federal Fund Wire Purchases QC       X
New Account Setup – New Business   X(3)    
New Account Quality Control – New Business        X(3)(4)      X(4)
Transfers (Re-registrations) New Accounts          X(3)
Transfers (Re-registrations) New Accounts QC         X(3)
Transfers (Re-registrations) New Accounts QA       X
Transfers       X
Transfers QC       X
Transfers QA       X
Telephone Transactions (Not requiring an E-Form)   X(1)    

Telephone Transactions – (Not requiring an E-Form)

Q.C. sampling

      X
E-Form Processing       X
E-Form Q.C.       X
Exchanges       X
Exchanges QC       X
Exchanges QA       X
Redemptions       X
Redemptions QC       X
Redemptions QA       X
Federal Funds Wire Redeems       X
Federal Funds Wire Redeems QC       X
Wire Order - NSCC        
Trade Establishment       X
Trade Settlement (Checks to Sub-TA)       X
Monitoring of Outstanding Trades       X
Maintenance       X
Maintenance QC       X

 

  Page 8  

 

 

Execution Version

 

Maintenance QA       X
After-hours trade pricing       X
After-hours trade pricing QC       X
Certificates       N/A
Certificates QC       N/A
Adjustments       X
Adjustments QC       X
Adjustments QA       X
         
Vendor Oversight        
Sub TA Performance Oversight   X(1)    
Management and Board Reporting   X(1)    
Ongoing Due Diligence and Feedback   X(1)    
Invoice and Billing Reconciliation   X(1)    
SLA Review and Adherence   X(1)    
         
Customer Service        
Telephones and Routine Transactions for Open and Closed End Funds (Series 6)   X(1)    
Correspondence -Shareholder/Dealer Letters/Emails (Series 6)   X(1)    
Correspondence QA (Series 26)   X(1)    
CAST (Customer Action Support Team)       X
         
Dealer Services        
NSCC FundServ/Networking Implementation       X
NSCC FundServ/Networking Activity Monitoring and Trade Corrections       X
Dealer and Advisor File Maintenance       X
System Enhancements       X
Create NSCC Position Files       X
Create NSCC Commission Files       X
Telephones for NSCC Firms – segregation for Focus Firms       X
         
Operator Security        
Recordkeeping System       X
Workflow System       X
         
Fund Control Reconciliation        
Cash Settlement (including NSCC)       X
Reconcile Transfer Agent DDA’s       X
Compile Fund Share Activity & Estimates and Transmit to Fund Accounting       X
Check writing Payments       X
Check writing Reject Review   X(1)    

 

  Page 9  

 

 

Execution Version

 

Research and Resolve Imbalances   X(2)   X(2)
Calculate and Pay Distributions       X
Produce Commission Data       X
Prepare Manual Checks       X
Sub Transfer Agent / Networking Invoice Reconciliation and Payment Initiation       X
Sub-TA/Networking Invoice Review and Payment Authorization   X(1)    
         
Print & Electronic Output        
Checks (Redeem, SWP, Dividend, Replacement) Production       X
Investor Statements (Daily & Quarterly) Production       X
Maintenance Verification (Bank or Address change) Production       X
Tax Form Production       X
Corrected Tax Form Production       X
RPO Mail       X
Microfiche       N/A
CD Rom (Investment Checks)       X
E-Statements/Tax Forms       X
Statement Suppression & Consent Database       X
Annual Account History Transcripts   X(2)   X(2)
         
Compliance/Regulatory        
Year End Tax Reporting   X(2)   X(2)
Proxy Mailing and Tabulation   X(1)    
Lost Shareholder Recovery and Reporting   X(2)   X(2)
Lost Certificate Filing and Processing       N/A
B & C Notice Reporting       X
Notice of Levy & Subpoena   X(2)   X(2)
Escheatment       X
W-8, W-9 Solicitation       X
Withholding Filing & Disbursement       X
Non Resident Alien Tax Reporting       X
Monitor Unusual Activity Report       X
Multi-State Bank Match Process       X
Monitor As Of Activity   X(2)   X(2)
Anti-Money Laundering/USA Patriot Act   X(2)   X(2)
Complaint Review and Reporting   X(1)    
Daily Excess Activity Review   X(1)    
22c2 – Monitoring and Reporting   X(1)    
         
Client Services        
Run Monthly Transaction Jobs       X
New Fund Setup   X(2)   X(2)

 

  Page 10  

 

 

Execution Version

 

Fund Option Updates       X
Adhoc Reports   X(1)    
Fund Mergers   X(2)   X(2)
Fund Closings   X(2)   X(2)
Mailings   X(2)   X(2)
Fiduciary Administration Fee   X(2)   X(2)
Billing to Fund for TA Services       X
         
Support        
Maintain Dedicated PO Box       X
Mail Pickup       X
Mail Sort       X
Scanning       X
Records Retention   X(2)   X(2)
Global Systems Enhancements       X
Fund Specific Systems Enhancements       X
Management Reporting   X(2)   X(2)
Reports On Line       X
Network Support/Maintenance       X
Mainframe Support/Maintenance       X
Technical Support       X

 

(1) Function to be performed by the Company that is not an obligation of BNYM under any term of this Agreement.
(2) Function to be performed by the Company and BNYM in accordance with applicable Written Procedures.
(3) Section 3(a)(2) of the Agreement consists of the following functions:
(i) New Account Set-up – New Business, which shall be the exclusive responsibility of the Company. This function consists of the creation of a new shareholder account on the BNYM System based on the receipt of a new account application and information contained in the new account application;
(ii) New Account Quality Control – New Business. Responsibility for performance of this function shall be determined in accordance with footnote 4. This function consists of the quality control review of the function described at clause (i) above.
(iii) Transfer (Re-registrations) New Accounts, which shall be the exclusive responsibility of BNYM. This function consists of the creation of a new shareholder account on the BNYM System based on the receipt of shareholder account information transferred to BNYM from another financial institution and the quality control review of that process;
(iv) The processing of all purchase orders, which shall be the exclusive responsibility of BNYM; and
(v) Confirmation of the receipt or crediting of funds by the Custodian for purchase orders, which shall be the exclusive responsibility of BNYM.
(4) BNYM will perform New Account Quality Control – New Business until the " Transition Date ", which is hereby defined to be the date (i) that quality reporting is developed by BNYM, and (ii) as of which BNYM and the Company by mutual agreement transfer performance of such duty to the Company. The Company will perform New Account Quality Control – New Business on and after the Transition Date.

 

  Page 11  

 

Exhibit h.3.n

 

FOURTEENTH AMENDMENT

to

AMENDED AND RESTATED ADMINISTRATION AGREEMENT

 

THIS AMENDMENT made effective as of the 1 st day of December, 2016 amends that certain amended and restated administration agreement, dated as of January 1, 2010, as amended, between the Trusts listed on Schedule A including the Funds listed under each Trust and Virtus Fund Services, LLC, a Delaware limited liability company (such party, the “Administrator” and such agreement, the “Agreement”) as herein below provided.

 

W I T N E S S E T H:

 

WHEREAS, pursuant to Section 8 of the Agreement, the Trusts and the Administrator wish to amend the fees payable to the Administrator under Section 4, and revise Schedule A of the Agreement to reflect the removal of Virtus Insight Trust and to include name changes for certain of the Funds listed on Schedule A;

 

NOW, THEREFORE, in consideration of the foregoing premise, the parties to the Agreement hereby agree that the Agreement is amended as follows:

 

1. Section 4(a) of the Agreement is hereby amended and restated as follows:

 

(a) For the services provided to each Trust and each Fund by the Administrator pursuant to this Agreement, each Fund shall pay the Administrator monthly for its services, fees at the following annual rates based on the combined aggregate average daily net assets across the Virtus Funds, defined as all funds of the Trusts, all funds of Virtus Alternative Solutions Trust, and all series of Virtus Variable Insurance Trust, plus out of pocket expenses (including out of pocket expenses of any sub-administrator to each Trust hired by the Administrator and not the Trusts):

 

Net Assets   Administrative Fee  
Less than or equal to $15 billion     0.10 %
         
Over $15 billion and up to and including $30 billion     0.095 %
         
Over $30 billion and up to and including $50 billion     0.09 %
         
In excess of $50 billion     0.085 %

 

Any Fund with net assets in excess of $10 billion will receive an offsetting credit to its administrative fee, such that the portion of its net assets in excess of $10 billion will only be assessed an administrative fee of .07%. The fees for the portion of such a Fund’s net assets up to and inclusive of the first $10 billion will remain consistent with the fee schedule above.

 

2. Schedule A to the Agreement is hereby replaced with Schedule A attached hereto and made a part hereof.

 

3. Except as herein provided, the Agreement shall be and remain unmodified and in full force and effect. All initial capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Agreement.

 

4. This Amendment may be executed in any number of counterparts (including executed counterparts delivered and exchanged by facsimile transmission) with the same effect as if all signing parties had originally signed the same document, and all counterparts shall be construed together and shall constitute the same instrument. For all purposes, signatures

 

     

 

 

delivered and exchanged by facsimile transmission shall be binding and effective to the same extent as original signatures.

 

[signature page follows]

 

     

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their duly authorized officers.

 

  VIRTUS MUTUAL FUNDS
    VIRTUS EQUITY TRUST
    VIRTUS OPPORTUNITIES TRUST
    VIRTUS RETIREMENT TRUST
       
       
    By: /s/ W. Patrick Bradley
      Name: W. Patrick Bradley
      Title: Executive Vice President, Chief Financial Officer & Treasurer
       
    VIRTUS FUND SERVICES, LLC
       
    By: /s/ David G. Hanley
      Name: David G. Hanley
      Title: Vice President & Assistant Treasurer

 

     

 

 

SCHEDULE A

(as of December 1, 2016)

 

Virtus Equity Trust
Virtus Contrarian Value Fund
Virtus Enhanced Core Equity Fund (fka Virtus Growth & Income Fund)
Virtus Mid-Cap Core Fund
Virtus Mid-Cap Growth Fund
Virtus Quality Large-Cap Value Fund
Virtus Quality Small-Cap Fund
Virtus Small-Cap Core Fund
Virtus Small-Cap Sustainable Growth Fund
Virtus Strategic Allocation Fund (fka Virtus Balanced Fund)
Virtus Strategic Growth Fund
Virtus Tactical Allocation Fund
 
Virtus Opportunities Trust
Virtus Alternatives Diversifier Fund
Virtus Bond Fund
Virtus CA Tax-Exempt Bond Fund
Virtus Emerging Markets Debt Fund
Virtus Emerging Markets Equity Income Fund
Virtus Emerging Markets Opportunities Fund
Virtus Emerging Markets Small-Cap Fund
Virtus Equity Trend Fund
Virtus Essential Resources Fund
Virtus Foreign Opportunities Fund
Virtus Global Equity Trend Fund
Virtus Global Infrastructure Fund
Virtus Global Opportunities Fund
Virtus Global Real Estate Securities Fund
Virtus Greater European Opportunities Fund
Virtus Herzfeld Fund
Virtus High Yield Fund
Virtus International Equity Fund
Virtus International Real Estate Securities Fund
Virtus International Small-Cap Fund
Virtus International Wealth Masters Fund
Virtus Low Duration Income Fund
Virtus Low Volatility Equity Fund
Virtus Multi-Asset Trend Fund
Virtus Multi-Sector Intermediate Bond Fund
Virtus Multi-Sector Short Term Bond Fund
Virtus Real Estate Securities Fund
Virtus Sector Trend Fund
Virtus Senior Floating Rate Fund
Virtus Tax-Exempt Bond Fund
Virtus Wealth Masters Fund
 
Virtus Retirement Trust
Virtus DFA 2015 Target Date Retirement Income Fund
Virtus DFA 2020 Target Date Retirement Income Fund
Virtus DFA 2025 Target Date Retirement Income Fund
Virtus DFA 2030 Target Date Retirement Income Fund
Virtus DFA 2035 Target Date Retirement Income Fund
Virtus DFA 2040 Target Date Retirement Income Fund

 

     

 

 

Virtus DFA 2045 Target Date Retirement Income Fund
Virtus DFA 2050 Target Date Retirement Income Fund
Virtus DFA 2055 Target Date Retirement Income Fund
Virtus DFA 2060 Target Date Retirement Income Fund

 

     

 

 

Exhibit h.5

 

TWENTY-SEVENTH AMENDED AND RESTATED

EXPENSE LIMITATION AGREEMENT

 

VIRTUS OPPORTUNITIES TRUST

 

This Twenty-Seventh Amended and Restated Expense Limitation Agreement (the “Agreement”), effective as of January 1, 2017, amends and restates that certain Amended & Restated Expense Limitation Agreement effective as of September 1, 2015, by and between Virtus Opportunities Trust, a Delaware statutory trust (the “Registrant”), on behalf of each series of the Registrant listed in Appendix A (each a “Fund” and collectively, the “Funds”) and the Adviser of each of the Funds, Virtus Investment Advisers, Inc., a Massachusetts corporation (the “Adviser”).

 

WHEREAS, the Adviser renders advice and services to the Funds pursuant to the terms and provisions of one or more Investment Advisory Agreements entered into between the Registrant and the Adviser (the “Advisory Agreement”);

 

WHEREAS, the Adviser desires to maintain the expenses of each Fund at a level below the level to which each such Fund might otherwise be subject; and

 

WHEREAS, the Adviser understands and intends that the Registrant will rely on this Agreement in accruing the expenses of the Registrant for purposes of calculating net asset value and for other purposes, and expressly permits the Registrant to do so.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1. Limit on Fund Expenses. The Adviser has agreed to limit the respective rate of Total Fund Operating Expenses (“Expense Limit”) for each Fund as specified in Appendix A of this Agreement, for the time period indicated.

 

2. Definitions.

 

2.1. For purposes of this Agreement, the term “Total Fund Operating Expenses” with respect to a Fund is defined to include all expenses necessary or appropriate for the operation of the Fund including the Adviser’s investment advisory or management fee under the Advisory Agreement and other expenses described in the Advisory Agreement that the Fund is responsible for and have not been assumed by the Adviser, but excludes front-end or contingent deferred loads, taxes, leverage expenses, interest, brokerage commissions, expenses incurred in connection with any merger or reorganization, unusual or infrequently occurring expenses (such as litigation) or acquired fund fees and expenses, if any.

 

3. Recoupment and Recapture of Fees and Expenses. Each Fund has agreed to reimburse the Adviser and/or certain of its affiliates (collectively, “Virtus”) out of assets belonging to the relevant class of the Fund for any Total Fund Operating Expenses of the relevant class of the Fund in excess of the Expense Limit paid, waived or assumed by Virtus for that Fund, provided that Virtus would not be entitled to reimbursement for any amount that would cause Total Fund Operating Expenses to exceed either the Expense Limit in place at the time of the applicable waiver or assumption of expenses by Virtus or, if less, any contractual Expense Limit in place at the time that the reimbursement would be made, and provided further that no amount would be reimbursed by the Fund more than three years after the date on which it was incurred or waived by Virtus .

 

4. Term, Termination and Modification. This Agreement is effective for the time period indicated on Appendix A, unless sooner terminated as provided below in this Paragraph. This Agreement may be

 

     

 

 

terminated by mutual agreement of the parties, by the Registrant on behalf of any one or more of the Funds at any time without payment of any penalty or by the Board of Trustees of the Registrant upon thirty (30) days’ written notice to the Adviser. In addition, this Agreement shall terminate with respect to a Fund upon termination of the Advisory Agreement with respect to such Fund.

 

5. Assignment. This Agreement and all rights and obligations hereunder may not be assigned without the written consent of the other party.

 

6. Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall otherwise be rendered invalid, the remainder of this Agreement shall not be affected thereby.

 

7. Captions. The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions hereof or otherwise affect their construction or effect.

 

8. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of Delaware without giving effect to the conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any Federal securities law, regulation or rule, including the Investment Company Act of 1940, as amended and the Investment Advisers Act of 1940, as amended and any rules and regulations promulgated thereunder.

 

9. Computation. If the fiscal year-to-date Total Fund Operating Expenses of a Fund or Other Expenses, as applicable, at the end of any month during which this Agreement is in effect exceed the Expense Limit for that Fund (the “Excess Amount”), the Adviser shall (at its option) waive or reduce its fee under the Advisory Agreement and/or remit to that Fund an amount that is sufficient to pay the Excess Amount computed on the last day of the month.

 

10. Liability. Virtus agrees that it shall look only to the assets of the relevant class of each respective relevant Fund for performance of this Agreement and for payment of any claim Virtus may have hereunder, and neither any other Fund (including the other series of the Registrant) or class of the Fund, nor any of the Registrant’s trustees, officers, employees, agents or shareholders, whether past, present or future, shall be personally liable therefor.

 

     

 

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their duly authorized officers.

 

VIRTUS OPPORTUNITIES TRUST   VIRTUS INVESTMENT ADVISERS, INC.
         
