UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-22608
Virtus Global
Multi-Sector Income Fund
(Exact name of registrant as specified in charter)
101 Munson Street
Greenfield, MA 01301-9683
(Address of principal executive offices) (Zip code)
Jennifer
Fromm, Esq.
Vice President, Chief Legal Officer, Counsel and Secretary for Registrant
One Financial Plaza
Hartford, CT 06103-4506
(Name and address of agent for service)
Registrant’s telephone number, including area code: (866) 270-7788
Date of fiscal year end: November 30
Date of reporting period: November 30, 2021
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to
stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose
the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any
suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
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Item 1.
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Reports to Stockholders.
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(a)
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The Report to Shareholders is attached herewith.
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Virtus Global Multi-Sector Income Fund
As permitted by regulations adopted by the Securities and
Exchange Commission, paper copies of the Fund’s shareholder reports like this one will no longer be sent by mail, unless specifically requested from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the
reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be
affected by this change and you need not take any action.
You may elect at any time to receive not only shareholder
reports but also certain other communications from the Fund electronically, or you may elect to receive paper copies of all future shareholder reports free of charge to you. If you own your shares directly with the Fund, you may make such elections
by calling the Fund at 1-866-270-7788 or, with respect to requesting electronic delivery, by visiting www.virtus.com. If you own your shares through a financial intermediary, please contact your financial intermediary to make your request and to
determine whether your election will apply to all funds in which you own shares through that intermediary.
Not FDIC Insured • No Bank Guarantee • May Lose
Value
FUND DISTRIBUTIONS AND MANAGED DISTRIBUTION PLAN
The
Board of Trustees (the “Board,” or the “Trustees”) of Virtus Global Multi-Sector Income Fund (the “Fund”) had adopted a Managed Distribution Plan (the “Plan”) which provided for the Fund to make a
monthly distribution at the rate of $0.08 per share (the rate was $0.10 per share prior to June 2021). Under the terms of the Plan, the Fund sought to maintain a consistent distribution level that may be paid in part or in full from net investment
income, realized capital gains, and a return of capital, or a combination thereof.
If the Fund estimates that it has distributed more than its
income and capital gains in a particular period, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of
capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”
You should not draw any conclusions about the Fund’s
investment performance from the amount of the Fund’s distributions or from the terms of the Fund’s Plan.
The amounts and sources of distributions reported in the
Fund’s notices issued pursuant to Section 19(a) of the Investment Company Act of 1940 are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will
depend upon the Fund’s investment results during its fiscal year and may be subject to changes based on tax regulations. The Fund will send shareholders a Form 1099-DIV for the calendar year that will tell you how to report distributions for
federal income tax purposes.
The Board may amend, suspend
or terminate the Plan at any time, without prior notice to shareholders, if it deems such action to be in the best interest of the Fund and its shareholders.
On November 18, 2021, the Fund announced the removal of its
managed distribution plan, effective with the December distribution. The Fund intends to maintain its level payout at the current distribution rate of $0.08 per share.
Information on the Fund is available through the closed-end
fund section on the web at
www.Virtus.com. Section 19(a) notices are posted on the website at:
https://www.virtus.com/products/virtus-global-multi-sector-income-fund.
Table of Contents
Virtus Global Multi-Sector Income Fund
(“Global Multi-Sector Income
Fund”)
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1
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2
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6
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7
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8
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29
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30
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31
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32
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33
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34
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44
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45
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47
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51
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54
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58
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Dear Virtus Global Multi-Sector Income Fund
Shareholder:
I am pleased to
present this annual report, which reviews the performance of the Virtus Global Multi-Sector Income Fund for the 12 months ended November 30, 2021.
This report contains commentary from the
portfolio management team at Newfleet Asset Management about the financial markets and the performance of the Fund during the period.
