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Investment Opportunity

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, Commodities, Natural Resources, Currencies and Floating Rate Securities.

Fund Risks

Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small or medium-sized companies may enhance that risk.

Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities.

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Derivatives: Investments in derivatives such as futures, options, forwards, and swaps may increase volatility or cause a loss greater than the principal investment.

Allocation: The fund's exposure to different asset classes may not be optimal for market conditions at a given time. Asset allocation does not guarantee a profit or protect against a loss in declining markets.

Foreign Investing: Investing internationally involves additional risks such as currency, political, accounting, economic, and market risk.

Real Estate: The fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management.

Fund of Funds: Because the fund can invest in other funds, it indirectly bears its proportionate share of the operating expenses and management fees of the underlying fund(s).

Affiliated Funds: The fund's adviser can select affiliated and/or unaffiliated funds, which may create a conflict of interest.

Prospectus: For additional information on risks, please see the fund's prospectus.

Key Stats (as of 9/1/2015)

Inception: 11/30/2005
Ticker: PDPAX
CUSIP: 92828R875
Fund No: 1641
Net Assets by Fund: $84,269,472
Net Assets by Class: $26,387,711

Management Team

Carlton Neel
Carlton Neel Euclid Advisors LLC

Industry start date: 1990

Start date with Fund: 2008

David Dickerson
David Dickerson Euclid Advisors LLC

Industry start date: 1993

Start date with Fund: 2008

Euclid Advisors LLC

Euclid Advisors leverages the multi-manager investment capabilities of Virtus Investment Partners in the construction of the Fund. Virtus brings the strength and diversification of best of breed money managers to investor portfolios through both affiliated and unaffiliated money managers.

Morningstar Ratings

Overall Rating Non Load-Waived

As of 7/31/2015 the Fund was rated 1 stars out of 217 funds and 2 stars out of 143 funds within the Multialternative category for the 3- and 5- year periods, respectively.

Overall Rating Load-Waived

As of 7/31/2015 the Fund was rated 2 stars out of 217 funds and 3 stars out of 143 funds within the Multialternative category for the 3- and 5- year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Average Annual Total Returns

Monthly Performance (%) (as of 8/31/2015)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -7.27 -7.85 -13.14 -0.99 2.68 NA 1.64
POP -12.60 -13.15 -18.13 -2.92 1.47 NA 1.02
Quarterly Performance (%) (as of 6/30/2015)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -3.13 -3.31 -8.93 2.03 4.59 NA 2.18
POP -8.70 -8.86 -14.16 0.04 3.36 NA 1.55
Index 0.28 1.23 7.42 17.31 17.34 7.89 NA
Index 2 -2.10 -2.47 -8.31 2.95 5.36 3.67 NA

Index: S&P 500® Index
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, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

Index 2: Alternatives Diversifier Composite
The Alternatives Diversifier Composite consists of Diversified Trends Index (15%)*, FTSE EPRA NAREIT Developed Rental Index-net (20%)**, MSCI World Infrastructure Sector Capped Index (15%)*** , S&P North American Natural Resources Sector Index (10%), Deutsche Bank Liquid Commodity Index (15%), Deutsche Bank G10 Currency Harvest Index (15%)**** and Credit Suisse Leveraged Loan Index (10%). The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and they are not available for direct investment. *Prior to 3/1/12 was the HFRX Equity Market Neutral Index (20%). **Prior to 6/1/15 was the UBS Global Investors Index (20%). ***Prior to 9/1/08 was a mix of the MSCI US Utilities Index (65%), MSCI World Telecom Services Index (20%) and MSCI World ex US Utilities Index (15%). ****Prior to 3/1/12 was Deutsche Bank G10 Currency Harvest Index (10%).

Sales Charge and Expense

POP (Public Offering Price) performance reflects the deduction of the maximum sales charge of 5.75%. A contingent deferred sales charge of 1% may be imposed on certain redemptions within 18 months on purchases on which a finder’s fee has been paid.

Fund class operating expenses are 1.70%.

Excluding the indirect expenses incurred by the underlying funds in which the Fund invests, fund class operating expenses are 0.65%.