By: /s/ W. Patrick Bradley   By: /s/ Francis G. Waltman
  W. Patrick Bradley     Francis G. Waltman
  Executive Vice President, Chief Financial Officer and Treasurer     Executive Vice President

 

     

 

 

APPENDIX A

 

Contractual Expense Limitations*

 

Virtus Mutual Fund   Total Fund Operating Expense Limit                 Term
   

Class

A

    Class
B 		   

Class

C

   

Class

I

   

Class

R6

    Class
T 		     
                                         
Virtus Bond Fund     0.85 %     1.60 %     1.60 %     0.60 %     0.54 %     —     November 1, 2016 – January 31, 2018
Virtus CA Tax Exempt Bond Fund     0.85 %     —       —       0.60 %     —       —     September 1, 2015 – January 31, 2018
Virtus Emerging Markets Debt Fund     1.35 %     —       2.10 %     1.10 %     —       —     September 1, 2015 – January 31, 2018
Virtus Emerging Markets Equity Income Fund     1.60 %     —       2.35 %     1.35 %     —       —     November 1, 2016 – January 31, 2018
Virtus Emerging Markets Small-Cap Fund     1.85 %     —       2.60 %     1.60 %     —       —     September 1, 2015 – January 31, 2018
Virtus Equity Trend Fund     1.42 %     —       2.02 %     1.24 %     1.03 %     —     February 8, 2016 – January 31, 2018
Virtus Essential Resources Fund     1.65 %     —       2.40 %     1.40 %     —       —     March 19, 2015 – January 31, 2018
Virtus Global Equity Trend Fund     1.75 %     —       2.50 %     1.50 %     —       —     September 1, 2015 – January 31, 2018
Virtus Global Opportunities Fund     1.55 %     2.30 %     2.30 %     1.30 %     —       —     September 1, 2015 – January 31, 2018
Virtus Global Real Estate Securities Fund     1.40 %     —       2.15 %     1.15 %     1.04 %     —     November 1, 2016 – January 31, 2018
Virtus Greater European Opportunities Fund     1.45 %     —       2.20 %     1.20 %     —       —     September 1, 2015 – January 31, 2018
Virtus Herzfeld Fund     1.60 %     —       2.35 %     1.35 %     —       —     September 1, 2015 – January 31, 2018
Virtus High Yield Fund     1.00 %     1.75 %     1.75 %     0.75 %     0.69 %     —     November 1, 2016 – January 31, 2018
Virtus International Equity Fund     1.50 %     —       2.25 %     1.25 %     —       —     September 1, 2015 – January 31, 2018
Virtus International Real Estate Securities Fund     1.50 %     —       2.25 %     1.25 %     —       —     September 1, 2015 – January 31, 2018
Virtus International Small-Cap Fund     1.60 %     —       2.35 %     1.35 %     1.26 %     —     September 1, 2015 – January 31, 2018
Virtus International Wealth Masters Fund     1.55 %     —       2.30 %     1.30 %     —       —     November 17, 2014 – January 31, 2018
Virtus Low Duration Income Fund     0.75 %     —       1.50 %     0.50 %     —       —     May 1, 2016 – January 31, 2018
Virtus Low Volatility Equity Fund     1.55 %     —       2.30 %     1.30 %     —       —     September 1, 2015 – January 31, 2018
Virtus Multi-Asset Trend Fund     1.75 %     —       2.50 %     1.50 %     —       —     September 1, 2015 – January 31, 2018
Virtus Multi-Sector Intermediate Bond Fund     0.99 %     1.74 %     1.74 %     0.74 %     0.67 %     —     January 1, 2017 – January 31, 2018
Virtus Multi-Sector Short Term Bond Fund     1.10 %     1.60 %     1.35 %     0.85 %     0.78 %     1.85 %   November 1, 2016 – January 31, 2018

 

     

 

 

Virtus Mutual Fund   Total Fund Operating Expense Limit                 Term
   

Class

A

    Class
B 		   

Class

C

   

Class

I

   

Class

R6

    Class
T 		     
Virtus Senior Floating Rate Fund 1     0.94 %     —       1.69 %     0.69 %     0.63 %     —     November 1, 2016 – January 31, 2018
Virtus Tax-Exempt Bond Fund     0.85 %     —       1.60 %     0.60 %     —       —     May 1, 2016 – January 31, 2018
Virtus Wealth Masters
Fund 		    1.45 %     —       2.20 %     1.20 %     —       —     September 1, 2015 – January 31, 2018

 

 

1 Excludes leverage expenses, if any.

 

     

 

 

Exhibit h.9

 

FORM OF INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (this “Agreement”) is effective as of October 24, 2016 by and between (i) each trust whose name is set forth on the signature page (each such trust hereafter referred to as the “Trust”), acting on behalf of itself and each of its portfolio series, whether existing on the date hereof (as listed on Appendix A hereto) or subsequently established (the “Series”) and (ii) the trustee of the Trust whose name is set forth on the signature page (the “Trustee”).

 

WHEREAS, the Trustee is a trustee of the Trust, and the Trust wishes the Trustee to continue to serve in that capacity;

 

WHEREAS, the declaration of trust of the Trust (the “Declaration of Trust”) provides that the business of the Trust shall be managed by the Trustees and they shall have all powers necessary to carry out that responsibility, does not limit any rights to indemnification that the Trustee may be entitled to by contract or otherwise under law and the Trustees have duly authorized this Agreement; and

 

WHEREAS, to induce the Trustee to continue to provide services to the Trust as a trustee of the Trust and to provide the Trustee with contractual assurance that indemnification will be available to the Trustee, the Trust desires to provide the Trustee with protection against personal liability and delineate certain procedural aspects relating to indemnification and advancement of expenses, as more fully set forth herein,

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual agreements set forth herein, the parties hereby agree as set forth below.

 

1.             Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

 

(a)           “ Disabling Conduct ” shall mean the Trustee’s willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office.

 

(b)           “ Expenses ” shall include without limitation all judgments, penalties, fines, amounts paid in settlement or compromise, prohibited transaction excise taxes, liabilities, losses, interest, expenses of investigation, attorneys’ fees, accountants’ fees, retainers, court costs, transcript costs, fees of experts and witnesses, expenses of preparing for and attending depositions and other proceedings, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other costs, disbursements or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or acting as a witness in a Proceeding.

 

(c)           “ Final Adjudication ” shall mean a final decision on the merits by court order or judgment of the court or other body before which a matter was brought, from which no further right of appeal or review exists.

 

(d)           “ Non-Party Trustee ” shall mean a trustee of the Trust who is not (i) an “interested person” of the Trust as defined in Section 2(a)(19) of the Investment Company Act of

 

     

 

 

1940, as amended, (ii) a party to the Proceeding with respect to which indemnification or advances are sought or (iii) a party to any other Proceeding based on the same or similar grounds that is then or has been pending.

 

(e)           The term “ Proceeding ” shall include without limitation any threatened, pending or completed claim, demand, discovery request, request for testimony or information, action, suit, arbitration, alternative dispute mechanism, investigation, hearing or other proceeding, including any appeal from any of the foregoing, whether civil, criminal, administrative, legislative or investigative and, except as otherwise provided herein, shall also include any proceeding brought by or in the right of the Trust or any Series and any proceeding brought by a Trustee against the Trust or any Series.

 

(f)           The Trustee’s “ service to the relevant Series ” shall include without limitation the Trustee’s service as a trustee or advisory trustee of the Trust and his or her service at the request of the Trust or the Series as a trustee, director, officer, employee, agent or representative of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

(g)           “ Special Counsel ” shall mean a law firm, or a member of a law firm, that is experienced in matters of investment company law and neither at the time of designation is, nor in the five years immediately preceding such designation was, retained to represent (i) the Trust or the Trustee (except that a majority of the Non-Party Trustees may determine, in their sole discretion, that any prior representation of the Trust or Trustee shall not disqualify such law firm or a member of a law firm from representation if the prior representation is not related to the issue in dispute) or (ii) any other party to the Proceeding (or any party reasonably expected to become a party to the Proceeding) giving rise to a claim for indemnification or advancements hereunder. Notwithstanding the foregoing, however, the term “ Special Counsel ” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Trust or the Trustee in an action to determine the Trustee’s rights pursuant to this Agreement, regardless of when the Trustee’s act or failure to act occurred.

 

2.             Indemnification . The Trust on behalf of each Series severally shall indemnify and hold harmless the Trustee against any and all Expenses actually incurred or paid by the Trustee in any Proceeding in connection with the Trustee’s service to the relevant Series, subject to the provisions of the following sentence and the provisions of Section 3 and paragraph (h) of Section 6 of this Agreement, provided that in any Proceeding initiated by the Trustee, other than one instituted pursuant to Section 6(d) or 6(f), the initiation of the Proceeding by the Trustee was approved in advance by a majority of the Non-Party Trustees. The Trustee shall be indemnified pursuant to this Section 2 against any and all Expenses unless (i) the Trustee is subject to such Expenses by reason of the Trustee’s not having acted in good faith in the reasonable belief that his or her action was in or not opposed to the best interests of the Series, (ii) the Trustee is liable to the Series or its shareholders by reason of the Trustee’s Disabling Conduct or (iii) in the case of a criminal proceeding, the Trustee had reasonable cause to believe that his or her conduct was unlawful, and with respect to each of (i), (ii) and (iii), there has been a Final Adjudication in the relevant Proceeding that the Trustee’s conduct fell within (i), (ii) or (iii).

 

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3.             Advancement of Expenses . Expenses, including accountants’ and counsel fees incurred by the Trustee (but excluding amounts paid in satisfaction of judgments, in compromise or as fines or penalties), shall be paid from time to time by the Trust on behalf of a Series in advance of Final Adjudication of a Proceeding in connection with the Trustee’s service to a Series, upon receipt by the Trust of (a) the Trustee’s written affirmation of his or her good faith belief that he or she is entitled to indemnification under this Agreement and his or her written undertaking to repay any funds advanced if it is ultimately determined that he or she is not entitled to indemnification under this Agreement, which undertaking must be an unlimited general obligation of the Trustee but need not be secured and may be accepted by the Trust without reference to the financial ability of the Trustee to make repayment or (b) a written confirmation in reasonably acceptable form that the Trust is insured against losses arising by reason of any lawful advancements and that the insurer will pay the Expenses of the Trustee in a reasonably prompt manner. Authorizations under this Section 3 shall be made in writing by a majority of the Non-Party Trustees (provided that a majority of such Non-Party Trustees then in office act on the matter), or Special Counsel stating that the Trustee has complied with the requirements of this Section 3.

 

4.             Presumptions . For purposes of the determination or opinion referred to in clause (c) of Section 3 or clauses (y)(i) or (y)(ii) of subsection (h) of Section 6 of this Agreement, the Non-Party Trustees or Special Counsel, as the case may be, shall be entitled to rely upon a rebuttable presumption that the Trustee has not engaged in Disabling Conduct.

 

5.             Witness Expenses . To the extent the Trustee is, by reason of the Trustee’s service to the relevant Series, a witness for any reason in any Proceeding to which such Trustee is not a party, such Trustee shall be indemnified against any and all Expenses actually incurred by or on behalf of such Trustee in connection therewith.

 

6.             Procedure for Determination of Entitlement to Indemnification and Advancements . A request by the Trustee for indemnification or advancement of Expenses shall be made in writing and shall be accompanied by such relevant documentation and information as is reasonably available to the Trustee. The Secretary of the Trust shall promptly advise the trustees of the Trust of such request.

 

(a)           Methods of Determination . Upon the Trustee’s request for indemnification of Expenses, a determination with respect to the Trustee’s entitlement thereto shall be made in a manner consistent with the terms of this Agreement and the Declaration of Trust. The Trustee shall cooperate with the person or persons making such determination, including without limitation providing to such person or persons upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and is reasonably available to the Trustee and reasonably necessary to such determination. Any failure by the Trustee to cooperate with the person or persons making such determination shall extend as necessary and appropriate the period or periods described in paragraph (c) of this Section 6 regarding determinations deemed to have been made. Any Expenses incurred by the Trustee in so cooperating shall be borne by the Series, irrespective of the determination as to the Trustee’s entitlement to indemnification or advancement of Expenses.

 

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(b)           Special Counsel . If the determination of entitlement to indemnification or advancement of Expenses is to be made by Special Counsel, the Special Counsel shall be selected by a majority of the Non-Party Trustees of the Trust (or, if there are no Non-Party Trustees with respect to the matter in question, by a majority of the Trustees of the Trust who are not “interested persons” of the Trust, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the “Independent Trustees”)), and the Trust shall give written notice to the Trustee advising the Trustee of the identity of the Special Counsel selected. The Trustee may, within five (5) days after receipt of such written notice, deliver to the Trust a written objection to such selection. Such objection may be asserted only on the ground that the Special Counsel so selected does not meet the requirements set forth in Section 1 and shall set forth with particularity the factual basis of such assertion. The Non-Party Trustees (or Independent Trustees, as the case may be) of the Trust shall determine the merits of the objection and, in their discretion, either determine that the proposed Special Counsel shall, despite the objection, act as such hereunder or select another Special Counsel who shall act as such hereunder.

 

If within fourteen (14) days after submission by the Trustee of a written request for indemnification or advancement of Expenses no such Special Counsel shall have been finally selected as provided in the previous paragraph, then either the Trust or the Trustee may petition an appropriate court of the State of Delaware or any other court of competent jurisdiction for the appointment as Special Counsel of a person selected by the court or by such other person as the court shall designate, and the person so appointed shall act as Special Counsel.

 

The relevant Series shall pay all reasonable fees and Expenses charged or incurred by Special Counsel in connection with his, her or its determinations pursuant to this Agreement and shall pay all reasonable fees and Expenses incident to the procedures described in this paragraph, regardless of the manner in which such Special Counsel was selected or appointed.

 

(c)           Failure to Make Timely Determination . Subject to paragraph (a) of this Section 6, if the person or persons empowered or selected to determine whether the Trustee is entitled to indemnification or advancement of Expenses (other than determinations that are made or to be made by a court) shall not have made such determination within thirty (30) days after receipt by the Trust of the request therefor, the requisite determination of entitlement to indemnification or advancement of Expenses shall be deemed to have been made, and the Trustee shall be entitled to such indemnification or advancement, absent (i) an intentional misstatement by the Trustee of a material fact, or an intentional omission of a material fact necessary to make the Trustee’s statement not materially misleading, in connection with the request for indemnification or advancement of Expenses, (ii) a prohibition of such indemnification or advancements under applicable law or the Declaration of Trust or the Trust’s by-laws, (iii) a requirement under the Investment Company Act of 1940, as amended, for insurance or security, which has not been satisfied, or (iv) a subsequent Final Adjudication or, in a matter disposed of without a Final Adjudication, determination pursuant to subsection (h) of Section 6, that the Trustee is not entitled to indemnification under this Agreement; provided , however , that such period may be extended for a reasonable period of time, not to exceed an additional thirty (30) days, if the person or persons making the determination in good faith require such additional time to obtain or evaluate documentation or information relating thereto. Any assertion under clauses (i), (ii), or (iii) of this Section 6(c) shall be made in writing, specify the basis for the assertion, and be delivered to the Trustee within thirty (30) days after receipt by the Trust of the request for

 

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indemnification or advancement of Expenses (or any extension of such period provided under this Section 6(c)). The Trustee shall be entitled to adjudication of such assertion in an appropriate court of the State of Delaware or any other court of competent jurisdiction.

 

(d)           Payment upon Determination of Entitlement . If a determination is made pursuant to Section 2 or Section 3 (or is deemed to be made pursuant to paragraph (c) of this Section 6 and, in the case of advancement of Expenses, the other conditions are satisfied) that the Trustee is entitled to indemnification or advancement of Expenses, payment of any indemnification amounts or advancements owing to the Trustee shall be made within ten (10) days after such determination (and, in the case of advancements of further Expenses, within ten (10) days after submission of supporting information, including the required undertaking). If such payment is not made when due, the Trustee shall be entitled to adjudication of the Trustee’s entitlement to such indemnification or advancements in an appropriate court of the State of Delaware or any other court of competent jurisdiction. The Trustee shall commence any proceeding seeking adjudication within 60 days following the date on which he or she first has the right to commence such proceeding pursuant to this paragraph (d). In any such proceeding, the Trust and the relevant Series shall be bound by the determination that the Trustee is entitled to indemnification or advancements, absent (i) an intentional misstatement by the Trustee of a material fact, or an intentional omission of a material fact necessary to make his or her statement not materially misleading, in connection with the request for indemnification or advancements, (ii) a prohibition of such indemnification or advancements under applicable law or (iii) a requirement under the Investment Company Act of 1940, as amended, for insurance or security, which has not been satisfied.

 

(e)           Appeal of Adverse Determination . If a determination is made that the Trustee is not entitled to indemnification or advancements (other than determinations that are made by a court), the Trustee shall be entitled to adjudication of such matter in an appropriate court of the State of Delaware or any other court of competent jurisdiction. Alternatively, the Trustee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Trustee shall commence such proceeding or arbitration within 60 days following the date on which the adverse determination is made. Any such judicial proceeding or arbitration shall be conducted in all respects as a de novo trial or arbitration on the merits, and the Trustee shall not be prejudiced by reason of such prior adverse determination.

 

(f)           Expenses of Appeal . If the Trustee seeks arbitration or a judicial adjudication to determine or enforce his or her rights under, or to recover damages for breach of, the indemnification or Expense advancement provisions of this Agreement, the Trustee shall be entitled to recover from the relevant Series, and shall be indemnified by the relevant Series against, any and all Expenses actually incurred by the Trustee in such arbitration or judicial adjudication, but only if the Trustee prevails therein. If it shall be determined in such arbitration or judicial adjudication that the Trustee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the expenses incurred by the Trustee in connection with such arbitration or judicial adjudication shall be appropriately prorated.

 

(g)         Validity of Agreement . In any arbitration or judicial proceeding commenced pursuant to this Section 6, the Trust shall be precluded from asserting that the procedures and

 

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presumptions set forth in this Agreement are not valid, binding and enforceable against the Trust or relevant Series and shall stipulate in any such court or before any such arbitrator that the Trust is bound by all the provisions of this Agreement.

 

(h)           Lack of Adjudication . Notwithstanding any provision herein to the contrary, as to any matter disposed of (whether by compromise payment, pursuant to a consent decree or otherwise) without a Final Adjudication by a court, or by any other body before which the Proceeding was brought, that the Trustee either (a) did not act in good faith in the reasonable belief that the Trustee’s action was in or not opposed to the best interests of the Series or (b) is liable to the Series or its shareholders by reason of Disabling Conduct, indemnification shall be provided if (x) there has been a determination that the Trustee did not engage in Disabling Conduct by the court or other body approving any settlement or other disposition of the matter or (y) there has been a reasonable determination, based upon a review of readily available facts (but not a full trial-type inquiry), that the Trustee acted in good faith in the reasonable belief that the Trustee’s action was in or not opposed to the best interests of the Series and is not liable to the Trust and the relevant Series or its shareholders by reason of Disabling Conduct, by (i) the vote of a majority of the Non-Party Trustees (provided that a majority of such Non-Party Trustees then in office act on the matter) or (ii) Special Counsel in a written opinion.

 

7.             General Provisions .

 

(a)           Non-Exclusive Rights . The provisions for indemnification of, and advancement of Expenses to, the Trustee set forth in this Agreement shall not be deemed exclusive of any other rights to which the Trustee may otherwise be entitled, including any other rights to be indemnified or have Expenses advanced by the Trust. For the avoidance of doubt, such other rights include, but are not limited to, any rights the Trustee may have pursuant to an Indemnification Agreement between the Trustee and each Trust. The Trust shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Trustee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise, if such payment is not recoverable from the Trustee.