During the fiscal year, markets expressed
optimism about the economic reopening but wrestled with the rise of Covid variants, as well as continuing supply chain issues and rising inflation. For the 12 months ended November 30, 2021, the Fund’s net asset value (NAV) returned 1.76%,
including $1.08 in reinvested distributions, and its market price returned 8.22%. For the same period, the Fund’s benchmark, the Bloomberg Global Aggregate Bond Index, returned -3.29%.
The Fund’s investment management team continues to
manage your assets with care as they navigate current market and economic challenges. If you have questions about your account, please visit the closed-end fund section of Virtus.com, or
call our customer service team at 866-270-7788. We appreciate the confidence you have placed in us, and wish you all the best in 2022.
Sincerely,
George R.
Aylward
President, Chief Executive Officer, and Trustee
Virtus Global Multi-Sector Income Fund
January 2022
Refer to the Manager’s Discussion section for your
Fund’s performance. Performance data quoted represents past results. Past performance is no guarantee of future results, and current performance may be higher or lower than the performance shown above. Investing involves risk, including the
risk of loss of principal invested.
GLOBAL MULTI-SECTOR INCOME
FUND MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited)
November 30, 2021
About the
Fund:
Virtus Global Multi-Sector Income
Fund’s (NYSE: VGI) (the “Fund”) investment objective is to maximize current income while preserving capital. The Fund seeks to achieve its investment objective by applying an approach, and extensive credit research, to capitalize
on opportunities across undervalued areas of the global bond markets. There is no guarantee that the Fund will achieve its investment objective.
The use of leverage currently enables the
Fund to borrow at short-term rates and invest at higher yields on its investments. As of November 30, 2021, the Fund’s leverage consisted of $52.5 million of borrowings made pursuant to a line of credit, which represented approximately 28% of
the Fund’s total assets.
Manager Comments –
Newfleet Asset Management, LLC (Newfleet)
Newfleet’s multi-sector fixed income
strategies team manages the Fund, leveraging the knowledge and skills of investment professionals with expertise in every sector of the bond market, including evolving, specialized, and out-of-favor sectors. The team employs active sector rotation
and disciplined risk management for portfolio construction, avoiding interest rate bets and remaining duration neutral. The following commentary is provided by the respective portfolio team at Newfleet and covers the Fund’s portfolio for the
year ended November 30, 2021.
How did the markets perform
during the Fund’s fiscal year ended November 30, 2021?
While the 12-month period included a variety
of market conditions, the impact of COVID-19 worldwide continued to be a dominant factor influencing market performance. Monetary and fiscal policy response evolved to support economic activity and allow market disruptions to heal. The final quarter
of 2020 was marked by vaccine development and distribution, the U.S. presidential election, and a trade deal between the U.K. and the EU.
The first three quarters of 2021 brought a
new U.S. administration, more fiscal stimulus, and bursts of optimism as the world continued its recovery from the COVID-19-related economic lockdowns that dominated early 2020. The virus continued to pose a global challenge to health care systems
and policymakers as they sought the correct mix of protective measures to contain it. Though variants of the virus emerged during the period, vaccines proved effective against them, with recent recommendations that a booster is needed to enhance
waning immunity and further protect against the Omicron variant. Global vaccine distribution and the resulting increase in protected populations contributed to the world’s progress against the virus.
Since the economic recovery remained on
track, the Federal Reserve (the Fed) began removing some of its monetary support, announcing the completion of the wind-down of its secondary market corporate credit facility during the third quarter of 2021. The Fed remained committed to its
communication strategy during the fiscal year, and with what seemed to be less transitory inflation and a strong economy, said it may tighten financial conditions faster than what was previously expected.
During the 12-month period, spread sectors
(non-governmental fixed income investments) outperformed U.S. Treasuries, led by the corporate high yield sector and high yield bank loans.
During the fiscal year, the Fed left its
target interest rate unchanged at a range of 0-0.25%, the rate that was set in late March of 2020 in response to the pandemic.
For information regarding the indexes and certain key investment terms, see
Key Investment Terms starting on page 7.
