Mutual Fund Summary Prospectus (497k)
January 31 2013 - 3:57PM
Edgar (US Regulatory)
Summary Prospectus January 31, 2013
Virtus Dynamic AlphaSector
SM
Fund
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A: EMNAX
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B: EMNBX
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C: EMNCX
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I: VIMNX
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Before you invest, you may want to review the funds prospectus, which contains more information about the fund and its risks.
You can find the funds prospectus, statement of additional information (SAI), annual report and other information about the fund online at http://www.virtus.com/individuals/forms/prospectuses.aspx?type=individual.
You can also get this information at no cost by calling 800-243-1574 or by sending an e-mail to:
virtus.investment.partners@virtus.com. If you purchase shares of the fund through a broker-dealer or other financial intermediary (such as a bank), the prospectus and other information will also be available from your financial intermediary.
The funds prospectus and SAI, both dated January 31, 2013, are incorporated by reference into this Summary
Prospectus.
Investment Objective
The Funds investment objective is to seek long-term 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 193 of the funds prospectus and Alternative Purchase Arrangements on page 57 of the funds
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 B
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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)
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5.75%
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None
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None
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None
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Maximum Deferred Sales Charge (load) (as a percentage of the lesser of
purchase price or redemption proceeds)
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1.00%
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(a)
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5.00%
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(
b
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1.25%
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(
b
)
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None
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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
Shares
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Class B
Shares
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Class C
Shares
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Class I
Shares
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Management Fees
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1.89%
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(
c
)(
d
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1.89%
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(
c
)(
d
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1.89%
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(
c
)(
d
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1.89%
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(
c
)(
d
)
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Distribution and Shareholder Servicing (12b-1) Fees
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0.25%
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1.00%
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1.00%
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None
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Other Expenses
(
d
)
:
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Dividends on Short Sales and Interest
Expense
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0.64%
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0.64%
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0.64%
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0.64%
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Remainder of Other
Expenses
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0.42%
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0.42%
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0.42%
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0.42%
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Total Other Expenses
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1.06%
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1.06%
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1.06%
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1.06%
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Acquired Fund Fees and Expenses
(
e
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0.20%
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0.20%
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0.20%
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0.20%
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Total Annual Fund Operating Expenses
(
d
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3.40%
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4.15%
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4.15%
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3.15%
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(a)
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Generally, Class A Shares are not subject to any charges by the Fund when redeemed; however, a contingent deferred sales charge may be imposed on certain redemptions within
18 months on exchanges from a Virtus non-money market fund into a Virtus money market fund and purchases on which a finders fee has been paid. The 18-month period begins on the last day of the month preceding the month in which the purchase
was made.
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(b)
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The maximum deferred sales charge is imposed on Class B Shares redeemed during the first year; thereafter, it decreases 1% annually to 3% during the third and fourth years and to
0% after the sixth year. The deferred sales charge is imposed on Class C Shares redeemed during the first year only.
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(c)
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Management Fees exceed the contractual percentage rate because the Advisory Agreement, as amended, calculates fees based on Managed Assets rather than based on net assets
although the table shows the percentage rate as applied to net assets. Managed Assets means the total assets of the fund, including any assets attributable to borrowings, minus the funds accrued liabilities other than such borrowings. In the
future, performance fee adjustments may increase or decrease the management fee by up to +/- 1.00% of the average net assets of the fund during a rolling 36-month period (or cumulative period since the implementation of the principal investment
management changes).
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(d)
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Restated to reflect current fees and expenses.
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(e)
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The Total Annual Fund Operating Expenses do not correlate to the ratio of expense to average net assets appearing in the Financial Highlights tables, which tables reflect only
the operating expenses of the fund and do not include acquired fund fees and expenses.
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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. It shows your costs if you
sold your shares at the end of the period or continued to hold them. In the case of Class B Shares, it assumes that your shares are converted to Class A Shares after seven years. The example
also assumes that your investment has a 5% return each year and that the funds 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
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Sold or Held
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$898
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$1,560
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$2,243
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$4,048
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Class B
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Sold
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$817
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$1,461
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$2,120
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$4,174
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Held
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$417
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$1,261
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$2,120
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$4,174
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Class C
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Sold
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$517
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$1,261
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$2,120
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$4,331
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Held
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$417
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$1,261
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$2,120
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$4,331
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Class I
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Sold or Held
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$318
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$971
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$1,649
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$3,457
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Portfolio Turnover
The fund pays transaction costs, such as commissions, when it buys and sells shares of exchange-traded funds (ETFs) or 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 funds performance.
During the most recent fiscal year, the funds portfolio turnover rate was 165% of the average value of its portfolio.
Investments, Risks and Performance
Principal Investment Strategies
The fund seeks to achieve its investment objective by taking long and short positions in ETFs and/or stocks representing the
nine primary sectors of the S&P
®
500 Index. The primary sectors of the S&P 500
®
Index are: consumer discretionary, consumer staples, energy, financials, healthcare, industrials, materials, technology, and
utilities. Allocations are based on a proprietary, quantitative model that seeks to evaluate trends within each sector by adjusting for changing levels of volatility in the market.