 

(b)           Continuation of Provisions . This Agreement shall be binding upon all successors of the Trust, including without limitation any transferee of all or substantially all assets of a Series and any successor by merger, consolidation or operation of law and shall inure to the benefit of the Trustee’s spouse, heirs, assigns, devisees, executors, administrators and legal representatives. The provisions of this Agreement shall continue with respect to the Trust until the final termination of all Proceedings in respect of which the Trustee has asserted, is entitled to assert or has been granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by the Trustee pursuant to Section 6 relating thereto. No amendment of the Declaration of Trust or by-laws of the Trust shall limit or eliminate the right of the Trustee to indemnification and advancement of Expenses set forth in this Agreement. The Trustee’s right of indemnification and advancement of Expenses set forth in this Agreement shall survive the Trustee’s death, disability, retirement or resignation as a Trustee.

 

(c)           Selection of Counsel . The Trust shall be entitled to assume the defense of any Proceeding for which the Trustee seeks indemnification or advancement of Expenses under this Agreement. However, counsel selected by the Trustee shall conduct the defense of the Trustee

 

  - 6 -  

 

 

to the extent reasonably determined by such counsel to be necessary to protect the interests of the Trustee, and the relevant Series shall indemnify the Trustee therefor to the extent otherwise permitted under this Agreement, if (i) the Trustee reasonably determines that there may be a conflict in the Proceeding between the positions of the Trustee and the positions of the Trust or the other parties to the Proceeding that are indemnified by the Trust and not represented by separate counsel, or the Trustee otherwise reasonably concludes that representation of both the Trustee, the Trust and such other parties by the same counsel would not be appropriate, or (2) the Proceeding involves the Trustee but neither the Trust nor any such other party who is indemnified by the Trust and the Trustee reasonably withholds consent to being represented by counsel selected by the Trust. If the Trust shall not have elected to assume the defense of any such Proceeding for the Trustee within thirty (30) days after receiving written notice thereof from the Trustee, the Trust shall be deemed to have waived any right it might otherwise have to assume such defense. If the Trust does not assume or conduct the defense of any Proceeding, the Trustee shall not consent to a settlement or any other disposition not involving a Final Adjudication without the prior written consent of the Trust.

 

(d)           D&O Insurance . To the extent the Trust maintains an insurance policy or policies providing liability insurance to its trustees or its trustees who are not “interested persons” of the Trust as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, the Trustee shall be covered by such policy or policies at all times when serving as a trustee of the Trust, in accordance with its or their terms, to the maximum extent of the coverage available for any similarly situated trustee of the Trust. For a period of ten (10) years or such shorter period as the “tail” or other coverage described below is reasonably available after the Trustee has ceased to serve as a trustee of the Trust, whether through resignation, death or otherwise, and to the extent insurance as provided in the previous sentence does not continue to cover the Trustee even though he or she is no longer serving as a trustee of the Trust, the Trust shall purchase and maintain in effect, through “tail” or other appropriate coverage, one or more policies of insurance on behalf of the Trustee to the maximum extent of the coverage provided to then serving trustees of the Trust (or, if the Trust has been terminated, the coverage in effect immediately prior to such termination), unless the purchase of such insurance by the Trust is not permitted by applicable law, including for these purposes any fiduciary duties applicable to the persons then constituting the trustees of the Trust, such insurance is not generally available, or in the reasonable business judgment of the persons then constituting the trustees of the Trust, the premium for such insurance is substantially disproportionate to the amount of coverage afforded. In the event of liquidation of the Trust, the Trust shall, prior to such liquidation, establish one or more reserves in amounts reasonably necessary to meet its obligations under this Agreement, including, without limitation, amounts reasonably necessary to pay insurance premiums, to pay deductibles, or to meet claims for indemnification or defense costs that are not reasonably likely to be recovered under applicable insurance policies.

 

(e)           Subrogation . In the event of any payment by any Series pursuant to this Agreement, the Series shall be subrogated to the extent of such payment to all of the rights of recovery of the Trustee, who shall, upon reasonable written request by the Trust on behalf of the Series and at the Series’ expense, execute all such documents and take all such reasonable actions as are necessary to enable the Trust to enforce such rights. Nothing in this Agreement shall be deemed to diminish or otherwise restrict the right of the Trust or the Trustee to proceed or collect against any insurers or to give such insurers any rights against the Trust under or with

 

  - 7 -  

 

 

respect to this Agreement, including without limitation any right to be subrogated to the Trustee’s rights hereunder, unless otherwise expressly agreed to by the Trust in writing, and the obligation of such insurers to the Trust and the Trustee shall not be deemed to be reduced or impaired in any respect by virtue of the provisions of this Agreement.

 

(f)            Notice of Proceedings . The Trustee shall promptly notify the Trust in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding that may be subject to indemnification or advancement of Expenses pursuant to this Agreement, but no delay in providing such notice shall in any way limit or affect the Trustee’s rights or the Trust’s obligations under this Agreement.

 

(g)           Notices . All notices, requests, demands and other communications to a party pursuant to this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally (with a written receipt by the addressee) or two (2) days after being sent (i) by certified or registered mail, postage prepaid, return receipt requested or (ii) by nationally recognized overnight courier service to 100 Pearl Street, Hartford, CT 06103 (if addressed to the Trust), the address specified on the signature page of this Agreement (if addressed to the Trustee) or such other address as may have been furnished by such party by notice in accordance with this paragraph.

 

(h)           Separate Agreements . Each Trust is entering into this Agreement on behalf of itself and its Series individually, and no Trust or its Series shall be deemed to bear any responsibility hereunder for the obligations of any other Trust or any other Trust’s Series.

 

(i)            Severability . If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, in whole or in part, for any reason whatsoever, (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation each portion of any Section of this Agreement containing any provision that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the remaining provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

(j)            Modification and Waiver . This Agreement supersedes any existing or prior agreement between the Trust and the Trustee pertaining to the subject matter of indemnification and advancement of Expenses, other than the Declaration of Trust, the by-laws of the Trust and the terms of any liability insurance policies, which shall not be modified or amended by this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both parties or their respective successors or legal representatives; provided , however , that any supplements, modifications or amendments to the Declaration of Trust, by-laws or the terms of the liability insurance policy or policies of the Trust shall not be deemed to constitute supplements, modifications or amendments to this Agreement. Any waiver by either party of any breach by the other party of any provision contained in this Agreement to be performed by the other party must be in writing and signed by the waiving party or such party’s successor or legal representative, and no such waiver shall be deemed a waiver of similar or other provisions at the same or any prior or subsequent time.

 

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(k)           Joinder of New Series . In the event that additional Series are created and added to the Trust from time to time, Appendix A listing each Series of the Trust covered by this Agreement may be amended to add the additional Series by the Trust’s execution and delivery to the Trustee of an amended Appendix A . Irrespective of whether the Trust executes and delivers to the Trustee an amended Appendix A , the additional Series shall be deemed a “Series” for all purposes of this Agreement as of the date that it is created and added to the Trust.

 

(l)            Headings . The headings of the Sections of this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

 

(m)           Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be an original, and all of which when taken together shall constitute one document.

 

(n)           Applicable Law . This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without reference to principles of conflict of laws.

 

(o)           WAIVER OF RIGHT TO JURY TRIAL. BY EXECUTING THIS AGREEMENT, THE PARTIES KNOWINGLY AND WILLINGLY WAIVE ANY RIGHT THEY HAVE UNDER APPLICABLE LAW TO A TRIAL BY JURY IN ANY DISPUTE ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE ISSUES RAISED BY THAT DISPUTE.

 

(p)           Miscellaneous . Copies of the Declaration of Trust are on file with the Secretary of State of the State of Delaware. The obligations of or arising out of this Agreement are not binding upon any of the Trust’s trustees, officers, employees, agents or shareholders individually, but are binding solely upon the assets and property of the respective Series in accordance with their proportionate interests hereunder. The assets and liabilities of each of the Series are separate and distinct, and the obligations of or arising out of this instrument are binding solely upon the assets or property of the respective Series.

 

[The remainder of this page is intentionally left blank]

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in its name and on its behalf on the date set forth above.

 

Virtus ALTERNATIVE SOLUTIONS FUNDS ,   TRUSTEE
on behalf of Itself and each of its Series    
listed on Appendix A attached hereto    
     
Virtus EQUITY Trust ,    
on behalf of Itself and each of its Series    
listed on Appendix A attached hereto    
     
Virtus OPPORTUNITIES Trust ,    
on behalf of Itself and each of its Series    
listed on Appendix A attached hereto    
     
Virtus RETIREMENT Trust ,    
on behalf of Itself and each of its Series    
listed on Appendix A attached hereto    
     
VIRTUS VARIABLE INSURANCE TRUST ,    
on behalf of Itself and each of its Series    
listed on Appendix A attached hereto    
     
     
     
Name:   Name:
Title:    
    Address for Notices:

   

     

 

 

APPENDIX A

 

TO

 

INDEMNIFICATION AGREEMENT

 

Virtus Alternative Solutions Trust, on behalf of each of:

Virtus Credit Opportunities Fund

Virtus Multi-Strategy Target Return Fund

Virtus Select MLP and Energy Fund

Virtus Strategic Income Fund

 

Virtus Equity Trust, on behalf of each of:

 

Virtus Contrarian Value Fund

Virtus Enhanced Core Equity Fund (fka Virtus Growth & Income Fund)

Virtus Mid-Cap Core Fund

Virtus Mid-Cap Growth Fund

Virtus Quality Large-Cap Value Fund

Virtus Quality Small-Cap Fund

Virtus Small-Cap Core Fund

Virtus Small-Cap Sustainable Growth Fund

Virtus Strategic Allocation Fund (fka Virtus Balanced Fund)

Virtus Strategic Growth Fund

Virtus Tactical Allocation Fund

 

Virtus Opportunities Trust, on behalf of each of:

 

Virtus Alternatives Diversifier Fund

Virtus Bond Fund

Virtus CA Tax-Exempt Bond Fund

Virtus Emerging Markets Debt Fund

Virtus Emerging Markets Equity Income Fund

Virtus Emerging Markets Opportunities Fund

Virtus Emerging Markets Small Cap Fund

Virtus Equity Trend Fund

Virtus Essential Resources Fund

Virtus Foreign Opportunities Fund

Virtus Global Equity Trend Fund

Virtus Global Infrastructure Fund

Virtus Global Opportunities Fund

Virtus Global Real Estate Securities Fund

 

  A- 1  

 

 

Virtus Greater European Opportunities Fund

Virtus Herzfeld Fund

Virtus High Yield Fund

Virtus International Equity Fund

Virtus International Real Estate Securities Fund

Virtus International Small-Cap Fund

Virtus International Wealth Masters Fund

Virtus Low Duration Income Fund

Virtus Low Volatility Equity Fund

Virtus Multi-Asset Trend Fund

Virtus Multi-Sector Intermediate Bond Fund

Virtus Multi-Sector Short Term Bond Fund

Virtus Real Estate Securities Fund

Virtus Sector Trend Fund

Virtus Senior Floating Rate Fund

Virtus Tax-Exempt Bond Fund

Virtus Wealth Masters Fund

 

Virtus Retirement Trust, on behalf of each of:

 

Virtus DFA 2015 Target Date Retirement Income Fund

Virtus DFA 2020 Target Date Retirement Income Fund

Virtus DFA 2025 Target Date Retirement Income Fund

Virtus DFA 2030 Target Date Retirement Income Fund

Virtus DFA 2035 Target Date Retirement Income Fund

Virtus DFA 2040 Target Date Retirement Income Fund

Virtus DFA 2045 Target Date Retirement Income Fund

Virtus DFA 2050 Target Date Retirement Income Fund

Virtus DFA 2055 Target Date Retirement Income Fund

Virtus DFA 2060 Target Date Retirement Income Fund

 

Virtus Variable Insurance Trust, on behalf of each of:

 

Virtus Capital Growth Series

Virtus Enhanced Core Equity Series (fka Virtus Growth & Income Series)

Virtus Equity Trend Series

Virtus International Series

Virtus Multi-Sector Fixed Income Series

Virtus Real Estate Securities Series

Virtus Small-Cap Growth Series

Virtus Small-Cap Value Series

Virtus Strategic Allocation Series

 

  A- 2  

 

Exhibit i.6 

 

CONSENT OF SULLIVAN & WORCESTER LLP

 

We hereby consent to the use of our name and any reference to our firm in the Statement of Additional Information of Virtus Opportunities Trust (the “Trust”), included as part of Post-Effective Amendment No. 92 to the Trust’s Registration Statement on Form N-1A (File No. 033-65137). In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.

 

 

/s/ Sullivan & Worcester LLP

Sullivan & Worcester LLP

 

 

Washington, DC

January 19, 2017

 

 

 

   

 

 

Exhibit j.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our reports dated November 22, 2016, relating to the financial statements and financial highlights which appear in the September 30, 2016 Annual Reports to Shareholders of Virtus Opportunities Trust, which are also incorporated by reference into the Registration Statement. We also consent to the references to us under the headings "Financial Highlights”, “Glossary”, “Independent Registered Public Accounting Firm,” “Non-Public Portfolio Holdings Information,” and "Financial Statements" in such Registration Statement.

 

/s/ PricewaterhouseCoopers LLP

  

Philadelphia, Pennsylvania  
January 20, 2017  

 

 

 

Exhibit n.1

 

VIRTUS FUNDS

 

AMENDED AND RESTATED

PLAN PURSUANT TO RULE 18f-3

under the

INVESTMENT COMPANY ACT OF 1940

 

INTRODUCTION

 

The Purpose of this Plan is to specify the attributes of the classes of shares of the funds of Virtus Funds including the expense allocations, conversion features and exchange features of each class, as required by Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940 Act"). The Virtus Funds are comprised of several trusts (each a “Trust” and collectively the “Trusts”) which in turn are comprised of a number of funds (each a “Fund” and collectively the “Funds”) offering various classes of shares, all of which are listed on the attached Schedule A. In general, shares of each class will have the same rights and obligations except for one or more expense variables (which will result in different yields, dividends and net asset values for the different classes), certain related voting and other rights, exchange privileges, conversion rights and class designation.

 

GENERAL FEATURES OF THE CLASSES

 

Shares of each class of a Fund of the Trusts shall represent an equal pro rata interest in such Fund and, generally, shall have identical voting, dividend, liquidation and other rights, preferences, powers, restrictions, limitations, qualifications, designations and terms and conditions, except that: (a) each class shall have a different designation; (b) each class shall bear any class expenses: (c) each class shall have exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and each class shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class; and (d) each class may have different exchange and/or conversion features.

 

ALLOCATION OF INCOME AND EXPENSES

 

i. General.

 

The gross income, realized and unrealized capital gains and losses and expenses (other than Class Expenses, as defined below) of each Fund shall be allocated to each class on the basis of its net asset value relative to the net asset value of the Fund.

 

ii. Class Expenses.

 

Expenses attributable to a particular class ("Class Expenses") shall be limited to Rule 12b-1 and shareholder servicing fees and such other expenses as designated by the Trusts’ Treasurer, subject to Board approval and/or ratification. Class Expenses shall be allocated to the class for which they are incurred.

 

In the event that a particular Class Expense is no longer reasonably allocable by class or to a particular class, it shall be treated as a Fund expense and in the event a Fund expense becomes allocable as a Class Expense, it shall be so allocated, subject to compliance with Rule 18f-3 and Board approval or ratification.

 

The initial determination of expenses that will be allocated as Class Expenses and any subsequent changes thereto as set forth in this Plan shall be reviewed by the Board of Trustees and

 

     

 

 

approved by such Board and by a majority of the Trustees who are not "interested persons" of the Funds, as defined in the 1940 Act ("Independent Trustees").

 

DESIGNATION OF THE CLASSES AND SPECIFIC FEATURES

 

Types of classes of each of the Funds may include: “A Shares”, “B Shares”, “C Shares”, “C1 Shares”, “I Shares”, “R6 Shares”, and “T Shares”. To the extent that more than one class is offered by a Fund, each class of such Fund has a different arrangement for shareholder services or distribution or both, as follows:

 

A SHARES

 

A Shares are offered at net asset value plus an initial sales charge as set forth in the then current prospectuses of a Fund. The initial sales charge may be waived or reduced on certain types of purchases as set forth in the Fund's then current prospectus. In certain cases, A Shares are also offered subject to a contingent deferred sales charge (subject to certain reductions or eliminations of the sales charge as described in the applicable prospectus).

 

A Shares of a Fund may pay VP Distributors, LLC (the “Distributor”) Rule 12b-1 fees or shareholder servicing fees of up to 0.25%, (annualized) of the average daily net assets of the Fund's A Shares. Rule 12b-1 fees may be used for, but are not limited to, payment of compensation, including incentive compensation to securities dealers and financial institutions and organizations to obtain various distribution related and/or shareholder services for the investors in the A Shares; payment of compensation to and expenses of personnel of the Distributor who support the distribution of the A Shares; expenses related to the cost of financing or providing such financing from the Distributor’s or an affiliate’s resources in connection with the Distributor’s payment of such distribution expenses and the payment of other direct distribution costs such as the cost of sales literature, advertising and prospectuses. Shareholder services include, but are not limited to, transmitting prospectuses, statements of additional information, shareholder reports, proxy statements and other materials to shareholders; providing educational materials; providing facilities to answer questions about the Funds; receiving and answering correspondence; assisting shareholders in completing application forms and selecting dividend and other account options and providing such other information and services as the Distributor or Fund may reasonably request. Fees paid under a shareholder services plan not adopted pursuant to Rule 12b-1 may only be used for shareholder service activities. A Shares do not have a conversion feature.

 

C SHARES

 

C Shares of a Fund are offered at net asset value without the imposition of any sales charge. C Shares are also offered subject to a contingent deferred sales charge. C Shares of a Fund may pay the Distributor a fee of up to 0.25% (annualized) of the average daily net assets of the Fund’s C Shares for shareholder servicing activities and a distribution fee of up to 0.75% (annualized) of the average daily net assets of the Fund’s C Shares pursuant to a Rule 12b-1 plan (0.25% for Virtus Multi-Sector Short Term Bond Fund) for distribution services. C Shares do not have a conversion feature.

