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Investment Opportunity

Invested in approximately 60% U. S. and non-U.S. equity and 40% fixed income, this portfolio may be suitable for investors who want income and growth from one fund. For the U. S. equity allocation, top-down and econometric sector analysis as well as industry level and fundamental security analysis are utilized to identify securities that the portfolio managers believe offer superior return opportunity. For the non-U.S. equity allocation, bottom-up fundamental analysis with a cash flow return on capital approach to valuation along with top-down macro views are employed to identified the best investment opportunities. The fixed income manager employs 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.

Fund Risks

The market price of equity securities may be 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.

Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a security may fail to make payments in a timely manner. Values of debt securities may rise and fall in response to changes in interest rates. This risk may be enhanced with longer-term maturities.

Changes in interest rates can cause both extension and prepayment risks for asset and mortgage-backed securities. These securities are also subject to risks associated with the repayment of underlying collateral.

There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities.

Investing internationally, especially in emerging markets, involves additional risks such as currency, political, accounting, economic, and market risk.

Key Stats (as of 4/23/2014)

Inception: 12/31/1975
Ticker: PHBLX
CUSIP: 92828N403
Fund No: 50
Net Assets by Fund: $611,790,098
Net Assets by Class: $568,858,884

Management Team

Carlton Neel
Carlton Neel Euclid Advisors LLC

Industry start date: 1990

Start date with Fund: 2009

David Dickerson
David Dickerson Euclid Advisors LLC

Industry start date: 1993

Start date with Fund: 2009

Frederick A. Brimberg
Frederick A. Brimberg Euclid Advisors LLC

Industry start date: 1979

Start date with Fund: 2012

David L. Albrycht, CFA
David L. Albrycht, CFA Newfleet Asset Management

Industry start date: 1985

Start date with Fund: 2012

Christopher J. Kelleher, CFA
Christopher J. Kelleher, CFA Newfleet Asset Management

Industry start date: 1983

Start date with Fund: 2012

Euclid Advisors LLC

The domestic equity strategy for Euclid uses econometric analysis as the framework for security selection that is influenced by macro forces, quantitative factors, and bottom-up fundamental research. The international equity strategy for Euclid is a high conviction core portfolio. Stock selection is informed by a forward looking analysis of cash flow return on invested capital.

Newfleet Asset Management

Newfleet leverages the knowledge and skill of a team of investment professionals with expertise in every sector of the bond market, including evolving, specialized, and out-of-favor sectors.

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 2 stars out of 742 funds, 2 stars out of 666 funds and 2 stars out of 437 funds within the Moderate Allocation category for the 3-, 5- and 10 year periods, respectively.

Overall Rating Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 742 funds, 3 stars out of 666 funds and 3 stars out of 437 funds within the Moderate Allocation category for the 3-, 5- and 10 year periods, respectively.

Strong ratings are not indicative of positive fund performance.

Average Annual Total Returns

Monthly Performance (%) (as of 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 2.67 2.67 13.79 8.74 14.68 5.72 10.49
POP -3.24 -3.24 7.25 6.61 13.33 5.10 10.32
Quarterly Performance (%) (as of 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 2.67 2.67 13.79 8.74 14.68 5.72 10.49
POP -3.24 -3.24 7.25 6.61 13.33 5.10 10.32
Index 1.87 1.87 12.72 10.40 14.65 6.52 NA

3 Mon., YTD and 1 Year performance is not annualized.

Index: Composite: 60% S&P 500® / 40% Barclays U.S. Aggregate Bond
The composite index consists of 60% S&P 500® Index and 40% Barclays U.S. Aggregate Bond 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 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, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

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 exchanges from a Virtus non-money market fund into a Virtus money market fund and purchases on which a finder’s fee has been paid.

Fund class operating expenses are 1.10%.

Risk Statistics3 (as of 3/31/2014)

  Fund Index
R2 0.92 1.00
Beta 1.34 1.00
Alpha -4.72 0.00
Std Dev 9.99 7.18
Index: Composite: 60% S&P 500® / 40% Barclays U.S. Aggregate Bond

Daily Price (as of 4/23/2014)

NAV Change ($)
15.55 0.00
POP Change ($)
16.50 0.00

Distribution History2 (March 2014)

Ex-Date 03/21/2014
Income $0.055000
STCG $0.000000
LTCG $0.000000
Reinvest NAV $15.46

Top Holdings (% Fund)
(as of 3/31/2014)

Macy's Inc 1.00
CF Industries Holdings, Inc. 0.98
Union Pacific Corporation 0.98
Fifth Third Bancorp 0.95
EMC Corporation 0.95
Zimmer Holdings, Inc. 0.94
Freeport-McMoRan Copper & Gold Inc. 0.93
Continental Resources, Inc. 0.93
U.S. Bancorp 0.93
Blackstone Group L.P. 0.93

Top Sectors (% Equity)
(as of 3/31/2014)

Financials 21.72
Consumer Discretionary 16.15
Information Technology 14.62
Industrials 13.75
Energy 12.35

Characteristics4
(as of 3/31/2014)

Avg Weighted Market Cap (bn) $63.50
Median Market Cap (bn) $29.16
Trailing P/E 15.17x
Price-to-Cash Flow 12.14
Price-to-Book Value 2.62
3-Year EPS Growth Rate 17.73

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 2 stars out of 742 funds, 2 stars out of 666 funds and 2 stars out of 437 funds within the Moderate Allocation category for the 3-, 5- and 10 year periods, respectively.

Overall Rating Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 742 funds, 3 stars out of 666 funds and 3 stars out of 437 funds within the Moderate Allocation category for the 3-, 5- and 10 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 annualizing the latest month's distribution and dividing by the NAV on the last business day of the period. SEC Yield represents the net investment income earned by a fund over a 30-day period (7-day period for Money Market Funds), expressed as an annual percentage rate based on the fund's public offering share price at the end of the 30-day period (7-day period for Money Market Funds).

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.