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Investment Opportunity

The Virtus AlphaSector® Rotation Fund seeks to help meet the real needs of individual investors by participating in rising markets while placing an emphasis on preserving capital during severe and extended market declines. The Fund has an investment objective of long-term capital appreciation and strives to outperform the S&P 500® Index over market cycles while also seeking to deliver lower volatility, low beta, and low correlation. The Virtus AlphaSector® Rotation Fund employs a flexible, proprietary quantitative model which can invest in any combination of the nine primary sectors of the S&P 500®, a combination of sectors and cash equivalents, or 100% cash equivalents.

The fund may also invest in stocks of primarily large-cap issuers. The fund may invest in a basket of securities to represent a sector if it determines that investment in the ETF for that sector is not feasible or otherwise not in the best interest of the fund.

Effective September 29, 2009 this fund changed its strategy and its name from the Virtus Wealth Builder Fund.

Fund Risks

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.

The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

U.S. government securities may be subject to price fluctuations. An agency may default on an obligation not backed by the United States. Any guarantee on U.S. government securities does not apply to the value of the fund's shares.

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.

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.

Key Stats (as of 3/3/2015)

Inception: 8/1/2003
Ticker: PWBAX
CUSIP: 92828R487
Fund No: 1425
Net Assets by Fund: $917,743,204
Net Assets by Class: $315,045,527

Management Team

Alexey Panchekha, CFA, Ph.D.
Alexey Panchekha, CFA, Ph.D. F-Squared Institutional Advisors

Industry start date: 1999

Start date with Fund: 2014

Amy Robinson
Amy Robinson Euclid Advisors LLC

Industry start date: 1979

Start date with Fund: 2009

F-Squared Institutional Advisors

F-Squared strives to deliver long-term outperformance while attempting to avoid short-term performance disappointments. The firms innovative business model delivers scalable, transparent investment strategies and customizable capabilities to meet investor needs.

Euclid Advisors LLC

F-Squared leverages the trading and operational expertise of Euclid Advisors in the management of the AlphaSector® Funds.

Morningstar Ratings

Overall Rating Non Load-Waived

As of 1/30/2015 the Fund was rated 2 stars out of 1334 funds, 2 stars out of 1194 funds and 3 stars out of 811 funds within the Large Blend category for the 3-, 5- and 10 year periods, respectively.

Overall Rating Load-Waived

As of 1/30/2015 the Fund was rated 3 stars out of 1334 funds, 3 stars out of 1194 funds and 4 stars out of 811 funds within the Large Blend 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 2/27/2015)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV -3.32 -2.61 4.60 14.15 12.62 6.84 7.44
POP -8.88 -8.21 -1.42 11.92 11.30 6.21 6.89
Quarterly Performance (%) (as of 12/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 1.32 8.15 8.15 16.89 13.06 6.94 7.80
POP -4.51 1.94 1.94 14.61 11.73 6.31 7.24
Index 4.93 13.69 13.69 20.41 15.45 8.41 NA

Index: AlphaSector® Rotation Linked Benchmark
The AlphaSector® Rotation Linked Benchmark consists of the S&P 500® Index, a free-float market capitalization-weighted index of 500 of the largest U.S. companies, 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. Performance of the AlphaSector® Rotation Linked Benchmark prior to 9/29/2009 represents an allocation consisting of 80% S&P 500® Index and 20% Barclays U.S. Aggregate Bond Index.

The fund's investment methodology changed on September 29, 2009 when F-Squared Investments began sub-advising the fund. Fund performance prior to that date represents the fund's record under the previous subadvisor.

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 0.50% 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 0.99%.

Excluding the indirect expenses incurred by the underlying funds in which the Fund invests, fund class operating expenses are 0.98%.

Risk Statistics3 (as of 12/31/2014)

  Fund Index
R2 0.91 1.00
Beta 0.90 1.00
Alpha -1.24 0.00
Std Dev 8.52 8.97
Index: AlphaSector® Rotation Linked Benchmark

Daily Price (as of 3/3/2015)

NAV Change ($)
11.58 -0.02
POP Change ($)
12.29 -0.02

Sector Allocation (% Fund)
(as of 12/31/2014)

Cash and Equivalents 50.61
Consumer Staples 24.70
Technology 24.69

Morningstar Ratings

Overall Rating Non Load-Waived

As of 1/30/2015 the Fund was rated 2 stars out of 1334 funds, 2 stars out of 1194 funds and 3 stars out of 811 funds within the Large Blend category for the 3-, 5- and 10 year periods, respectively.

Overall Rating Load-Waived

As of 1/30/2015 the Fund was rated 3 stars out of 1334 funds, 3 stars out of 1194 funds and 4 stars out of 811 funds within the Large Blend 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 (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.