 

C1 SHARES

 

C1 Shares of a Fund are offered at net asset value without the imposition of a sales charge. C1 Shares are also offered subject to a contingent deferred sales charge. C1 Shares of a Fund may pay the Distributor a fee of up to 0.25% (annualized) of the average daily net assets of the Fund’s C1 Shares for shareholder servicing activities and a distribution fee of up to 0.75% (annualized) of the average daily net assets of the Fund’s C1 Shares pursuant to a Rule 12b-1 plan for distribution services. C1 Shares do not have a conversion feature.

 

     

 

 

I SHARES

 

I Shares of a Fund are offered at net asset value without the imposition of any sales charge, Rule 12b-1 or shareholder servicing fees.

 

I Shares do not have a conversion feature.

 

R6 SHARES

 

R6 Shares of a Fund are offered at net asset value without the imposition of any sales charge, Rule 12b-1 fees, shareholder servicing fees or intermediary sub-transfer agency fees. R6 Shares do not have a conversion feature.

 

T SHARES

 

T Shares are offered at net asset value plus an initial sales charge as set forth in the then current prospectuses of a Fund. All or a portion of the initial sales charge may be waived or reduced on certain types of purchases or for certain intermediaries as set forth in the Fund's then current prospectus. T Shares of a Fund may pay the Distributor Rule 12b-1 fees or shareholder servicing fees of up to 0.25%, (annualized) of the average daily net assets of the Fund's T Shares. T shares do not have a conversion feature.

 

VOTING RIGHTS

 

Each class shall have exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement. Each class shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class.

 

EXCHANGE PRIVILEGES

 

Shareholders of a class may exchange their shares for shares of another Fund in accordance with Section 11(a) of the 1940 Act, the rules thereunder and the requirements of the applicable prospectuses as follows: Each class of shares of a Fund may be exchanged for the corresponding class of shares of another Fund. Shareholders of C1 Shares of Virtus Multi-Sector Short Term Bond Fund may exchange shares of such class for C Shares in any other Virtus Fund for which exchange privileges are available, at the relative net asset values of the respective shares to be exchanged and with no sales charge, provided the shares to be acquired in the exchange are, as may be necessary, qualified for sale in the shareholder’s state of residence and subject to the applicable requirements, if any, as to minimum amount. Shareholders of one class of shares of a Fund may exchange such shares for shares of another class in the same Fund having lower fixed expenses, at the relative net asset values of the respective shares to be exchanged and with no sales charge, provided that: (a) the shares to be acquired in the exchange are, as may be necessary, qualified for sale in the shareholder’s state of residence; and (b) such exchange is permitted by the disclosure documents of the Fund. Class T shares are not exchangeable for any other share class.

 

     

 

 

BOARD REVIEW

 

The Board of Trustees shall review this Plan as frequently as it deems necessary. Prior to any material amendments(s) to this Plan (including any proposed amendments to the method of allocating Class Expenses and/or Fund expenses), The Board of Trustees, including a majority of the Independent Trustees, must find that the Plan is in the best interests of each class of shares of the affected Fund(s) individually and the affected Fund(s) as a whole. In considering whether to approve any proposed amendment(s) to the Plan, the Board of Trustees of the Trust shall request and evaluate such information as they consider reasonably necessary to evaluate the proposed amendment(s) to the Plan.

 

Adopted: January 6, 2017

 

     

 

 

SCHEDULE A

(as of January 6, 2017)

 

   

A

Shares

 

C

Shares

 

I

Shares

 

R6

Shares

 

T

Shares

                     
Virtus Alternative Solutions Trust                    
Virtus Credit Opportunities Fund   X   X   X   X    
Virtus Multi-Strategy Target Return Fund   X   X   X   X   X
Virtus Select MLP and Energy Fund   X   X   X        
Virtus Strategic Income Fund   X   X   X        
                     
Virtus Equity Trust                    
Virtus Contrarian Value Fund   X   X           X
Virtus Enhanced Core Equity Fund (fka Virtus Growth & Income Fund)   X   X   X       X
Virtus Mid-Cap Core Fund   X   X   X        
Virtus Mid-Cap Growth Fund   X   X   X       X
Virtus Quality Large-Cap Value Fund   X   X   X       X
Virtus Quality Small-Cap Fund   X   X   X   X   X
Virtus Small-Cap Core Fund   X   X   X   X   X
Virtus Small-Cap Sustainable Growth Fund   X   X   X       X
Virtus Strategic Allocation Fund (fka Virtus Balanced Fund)   X   X           X
Virtus Strategic Growth Fund   X   X   X       X
Virtus Tactical Allocation Fund   X   X           X
                     
Virtus Opportunities Trust                    
Virtus Alternatives Diversifier Fund   X   X   X        
Virtus Bond Fund   X   X   X   X    
Virtus CA Tax-Exempt Bond Fund   X       X        
Virtus Emerging Markets Debt Fund   X   X   X        
Virtus Emerging Markets Equity Income Fund   X   X   X        
Virtus Emerging Markets Opportunities Fund   X   X   X   X   X
Virtus Emerging Markets Small-Cap Fund   X   X   X        
Virtus Equity Trend Fund   X   X   X   X   X
Virtus Essential Resources Fund   X   X   X        
Virtus Foreign Opportunities Fund   X   X   X   X   X
Virtus Global Equity Trend Fund   X   X   X        
Virtus Global Infrastructure Fund   X   X   X        
Virtus Global Opportunities Fund   X   X   X       X
Virtus Global Real Estate Securities Fund   X   X   X   X   X
Virtus Greater European Opportunities Fund   X   X   X        

 

     

 

 

 

   

A

Shares

 

C

Shares

 

I

Shares

 

R6

Shares

 

T

Shares

Virtus Herzfeld Fund   X   X   X       X
Virtus High Yield Fund   X   X   X   X   X
Virtus International Equity Fund   X   X   X        
Virtus International Real Estate Securities Fund   X   X   X        
Virtus International Small-Cap Fund   X   X   X   X    
Virtus International Wealth Masters Fund   X   X   X        
Virtus Low Duration Income Fund   X   X   X       X
Virtus Low Volatility Equity Fund   X   X   X        
Virtus Multi-Asset Trend Fund   X   X   X        
Virtus Multi-Sector Intermediate Bond Fund   X   X   X   X   X
Virtus Multi-Sector Short Term Bond Fund 1   X   X   X   X   X
Virtus Real Estate Securities Fund   X   X   X   X   X
Virtus Sector Trend Fund   X   X   X       X
Virtus Senior Floating Rate Fund   X   X   X   X   X
Virtus Tax-Exempt Bond Fund   X   X   X        
Virtus Wealth Masters Fund   X   X   X        
                     
Virtus Retirement Trust                    
Virtus DFA 2015 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2020 Target Date Retirement Income Fund   X       X   X   X
Virtus DFA 2025 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2030 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2035 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2040 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2045 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2050 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2055 Target Date Retirement Income Fund   X       X   X    
Virtus DFA 2060 Target Date Retirement Income Fund   X       X   X    

  

 

1 Virtus Multi-Sector Short Term Bond Fund also offers Class C1 Shares.

 

     

 

 

Exhibit p.4

 

CODE OF ETHICS

OF

THE HERZFELD CARIBBEAN BASIN FUND, INC.

&

THOMAS J. HERZFELD ADVISORS, INC.

 

PREAMBLE

 

This Code of Ethics is being adopted in compliance with the requirements of Rule 17j-1 under the Investment Company Act of 1940 (the “Act”) and Rule 204A-1 under the Investment Advisers Act of 1940 (the “Advisers Act”) adopted by the United States Securities and Exchange Commission to effectuate the purposes and objectives of the rules.

 

Rule 17j-1 makes it unlawful for certain persons, in connection with purchase or sale by such person of a security held or to be acquired by The Herzfeld Caribbean Basin Fund, Inc. (the “Fund”):

 

(1) To employ a device, scheme or artifice to defraud the Fund;

 

(2) To make to the Fund any untrue statement of a material fact or omit to state to the Fund a material fact necessary in order to make the statements made, in light of the circumstances in which they are made, not misleading;

 

(3) To engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon the Fund; or

 

(4) To engage in a manipulative practice with respect to the Fund.

 

Section 206 of the Advisers Act makes it unlawful for certain persons including Thomas J. Herzfeld Advisors, Inc. (the “Adviser”):

 

(1)          To employ any device, scheme or artifice to defraud any client or prospective client;

 

(2)          To engage in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client;

 

(3)          Acting as principal for his own account, knowingly to sell any security to or purchase any security from a client; or acting as broker for a person other than such client, knowingly to effect any sale or purchase of any security for the account of such client, without disclosing to such client in writing before the completion of such transaction, the capacity in which he is acting and obtaining the consent of the client to such transaction. The prohibitions of this paragraph (3) shall not apply to any transaction with a customer of a broker or dealer if such broker or dealer is not acting as an investment adviser in relation to such transaction; or

 

     

 

 

(4)          To engage in any act, practice, or course of business which is fraudulent, deceptive or manipulative.

 

Rule 17j-1 and/or Rule 204A-1 require the Fund and its investment adviser to adopt a written Code of Ethics containing provisions reasonably necessary to prevent persons from engaging in acts in violation of the above standard and to use reasonable diligence, and institute procedures reasonably necessary to prevent violations of the Code.

 

Set forth below is the Code of Ethics adopted by the Board of Directors of the Fund (the “Fund Board”) and by the Adviser in compliance with the Rule. This Code is based upon the principle that the directors and officers of the Fund, and certain affiliated persons of the Fund and Adviser, owe a fiduciary duty to, among others, the shareholders of the Fund to conduct their affairs, including their personal securities transactions, in such manner to avoid (i) serving their own personal interests ahead of shareholders; (ii) taking inappropriate advantage of their position with the Fund; and (iii) any actual or potential conflicts of interest or any abuse of their position of Fund and responsibility.

 

1. DEFINITIONS

 

(a) “Access Person” means any Advisory Person of the Fund or the Fund’s Adviser.

 

(b) “Advisory Person” means

 

(i) any director, trustee, officer, general partner or employee of the Fund or its Adviser (or any company in a control relationship to the Fund or investment adviser) who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding, the purchase or sale of Covered Securities by the Fund, or whose functions relate to the making of any recommendations with respect to such purchase or sales; and

 

(ii) any natural person in a control relationship to the Fund or the Adviser who obtains information concerning recommendations made to the Fund with regard to the purchase or sale of a Covered Security by the Fund.

 

(c) A security is “ being considered for purchase or sale” or is “ being purchased or sold” when a recommendation to purchase or sell the security has been made and communicated to the trading desk, which includes when the Fund has a pending “buy” or “sell” order with respect to a security, and, with respect to the person making the recommendation, when such person seriously considers making such a recommendation.

 

(d) “Beneficial ownership” shall be as defined in, and interpreted in the same manner as it would be in determining whether a person is subject to the provisions of, Section 16 of the Securities Exchange Act of 1934 and the rules and regulations thereunder which, generally speaking, encompasses those situations where the beneficial owner has the right to enjoy some economic benefit from the ownership of the security regardless of who is the registered owner. This would include:

 

  - 2 -  

 

 

(i) securities which a person holds for his or her own benefit either in bearer form, registered in his or her own name or otherwise regardless of whether the securities are owned individually or jointly;

 

(ii) securities held in the name of a member of his or her immediate family (spouse or child) sharing the same household;

 

(iii) securities held by a trustee, executor, administrator, custodian or broker;

 

(iv) securities owned by a general partnership of which the person is a member or a limited partnership of which such person is a general partner;

 

(v) securities held by a corporation which can be regarded as a personal holding company of a person; and

 

(vi) securities recently purchased by a person and awaiting transfer into his or her name.

 

(e) “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the Act.

 

(f) “ Chief Compliance Officer ” for the Fund means Reanna Lee or her successor(s) appointed by the Fund Board. “ Chief Compliance Officer ” for the Adviser means Reanna Lee or her successor(s) appointed by the board of directors of the Adviser.

 

(g) “Covered Security” means a security, except that it shall not include

 

(i) direct obligations of the Government of the United States;

 

(ii) bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements; and

 

(iii) shares issued by registered, open-end investment companies, except shares issued by exchange traded funds or ETFs.

 

(h) “Independent Director” means a Director of the Fund who is not an “interested person” of the Fund within the meaning of Section 2(a)(19) of the Act.

 

(i) “Initial Public Offering” (“IPO”) means an offering of securities registered under the Securities Act of 1933 (“Securities Act”), the issuer of which, immediately before the registration, was not subject to the reporting requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934.

 

  - 3 -  

 

 

(j) “Investment Personnel” means:

 

(i) Any Advisory Person who, in connection with his regular functions or duties, makes or participates in making recommendations regarding the purchase or sale of securities by the Fund.

 

(ii) Any natural person who controls the Fund or Adviser and who obtains current information concerning recommendations made to the Fund regarding the purchase or sale of securities by the Fund.

 

(k) “Limited Offering” means an offering that is exempt from registration under the Securities Act pursuant to Section 4(2) or Section 4(6) or pursuant to rule 504, rule 505 or rule 506 under the Securities Act.

 

(l) “Purchase or Sale of a Covered Security” includes the writing of an option to purchase or sell a Covered Security.

 

(m) “Security Held or to be Acquired” by the Fund means:

 

(i) any Covered Security which, within the most recent fifteen (15) days:

 

(A) is or has been held by the Fund; or

 

(B) is being or has been considered by the Fund or the Adviser for purchase by the Fund; and

 

(ii) any option to purchase or sell, and any security convertible into or exchangeable for, a Covered Security described in paragraph (m)(i) of this section.

 

(n) “security” as defined in Section 2(a)(36) of the Act means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into in a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

 

2. PROHIBITED TRANSACTIONS

 

(a) No Access Person shall engage in any act, practice or course of conduct, which would violate the provisions of Rule 17j-1 under the Act, Section 206 of the Adviser Act or Rule 204A-1 under the Advisers Act.

 

  - 4 -  

 

 

(b) No Access Person shall:

 

(i) purchase or sell, directly or indirectly, any Covered Security in which he has or by reason of such transaction acquires, any direct or indirect beneficial ownership and which to his or her actual knowledge at the time of such purchase or sale is a Security Held or to be Acquired by the Fund or the Adviser as defined under paragraph 1(m) above;

 

(ii) disclose to other persons the securities activities engaged in or contemplated for the various series of the Fund;

 

(iii) seek or accept anything of value, either directly or indirectly, from broker- dealers or other persons providing services to the Fund because of such person’s association with the Fund. For the purposes of this provision, the following gifts from broker-dealers or other persons providing services to the Fund will not be considered to be in violation of this section:

 

(A) an occasional meal;

 

(B) an occasional ticket to a sporting event, the theater or comparable entertainment;

 

(C) a holiday gift of fruit or other foods, or other comparable gift.

 

(c) No Investment Personnel shall:

 

(i) Acquire directly or indirectly any beneficial ownership in any securities in an IPO if such security is being considered for purchase or sale by the Fund or is being purchased or sold by the Fund.

 

(ii) Acquire directly or indirectly any beneficial ownership in any securities in a Limited Offering without prior approval of the Chief Compliance Officer or other person designated by the Fund Board. Any person authorized to purchase securities in a Limited Offering shall disclose such investment when they play a part in any subsequent consideration of an investment by the Fund in the issuer. In such circumstances, the Fund’s decision to purchase securities of the issuer shall be subject to independent review by the Fund’s officers with no personal interest in the issuer.

 

(iii) Applicable to all Adviser employees , buy or sell a Covered Security within seven (7) calendar days before and after any trade in that security by a Fund managed by the Adviser. Any profits realized on trades within the proscribed period are required to be disgorged.

 

(iv) Serve on the board of directors of any publicly traded company without prior authorization of the Chairman and/or President of the Fund. Any such authorization shall be based upon a determination that the board service would be consistent with the interests of the Fund and its shareholders.

 

  - 5 -  

 

 

3. EXEMPTED TRANSACTIONS

 

The prohibitions of Sections 2(b) and 2(c) shall not apply to:

 

(a) purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control;

 

(b) purchases or sales which are non-volitional on the part of either the Access Person or the Fund;

 

(c) purchases which are part of an automatic dividend reinvestment plan;

 

(d) purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

 

(e) purchases or sales other than those exempted in (a) through (d) of this Section 3 that have been authorized in advance and in writing by the Chief Compliance Officer following a specific determination that the transaction is consistent with the provisions of the Preamble;

 

(f) purchases or sales of publicly traded shares of companies that have a market capitalization at the time of purchase in excess of $5 billion; and

 

(g) purchase or sale transactions by Investment Personnel in accordance with the investment program of Managed Portfolios, as defined and published monthly in The Investor’s Guide to Closed -End Funds , provided that such transactions are executed simultaneously, and at the same price as, a purchase or sale by the Fund or, if not executed simultaneously with the Managed Portfolios then after such transactions have been executed. All such transactions by Investment Personnel are not required to be pre-cleared by the CCO.

 

4. HOLDING PERIOD RULE

 

As long as the nature of investment in any fund advised or subadvised by the Thomas J. Herzfeld Advisors, Inc. is to invest in closed-end funds, Access Persons must hold all closed-end funds for no less than thirty (30) days.

 

Exempted Transactions . The prohibitions of the Holding Period shall not apply to:

 

(a) purchases or sales effected in any account over which the Access Person has no direct or indirect influence or control;

 

(b) purchases or sales which are non-volitional on the part of either the Access Person or the Fund;

 

(c) purchases which are part of an automatic dividend reinvestment plan;

 

(d) purchases effected upon the exercise of rights issued by an issuer pro rata to all

 

  - 6 -  

 

 

holders of a class of its securities, to the extent such rights were acquired from such issuer, and sales of such rights so acquired;

 

(e) purchases or sales other than those exempted in (a) through (d) of this Section that have been authorized in advance and in writing by the Chief Compliance Officer following a specific determination that the transaction is consistent with the provisions of the Preamble;

 

(f) purchase or sales transactions by Investment Personnel in accordance with the investment program of Managed Portfolios, as defined and published monthly in The Investor’s Guide to Closed -End Funds , provided that such transactions are executed simultaneously, and at the same price as, a purchase or sale by the Fund or, if not executed simultaneously with the Managed Portfolios then after such transactions have been executed. All such transactions by Investment Personnel are not required to be pre-cleared by the CCO.

 

(g) covered accounts subject to advisory fees.