GLOBAL MULTI-SECTOR INCOME
FUND MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited) (Continued)
November 30, 2021
Additionally, over the 12-month period, the
U.S. Treasury yield curve steepened, shifting broadly higher, especially for maturities up to five years.
What factors affected the Fund’s performance during its
fiscal year?
For the fiscal year ended
November 30, 2021, the Fund returned 1.76%, while the Bloomberg Global Aggregate Bond Index, which serves as the Fund’s benchmark, returned -3.29%.
An underweight to U.S. Treasuries in favor of
spread sectors was a driver of the Fund’s outperformance for the fiscal year. Among fixed income sectors, the Fund’s allocations to corporate high yield and high yield bank loans contributed positively to performance for the fiscal year.
Issue selection within corporate high quality securities was also beneficial for relative performance.
The Fund’s allocation to emerging
markets high yield, as well as issue selection within the yankee high quality sector, were detractors from performance for the 12-month period. The Fund’s underweight to the corporate high quality sector also negatively impacted performance
for the 12-month period, despite the fact that issue selection within the sector was positive.
The preceding information is the opinion of
portfolio management only through the end of the period of the report as stated on the cover. Any such opinions are subject to change at any time based upon market conditions and should not be relied upon as investment advice.
The Fund’s portfolio holdings are
subject to change and may not be representative of the portfolio managers’ current or future investment decisions. The mention of individual securities held by the Fund is for informational purposes only and should not be construed as a
recommendation to purchase or sell any securities. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional.
For
information regarding the indexes and certain key investment terms, see Key Investment Terms starting on page 7.
GLOBAL MULTI-SECTOR INCOME
FUND MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited) (Continued)
November 30, 2021
Average Annual Total Returns1 for periods ended 11/30/21
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1
Year
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5
Years
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Since
Inception
2/23/12
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Market
Value1,2
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8.22%
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6.32%
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5.24%
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Net
Asset Value1,2
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1.76%
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4.29%
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5.84%
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Bloomberg
Global Aggregate Bond Index1,3
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-3.29%
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3.29%
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1.71%
4
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All returns represent past performance which is no guarantee of
future results. Current performance may be higher or lower than the performance shown. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 11/30
This graph shows the change in value of a hypothetical
investment of $10,000 in the Fund made on February 23, 2012 (inception date of the Fund) for the years indicated. For comparison, the same investment is shown in the indicated index.
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1
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Past
performance is not indicative of future results. Current performance may be lower or higher than performance in historical periods.
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2
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Total
return on market value is calculated assuming a purchase of common shares on the opening of the first day and sale on the closing of the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to
be reinvested at prices obtained under the Fund’s Automatic Reinvestment and Cash Purchase Plan. Total return on market value is not annualized for periods of less than one year. Brokerage commissions that a shareholder may pay are not
reflected. Total return on market value does not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares. Total return on net asset value uses the same methodology, but with use of net asset value
for the beginning and ending values.
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For information regarding the indexes and certain key investment terms, see
Key Investment Terms starting on page 7.
GLOBAL MULTI-SECTOR INCOME
FUND MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited) (Continued)
November 30, 2021
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3
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The index
is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
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4
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The
since inception index return is from the Fund’s inception date.
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For information regarding the indexes and certain key investment terms, see
Key Investment Terms starting on page 7.
PORTFOLIO HOLDINGS SUMMARY
WEIGHTINGS (Unaudited)
November 30, 2021
The
following tables present the portfolio holdings within certain
sectors
or countries as a percentage of total investments at November 30, 2021.
Asset
Allocations
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Corporate
Bonds and Notes
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47%
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Energy
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13%
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Financials
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11
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Materials
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4
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All
other Corporate Bonds and Notes
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19
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Foreign
Government Securities
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16
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Leveraged
Loans
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13
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Asset-Backed
Securities
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8
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Mortgage-Backed
Securities
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7
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U.S.