The fund intends to employ leverage in the form of borrowing on its long positions in circumstances where the fund has determined to take long positions representing four or more sectors. The fund intends to take
short positions in sectors projected to have negative absolute performance, up to approximately 5.5% of the funds net assets, for each such sector. In the event that all nine sectors are projected to have negative absolute performance, the
fund may take short positions worth up to 50% of the funds net assets, with the remainder of the funds assets remaining in cash and cash equivalents.
Principal Risks
The fund may not achieve its objective, and it is not intended to be a
complete investment program. The value of the funds 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 funds investments decreases, you will lose
money. Investment values can decrease for a number of reasons. Conditions affecting the overall economy, specific industries or companies in which the fund invests can be worse than expected, and investments may fail to perform as the adviser
expects. As a result, the value of your shares may decrease. In addition, you will also be subject to the risks associated with the principal investment strategies of any ETFs in which the fund invests. The principal risks of investing in the fund
are:
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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 funds shares over short or extended periods.
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>
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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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>
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Leverage Risk.
The risk that the
value of the funds shares will be more volatile or that the fund will incur a loss greater than the funds investment in a given security when leverage is used.
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>
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Market Volatility Risk.
The risk
that the value of the securities in which the fund invests may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be temporary or may last for extended periods.
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>
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Model Portfolio 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.
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>
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Portfolio Turnover Risk.
The risk
that the funds 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 fund
performance.
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>
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Sector Focused Investing Risk.
The
risk events negatively affecting a particular industry or market sector in which the fund focuses its investments will cause the value of the funds shares to decrease, perhaps significantly. To the extent the fund invests a significant portion
of its portfolio in ETF 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.
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>
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Short Sales Risk.
The risk that a
fund may experience a loss if the price of a borrowed security increases between the date of a short sale and the date on which the fund replaces the security.
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2
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U.S. Government Securities Risk.
The risk that the U.S. Government securities in the funds 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.
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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 funds 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 funds performance from year to year over a 10-year period. The table shows how the
funds average annual returns compare to those of a broad-based securities market index and a more narrowly-based benchmark. Updated performance information is available at
virtus.com
or by calling 800-243-1574.
Calendar year total returns for Class A Shares
(includes returns of a predecessor
fund)
Returns do not reflect sales charges and would be lower if they did.
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Best
Quarter: Q1/2009: 5.86%
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Worst Quarter:
Q3/2011: -6.00%
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Average Annual Total Returns
(for the periods ended 12/31/12;
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
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0.56%
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-1.96%
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-1.35%
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Return After Taxes on
Distributions
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0.07%
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-2.13%
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-1.52%
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Return After Taxes on Distributions and
Sale of Fund Shares
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0.04%
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-1.73%
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-1.20%
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Class B
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Return Before Taxes
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1.88%
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-1.78%
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-1.52%
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Class C
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Return Before Taxes
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5.94%
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-1.55%
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-1.50%
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Class I
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Return Before Taxes
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7.20%
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-1.34%
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S&P 500
®
Index (reflects no deduction for fees, expenses or taxes)
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16.00%
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1.66%
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7.10%
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12.89%
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Citigroup 90-Day Treasury Bill Index (reflects no deduction for fees,
expenses or taxes)
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8.30%
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2.05%
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2.50%
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2.56%
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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 Citigroup 90-Day Treasury Bill Index measures monthly return equivalents of yield averages that are not marked to market. The 90-Day Treasury Bill Index is an average of the last three three-month Treasury bill issues. 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 investors 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 funds investment adviser is Virtus Investment Advisers, Inc.
(VIA).
The funds subadvisers are Euclid Advisors LLC (Euclid), an affiliate of VIA, and F-Squared Alternative Investments,
LLC (F-Squared Alternative).
3
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c/o Virtus Mutual Funds
P.O. Box 9874
Providence, RI 02940-8074
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Portfolio Management
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Howard Present,
Co-founder,
President and CEO of F-Squared Alternative, is a manager of the fund. Mr. Present has served as a Portfolio Manager of the fund since February 2012.
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>
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Amy Robinson,
Managing Director at
Euclid, is a manager of the fund. Ms. Robinson has served as a Portfolio Manager of the fund since February 2012.
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Purchase and Sale of
Fund Shares
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Purchase Minimums
(except Class I
Shares)
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Minimum Initial Purchase
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$2,500
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Individual Retirement Accounts (IRAs),
systematic purchase or systematic exchange accounts
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$100
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Defined contribution plans, asset-based
fee programs, profit-sharing plans or employee benefit plans
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No minimum
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Minimum Additional Purchase
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$100
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Defined contribution plans, asset-based
fee programs, profit-sharing plans or employee benefit plans
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No minimum
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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.
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 prospectus).
Taxes
The funds distributions are taxable to you either as ordinary income or capital
gains, except when your investment is through a tax-deferred arrangement, such as a 401(k) plan or an individual retirement account. Such tax-deferred arrangements may be taxed later upon withdrawal of monies from those arrangements.
Payments to Broker-Dealers and Other Financial Intermediaries
If you purchase the fund through a broker-dealer or other financial intermediary (such as a bank), the fund and its related companies may pay the intermediary for the sale of fund shares and related services. These
payments may create a conflict of interest by influencing the broker-dealer or other intermediary and your financial advisor to recommend the fund over another investment. Ask your financial advisor or visit your financial intermediarys Web
site for more information.
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