 

5. COMPLIANCE PROCEDURES

 

(a) Pre-clearance

 

With the exception of the Independent Directors, all Access Persons shall receive prior approval from the Chief Compliance Officer or other officer designated by the Fund Board or Adviser’s board, as the case may be, before purchasing or selling securities. No pre-clearance request will be approved to buy or sell a Covered Security within seven (7) calendar days before and after any trade in that security by a Fund managed by the Adviser. Any approval is valid only for one day after authorization is received. If an Access Person is unable to effect the securities transaction during such period, he or she must re-obtain approval prior to effecting the securities transaction.

 

(b) Reporting Requirements

 

Initial & Annual Reports. All Access Persons, except Independent Directors, shall disclose to the Chief Compliance Officer within 10 days of becoming an Access Person, and thereafter on an annual basis as of December 31(i) the name, number of shares and principal amount of each Covered Security in which the Access Person has any direct or indirect beneficial ownership and (ii) the name of any broker, dealer or bank with whom the Access Person maintains a securities account. The initial holdings report shall be made on the form attached as Exhibit A , and the annual holdings report shall be made on the form attached as Exhibit B . The information on the initial holdings and annual reports must be current as of a date no more than 45 days before the date the person becomes an Access Person.

 

Quarterly Reports. Every Access Person shall report to the Chief Compliance Officer the information described below with respect to transactions in any

 

  - 7 -  

 

 

Covered Security in which such person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership in the security; provided, however, that an Access Person shall not be required to make a report with respect to transactions effected for any account over which such person has no direct or indirect influence or control.

 

(i) Each Independent Director need only report a transaction in a Covered Security if such Director, at the time of that transaction, knew, or, in the ordinary course of fulfilling his official duties as a trustee, should have known that on the date, or during the 7 calendar days immediately before or after such date, of the Director’s transaction, such Covered Security was purchased or sold by the Fund or was being considered for purchase or sale by the Fund or Adviser.

 

(ii) Reports required to be made under this Paragraph (b) shall be made not later than 30 days after the end of the calendar quarter. Every Access Person shall be required to submit a report for all periods, including those periods in which no securities transactions were effected. A report shall be made on the form attached hereto as Exhibit C or on any other form containing the following information:

 

With respect to any transaction during the quarter in a Covered Security in which the Access Person had any direct or indirect beneficial ownership:

 

(A) the date of the transaction, the name, the interest rate and maturity date (if applicable), the number of shares, and the principal amount of each Covered Security involved;

 

(B) the nature of the transaction ( i.e. , purchase, sale or any other type of acquisition or disposition);

 

(C) the price of the Covered Security at which the transaction was effected;

 

(D) the name of the broker, dealer or bank with or through which the transaction was effected; and

 

(E) the date that the report is submitted by the Access Person.

 

  - 8 -  

 

 

With respect to any securities account established at a broker, dealer, or bank during the quarter for the direct or indirect benefit of the Access Person:

 

(A) the name of the broker, dealer or bank with whom the Access Person established the account;

 

(B) the date the account was established; and

 

(C) the date that the report is submitted by the Access Person.

 

Any report may contain a statement that the report shall not be construed as an admission by the person making such report that he or she has any direct or indirect beneficial ownership in the security to which the report relates.

 

Exceptions. Access Persons need not make reports under the following circumstances:

 

(i) an Access Person to the Adviser need not make a separate report to the Adviser as provided in this Paragraph (b) to the extent that the information in the report would duplicate information required to be recorded by Section 204-2(a)(13) of the Advisers Act; and

 

(ii) an Access Person need not make a quarterly transaction report if the report would duplicate information contained in broker trade confirmations or account statements received by the Fund or Adviser with respect to the Access Person within the 30 day reporting period described under “Quarterly Reports” above, as long as all the information required to be presented in a quarterly report is contained in the broker trade confirmations or account statements, or in the records of the Fund or Adviser.

 

(c) Provision of Brokers’ Statements

 

With the exception of the Independent Directors, every Access Person shall direct their brokers to supply to the Chief Compliance Officer , on a timely basis, duplicate copies of the confirmation of all personal securities transactions and copies of all periodic statements for all securities accounts.

 

(d) Notification of Reporting Obligations

 

The Chief Compliance Officer shall notify each Access Person that he or she is subject to these reporting requirements, and shall deliver a copy of this Code of Ethics to each such person upon request.

 

(e) Certification of Compliance with Code of Ethics

 

With the exception of the Independent Directors, every Access Person shall certify in an annual report that:

 

(i) they have read and understand the Code of Ethics and recognize that they are subject thereto;

 

  - 9 -  

 

 

(ii) they have complied with the requirements of the Code of Ethics; and

 

(iii) they have reported all personal securities transactions required to be reported pursuant to the requirements of the Code of Ethics.

 

(f) Conflict of Interest

 

Every Access Person shall notify the Chief Compliance Officer of any personal conflict of interest relationship which may involve the Fund, such as the existence of any economic relationship between their transactions and securities held or to be acquired by any series of the Fund. Such notification shall occur in the pre-clearance process.

 

(g) Review of Reports

 

The Chief Compliance Officer or her designate immediately shall review all personal holdings reports, submitted by each Access Person, including confirmations of personal securities transactions, to ensure no trading has taken place in violation of Rule 17j-1, Rule 204A-1 or the Code of Ethics. Any violations of the Code of Ethics shall be reported to the Fund Board in accordance with Section 5 of the Code. The Chief Compliance Officer shall maintain a list of the personnel responsible for reviewing the transactions and personal holdings reports.

 

6. REPORTING OF VIOLATIONS

 

(a) All apparent violations of this Code of Ethics shall be promptly reported to the Chief Compliance Officer .

 

(b) The Chief Compliance Officer shall promptly report to the Fund Board:

 

(i) all apparent violations of this Code of Ethics and the reporting requirements thereunder; and

 

(ii) any reported transaction in a Covered Security which was purchased or sold by the Fund within seven (7) days before or after the date of the reported transaction.

 

(c) When the Chief Compliance Officer finds that a transaction otherwise reportable to the Fund Board under Paragraph (b) of this Section could not reasonably be found to have resulted in a fraud, deceit or manipulative practice in violation of Rule 17j-1(a), it may, in its discretion, lodge a written memorandum of such finding and the reasons therefor with the reports made pursuant to this Code of Ethics, in lieu of reporting the transaction to the Fund Board.

 

(d) The Fund Board, or a committee of directors thereof created by the Fund Board for that purpose, shall consider reports made to the Fund Board hereunder and shall determine whether or not this Code of Ethics has been violated and what

 

  - 10 -  

 

 

sanctions, if any, should be imposed in respect of transactions related to the Fund, and the board of the Adviser shall take such similar action in respect of transactions unrelated to the Fund.

 

7. ANNUAL REPORTING TO THE FUND BOARD

 

(a) The Chief Compliance Officer and Adviser shall furnish to the Fund Board, and the Fund Board must consider, an annual report relating to this Code of Ethics. Such annual report shall:

 

(i) describe any issues arising under the Code of Ethics or procedures during the past year;

 

(ii) identify any material violations of this Code or procedures, including sanctions imposed in response to such violations during the past year;

 

(iii) identify any recommended changes in the existing restrictions or procedures based upon the Fund’s experience under its Code of Ethics, evolving industry practices or developments in applicable laws or regulations; and

 

(iv) certify that the Fund, Adviser and principal underwriter have adopted procedures reasonably necessary to prevent Access Persons from violating the Code of Ethics.

 

8. SANCTIONS

 

Upon discovering a violation of this Code, the Fund Board or the board of the Adviser, as the case may be, may impose such sanctions as they deem appropriate, including, among other things, a letter of censure or suspension or termination of the employment of the violator.

 

9. RETENTION OF RECORDS

 

This Code of Ethics, a list of all persons required to make reports hereunder from time to time, a copy of each report made by an Access Person hereunder, a list of all persons responsible for reviewing the reports required hereunder, a record of any decision and the reasons supporting the decision to approve the acquisition by Investment Personnel of securities in a Limited Offering, each memorandum made by the Chief Compliance Officer hereunder and a record of any violation hereof and any action taken as a result of such violation, shall be maintained by the Fund as required under Rule 17j-1 and by the Adviser as required under Rule 204-2.

 

10. ADOPTION AND APPROVAL

 

The Fund Board, including a majority of Independent Directors, shall approve this Code of Ethics and any material changes to the Code.

 

  - 11 -  

 

 

Before approving this Code or any amendment to this Code, the Fund Board shall have received a certification from the Fund and the Adviser that it has adopted procedures reasonably necessary to prevent Access Persons from violating the Code.

 

Dated: August 3, 2016

 

Approved by Board: August 11, 2016

 

  - 12 -  

 

 

THOMAS J. HERZFELD ADVISORS, INC.

 

POLICY STATEMENT ON INSIDER TRADING

 

SECTION I.           POLICY STATEMENT ON INSIDER TRADING

 

A. Policy Statement on Insider Trading

 

Thomas J. Herzfeld Advisors, Inc. (the “Adviser”) forbids any director, officer or employee from trading, either personally or on behalf of a Client Account, on material nonpublic information, or communicating material nonpublic information to other persons in violation of the law. This conduct is frequently referred to as “insider trading”. The Adviser’s policy applies to every director, officer and employee and extends to activities within and outside their duties for the Adviser. Every officer and employee must read and retain a copy of this policy statement. Any questions regarding the Adviser’s policy and procedures should be referred to the Chief Compliance Officer .

 

The term “insider trading” is not defined in the federal securities laws, but generally is used to refer to the use of material nonpublic information to trade in securities (whether or not one is an “insider”) or to communications of material nonpublic information to others.

 

While the law concerning insider trading is not static, it is generally understood that the law prohibits:

 

i) trading by an insider, while in possession of material nonpublic information, or

 

ii) trading by a non-insider, while in possession of material nonpublic information, where the information either was disclosed to the non-insider in violation of an insider’s duty to keep it confidential or was misappropriated, or

 

iii) communicating material nonpublic information to others.

 

The elements of insider trading and the penalties for such unlawful conduct are discussed below. If, after reviewing this policy statement, you have any questions, you should consult the Adviser’s Chief Compliance Officer , Cecilia Gondor, or her successor.

 

2. Who is an Insider ?

 

The concept of “insider” is broad. It includes partners and employees of a company. In addition, a person can be a “temporary insider” if he or she enters into a special confidential relationship in the conduct of a company’s affairs and as a result is given access to information solely for the company’s purposes. A temporary insider can include, among others, a company’s attorneys, accountants, consultants, bank lending officers, and the employees of such organizations. In addition, the Adviser may become a temporary insider of a company it

 

  - 1 -  

 

 

advises or for which it performs other services. According to the U.S. Supreme Court, the company must expect the outsider to keep the disclosed nonpublic information confidential and the relationship must at least imply such a duty before the outsider will be considered an insider.

 

3. What is Material Information ?

 

Trading on inside information is not a basis for liability unless the information is material. “Material information” generally is defined as information for which there is a substantial likelihood that a reasonable investor would consider it important in making his or her investment decisions, or information that is reasonably certain to have a substantial effect on the price of a company’s securities. Information that managing members and employees should consider material includes, but is not limited to: dividend changes, earnings estimates, changes in previously released earnings estimates, significant merger or acquisition proposals or agreements, major litigation, liquidation problems, and extraordinary management developments.

 

Material information does not have to relate to a company’s business. For example, in Carpenter v. U.S. , 108 U.S. 316 (1987), the Supreme Court considered material certain information about the contents of a forthcoming newspaper column that was expected to affect the market price of a security. In that case, a Wall Street Journal reporter was found criminally liable for disclosing to others the dates that reports on various companies would appear in the Journal and whether those reports would be favorable or not.

 

4. What is Nonpublic Information ?

 

Information is nonpublic until it has been effectively communicated to the market place. One must be able to point to some fact to show that the information is generally public. For example, information found in a report filed with the SEC, or appearing in Dow Jones , Reuters Economic Services , The Wall Street Journal or other publications of general circulation would be considered public.

 

5. Basis for Liability .

 

i) fiduciary duty theory

 

In 1980, the Supreme Court found that there is no general duty to disclose before trading on material nonpublic information, but that such a duty arises only where there is a fiduciary relationship. That is, there must be a relationship between the parties to the transaction such that one party has a right to expect that the other party will disclose any material nonpublic information or refrain from trading. Chiarella v. U.S. , 445 U.S. 22 (1980).

 

In Dirks v. SEC , 463 U.S. 646 (1983), the Supreme Court stated alternate theories under which non-insiders can acquire the fiduciary duties of insiders: they can enter into a confidential relationship with the company through which they gain information ( i.e. , attorneys, accountants), or they can acquire a fiduciary duty to

 

  - 2 -  

 

 

the company’s shareholders as “tippees” if they are aware or should have been aware that they have been given confidential information by an insider who has violated his fiduciary duty to the company’s shareholders.

 

However, in the “tippee” situation, a breach of duty occurs only if the insider personally benefits, directly or indirectly from the disclosure. The benefit does not have to be pecuniary, but can be a gift, a reputational benefit that will translate into future earnings, or even evidence of a relationship that suggests a quid pro quo .

 

ii) misappropriation theory

 

Another basis for insider trading liability is the “misappropriation” theory, where liability is established when trading occurs on material nonpublic information that was stolen or misappropriated from any other person. In U.S. v. Carpenter , supra , the Court found, in 1987, a columnist defrauded The Wall Street Journal when he stole information from the Journal and used it for trading in the securities markets. It should be noted that the misappropriation theory can be used to reach a variety of individuals not previously thought to be encompassed under the fiduciary duty theory.

 

6. Penalties for Insider Trading

 

Penalties for trading on or communicating material nonpublic information are severe, both for individuals involved in such unlawful conduct and their employers. A person can be subject to some or all of the penalties below even if he or she does not personally benefit from the violation. Penalties include:

 

i) civil injunctions

 

ii) treble damages

 

iii) disgorgement of profits

 

iv) jail sentences

 

v) fines for the person who committed the violation of up to three times the profit gained or loss avoided, whether or not the person actually benefited, and

 

vi) fines for the employer or other controlling person of up to the greater of $1,000,000 or three times the amount of the profit gained or loss avoided.

 

  - 3 -  

 

 

In addition, any violation of this policy statement can be expected to result in serious sanctions by the Adviser, including dismissal of the persons involved.

 

SECTION II.         PROCEDURES TO IMPLEMENT INSIDER TRADING POLICY

 

The following procedures have been established to aid the officers and employees of Thomas J. Herzfeld Advisors, Inc. to avoid insider trading, and to aid the Adviser in preventing, detecting and imposing sanctions against insider trading. Every officer and employee of the Adviser must follow these procedures or risk serious sanctions, including dismissal, substantial personal liability and criminal penalties. If you have any questions about these procedures, you should consult the Adviser’s Chief Compliance Officer .

 

1. Identifying Inside Information

 

Before trading for yourself or others, including Client Accounts, in the securities of a company about which you may have potential inside information, ask yourself the following questions:

 

i) Is the information material? Is this information that an investor would consider important in making his or her investment decisions? Is this information that would substantially affect the market price of the securities if generally disclosed?

 

ii) Is the information nonpublic? To whom has this information been provided? Has the information been effectively communicated to the marketplace by being published in Reuters , The Wall Street Journal , or other publications of general circulation?

 

If, after consideration of the above, you believe that the information is material and nonpublic, or if you have questions as to whether the information is material and nonpublic, you should take the following steps.

 

iii) Report the matter immediately to the Chief Compliance Officer .

 

iv) Do not purchase or sell the securities on behalf of yourself or others, including Client Accounts.

 

v) Do not communicate the information inside or outside the Adviser, other than to the Chief Compliance Office.

 

vi) After the Chief Compliance Officer has reviewed the issue, you will be instructed to continue the prohibitions against trading and communication, or you will be allowed to trade and communicate the information.

 

2. Personal Security Trading . All officers and employees of the Adviser (other than managing members and employees who are required to report their securities transactions to a registered investment company in

 

  - 4 -  

 

 

accordance with a Code of Ethics) shall submit to the compliance officer, on a quarterly basis, a report of every securities transaction in which they, their families (including the spouse, minor children and adults living in the same household as the managing member or employee), and Funds of which they are trustees or in which they have a beneficial interest have participated, or at such lesser intervals as may be required from time to time. (A report is not required, however, if the report would duplicate information contained in broker trade confirmations or account statements held by the Adviser as long as the Adviser receives such confirmations or statements no later than 30 days after the end of the applicable calendar quarter.) The report shall include the name of the security, date of the transaction, quantity, price, and broker-dealer through which the transaction was effected. All managing members and employees must also instruct their broker(s) to supply the Chief Compliance Officer , on a timely basis, with duplicate copies of confirmations of all personal securities transactions and copies of all periodic statements for all securities accounts. No reports are required for “Managed Portfolios,” as defined and published monthly in The Investor’s Guide to Closed-End Funds .

 

3. Restricting Access to Material Non-public Information . Any information in your possession that you identify as material and non-public may not be communicated other than in the course of performing your duties to anyone, including persons within your company, except as provided in paragraph 1 above. In addition, care should be taken so that such information is secure. For example, files containing material non-public information should be sealed and access to computer files containing material non-public information should be restricted.

 

4. Resolving Issues Concerning Insider Trading . If, after consideration of the items set forth in paragraph 1, doubt remains as to whether information is material or non-public, or if there is any unresolved question as to the applicability or interpretation of the foregoing procedures, or as to the propriety of any action, it must be discussed with the Chief Compliance Officer before trading or communicating the information to anyone.

 

SECTION III.        SUPERVISION

 

The role of the Chief Compliance Officer is critical to the implementation and maintenance of this Statement on Insider Trading. These supervisory procedures can be divided into two classifications, (1) the prevention of insider trading, and (2) the detection of insider trading.

 

  - 5 -  

 

 

1. Prevention of Insider Trading :

 

To prevent insider trading the Chief Compliance Officer should:

 

(a) answer promptly any questions regarding the Statement on Insider Trading;

 

(b) resolve issues of whether information received by an officer or employee is material and non-public;

 

(c) review and ensure that officers and employees review, at least annually, and update as necessary, the Statement on Insider Trading; and

 

(d) when it has been determined that an officer or employee has material non-public information,

 

(i) implement measures to prevent dissemination of such information, and

 

(ii) if necessary, restrict officers, directors, and employees from trading the securities.

