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Investment Opportunity

The fund seeks to generate total return, comprised of income and capital appreciation, by identifying undervalued sectors of the bond market. Individual opportunities are analyzed through extensive fundamental credit research. The portfolio seeks diversification across 14 bond market sectors. Security and sector convictions, and macro views, may be enhanced or hedged through the use of derivatives. The fund can also employ an options overlay strategy to generate incremental income. Investors should recognize that this strategy may detract from performance during periods of volatility.

Fund Risks

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.

High Yield-High Risk Fixed Income Securities: There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities.

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

Bank Loans: Loans may be unsecured or not fully collateralized, may be subject to restrictions on resale and/or trade infrequently on the secondary market. Loans can carry significant credit and call risk, can be difficult to value and have longer settlement times than other investments, which can make loans relatively illiquid at times.

ABS/MBS: 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.

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

Call/Put Spreads: Buying and selling call and put option spreads on the SPX Index risks the loss of the premium when buying, can limit upside participation and increase downside losses.

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

Key Stats (as of 9/28/2016)

Inception: 9/8/2014
Ticker: VASBX
CUSIP: 92835M877
Fund No: 2435
Net Assets by Fund: $30,527,085
Net Assets by Class: $825,160

Management Team

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

Industry start date: 1985

Start date with Fund: 2014

Francesco Ossino
Francesco Ossino Newfleet Asset Management, LLC

Industry start date: 1996

Start date with Fund: 2014

Jonathan Stanley, CFA
Jonathan Stanley, CFA Newfleet Asset Management, LLC

Industry start date: 1997

Start date with Fund: 2014

Newfleet Asset Management, LLC

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.

Average Annual Total Returns

Monthly Performance (%) (as of 8/31/2016)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 3.95 7.62 6.20 NA NA NA 3.63
POP 0.05 3.58 2.22 NA NA NA 1.65
Quarterly Performance (%) (as of 6/30/2016)
  3 Mon. YTD 1YR 3YR 5YR 10YR Since Inception
NAV 3.72 4.78 2.45 NA NA NA 2.46
POP -0.17 0.85 -1.39 NA NA NA 0.32
Index 0.16 0.31 0.41 0.30 0.34 1.52 NA

Index: BofA Merrill Lynch USD 3-Month LIBOR Constant Maturity Index
The BofA Merrill Lynch USD 3-Month LIBOR Constant Maturity Index is based on the assumed purchase of a synthetic instrument having 3 months to maturity and with a coupon equal to the closing quote for 3-Month LIBOR. That issue is sold the following day (priced at a yield equal to the current day closing 3-Month LIBOR rate) and is rolled into a new 3-Month instrument. The index, therefore, will always have a constant maturity equal to exactly 3 months. 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 3.75%. 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 1.40% and gross operating expenses are 2.42%.

Operating expenses reflect a contractual expense reimbursement in effect through 03/01/2017.

Daily Price (as of 9/28/2016)

NAV Change ($)
10.01 0.01
POP Change ($)
10.40 0.01

Yields/Distributions1 (as of 8/31/2016)

Distribution Yield (at NAV) 3.22%
SEC Yield 3.33%
SEC Yield (gross) 2.45%
Distributions Current Month $0.026896
Distributions YTD $0.225018

Distribution History2 (August 2016)

Ex-Date 08/31/2016
Income $0.026896
STCG $0.000000
LTCG $0.000000
Reinvest NAV $10.01

Top Sectors (% Fund)
(as of 6/30/2016)

Corporate - High Yield 41.75
Corporate - High Quality 22.09
Non-Agency Residential MBS 12.24
Bank Loans 10.92
Emerging Market - High Yield 7.85

Characteristics4
(as of 6/30/2016)

Duration 4.28 years

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.

© 2016 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.