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Investment Opportunity

The fund offers the potential for attractive total return and income by investing in higher quality, non-investment grade bank loans. Using extensive credit and company analysis and monitoring, the portfolio managers look for those securities with strong income potential while maintaining an emphasis on managing risk.

Fund Risks

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.

There may be no ready market for loan participation interests. The fund may have to sell the interests at a substantial discount. Such interests are subject to the credit risk of the underlying corporate borrower.

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

When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded.

Certain securities may be difficult to sell at a time and price beneficial to the fund.

Key Stats (as of 4/23/2014)

Inception: 1/31/2008
Ticker: PSFRX
CUSIP: 92828R545
Fund No: 1805
Net Assets by Fund: $1,064,640,120
Net Assets by Class: $447,206,112

Management Team

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

Industry start date: 1985

Start date with Fund: 2008

Kyle A. Jennings, CFA
Kyle A. Jennings, CFA Newfleet Asset Management

Industry start date: 1992

Start date with Fund: 2008

Francesco Ossino
Francesco Ossino Newfleet Asset Management

Industry start date: 1996

Start date with Fund: 2012

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. The team employs active sector rotation and disciplined risk management to portfolio construction, avoiding interest rate bets and remaining duration neutral to each strategy's stated benchmark.

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 2 stars out of 147 funds and 2 stars out of 111 funds within the Bank Loan category for the 3- and 5- year periods, respectively.

Overall Rating Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 147 funds and 2 stars out of 111 funds within the Bank Loan 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 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 0.93 0.93 3.78 4.79 9.81 NA 6.02
POP -1.85 -1.85 0.93 3.82 9.20 NA 5.54
Quarterly Performance (%) (as of 3/31/2014)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 0.93 0.93 3.78 4.79 9.81 NA 6.02
POP -1.85 -1.85 0.93 3.82 9.20 NA 5.54
Index 1.20 1.20 4.35 5.01 12.52 5.23 NA

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

Index: S&P/LSTA Leveraged Loan Index
The S&P/LSTA Leveraged Loan Index is a daily total return index that uses LSTA/LPC Mark-to-Market Pricing to calculate market value change. On a real-time basis, the Index tracks the current outstanding balance and spread over LIBOR for fully funded term loans. The facilities included in the Index represent a broad cross section of leveraged loans syndicated in the United States, including dollar-denominated loans to overseas issuers. 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 2.75%. A contingent deferred sales charge of 0.50% 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 1.22%.

Operating expenses do not include indirect expenses incurred by the underlying funds in which the Fund invests.

Risk Statistics3 (as of 3/31/2014)

  Fund Index
R2 0.97 1.00
Beta 1.04 1.00
Alpha -0.39 0.00
Std Dev 3.86 3.66
Index: S&P/LSTA Leveraged Loan Index

Daily Price (as of 4/23/2014)

NAV Change ($)
9.84 -0.01
POP Change ($)
10.12 -0.01

Yields/Distributions1 (as of 3/31/2014)

Distribution Yield (at NAV) 3.51%
SEC Yield 3.63%
Distributions Current Month $0.028901
Distributions YTD $0.091417

Distribution History2 (March 2014)

Ex-Date 03/31/2014
Income $0.028901
STCG $0.000000
LTCG $0.000000
Reinvest NAV $9.88

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

Clear Channel Communications, Inc., 01/30/2019 1.42
Heinz (H.J.) Co., 06/05/2020 1.36
Alcatel-Lucent USA, Inc., 01/30/2019 0.96
Ineos Group Holdings, Inc., 05/04/2018 0.87
Hilton Worldwide Finance LLC, 10/26/2020 0.84
CDW LLC, 04/29/2020 0.78
TransDigm, Inc., 02/28/2020 0.76
Sedgwick, Inc., 02/11/2021 0.75
American Airlines Inc, 06/27/2019 0.73
Realogy Corp, 03/05/2020 0.72

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

Healthcare 13.60
Information Technology 10.21
Service 10.00
Gaming/Leisure 8.32
Financial 5.68

Characteristics4
(as of 3/31/2014)

Duration 0.51 years

Morningstar Ratings

Overall Rating Non Load-Waived

As of 3/31/2014 the Fund was rated 2 stars out of 147 funds and 2 stars out of 111 funds within the Bank Loan category for the 3- and 5- year periods, respectively.

Overall Rating Load-Waived

As of 3/31/2014 the Fund was rated 3 stars out of 147 funds and 2 stars out of 111 funds within the Bank Loan 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 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.