 

2. Detection of Insider Trading :

 

To detect insider trading, the Chief Compliance Officer should:

 

(a) review the trading activity reports filed by each officer and employee, to ensure no trading took place in securities in which the Adviser has material non-public information;

 

(b) review the trading activity of the mutual funds managed by the Adviser;

 

(c) coordinate, if necessary, the review of such reports with other appropriate officers, members, trustees or employees of the Adviser and any mutual funds managed by the Adviser.

 

3. Special Reports to Management :

 

Promptly, upon learning of a potential violation of the Statement on Insider Trading, the Chief Compliance Officer must prepare a written report to management of the Adviser, and provide a copy of such report to the board of directors of the any mutual funds managed by the Adviser, providing full details and recommendations for further action.

 

4. Annual Reports :

 

On an annual basis, the Chief Compliance Officer of the Adviser will prepare a written report to the management of the Adviser, and provide a copy of such report to the board of directors of the any mutual funds managed by the Adviser, setting forth the following:

 

(a) a summary of the existing procedures to detect and prevent insider trading;

 

  - 6 -  

 

 

(b) full details of any investigation, either internal or by a regulatory agency, of any suspected insider trading and the results of such investigation;

 

(c) an evaluation of the current procedures and any recommendations for improvement.

 

The Undersigned has read, understands and agrees to abide by the foregoing Insider Trading Policy and has retained a copy of the said document.

 

Date:     Signature:  

 

  - 7 -  

 

 

EXHIBIT A

 

CODE OF ETHICS

INITIAL HOLDINGS REPORT

 

To the Chief Compliance Officer of The Herzfeld Caribbean Basin Fund, Inc. and Thomas J. Herzfeld Advisors, Inc.

 

1.             I hereby acknowledge receipt of a copy of the Code of Ethics for The Herzfeld Caribbean Basin Fund, Inc. (the “Fund”) and Thomas J. Herzfeld Advisors, Inc. (the “Adviser”).

 

2.             I have read and understand the Code and recognize that I am subject thereto in the capacity of an “Access Person.”

 

3.             Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Fund, such as any economic relationship between my transactions and securities held or to be acquired by the Fund or any of its series.

 

4.             As of the date below I had a direct or indirect beneficial ownership interest in the following securities:

 

        Type of Interest
Name of Securities   Number of Shares   (Direct or Indirect)
         
         
         

 

5.             As of the date below, the following is a list of all brokers, dealers or banks with whom I maintain an account in which securities are held for my direct or indirect benefit:

 

        Type of Interest
Firm   Account   (Direct or Indirect)
         
         
         

 

Date:     Signature:    

 

      Print Name:    

 

      Title:    

 

      Employer’s Name:    

 

     

 

 

EXHIBIT B

 

CODE OF ETHICS
ANNUAL HOLDINGS REPORT

 

To the Chief Compliance Officer of The Herzfeld Caribbean Basin Fund, Inc. and Thomas J. Herzfeld Advisors, Inc.

 

1.            I have read and understand the Code of Ethics and recognize that I am subject thereto in the capacity of an “Access Person.”

 

2.            I hereby certify that, during the year ended December 31,       , I have complied with the requirements of the Code and I have reported all securities transactions required to be reported pursuant to the Code.

 

3.            Except as noted below, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Fund, such as any economic relationship between my transactions and securities held or to be acquired by the Fund or any of its Series.

 

4.            As of December 31,         , I had a direct or indirect beneficial ownership interest in the following securities:

 

        Type of Interest
Name of Securities   Number of Shares   (Direct or Indirect)
         
         
         

  

5.            As of the December 31,          the following is a list of all brokers, dealers or banks with whom I maintain an account in which securities are held for my direct or indirect benefit:

 

        Type of Interest
Firm   Account   (Direct or Indirect)
         
         
         

 

Date:     Signature:    

 

      Print Name:    

 

      Title:    

 

      Employer’s Name:    

 

     

 

 

EXHIBIT C

 

SECURITIES TRANSACTIONS REPORT

FOR THE CALENDAR QUARTER ENDED:           

 

To the Chief Compliance Officer of The Herzfeld Caribbean Basin Fund, Inc. and Thomas J. Herzfeld Advisors, Inc.

 

During the quarter referred to above, the following transactions were effected in securities of which I had, or by reason of such transaction acquired, direct or indirect beneficial ownership, and which are required to be reported pursuant to the Code of Ethics adopted by the Fund.

 

SECURITY

(including
interest rate
and maturity
date, if
applicable)

 

 

 

DATE OF
TRANSACTION

 

 

 

NO. OF
SHARES

 

 

 

DOLLAR
AMOUNT OF
TRANSACTION

 

 

 

NATURE OF
TRANSACTION

(Purchase, Sale,
Other)

 

 

 

PRICE

  BROKER/
DEALER
OR BANK
THROUGH
WHOM
EFFECTED
                         
                         
                         

 

During the quarter referred to above, the following accounts were established by me in which securities were held for my direct or indirect benefit:

 

FIRM NAME

(of broker, dealer or bank)

  DATE THE ACCOUNT
WAS ESTABLISHED 		 

 

ACCOUNT NUMBER

         
         
         

 

     

 

 

This report (i) excludes transactions with respect to which I had no direct or indirect influence or control, (ii) other transactions not required to be reported, and (iii) is not an admission that I have or had any direct or indirect beneficial ownership in the securities listed above.

 

Except as noted on the reverse side of this report, I hereby certify that I have no knowledge of the existence of any personal conflict of interest relationship which may involve the Fund, such as the existence of any economic relationship between my transactions and securities held or to be acquired by the Fund or any of its series.

 

Date:     Signature:    

 

      Print Name:    

 

      Title:    

 

      Employer’s Name:    

 

     

 

Exhibit p.6

 

 

 

KBI GLOBAL INVESTORS

CODE OF ETHICS

 

Department: Compliance and Risk
Policy name: KBI Global Investors Code of Ethics
Applicable to:  KBI Global Investors Ltd & KBI Global Investors (North America) Ltd.
Date: Sept 2016
Reviewed/Updated by: Emer Keating
Approved by:  Aisling Carvill
Version: 5
Summary of Changes: Updated to reflect name change.
Executive Committee Approval Date: N/A

 

 

   

 

While affirming its confidence in the integrity and good faith of all its employees, officers and directors, KBI Global Investors (North America) Ltd and its direct parent, KBI Global Investors Ltd ( (collectively the “Adviser”) recognizes that knowledge of present or future portfolio transactions and, in certain instances, the power to influence portfolio transactions made by or for its Advisory Clients which may be possessed by certain of its personnel could place such individuals, if they engage in personal transactions in Securities which are eligible for investment by Advisory Clients, in a position where their personal interest may conflict with the interests of the Advisory Clients.

 

In view of the foregoing, the Adviser’s Code of Conduct, the provisions of Rule 17j-1(b)(1) as amended under the Investment Company Act of 1940 (the “1940 Act”) and Section 204A of the Investment Advisers Act 1940 as amended the Adviser has determined to adopt this Code of Ethics to set forth standards of conduct expected of its Advisory personnel, specify and prohibit certain types of transactions deemed to create conflicts of interest (or at least the potential for or the appearance of such a conflict), and to establish reporting requirements and enforcement procedures.

 

In addition KBI Global Investors Ltd and its subsidiaries are subject to supervision by a number of regulatory bodies in the EU in addition to its home regulator the Central Bank of Ireland. These regulators require that an explicit Code of Conduct covering personal share dealing & gifts must be made available to all executive directors and members of staff.

 

At all times, the Adviser and its personnel must comply with the spirit and the letter of the applicable securities laws and the rules governing the capital markets. The CCO administers this Code of Ethics and all questions regarding the provisions contained herein should be directed to the CCO. Employees must cooperate to the fullest extent reasonably requested by the CCO to enable (i) the Adviser to comply with all applicable securities laws and (ii) the CCO to discharge her duties as outlined in this Code of Ethics and other written policies and procedures.

 

I. STATEMENT OF GENERAL PRINCIPLES

 

In recognition of the trust and confidence placed in the Adviser by its Advisory Clients and to give effect to the Adviser’s belief that its operations should be directed to the benefit of its Advisory Clients, the Adviser hereby adopts the following general principles to guide the actions of its employees, officers and directors:

 

(1) The interests of the Advisory Clients are paramount, and all of the Adviser’s personnel must conduct themselves and their operations to give maximum effect to this tenet by assiduously placing the interests of the Advisory Clients before their own.

 

(2) All of the Adviser’s personnel are also required to act in the best interests of the Adviser’s Advisory Clients especially regarding execution and brokerage services. In this regard the Adviser’s personnel are reminded to adhere to the

 

 

   

 

Adviser’s policies and procedures regarding brokerage, including allocation, best execution, soft dollars and directed brokerage.

 

(3) All personal transactions in Securities by the Adviser’s personnel must be accomplished so as to avoid even the appearance of a conflict of interest on the part of such personnel with the interest of any Advisory Client.

 

(4) All of the Adviser’s personnel must avoid actions or activities that allow (or appear to allow) a person to profit or benefit from his or her position with respect to an Advisory Client, or that otherwise bring into question the person’s independence or judgment.

 

(5) All information about the Adviser’s Clients (including former Clients) must be kept in strict confidence, including the Client’s identity (unless the Client consents), the Client’s financial circumstances, the Client’s Security holdings and advice furnished to the Client by the Adviser.

 

(6) Independence in the investment decision making process is paramount.

 

II. DEFINITIONS

 

(1) “Access person” for an Investment Adviser, whose primary business is the business of providing investment advice, includes any “Supervised Person” who:

 

Ø Has access to nonpublic information regarding any Clients’ purchase or sale of Securities, or nonpublic information regarding portfolio holdings of any fund the Adviser or its control affiliates manage; or

 

Ø Is involved in making Securities recommendations to Clients or has access to such recommendations that are nonpublic.

 

If the Adviser’s primary business in providing investment advice, all of the Adviser’s executive directors, officers, and partners are presumed to be Access Persons.

 

“Access Persons for Mutual Funds” means any officer, director, general partner or Advisory Person of the Adviser who, with respect to the Funds:

 

(i) Makes any recommendation or participates in the determination of which recommendation will be made; or

 

(ii) Whose principal function or duties relate to the determination of which recommendation will be made or who, in connection with his or her

 

 

   

 

duties, obtains any information concerning recommendations on Securities made by the Adviser to the Fund.

 

The Adviser’s “Access Persons” shall include: (a) all executive directors of the Adviser, (b) Asset Managers, (c) Researchers, (d) Middle Office Personnel, (e) Information Technology personnel who have access to PORTIA and “”OMS trading system and/or any such other system that holds pre-trade information, (f) Compliance Unit personnel, and (g) any other managers or individuals whom the Review Officer determines to be Access Persons from time to time. A list of all such Access Persons is available from the Adviser on request and includes Clients, regulatory authorities and any other entity/person that the CCO deems it appropriate to provide such information.

 

(2) “Advisory Client” means any client or fund to which the Adviser provides investment advice .

 

(3) “Advisory Person” means any employee of the Adviser who, in connection with his or her regular functions or duties, makes, participates in, or obtains information regarding the purchase or sale of Securities by an Advisory Client, or whose functions relate to the purchase or sale of Securities by a n Advisory Client. All Advisory Persons are Access Persons .

 

(4) “Beneficial Ownership” of a Security is to be determined in the same manner as it is for purposes of Section 16 of the Securities Exchange Act of 1934 and Rule 16a-1(a)(2) there under. This means that a person should generally consider him or herself the beneficial owner of any Securities in which he or she has a direct or indirect pecuniary interest. In addition, a person should consider him or herself the beneficial owner of Securities held by his or her spouse, minor children, a relative who shares his or her home, or other persons by reason of any contract, arrangement, understanding or relationship that provides him or her with sole or shared voting or investment power.

 

(5) “Control” shall have the same meaning as that set forth in Section 2(a)(9) of the 1940 Act.

 

(6) “Fund” means an investment company registered under the 1940 Act for which KBI Global Investors (North America) Ltd acts as adviser or sub-adviser.

 

(7) “High quality short-term debt instrument” means any instrument that has a maturity at issuance of 365 days or less and that is rated in one of the two highest rating categories by a nationally recognized statistical rating organization.

 

(8) “Investment Personnel” means a) any employee of the Adviser (or of any company in a control relationship to the Adviser ) who, in connection with his or her regular functions or duties , makes or participates in making recommendations

 

 

   

 

regarding the purchase or sale of Securities by the Advisory Client (b) any employee who helps execute and/or implement the asset manager’s decision and (c) any natural person who controls the Adviser and who obtains information concerning recommendations made to an Advisory Client regarding the purchase or sale of Securities by such Advisory Client .

 

(9) “Initial public offering” (i.e . IPO), means an offering of Securities registered under the Securities Act of 1933, the issuer of which, immediately before registration, was not subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934.

 

(10) “ Limited offering” means an offering that is exempt from registration under the Securities Act of 1933 pursuant to Section 4(2), Section 4(6), Rule 504, Rule 505 or Rule 506.

 

(11) A “personal securities account” means any account in which any securities are held for the person’s direct or indirect benefit.

 

(12) “Purchase or sale of a Security” includes, among other things, the writing of an option to purchase or sell a Security.

 

“Security” means any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a "security," or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guaranty of, or warrant or right to subscribe to or purchase any of the foregoing. Also included is any regulated instrument under MiFID (as defined in Schedule 1 Part 3 of European Communities (Markets in Financial Instruments) Regulations 2007 1 ) and the Investor Intermediaries Act 1995 2 such as units in collective investment schemes, shares in an investment company, units in a unit trust or units in a common contractual fund, capital contributions to an investment limited partnership, dealings in stock, shares, loan stock, warrants, rights, options, spread betting, traded options, futures contracts, money market instruments, financial contracts for difference, swaps, forward rate agreements, tracker bonds, hybrid instruments, repurchase and reverse repurchase agreements, regular savings plans operated by way of an investment trust In addition, derivative contracts relating to:

 

- securities, currencies, interest rates or yields, financial indices

 

 

1 http://www.finance.gov.ie/documents/publications/statutoryinstruments/SINo60of2007.pdf

 

2 http://www.irishstatutebook.ie/1995/en/act/pub/0011/print.html

 

 

   

 

- commodities
- climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics if the contracts must be settled in cash
- derivative instruments for the transfer of credit risk.

 

(13) A “Security held or to be acquired” by an Advisory Client means (a) any Security which, within the most recent 15 days, (i) is or has been held by an Advisory Client or (ii) is being or has been considered by the Adviser for purchase by an Advisory Client and (b) any option to purchase or sell, and any Security convertible into or exchangeable for, a Security .

 

(14) A Security is “being purchased or sold” by an Advisory Client from the time when a purchase or sale program has been communicated to the person who places the buy and sell order for an Advisory Client until the time when such program has been fully completed or terminated.

 

(15) “Supervised Person” includes:
Ø Directors, officers and partners of the Adviser (or other persons occupying a similar status or performing similar functions)
Ø Employees of the Adviser; and
Ø Any other person who provides advice on behalf of the Adviser and is subject to the Adviser’s supervision and control

 

The Adviser also has the discretion to include some or all of the following categories of persons as “Supervised Persons”:

 

Ø Temporary workers
Ø Consultants
Ø Independent Contractors
Ø Certain employees of affiliates; or
Ø Particular persons designated by the Chief Compliance Officer

 

(16) The designated “Review Officer” shall be the Chief Compliance Officer of the Adviser.

 

III. GENERAL PROHIBITION AGAINST INSIDER-DEALING, FRAUD, DECEIT AND MANIPULATION

 

(1) No Access Person shall:

 

(a) Engage in any manipulative practice with respect to Securities, including price manipulation;

 

 

   

 

(b) Engage in any trading, either personally or on behalf of others, while in possession of material, non public information (including the following):

 

§ Preliminary profit announcements for a year, half year of other period.

 

§ Dividends and other distributions to shareholders recommended or declared or resolved to be paid and any decision to pass any dividend or interest payment.

 

§ Proposed changes in capital, structure or redemption of securities.

 

§ Material acquisitions or realisation of assets as defined by the Stock Exchange.

 

§ Matters requiring disclosure to the Stock Exchange under the provisions of the City Code on Takeovers and Mergers.

 

§ Any changes in the Directorate other than normal retirements and replacements.

 

§ Proposed changes in the general character or nature of the business.

 

§ Matters requiring to be notified to a company (interests of 5% or more of the nominal value of any class of voting capital) or any variation thereof.

 

§ Changes in the status of a company under the close company provisions (as defined by the Irish Revenue) of the various tax acts as amended.

 

(c) Engage in communicating any material non-public information to others in violation of the law. ”Material non-public information” relates not only to issuers but also to the Adviser’s Client, the Securities investments made by the Adviser on behalf of the Client, information about contemplated Securities transactions, or information regarding the Adviser’s trading strategies except as required to effect Securities transactions on behalf of the Client or for regulatory and/or other legitimate business purposes.

 

Where an Access Person becomes an “insider” regarding an issuer s/he must report the matter to the Review Officer where it will be dealt with in line with the Adviser’s procedures and the issuer will become a “restricted issuer” until such time that the Adviser is no longer an insider.

 

(2) No Access Person shall, in connection with the purchase or sale, directly or indirectly, by such person of a Security held or to be acquired by any Advisory Client:

 

 

   

 

(a) Employ any device, scheme or artifice to defraud such Advisory Client;

 

(b) Make to such Advisory Client any untrue statement of a material fact or omit to state to such Advisory Client a material fact necessary in order to make the statements made;

 

(c) Engage in any act, practice or course of business which would operate as a fraud or deceit upon such Advisory Client; or

 

(d) Engage in any manipulative practice with respect to such Advisory Client.

 

If an Access Person engages in any of the practices listed above or any practices associated with these practices the Adviser will commence enforcing its disciplinary procedures as set out in its HR policies.

 

 

   

 

IV. PROHIBITED PURCHASES AND SALES OF SECURITIES

 

(1) Except as provided in Sections V(3) and V(4) of this Code of Ethics , no Access Person shall purchase or sell, directly or indirectly, any Security in which he or she had or by reason of such transaction acquired any Beneficial Ownership, within 24 hours (seven (7) working days, in the case of Investment Personnel – such persons are determined by the CCO and the individuals are informed accordingly) before or after the time that the same (or a related) Security is being purchased or sold by any Advisory Client. The Review Officer also performs a review of all personal transactions on a post trade basis and there is a separate documented procedure for this. Subject to determination by the Review Officer, such Access Person may be required to sell any Security and to disgorge any profits realized on trades within these proscribed periods. The Review Officer’s determination shall be made in writing and a record of such shall be maintained in accordance with Section X(7) of this Code of Ethics . In the event of the absence of the Review Officer, a member of the Adviser’s Compliance team will make such determination.