Risk Statistics3 (as of 6/30/2015)

  Fund Index
R2 0.36 1.00
Beta 0.50 1.00
Alpha -5.93 0.00
Std Dev 7.02 8.43
Index: S&P 500® Index

Daily Price (as of 9/1/2015)

NAV Change ($)
9.95 -0.18
POP Change ($)
10.56 -0.19

Top Holdings (% Fund)
(as of 6/30/2015)

Virtus Global Dividend Fd Cl I 21.48
Virtus Senior Floating Rate Fund Class I 13.68
PowerShares DB Commodity Index Tracking Fund 11.08
Virtus International Real Estate Securities Fund Class I 10.04
Virtus Global Real Estate Securities Fd Cl I 9.44
PowerShares DB G10 Currency Harvest Fund 8.92
WisdomTree Managed Futures Strategy Fund 7.65
iShares North American Natural Resources ETF 7.40
Virtus Real Estate Securities Fund Class I 5.85
Market Vectors Agribusiness ETF 2.73

Morningstar Ratings

Overall Rating Non Load-Waived

As of 7/31/2015 the Fund was rated 1 stars out of 217 funds and 2 stars out of 143 funds within the Multialternative category for the 3- and 5- year periods, respectively.

Overall Rating Load-Waived

As of 7/31/2015 the Fund was rated 2 stars out of 217 funds and 3 stars out of 143 funds within the Multialternative category for the 3- and 5- year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Investors should carefully consider the investment objectives, risks, charges and expenses of any Virtus Mutual Fund before investing. The prospectus and summary prospectus contains this and other information about the fund. Please contact your financial representative, call 1-800- 243-4361 or visit www.virtus.com to obtain a current prospectus and/or summary prospectus. You should read the prospectus and/or summary prospectus carefully before you invest or send money.


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. Investment return and principal value will fluctuate, so your shares, when redeemed, may be worth more or less than their original cost.

Average annual total return is the annual compound return for the indicated period. It reflects the change in share price and the reinvestment of all dividends and capital gains. NAV returns do not include the effect of any applicable sales charges. POP and w/CDSC returns include the effect of maximum applicable sales charges.

Returns for periods of less than one year are cumulative total returns.

1 Yields/Distributions: Distribution Yield (at NAV) is calculated by (a) annualizing the latest distribution for fixed income funds or funds less than 1 year old (b) summing all distributions over the preceding 12 months for all other funds, and dividing the NAV on the last business date of the period. SEC Yield represents the net investment income earned by a fund over a 30-day period, expressed as an annual percentage rate based on the fund's public offering share price at the end of the 30-day period.  Gross SEC Yield represents the yield if there were no expense reimbursements.

2 Distribution History: Distributions are represented on a cash basis and may be reclassified at year end for tax purposes. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes. STCG: Short Term Capital Gain, LTCG: Long Term Capital Gain

3 Risk Statistics:  R2 is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. Beta is a quantitative measure of the volatility of a given portfolio to the overall market. Alpha is a risk adjusted measure of an investment's excess return relative to a benchmark. A positive Alpha indicates that the investment produced a return greater than expected for the risk (as measured by Beta) taken. Standard Deviation measures variability of returns around the average return for an investment fund. Higher standard deviation suggests greater risk. Risk Statistics are calculated using 36 monthly returns.

4 Characteristics: For Equity Funds:Trailing P/E: Per-share stock price divided by the latest12-months Earnings per Share; Price/Cash Flow: Per-share stock price divided by the per-share operating cash flow; Price/Book: Per-share stock price divided by the latest 12-month per-share Book Value; 3-Year EPS Growth Rate: Average of earnings per share growth for latest 3-year period. The 3-Year EPS Growth Rate is not a forecast of the fund's performance.

4 Characteristics: For Fixed Income Funds:  Duration represents the interest rate sensitivity of a fixed income fund. For example, if a fund's duration is five years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price.



Morningstar Disclosures: 
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for a variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in an investment category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. Ratings are for the A Shares as shown only; other share classes bear different fees and expenses, which affect performance.

Load-waived A share star ratings do not include any front-end sales load and are intended for those investors who have access to such purchase terms (e.g., plan participants of a defined contribution plan). Not all A share mutual funds for which Morningstar calculates a load-waived A share star rating may actually waive their front-end sales load. Therefore, Morningstar strongly encourages investors to contact their investment professional to determine whether they are eligible to purchase the A share without paying the front load.

© 2013 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.