Government Securities
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3
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Other
(includes short-term investment)
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6
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Total
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100%
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Country
Weightings
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United
States
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60%
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Mexico
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7
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Indonesia
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3
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Netherlands
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2
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Canada
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2
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Chile
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2
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Saudi
Arabia
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2
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Other
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22
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Total
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100%
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Item 7.
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Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
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The Fund has adopted a Policy Regarding Proxy Voting (the “Policy”) stating the
Fund’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 Fund. The Fund or its voting delegates will
endeavor 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 Fund or its voting
delegates 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.
In the absence of a specific direction to the contrary from the Board, the Adviser or the subadviser that is managing the Fund is responsible for voting
proxies for such fund, or for delegating such responsibility to a qualified, independent organization engaged by the Adviser or respective subadviser to vote proxies on its behalf. The applicable voting party will vote proxies in accordance with the
Policy or its own policies and procedures, which must be reasonably designed to further the best economic interests of the affected fund shareholders. Because the Policy and the applicable voting party’s policies and procedures used to vote
proxies for the funds both are designed to further the best economic interests of the affected fund shareholders, they are not expected to conflict with one another although the types of factors considered by the applicable voting party under its
own policies and procedures may be in addition to or different from the ones listed below for the Policy.
The Policy specifies the types of factors to be
considered when analyzing and voting proxies on certain issues when voting in accordance with the Policy, including, but not limited to:
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•
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Anti-takeover measures – the overall long-term financial performance of the target company relative to its
industry competition.
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•
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Corporate Governance Matters – tax and economic benefits of changes in the state of incorporation; dilution
or improved accountability associated with changes in capital structure.
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•
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Contested elections – the qualifications of all nominees; independence and attendance record of board and
key committee members; entrenchment devices in place that may reduce accountability.
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•
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Stock Option and Other Management Compensation Issues—executive pay and spending on perquisites,
particularly in conjunction with sub-par performance and employee layoffs.
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•
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Shareholder proposals – whether the proposal is likely to enhance or protect shareholder value; whether
identified issues are more appropriately or effectively addressed by legal or regulatory changes; whether the issuer has already appropriately addressed the identified issues; whether the proposal is unduly burdensome or prescriptive; whether the
issuer’s existing approach to the identified issues is comparable to industry best practice.
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The Fund and its voting delegates seek to avoid actual or perceived conflicts of interest of Fund shareholders,
on the one hand, and those of the Adviser, subadviser, other voting delegate, Distributor, or any affiliated person of the Fund, on the other hand.
Depending on the type and materiality, the Board or its delegates may take the following actions, among others, in addressing any material conflicts of
interest that arise with respect to voting (or directing voting delegates to vote): (i) rely on the recommendations of an established, independent third party proxy voting vendor; (ii) vote pursuant to the recommendation of the proposing
delegate; (iii) abstain; (iv) where two or more delegates provide conflicting requests, vote shares in proportion to the assets under management of each proposing delegate; (v) vote shares in the same proportion as the vote of all other
shareholders of such issuer; or (vi) the Adviser may vote proxies where the subadviser has a direct conflict of interest. The Policy requires each Adviser/subadviser that is a voting delegate to notify the Chief Compliance Officer of the Trust
(or, in the case of a subadviser, the Chief Compliance Officer of the Adviser) of any actual or potential conflict of interest that is identified, and provide a recommended course of action for protecting the best interests of the affected
fund’s shareholders. No Adviser/subadviser or other voting delegate may waive any conflict of interest or vote any conflicted proxies without the prior written approval of the Board (or the Executive Committee thereof) or the Chief Compliance
Officer of the Trust.
The Policy further imposes certain record-keeping and reporting requirements on each Adviser/subadviser or other voting delegate.
Information regarding how the funds voted proxies relating to portfolio securities during the most recent
12-month period ended September 30 will be available, no later than August 31 of each year, free of charge by calling, toll-free, 800.243.1574, or on the SEC’s Web site at www.sec.gov.
During the period of the report, any proxies for the Fund were handled by the Fund’s subadviser, Newfleet Asset Management, LLC (“Newfleet”).
Following are a summary of Newfleet’s proxy voting policies.
Newfleet
Although the nature of Newfleet’s portfolios is such that ballots are rarely required, Newfleet has adopted
pre-determined proxy voting guidelines (the “Guidelines”) to make every effort to ensure the manner in which shares are voted is in the best interest of its clients and the value of the investment.
Under the Guidelines, Newfleet sometimes delegates to a non-affiliated third party vendor the responsibility to review proxy proposals and make voting recommendations on behalf of Newfleet. Newfleet may also
vote a proxy contrary to the Guidelines if it determines that such action in the best interest of its clients including the Fund.
A complete copy of
Newfleet’s current Proxy Voting Policies & Procedures is available by sending a written request to Newfleet Asset Management, LLC, Attn: Compliance Department, One Financial Plaza, Hartford, CT 06103. Email requests may be sent to:
james.sena@virtus.com.
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Item 8.
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Portfolio Managers of Closed-End Management Investment Companies.
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The names, titles, and length of service of the person or persons employed by or associated with the registrant or an investment
adviser of the registrant who are primarily responsible for the day-to-day management of the registrant’s portfolio (“Portfolio Manager”) and each
Portfolio Manager’s business experience during the past 5 years as of the date of filing of this report:
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(a)(1)
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Identification of Portfolio Manager(s) or Management Team Members and Description of Role of Portfolio
Manager(s) or Management Team Members
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Newfleet Asset Management, LLC
David L. Albrycht, CFA. David Albrycht is president and chief investment officer of Newfleet. Prior to joining Newfleet in 2011,
Mr. Albrycht was executive managing director and senior portfolio manager with Goodwin Capital Advisers, a former affiliate of Virtus Investment Partners (“Virtus”), the parent of Newfleet. He joined the Goodwin multi-sector fixed
income team in 1985 as a credit analyst and has managed fixed income portfolios since 1991. He holds the Chartered Financial Analyst designation and has been working in the investment industry since 1985.
Mr. Albrycht has been a portfolio manager of the Fund since its inception, Virtus Newfleet Multi-Sector Short Term Bond Fund since 1993,
Virtus Newfleet Multi-Sector Intermediate Bond Fund since 1994, Virtus Newfleet Senior Floating Rate Fund since 2008, and co-manager of Virtus Tactical Allocation Fund and Virtus Newfleet High Yield Fund since
2011, Virtus Newfleet Core Plus Bond Fund and Virtus Newfleet Low Duration Income Fund since 2012. He also co-manages two variable investment options and is co-manager
of another closed-end fund, Virtus Total Return Fund (NYSE: ZTR). He also is a manager of three exchange-traded funds, AdvisorShares Newfleet Multi-Sector Income ETF (NYSE: MINC), Virtus Newfleet Multi-Sector
Bond ETF (NFLT), and Virtus Newfleet High Yield Bond ETF (BLHY), and two offshore funds, the Virtus GF Multi-Sector Short Duration Bond Fund and Virtus GF Multi-Sector Income Fund. He is also responsible for the structuring and management of
Newfleet’s CLO platform.
Mr. Albrycht earned a B.A., cum laude, from Central Connecticut State University and an M.B.A., with
honors, from the University of Connecticut. He is a Chartered Financial Analyst® (CFA®) charterholder and has been working in the
investment industry since 1985.
Benjamin Caron, CFA. Ben Caron is a senior managing director and portfolio manager at Newfleet. In
addition to the Fund, Mr. Caron is co-portfolio manager of the Virtus Newfleet Low Duration Core Plus Bond Fund, and two actively managed ETFs: AdvisorShares Newfleet Multi-Sector Income ETF (NYSE: MINC),
and Virtus Newfleet Multi-Sector Bond ETF (NYSE: NFLT). He also assists in the management of Virtus Newfleet Multi-Sector Short Term Bond Fund, Virtus Newfleet Multi-Sector Intermediate Bond Fund, Virtus Tactical Allocation Fund, two variable
insurance investment options and the closed-end Virtus Total Return Fund Inc. (NYSE: ZTR).
Prior
to joining Newfleet in 2011, Mr. Caron was on the fixed income team at Goodwin Capital Advisers, a former Virtus investment management subsidiary. He joined Goodwin Capital in 2002 as a client service associate for the institutional markets
group focusing on institutional fixed income clients. Earlier in his career, he was with Fidelity Investments, where he was responsible for client management and sales in the managed account group.
Mr. Caron earned a B.A. from Syracuse University and an M.B.A. from Suffolk University. He
is a Chartered Financial Analyst® (CFA®) charterholder and has been working in the investment industry since 1996.
Kyle A. Jennings, CFA. Kyle Jennings is a senior managing director and the head of credit research Newfleet. Mr. Jennings is also co-portfolio manager of Virtus Newfleet Senior Floating Rate Fund and Virtus Newfleet High Yield Fund.
Mr. Jennings has been a member of Newfleet’s corporate credit research team since 1998 and currently covers the gaming, healthcare,
and automotive industries. He is also a member of the team that formulates the leveraged finance strategy for the multi-sector fixed income strategies. In addition, Mr. Jennings is responsible for the structuring and management of
Newfleet’s CLO platform.
Prior to joining Newfleet in 2011, Mr. Jennings was on the fixed income team at Goodwin Capital
Advisers, a former Virtus investment management subsidiary. Before that, he was a credit research analyst in the banking industry for Shawmut Bank, Ironwood Capital, and Citizens Bank.
Mr. Jennings earned a B.S. in finance from the University of Connecticut and is a Chartered Financial Analyst® (CFA®) charterholder. He began his career in the investment industry in 1992.
Daniel Senecal, CFA. Daniel Senecal is a managing director at Newfleet. Mr. Senecal is a sector manager within the emerging markets
with regional responsibilities for Latin America, including Mexico and Central America.
Prior to joining Newfleet in 2011,
Mr. Senecal was on the fixed income team at Goodwin Capital Advisers, a former Virtus investment management subsidiary. He began at Goodwin Capital in 1997 as a corporate credit research analyst, followed by several roles, including sector
manager for investment grade corporate credit and sovereign credit. He was also the lead portfolio manager for the Phoenix High Yield Fund from 2003 until 2005 and the Phoenix Emerging Market Fund from 2004 to 2005.
Earlier in his career, Mr. Senecal completed a formal credit training program at Shawmut National Bank where he was a credit research
analyst and lender. He also worked at BankBoston as a corporate bond analyst.
Mr. Senecal earned a B.A. in economics and English from
Assumption College and an M.B.A. in finance from the University of Connecticut. He is a Chartered Financial Analyst® (CFA®)
charterholder, and he began his career in the investment industry in 1990.
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(a)(2)
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Other Accounts Managed by Portfolio Manager(s) or Management Team Member
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There may be certain inherent conflicts of interest that arise in connection with the portfolio managers’ management of the Fund’s
investments and the investments of any other accounts they manage. Such conflicts could include the aggregation of orders for all accounts managed by a particular portfolio manager, the allocation of purchases across all such accounts, the
allocation of IPOs and any soft dollar arrangements that the adviser/subadviser may have in place that could benefit the Fund and/or such other accounts. The Board of Trustees has adopted policies and procedures designed to address any such
conflicts of interest to ensure that all transactions are executed in the best interest of the Fund’s shareholders. Each adviser/subadviser is required to certify its compliance with these procedures on a quarterly basis. There have been no
material compliance issues with respect to any of these policies and procedures during the Fund’s most recent fiscal year. Additionally, there are no material conflicts of interest between the investment strategy of the Fund and the investment
strategy of other accounts managed by portfolio managers since the portfolio managers generally manage funds and other accounts having similar investment strategies.
The following table provides information as of November 30, 2021, regarding any other accounts managed by the portfolio managers and
portfolio management team members for the Fund. As noted in the table, the portfolio managers managing the Funds may also manage or be members of management teams for other mutual funds within the Virtus Fund complex or other similar accounts.
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Name of
Portfolio
Manager or
Team Member
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Type of Accounts
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Total
No. of
Accounts
Managed
|
|
|
Total
Assets
(in millions)
|
|
|
No. of
Accounts
where
Advisory
Fee is Based
on
Performance
|
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Total Assets
in Accounts
where
Advisory Fee
is Based on
Performance
(in millions)
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|
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David L. Albrycht
|
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Registered Investment Companies:
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15
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9,217
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1
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92
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Other Pooled Investment Vehicles:
|
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2
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112
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None
|
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None
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Other Accounts:
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None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
Benjamin Caron
|
|
Registered Investment Companies:
|
|
|
5
|
|
|
|
1,404
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Pooled Investment Vehicles:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Accounts:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
Kyle A. Jennings
|
|
Registered Investment Companies:
|
|
|
3
|
|
|
|
390
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Pooled Investment Vehicles:
|
|
|
1
|
|
|
|
194
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Accounts:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
Daniel Senecal
|
|
Registered Investment Companies:
|
|
|
1
|
|
|
|
133
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Pooled Investment Vehicles:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
|
Other Accounts:
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
|
(a)(3)
|
Compensation Structure of Portfolio Manager(s) or Management Team Members
|
Virtus, along with its affiliated investment management firms, including Newfleet (collectively, “Virtus”), is committed to attracting and retaining
the highest caliber employees and investment talent. The company’s compensation and benefits program is comprehensive and designed to reward performance and commitment to our shareholders. Virtus personnel 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 (“RSUs”) with multi-year vesting, subject to Virtus corporate board approval, and
opportunities to defer their compensation and reduce tax implications.
Following is a more detailed description of the compensation structure:
|
|
•
|
|
Base Salary: Each individual is paid a fixed based salary, which is designed to be competitive in light of
the individual’s experience and responsibilities. Management uses independent, third-party compensation surveys of the investment industry to evaluate competitive market compensation for its employees.
|
|
|
•
|
|
Incentive Bonus: Annual incentive payments for investment personnel are based on targeted compensation
levels, adjusted for profitability and investment performance factors, and a subjective assessment of contribution to the team effort. Individual payments are assessed using comparisons of actual investment performance with specific peer group or
index measures. For compensation purposes, a fund’s performance 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. The short-term incentive payment is generally paid in cash, but a portion may be payable in Virtus restricted stock units or as deferred cash that appreciates or depreciates in value based on the rate of return of one or
more mutual funds managed or advised by the investment professional.
|
|
|
•
|
|
Other Benefits: Employees are also eligible to participate in broad-based plans offered by Virtus,
including 401(k), health, and other employee benefit plans.
|
While portfolio managers 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 helps ensure 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. The Investment Adviser 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.
|
(a)(4)
|
Disclosure of Securities Ownership
|
For the most recently completed fiscal year ended November 30, 2021, beneficial ownership of shares of the Fund by Messrs. Albrycht,
Caron, Jennings and Senecal are as follows. Beneficial ownership was determined in accordance with rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (17 CFR
240.161-1(a)(2)).
|
|
|
|
|
Name of Portfolio Manager or
Team
Member
|
|
Dollar ($) Range of Fund Shares Beneficially
Owned
|
|
David L. Albrycht
|
|
$0
|
|
Benjamin Caron
|
|
$100,001 - $500,000
|
|
Kyle A. Jennings
|
|
$0
|
|
Daniel Senecal
|
|
$0
|
|
Item 9.
|
Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
|
Not Applicable.
|
Item 10.
|
Submission of Matters to a Vote of Security Holders.
|
There were no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that were implemented
after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.