 

(2) No Access Person (including Investment Personnel) may acquire Securities, whether acquired directly or indirectly (through Beneficial Ownership), as part of an initial public offering without obtaining the written approval of the designated Review Officer before either directly or indirectly acquiring a Beneficial Ownership in such Securities.

 

(3) No Access Person shall purchase a Security, whether purchased directly or indirectly (through Beneficial Ownership), offered in a limited offering (e.g. private placement) without the specific, prior written approval of the Adviser’s designated Review Officer. Where an Access Person has been authorized to purchase a Security in a limited offering they will be required to disclose that investment when they play a part in any Client’s subsequent consideration of an investment in the issuer and in such circumstances the decision to purchase Securities of the issuer for the Client be made either by another employee or, at a minimum, should be subject to an independent review by investment personnel with no personal interest in the issuer.

 

(4) No Access Person shall profit from the purchase and sale, or sale and purchase, of the same (or equivalent) Security, whether held directly or indirectly (through Beneficial Ownership), within a 60-day period . Profit due to any such short-term trades will be disgorged. Exceptions to this policy are permitted only with the written approval of the Review Officer of the Adviser and then only in an emergency or extraordinary circumstances.

 

(5) No Access Person shall make speculative purchases or sales of securities or currencies to the detriment of the Company’s good name or for which insufficient funds are available. In particular, the purchase or sale of shares where settlement

 

 

   

 

depends on a subsequent sale or purchase, within the same account, period must be avoided.

 

(6) Additional Rules for Dealing in Options

 

An Access Person may only undertake options dealings, whatever the underlying asset, in accordance with the following addition rules:

 

1. Uncovered calls – the writing of uncovered calls is not permitted.

 

2. Uncovered puts – the writing of uncovered puts is not permitted.

 

3. Covered calls – covered calls may be written where one of the following conditions is satisfied:

 

a. Previously or at the same time a long call position is established which covers the short call. This means that the exercise price of the long call must be the same or lower than that of the short call and the expiry date of the long call must be at least as long as that of the short call. (It is not permissible to close out the long position prior to the closing of the short call position).

 

b. The underlying security is held by the individual, and pledged as collateral to a recognized clearing house. It is not permissible to sell the underlying security prior to closing of the short call position.

 

4. Covered puts – covered puts may be written when the following condition is satisfied:

 

Previously or at the same time a long put position is established which covers the short put in the following manner:

 

The exercise price of the long put must be the same or higher than that of the short put and the expiry date of the long put must be at least as long as that of the short put. It is not permissible to close out the long position prior to the closing of the short put option.

 

5. Buying of puts and calls will be permitted provided the size of the financial commitment is suitable with regard to the individual’s financial situation.

 

 

   

 

V. PRE-CLEARANCE OF TRANSACTIONS

 

(1) Except as provided in Section V(3), each Access Person must pre-clear each proposed transaction in securities with the Review Officer prior to proceeding with the transaction. Where an Access Person undertakes dealings on behalf of third parties or in nominee names outside the course of their normal duties, prior written approval must be sought also. No transaction in Securities shall be effected without the prior written approval of the Review Officer. Pre-clearance is obtained by filling out the ‘Pre-Clearance Request Form’ available to all access persons on the PRISM (Internal website). The completed form should be given in person to the Review Officer who will carry out the necessary checks to determine whether or not to grant approval for the personal transaction. Pre-clearance trading authorisation is valid for 48 hours only. In determining whether to grant such clearance, the Review Officer shall abide by Section V(4), below.

 

(2) In determining whether to grant approval for the purchase of a Security offered in a limited offering , the Review Officer shall take into account, among other factors, whether the investment opportunity should be reserved for an Advisory Client, and whether the opportunity is being offered to the Access Person by virtue of his or her position with the Adviser.

 

(3) The pre-clearance requirements of Section V(1) shall not apply to the following transactions:

 

(A) Purchases or sales over which the Access Person has no direct or indirect influence or control*.

 

(B) Purchases or sales which are non-volitional on the part of the Access Person, including purchases or sales upon exercise of puts or calls written by the Access Person and sales from a margin account pursuant to a bona fide margin call.

 

(C) Purchases that are effected as part of an automatic dividend reinvestment plan.

 

(D) Purchases effected upon the exercise of rights issued by an issuer pro rata to all holders of a class of its Securities, to the extent such rights were acquired from such issuer.

 

(E) Acquisitions of securities through stock dividends, stock splits, reverse stock splits, mergers, consolidations, spin-offs, and other similar corporate reorganisations or distributions generally applicable to all holders of the same class of Securities;

 

(F) Acquisitions of Securities through gifts or bequests; and

 

 

   

 

(G) Transactions in Securities of open-end mutual funds, other than:
a. shares of all investment companies/funds advised by the Adviser or its affiliates or sub-advised by the Adviser
b. Exchange Traded Funds

 

* Please refer to Section VIII for definition of ‘no direct or indirect influence or control’.

 

(4) The following transactions generally would be expected to receive pre -clearance from the Review Officer absent extenuating circumstances :

 

(A) Transactions which appear upon reasonable inquiry and investigation to present no reasonable likelihood of harm to any Advisory Client and which are otherwise in accordance with Rule 17j-1 and Section 204. Such transactions would normally include purchases or sales of up to 1,000 shares of a Security, which is being considered for purchase or sale by an Advisory Client (but not then being purchased or sold) if the issuer has a market capitalization of over $1 billion. Permission to purchase Securities described above is not assumed or automatic, but rather may be granted by the Review Officer after extensive review of the facts surrounding such transaction and the effect such transaction would have on the shareholders of the Fund and/or Advisory Clients .

 

(B) Purchases or sales of Securities which are not eligible for purchase or sale by any Advisory Client as determined by reference to the 1940 Act, the Investment Advisers Act and regulations there under, or any relevant “blue sky” laws , the investment objectives policies and investment restrictions of any Advisory Client or undertakings made to regulatory authorities.

 

(C) Transactions that the Review Officer, or other appropriate officers of the Adviser, as a group and after consideration of all the facts and circumstances, determine to be in accordance with Section III and to present no reasonable likelihood of harm to an Advisory Client.

 

(5) The Compliance Department of the Adviser will maintain pre-clearance records for 6 years

 

VI. ADDITIONAL RESTRICTIONS AND REQUIREMENTS

 

(1) Access Persons should not accept inappropriate gifts, favours, entertainment, special accommodation, or other things of material value that could influence their decision-making or make them feel beholden to a person or a firm. Similarly Access Persons should not offer gifts, favours, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a Client feel beholden to the Adviser or the Access Person.

 

 

   

 

This is particularly the case where the Adviser in managing state or municipal pension funds as certain laws or rules in various states may prohibit or limit gifts or entertainment extended to public officials. Access Persons are prohibited from making political contributions for the purposes of obtaining or retaining advisory contracts with government entities.

 

No Access Person may accept any gift and/or entertainment packages of more than €100.00 or equivalent from any person or entity that it does business with or proposes to do business with on behalf of the Adviser or its direct parent, KBI Global Investors Ltd, or an Advisory Client, without prior approval by the Review Officer and their supervising director. Approval should be sought by sending an email containing the following information; nature of gift/entertainment, approximate value, donor & recipient(s). The Review Officer/Supervising Director reserves the right to approve or deny such gifts/entertainment packages.

 

All gifts/entertainment packages of less than €100.00 or equivalent received by any Access Person from any person or entity that it does business with or proposes to do business with on behalf of the Adviser or its direct parent, KBI Global Investors Ltd, or an Advisory Client must be notified to the Review Officer and their supervising Director . Such notification should be made via e-mail and shall be logged by the Review Officer in the Gifts Register.

 

All gifts/entertainment packages of more than €50 or equivalent offered by any Access Person to any person or entity that it does business with or proposes to do business with on behalf of the Adviser or its direct parent, KBI Global Investors Ltd, or an Advisory Client must be recorded in the relevant section of CRM- Interactions under one of the following heading types;

 

o Conferences
o Lunch/Dinner/Transport (e.g. airport transfers etc.)
o Entertainment e.g. golf, concert, match tickets etc.
o Sponsorship e.g. golf sponsorship. Charity events (no KBI attendees)
o Gifts

 

The gift/entertainment should be tagged to the relevant client or clients by the organizer and the description and the value must be recorded in the ‘title’ of the interaction. Such records shall be tracked and reviewed by the Review Officer as part of the Compliance & Risk Unit’s on-going monitoring programme.

 

No Access Person may offer any gift and/or entertainment packages of more than €500.00 or equivalent to any person or entity that it does business with or proposes to do business with on behalf of the Adviser or its direct parent, KBI Global Investors Ltd, or an Advisory Client, without prior advance approval by

 

 

   

 

their supervising Director and the Review Officer. Approval should be sought by sending an email containing the following information; nature of gift/entertainment, approximate value, donor & recipient(s). Entertainment includes lunches, dinners, transport, gifts, sporting/other tickets, sponsorship & conferences etc.

 

No business related travel and or accommodation (regardless of value) may be accepted or offered without pre approval from the supervising director and the Review Officer e.g. offering to cover the travel/accommodation costs of a prospective client, accepting travel/accommodation from a broker along with a match/concert ticket etc.

 

No Access Person may give or accept cash gifts or cash equivalents to or from a Client, prospective Client, or any entity that it does business with or on behalf of the Adviser, or its direct patent.

 

Occasional participation in lunches, dinners, sporting activities or similar gatherings conducted for business purposes are not prohibited. However where the Access Person would feel compromised by accepting such invitations s/he is advised to refuse the offer or consult with the Review Officer if in any doubt.

 

The Adviser and its Access Persons are prohibited from giving gifts or providing meals or entertainment for business purposes that would appear lavish or extravagant in nature.

 

Policy at Christmas time: All gifts received at Christmas time e.g. hampers, cases or bottles of wine etc. will be centrally pooled and raffled among staff prior to Christmas. All gifts given during Christmas time to Advisory Clients, investors, or any persons or entities with whom the Adviser does business must be reported to the Reporting Officer as described above.

 

Where you are in doubt about any gift and/or entertainment being offered or received you should contact the Review Officer or his/her designate immediately.

 

(2) Special restrictions will apply to all personal dealings in Amundi SA securities. At set periods during the year ‘Closed Periods’ will exist during which time the purchase or sale of Amundi SA securities is prohibited. During ‘Open Periods’ the purchase or sale of Amundi SA securities will be permitted subject to the Code of Ethics Personal Share Dealing rules. Access persons are reminded that they must not at any time deal in securities whilst in the possession of Inside Information. Additionally, where Access Persons make purchases of Amundi SA securities they will be required to hold such securities for a minimum of 6 months.

 

 

   

 

(4) No Investment Personnel shall accept a position as a director, trustee or general partner of a publicly-traded company or partnership unless the acceptance of such position has been approved by the Review Officer and is consistent with the interests of all Advisory Clients.

 

5) In general, all Access Persons are reminded that they must disclose any personal interest that might present a conflict of interest or harm the reputation of the Adviser or its affiliates.

 

(6) All Access Persons are reminded that all oral and written statements, including those made to Clients, prospective clients, their representatives, or the media must be professional, accurate, balanced and not misleading in any way. All written marketing or promotional material must be approved by the Review Officer or his/her designate, in line with procedure, prior to being issued.

 

(7) Non-public information about the Adviser’s investment strategies, trading and Advisory Client holdings may not be shared with third parties except as is necessary to implement investment decisions and conduct other legitimate business. Access Persons must never disclose proposed or pending trades or other sensitive information to any third party without the prior approval of the CCO. Securities laws may prohibit the dissemination of such information and doing so may be considered a violation of the fiduciary duty that Adviser owes to its Advisory Clients.

 

With respect to Adviser’s unregistered fund clients (e.g., KBI Global Investors (North America) Ltd Investment Trust & KBI Global Investors (North America) Ltd Delaware Statutory Trust), Access Persons may disclose information about the funds to investors and certain other third-parties (e.g., fund service providers investor representatives) that have a legitimate business need to know such information. Such information should generally be limited to the following:

 

» Fund holdings information contained in marketing materials should be at least thirty days old;
» Discussions of specific, current fund holdings should be limited to one-on-one conversations with existing investors or their representatives;
» Discussions of pending transactions are strictly prohibited; and

 

All investors should have equal access to information about a fund’s holdings and activities. Any questions regarding this policy should be addressed to the CCO.

 

VII.       REPORTING AND COMPLIANCE OBLIGATIONS

 

(1) The Review Officer shall create and thereafter maintain a list of all Access Persons.

 

 

   

 

(2) Each Access Person must provide duplicate copies of their account statement (on an annual basis) and brokerage confirmations (post trade contract notes) promptly to the Review Officer.

 

(3) As provided in Section VII(5) below, each Access Person must provide to the Review Officer a complete listing of all Securities owned by such person as of the later of adoption of this Code of Ethics or 10 days after becoming an Access Person. Each Access Person must disclose all memberships of Investment Clubs to the Compliance and Risk Unit. Where they do not participate in decision making, the transaction does not need to be approved but should be reported in the Access Person’s Annual Holdings Report. Each Access Person must submit a list of Securities holdings to the Review Officer within 45 days after the end of each calendar year.

 

(4) Every Access Person shall certify annually that he or she:

 

(A) Has read and understands this Code of Ethics ;

 

(B) Recognizes that he or she is subject to this Code of Ethics ;

 

(C) Has complied with this Code of Ethics ; and

 

(D) Has disclosed and reported all personal Securities transactions and personal securities accounts required to be disclosed or reported by this Code of Ethics .

 

(5) Reports.

 

(A) Initial Holdings Reports : Every Access Person must provide to the Review Officer a complete listing of all Securities owned by such person, including the title, the exchange ticker or SEDOL number, the type of Security, the number of shares and principal amount , as well as all personal securities accounts, including the name of the broker, dealer or bank at which such account is maintained. Personal securities accounts over which the Access Person has no direct or indirect influence or control should also be included. Such accounts could include a discretionary investment account managed by a third party e.g. stockbroker account, a trust in which the Access Person is a beneficiary and has no knowledge of the holdings etc. (hereafter referred to as “accounts with no direct or indirect influence or control”). Such reports need not show transactions effected for, or Securities held in, personal securities accounts over which the person has no direct or indirect influence or control and which they have certified to be the case. All information must be provided within ten

 

 

   

 

days of the later of the adoption of this Code of Ethics or such person’s becoming an Access Person. A form of Initial Holdings Report is attached as Appendix I.

 

(B) Annual Holdings Reports : On an annual basis, each Access Person must submit to the Review Officer a listing of all Securities beneficially owned by such person, including the title, number of shares and principal amount, as well as all personal securities accounts held, including the name of the broker, dealer or bank at which such account is maintained . This report must also include details of any accounts held where the Access Person has no direct or indirect influence or control. In relation to such accounts a certification must be provided by the Access Person to confirm that they have no direct influence or control over such accounts. Such reports need not show transactions effected for, or Securities held in, personal securities accounts over which the person has no direct or indirect influence or control and which they have certified to be the case. The list must be current as of a date no more than 45 days before the report is submitted and must be received within 45 days of the end of the calendar year. A form of Annual Holdings Report is attached as Appendix II.

 

(C) Quarterly Reports :

 

1. Each Access Person shall report all transactions in Securities in which the person has, or by reason of such transaction acquires, any direct or indirect beneficial ownership. Reports shall be filed with the Review Officer quarterly. Each Access Person must also report any personal securities accounts established during the quarter. This report must also include details of any accounts established during the quarter where the Access Person has no direct or indirect influence or control. Such reports need not show transactions effected for, or Securities held in, personal securities accounts over which the person has no direct or indirect influence or control and which they have certified that this is the case. The Review Officer shall submit confidential quarterly reports with respect to his or her own personal Securities transactions and personal securities accounts established to an officer designated to receive his or her reports, who shall act in all respects in the manner prescribed herein for the Review Officer.

 

2. Every quarterly report shall be made no later than 30 days after the end of the calendar quarter in which the transaction to which the report relates was effected, and shall contain the following information (a form of Quarterly Report Form is attached as Appendix III):

 

 

   

 

(a) The date of the transaction, the title, the exchange ticker or SEDOL no, the interest rate and maturity (if applicable), the number of shares and principal amount of each Security involved;

 

(b) The nature of the transaction (i.e . purchase, sale or any other type of acquisition or disposition);

 

(c) The price of the Security at which the transaction was effected;

 

(d) The name of the broker, dealer or bank with or through which the transaction was effected;

 

(e) The date the report is submitted by the Access Person; and

 

(f) With respect to any personal securities account established during the quarter, the broker, dealer or bank with whom the account was established, and the date the account was established.

 

3. In the event the Access Person has no reportable items during the quarter, the report should so note and be returned signed and dated.

 

(D) Other than Annual Holdings Report: Following a period of prolonged leave each Access Person must provide to the Review Officer a complete list of all Securities owned by such person, including the title, number of shares and principal amount, as well as all personal securities accounts, including the name of the broker, dealer or bank at which such account is maintained .

 

(E) Any reports covered by this Code of Ethics may contain a statement that the report shall not be construed as an admission by the person making such report that he has any direct or indirect beneficial ownership in the Security to which the report relates.

 

(F) Every Access Person shall report the name of any publicly-traded company (or any company that such Access Person is aware of is anticipating a public offering of its equity Securities) and the total number of its shares beneficially owned by him or her if such total ownership is more than 1% of the company’s outstanding shares.

 

(G) Every Access Person who owns Securities acquired in a limited offering shall disclose such ownership to the Review Officer if such person is involved in any subsequent consideration of an investment in the issuer by an Advisory Client. The Adviser’s decision to recommend the purchase of

 

 

   

 

such issuer’s Securities to an Advisory Client will be subject to independent review by Investment Personnel with no personal interest in the issuer.

 

(6) Reporting Violations of the Code of Ethics

 

All Access Persons are required to report violations of the Adviser’s Code of Ethics promptly to the Review Officer or other appropriate personnel as designated in this Code, provided the Review Officer also receives reports of all violations. The violations that should be reported include noncompliance with applicable laws, rules and regulations, fraud or illegal acts involving any aspect of the Adviser’s business, material misstatements in regulatory filings, internal books and records, Clients reports and, activity that is harmful to Clients, including fund shareholders and deviations from required controls and procedures that safeguard Clients and the Adviser. This list is not exhaustive.

 

Such reports will be treated confidentially to the extent permitted by law and investigated promptly and appropriately. Retaliation against an individual who reports a violation is prohibited and constitutes a further violation of the Code.

 

VIII . ACCOUNTS OVER WHICH ACCESS PERSONS HAVE NO DIRECT OR INDIRECT INFLUENCE OR CONTROL

 

Rule 204A-1 of the Investment Advisers Act 1940 allows for a “reporting exception” from some of the above reporting and pre clearance requirements for personal security accounts over which an Access Person has ‘no direct or indirect influence or control’.

 

To avail of this exception it is necessary for an Access Person to certify that they have no influence or control over the relevant account(s).

 

An Access Person is deemed to have “no direct or indirect influence or control” over the relevant account(s) if they can definitively answer ‘No’ to all of the following questions on an on-going basis:

 

- Did you suggest purchases or sales of investments to the third-party discretionary stockbroker or trustee for this account during x time period?
- Did you direct purchases or sales of investments for this account during x time period, or;
- Did you consult with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in the account during x time period?

 

If an Access Person cannot answer ‘No’ to all of the above questions, at all times during the existence of the account, then such account(s) do not qualify for the reporting exception and are therefore subject to the full reporting and pre-clearance of transactions requirements as set out in this policy.

 

 

   

 

Any doubt or queries in relation to any individual circumstances should be raised with the Review Officer.

 

Where an Access Person holds such an account the Review Officer is obliged to implement additional controls to establish a reasonable belief that an Access Person has no direct or indirect influence or control over the trust or account and can therefore rely on the exception.

 

To monitor the nature of such accounts and determine whether or not an Access Person has any influence or control over the account, in addition to the disclosure and certification requirements set out above the Review Officer may also carry out the following checks:

 

1) Obtain information about a third party manager’s or trustee’s relationship with the Access Person (e.g.is the trustee an independent professional of a friend or relative)

 

2) On a sample basis, request reports on holdings/transactions made on the discretionary account or trust.

 

IX. REVIEW AND ENFORCEMENT

 

(1) The Review Officer’s Duties and Responsibilities . The Review Officer shall notify each person who becomes an Access Person and who is required under this Code of Ethics of his or her reporting requirements, on a best endeavors basis, within ten days before the first quarter in which such person is required to begin reporting.

 

(2) The Review Officer will, on a quarterly basis, compare all confirmations, account statements and other reports received with a list of Securities that have been purchased or sold on behalf of any Advisory Client to determine whether a violation of this Code of Ethics may have occurred. Before determining that a person has violated the Code of Ethics , the Review Officer shall give such person an opportunity to supply additional explanatory material.

 

If the Review Officer determines that a violation has occurred, or believes that a Code of Ethics violation may have occurred, the Review Officer must submit a written report regarding the possible violation, together with any confirmations, account statements or other reports and any additional explanatory material provided by the Access Person, to the Access Person’s primary supervisor, and legal counsel for the Adviser, who shall make an independent determination as to whether a violation has occurred. If the primary supervisor is unavailable or is unable to review the transaction, the alternate supervisor shall act in all respects in the manner prescribed herein for the primary supervisor.

 

 

   

 

If the primary or alternate supervisor finds that a violation has occurred, the CCO in consultation with the supervisor shall impose upon the individual such sanctions as he or she deems appropriate.

 

X. ANNUAL WRITTEN REPORTS TO SENIOR MANAGEMENT AND THE BOARD

 

At least annually, the Adviser will provide a written report to the Senior Management of the Adviser and to each Fund Client’s Adviser for onward reporting to the Fund Board of Trustees , or Board of Directors (collectively the “Board”), as the case may be, as follows:

 

(1) Issues Arising Under the Code of Ethics . The report must describe any issue(s) that arose during the previous year under the Code of Ethics or procedures thereto, including any material Code of Ethics or procedural violations, and any resulting sanction(s). The Adviser may report to senior management of the Adviser and/or the Adviser’s Board more frequently as it deems necessary or appropriate and shall do so as requested by the Board.

 

(2) Certification . Each report must be accompanied by a certification to senior management and/or the Board that the Adviser has adopted procedures reasonably necessary to prevent its Access Persons from violating this Code of Ethics.

 

XI. RECORDKEEPING

 

The Adviser will maintain the records set forth below. These records will be maintained in accordance with the 1940 Act, Rule 204 of the Investment Advisers Act, 1940 and the following requirements. They will be available for examination by representatives of the Securities and Exchange Commission and other regulatory agencies.

 

(1) A copy of this Code of Ethics and any other code adopted by the Adviser under Rule 17j-1 of the IC Act and/or Rule 204 of the Investment Advisers Act 1940, which is, or at any time within the past five years has been, in effect will be preserved in an easily accessible place.

 

(2) A record of any Code of Ethics violation and of any sanctions taken will be preserved in an easily accessible place for a period of at least five years following the end of the fiscal year in which the violation occurred.

 

(3) A copy of each Quarterly Report, Initial Holdings Report, and Annual Holdings Report submitted under this Code of Ethics , including any information provided in addition to any such reports made under this Code of Ethics , will be preserved for a period of at least five years from the end of the fiscal year on which it is made, for the first two years in an easily accessible place.

 

 

   

 

(4) A record of all persons, currently or within the past five years, who are or were required to submit reports under this Code of Ethics , or who are or were responsible for reviewing these reports, will be maintained in an easily accessible place.

 

(5) A copy of each annual report required by Section IX of this Code of Ethics must be maintained for at least five years from the end of the fiscal year in which it is made, for the first two years in any easily accessible place.

 

(6) A record of any decision and the reasons supporting the decision, to approve the acquisition of Securities acquired in an IPO or a limited offering, for at least five years after the end of the fiscal year in which the approval is granted.

 

(7) A record of any decision, and the reasons supporting the decision, related to the Review Officer’s determination regarding an Access Person’s transaction in a Security as described in Section IV(1).

 

XII.       MISCELLANEOUS

 

(1) Confidentiality . All reports and other confirmations and reports of Securities transactions, and any other information filed with the Adviser pursuant to this Code of Ethics , shall be treated as confidential, provided such reports and information may be produced to the Securities and Exchange Commission and other regulatory agencies.

 

(2) Interpretation of Provisions . The Adviser may from time to time adopt such interpretations of this Code of Ethics as it deems appropriate.

 

(3) Compliance Certification . Within ten days of becoming an Access Person, and each year thereafter, each such person must complete a Compliance Certification. A Compliance Certification Form is attached as Appendices IV & V.

 

 

   

 

APPENDICES

 

 

   

 

APPENDIX I

KBI GLOBAL INVESTORS

INITIAL HOLDINGS REPORT

 

Name of Reporting Person: _______________________________________________________

Date Person Became Subject to the Code’s Reporting Requirements: ______________________

Information in Report Dated as of: _________________________________________________

Date Report Due: _______________________________________________________________

Date Report Submitted: __________________________________________________________

 

Securities Holdings

 

Name of Issuer and Title
of Security 		  No. of Shares (if
applicable) 		  SEDOL   Principal Amount,
Maturity Date and Interest
Rate (if applicable)
             
             
             
             

 

If you have no securities holdings to report, please check here. ¨

 

If you do not want this report to be construed as an admission that you have beneficial ownership of one or more securities reported above, please describe below and indicate which securities are at issue.

____________________________________________________________________

____________________________________________________________________

 

Securities Accounts

 

Name of Broker, Dealer or Bank  

Name(s) on and Type

of Account

     
     
     

 

If you have no securities accounts to report, please check here. ¨

 

 

   

 

Accounts over which you have no direct or indirect influence or control

Please list below any accounts where you are the beneficial owner and over which you have no direct or indirect influence or control, e.g. discretionary investment account managed by a third party (e.g. stockbroker account), a trust in which you are a beneficiary and have no knowledge of the holdings etc.

 

Please provide the following information for each account(s):

 

Name of Broker, Investment
Manager, Trustee 		  Name(s) on and
Type
 of Account 		  Access Persons relationship to Manager/Trustee (independent
professional, friend, relative, etc.)
         
         

 

If you have listed any account(s) above, please complete Section A below.

Otherwise please tick here to confirm you do not hold any such accounts & proceed to certification at end of page ☐

 

SECTION A

 

In relation to the above listed account(s):

 

(i) Have you ever suggested purchases or sales of investments to the third-party discretionary stockbroker or trustee on any account above? Yes ¨      No ¨
(ii) Have you ever directed purchases or sales of investments for any account above? Yes ¨        No ¨
(iii) Have you ever consulted with the trustee or third-party discretionary stockbroker as to the particular allocation of investments to be made in any account above? Yes ¨     No ¨

 

If you have answered ‘Yes’ to any of (i), (ii) or (iii) above, this account(s) does not qualify under the reporting exception as described in Section VIII above and such account(s) are subject to the full reporting and pre-clearance requirements as set out in this policy.

 

If you have answered ‘No’ to all of the above 3 questions, please confirm that you acknowledge and certify that:

 

1) You have no direct or indirect influence or control over the Accounts;

2) If your control over the Accounts should change in any way, you will immediately notify the Review Officer in writing of such a change; and

3) You agree to provide reports of holdings and/or transactions (including, but not limited to, duplicate account statements and trade confirmations) made in the Accounts at the request of the Review Officer

 

Signature:       Date:    

 

I certify that I have included on this report all securities transactions and accounts required to be reported pursuant to the Code of Ethics.

 

Signature:       Date:    

 

 

   

 

APPENDIX II

KBI GLOBAL INVESTORSANNUAL HOLDINGS REPORT

 

Name of Reporting Person: ______________________________________________________

Information in Report Dated as of: _________________________________________________

Date Report Due: _______________________________________________________________

Date Report Submitted: __________________________________________________________

Calendar Year Ended: December 31, _______

 

Securities Holdings

 

Name of Issuer and Title
of Security 		  No. of Shares (if
applicable) 		  SEDOL   Principal Amount,
Maturity Date and Interest
Rate (if applicable)
             
             
             
             

 

If you have no securities holdings to report for the year, please check here. ¨

If you do not want this report to be construed as an admission that you have beneficial ownership of one or more securities reported above, please describe below and indicate which securities are at issue.

____________________________________________________________________

_______________________________________________________________________

 

Securities Accounts

 

Name of Broker, Dealer or Bank   Date Account was Established   Name(s) on and Type of
Account
         
         

 

If you have no securities accounts to report for the year, please check here. ¨

 

 

   

 

Accounts over which you have no direct or indirect influence or control

Please list below any accounts where you are the beneficial owner and over which you have no direct or indirect influence or control, e.g. discretionary investment account managed by a third party (e.g. stockbroker account), a trust in which you are a beneficiary and have no knowledge of the holdings etc.

 

Name of Broker, Dealer or
Bank 		 

Name(s) on and
Type

of Account

  Relationship to Manager (independent professional, friend,
relative, etc.)
         
         

 

If you have listed any account(s) above, please complete Section A below.

Otherwise please tick here to confirm you do not hold any such accounts & proceed to certification at end of page ¨

 

SECTION A

 

In relation to the above listed account(s):

(i) Within the last calendar year, did you suggest purchases or sales of investments to the trustee or third-party discretionary manager for any account above? Yes ¨      No ¨
(ii) Within the last calendar year, did you direct purchases or sales of investments for any account above? Yes ¨       No ¨
(iii) Within the last calendar year, did you consult with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in any account above? Yes ¨         No ¨

 

If you have answered ‘Yes’ to any of (i), (ii) or (iii) above, this account(s) does not qualify under the reporting exception as described in Section VIII above and such account(s) are subject to the full reporting and pre-clearance requirements as set out in this policy.

 

If you have answered ‘No’ to all of the above 3 questions, please confirm that you acknowledge and certify that:

 

1) I have no direct or indirect influence or control over the Accounts;
2) If my control over the Accounts should change in any way, I will immediately notify the Review Officer in writing of such a change and will provide any required information regarding holdings and transactions in the Accounts pursuant to the Rule; and
3) I agree to provide reports of holdings and/or transactions (including, but not limited to, duplicate account statements and trade confirmations) made in the Accounts at the request of the Review Officer

 

Signature:       Date:    

 

I certify that I have included on this report all securities transactions and accounts required to be reported pursuant to the Code of Ethics.

 

Signature:       Date:    

 

 

   

 

APPENDIX III

KBI GLOBAL INVESTORSQUARTERLY PERSONAL SECURITIES TRANSACTIONS REPORT

 

Name of Reporting Person: _______________________________________________________

Calendar Quarter Ended:_________________________________________________________

Date Report Due:_______________________________________________________________

Date Report Submitted:__________________________________________________________

 

Securities Transactions

 

Date of
Transaction 		  Name of
Issuer and
Title of
Security 		  SEDOL   No. Of
Shares (if
applicable) 		  Principal Amount,
Maturity Date
and Interest
Rate
(if applicable) 		  Type of
Transaction 		  Price   Name of Broker,
Dealer or Bank
Effecting
Transaction
                             
                             
                             

 

If you had no reportable transactions during the quarter, please check here. ¨

 

If you do not want this report to be construed as an admission that you have beneficial ownership of one or more securities reported above, please describe below and indicate which securities are at issue.

______________________________________________________________________

_____________________________________________________________________________

 

Securities Accounts

If you established an account within the quarter, please provide the following information:

 

Name of Broker,
Dealer or Bank 		  Date Account was Established   Name(s) on and Type
of Account
         

 

If you did not establish a securities account during the quarter, please check here . ¨

 

Accounts over which you have no direct or indirect influence or control

If you established an account(s) where you are the beneficial owner and over which you have no direct or indirect influence or control, e.g. discretionary investment account managed by a third party (e.g. stockbroker account), a trust in which you are a beneficiary and has no knowledge of the holdings etc., please provide the following information:

 

Name of Broker,
Dealer or Bank 		 

Name(s) on and Type

of Account

  Relationship to Manager (independent professional,
friend, relative, etc.)
         
         

 

 

   

 

If you have listed any account(s) above, please complete Section A below.

Otherwise please tick here to confirm you did not establish any such accounts & proceed to certification at end of page ¨

 

SECTION A:

 

In relation to the above listed account(s):

 

Have you ever suggested purchases or sales of investments to the trustee or third-party discretionary manager any account above? Yes ¨       No ¨

Have you ever directed purchases or sales of investments for any account above? Yes ¨          No ¨

Have you ever consulted with the trustee or third-party discretionary manager as to the particular allocation of investments to be made in any account above? Yes ¨         No ¨

 

If you have answered ‘Yes’ to any of the 3 questions above, this account(s) does not qualify under the reporting exception as described in section VIII above and such account(s) are subject to the full reporting and pre-clearance requirements as set out in this policy. Transactions in such accounts during the previous quarter should be listed in the Securities Transactions box at the top of the first page.

 

If you have answered ‘No’ to all of the above 3 questions, please confirm that you acknowledge and certify that:

 

I have no direct or indirect influence or control over the Accounts;

 

If my control over the Accounts should change in any way, I will immediately notify the Review Officer in writing of such a change and will provide any required information regarding holdings and transactions in the Accounts pursuant to the Rule; and

 

I agree to provide reports of holdings and/or transactions (including, but not limited to, duplicate account statements and trade confirmations) made in the Accounts at the request of the Review Officer

 

Signature:       Date:    

 

I certify that I have included on this report all securities transactions and accounts required to be reported pursuant to the Code of Ethics.

 

Signature:       Date:    

 

 

   

 

APPENDIX IV

 

KBI GLOBAL INVESTORS

 

INITIAL COMPLIANCE CERTIFICATION

 

 

INITIAL CERTIFICATION

 

I certify that I: (i) have received, read and reviewed the Code of Ethics;
     
  (ii) understand the policies and procedures in the Code of Ethics ;
     
  (iii) recognize that I am subject to such policies and procedures;
     
  (iii) understand the penalties for non-compliance;
     
  (v) will fully comply with the Code of Ethics; and
     
  (vi) have fully and accurately completed this Certificate.

 

Signature:    
     
Name:   (Please print)
     
Date Submitted:    
     
Date Due:    

 

 

   

 

APPENDIX V

 

KBI GLOBAL INVESTORS

ANNUAL COMPLIANCE CERTIFICATION

 

 

ANNUAL CERTIFICATION

 

I certify that I:

(i) have received, read and reviewed the Code of Ethics as amended;;

 

(ii) understand the policies and procedures in the Code of Ethics ;

 

(iii) recognise that I am subject to such policies and procedures;

 

(iv) understand the penalties for non-compliance;

 

(v) have complied with the Code of Ethics and any applicable reporting requirements during this past year;

 

(vi) have fully disclosed any exceptions to my compliance with the Code of Ethics below;

 

(vii) have complied with the gifts and benefits notification, recording and pre-approval requirements outlined in the Code of Ethics

 

(viii) will fully comply with the Code of Ethics; and

 

(ix) have fully and accurately completed this Certificate.

 

EXCEPTION(S):
______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

 

Signature :    
     
Name:     (Please print)
     
Date Submitted :    
     
Date Due:       

 

 

   

 

INITIAL CERTIFICATION PURSUANT TO RULE 17j-1

 

The undersigned, _______________________________________, in his/her capacity as                                                               , of KBI Global Investors (North America) Ltd ( KBIGI (North America) the sub-adviser to the [ insert name of Fund to which cert is being provided] (the “Fund”) hereby certifies the following:

 

1. KBIGI (North America) has adopted a Code of Ethics (the “Code”) covering the sub-adviser, pursuant to, and in compliance with, Rule 17j-1 under the Investment Company Act of 1940;

 

2. KBIGI (North America) has adopted procedures reasonably necessary to prevent its access persons from violating the Code;

 

3. KBIGI (North America’s) Code of Ethics contains provisions reasonably necessary to prevent access persons from violating Rule 17j-1(b); and

 

4. In accordance with Rule 17j-1, KBIGI (North America) has submitted its Code of Ethics to the Fund’s Board of Directors for approval.

 

Witness my hand this ____ day of _________, 20

 

 

  Signature:  

 

  Printed Name:  

 

  Title: