N-CSR 1 d366236dncsr.htm VIRTUS EQUITY TRUST Virtus Equity Trust

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-CSR

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-00945

 

 

Virtus Equity Trust

(Exact name of registrant as specified in charter)

 

 

101 Munson Street

Greenfield, MA 01301-9668

(Address of principal executive offices) (Zip code)

 

 

Kevin J. Carr, Esq.

Senior Vice President, Chief Legal Officer, Counsel and Secretary for Registrant

One Financial Plaza

Hartford, CT 06103-2608

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (800) 243-1574

Date of fiscal year end: September 30

Date of reporting period: September 30, 2022

 

 

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

 


Item 1. Reports to Stockholders.

 

(a)

The Report to Shareholders is attached herewith.

 

(b)

Not applicable.


ANNUAL REPORT
VIRTUS EQUITY TRUST

September 30, 2022
Virtus KAR Capital Growth Fund
Virtus KAR Equity Income Fund
Virtus KAR Global Quality Dividend Fund
Virtus KAR Mid-Cap Core Fund
Virtus KAR Mid-Cap Growth Fund
Virtus KAR Small-Cap Core Fund
Virtus KAR Small-Cap Growth Fund
Virtus KAR Small-Cap Value Fund
Virtus KAR Small-Mid Cap Core Fund
Virtus KAR Small-Mid Cap Growth Fund
Virtus KAR Small-Mid Cap Value Fund
Virtus SGA Emerging Markets Growth Fund
Virtus SGA Global Growth Fund*
Virtus SGA New Leaders Growth Fund
Virtus Tactical Allocation Fund*
*Prospectus supplement applicable to this fund appears at the back of this annual report.

Not FDIC Insured • No Bank Guarantee • May Lose Value


Table of Contents

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2

6
Fund Fund
Summary
Schedule
of
Investments

10 62

13 63

16 64

19 66

23 67

26 69

30 70

34 72

38 73

42 74

45 75

48 76

52 77

55 78

58 79

90

98

101

109

119

139

141

142

143

144
Proxy Voting Procedures and Voting Record (Form N-PX)
The subadvisers vote proxies, if any, relating to portfolio securities in accordance with procedures that have been approved by the Board of Trustees of the Trust (“Trustees”, or the “Board”). You may obtain a description of these procedures, along with information regarding how the Funds voted proxies during the most recent 12-month period ended June 30, free of charge, by calling toll-free 1-800-243-1574. This information is also available through the Securities and Exchange Commission’s (the “SEC”) website at https://www.sec.gov.
PORTFOLIO  HOLDINGS INFORMATION
The Trust files a complete schedule of portfolio holdings for each Fund with the SEC for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT-P. Form N-PORT-P is available on the SEC’s website at https://www.sec.gov.
This report is not authorized for distribution to prospective investors in the Funds presented in this book unless preceded or accompanied by an effective prospectus which includes information concerning the sales charge, each Fund’s record and other pertinent information.


MESSAGE TO SHAREHOLDERS
To Virtus Equity Trust Shareholders:
I am pleased to present this annual report, which reviews the performance of your Fund for the 12 months ended September 30, 2022.
During the reporting period, market strength in 2021 was followed by volatility in the first nine months of 2022. The Federal Reserve (the “Fed”) and other central banks raised interest rates and tightened monetary policy in an effort to fight rising inflation. Russia’s invasion of Ukraine in February created geopolitical uncertainty and contributed to rising prices, particularly for energy and food.
Domestic equity indexes recorded declines for the 12 months ended September 30, 2022. U.S. large-capitalization stocks were down 15.47%, as measured by the S&P 500® Index, and small-cap stocks lost 23.50%, as measured by the Russell 2000® Index. Losses were also felt across international equities, with developed markets, as measured by the MSCI EAFE® Index (net), declining 25.13%, while emerging markets, as measured by the MSCI Emerging Markets Index (net), were down 28.11%.
In fixed income markets, the yield on the 10-year Treasury rose sharply to 3.83% on September 30, 2022, from 1.52% on September 30, 2021, as the Fed implemented several large interest rate hikes. The broader U.S. fixed income market, as represented by the Bloomberg U.S. Aggregate Bond Index, was down 14.60% for the 12-month period, while non-investment grade bonds, as measured by the Bloomberg U.S. Corporate High Yield Bond Index, lost 14.14%.
While market volatility can be challenging, staying focused on your long-term goals can help. Please call our customer service team at 800-243-1574 if you have questions about your account or require assistance. Thank you for your continued confidence in us.
Sincerely,
George R. Aylward
President,
November 2022
Refer to the Fund Summary section for your Fund’s performance. 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 above. Investing involves risk, including the risk of loss of principal invested.
1


VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited)
FOR THE SIX-MONTH PERIOD OF April 1, 2022 TO September 30, 2022
We believe it is important for you to understand the impact of costs on your investment. All mutual funds have operating expenses. As a shareholder of a Virtus Equity Trust Fund (each, a “Fund”), you may incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class C shares; and (2) ongoing costs, including investment advisory fees, distribution and service fees, and other expenses. Class I shares and Class R6 shares are sold without sales charges and do not incur distribution and service fees. Class R6 shares also do not incur shareholder servicing fees. For further information regarding applicable sales charges, see Note 1 in the Notes to Financial Statements. These examples are intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period. The Annualized Expense Ratios may be different from the expense ratios in the Financial Highlights which are for the fiscal year ended September 30, 2022.
Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the accompanying tables are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The calculations assume no shares were bought or sold during the period. Your actual costs may have been higher or lower, depending on the amount of your investment and the timing of any purchases or redemptions.
Actual Expenses
The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
    Beginning
Account Value
April 1, 2022
  Ending
Account Value
September 30, 2022
  Annualized
Expense
Ratio
  Expenses
Paid
During
Period*
KAR Capital Growth Fund

               
  Class A $ 1,000.00   $ 711.50   1.23 %   $ 5.28
  Class C 1,000.00   708.30   2.08   8.91
  Class I 1,000.00   711.60   1.05   4.51
  Class R6 1,000.00   712.90   0.76   3.26
KAR Equity Income Fund

               
  Class A 1,000.00   867.40   1.25   5.85
  Class C 1,000.00   863.90   2.00   9.35
  Class I 1,000.00   868.40   1.01   4.73
  Class R6 1,000.00   868.30   0.96   4.50
KAR Global Quality Dividend Fund

               
  Class A 1,000.00   841.00   1.38   6.37
  Class C 1,000.00   837.10   2.13   9.81
  Class I 1,000.00   841.90   1.13   5.22
  Class R6 1,000.00   842.90   0.81   3.74
KAR Mid-Cap Core Fund

               
  Class A 1,000.00   824.40   1.23   5.63
  Class C 1,000.00   821.30   1.98   9.04
  Class I 1,000.00   825.40   0.98   4.48
  Class R6 1,000.00   825.70   0.90   4.12
KAR Mid-Cap Growth Fund

               
  Class A 1,000.00   754.80   1.27   5.59
  Class C 1,000.00   751.40   2.16   9.48
  Class I 1,000.00   755.40   1.07   4.71
  Class R6 1,000.00   756.20   0.86   3.79
KAR Small-Cap Core Fund

               
  Class A 1,000.00   906.10   1.29   6.16
  Class C 1,000.00   902.80   2.03   9.68
  Class I 1,000.00   907.30   1.03   4.92
  Class R6 1,000.00   907.70   0.95   4.54
KAR Small-Cap Growth Fund

               
  Class A 1,000.00   811.80   1.36   6.18
  Class C 1,000.00   808.90   2.12   9.61
  Class I 1,000.00   812.70   1.12   5.09
  Class R6 1,000.00   813.10   1.02   4.64
2


VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2022 TO September 30, 2022
    Beginning
Account Value
April 1, 2022
  Ending
Account Value
September 30, 2022
  Annualized
Expense
Ratio
  Expenses
Paid
During
Period*
KAR Small-Cap Value Fund

               
  Class A $1,000.00   $825.30   1.24%   $ 5.67
  Class C 1,000.00   822.10   2.01   9.18
  Class I 1,000.00   826.30   1.02   4.67
  Class R6 1,000.00   826.50   0.93   4.26
KAR Small-Mid Cap Core Fund

               
  Class A 1,000.00   785.70   1.31   5.86
  Class C 1,000.00   782.60   2.09   9.34
  Class I 1,000.00   787.10   1.07   4.79
  Class R6 1,000.00   787.00   1.00   4.48
KAR Small-Mid Cap Growth Fund

               
  Class A 1,000.00   804.40   1.33   6.02
  Class C 1,000.00   801.50   2.08   9.39
  Class I 1,000.00   805.20   1.08   4.89
  Class R6 1,000.00   806.20   1.02   4.62
KAR Small-Mid Cap Value Fund

               
  Class A 1,000.00   852.00   1.21   5.62
  Class C 1,000.00   848.20   1.95   9.03
  Class I 1,000.00   851.80   0.95   4.41
  Class R6 1,000.00   853.10   0.85   3.95
SGA Emerging Markets Growth Fund

               
  Class A 1,000.00   810.90   1.51   6.85
  Class C 1,000.00   807.50   2.26   10.24
  Class I 1,000.00   812.30   1.26   5.72
  Class R6 1,000.00   813.20   1.08   4.91
SGA Global Growth Fund

               
  Class A 1,000.00   752.80   1.41   6.20
  Class C 1,000.00   750.10   2.16   9.48
  Class I 1,000.00   753.80   1.16   5.10
  Class R6 1,000.00   754.80   0.93   4.09
SGA New Leaders Growth Fund

               
  Class A 1,000.00   727.60   1.38   5.98
  Class C 1,000.00   724.70   2.14   9.25
  Class I 1,000.00   728.50   1.14   4.94
  Class R6 1,000.00   728.30   0.94   4.07
Tactical Allocation Fund

               
  Class A 1,000.00   773.20   1.02   4.53
  Class C 1,000.00   770.10   1.78   7.90
  Class I 1,000.00   773.40   0.79   3.51
  Class R6 1,000.00   775.20   0.63   2.80
    
* Expenses are equal to the relevant Fund’s annualized expense ratio, which is net of waived fees and reimbursed expenses, if applicable, multiplied by the average account value over the period, multiplied by the number of days (183) expenses were accrued in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period.
For Funds which may invest in other funds, the annualized expense ratios noted above do not reflect fees and expenses associated with any underlying funds. If such fees and expenses had been included, the expenses would have been higher.
You can find more information about a Fund’s expenses in the Financial Statements section that follows. For additional information on operating expenses and other shareholder costs, refer to that Fund’s prospectus.
Hypothetical Example for Comparison Purposes
The table below provides information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of other mutual funds.
3


VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2022 TO September 30, 2022
    Beginning
Account Value
April 1, 2022
  Ending
Account Value
September 30, 2022
  Annualized
Expense
Ratio
  Expenses
Paid
During
Period*
KAR Capital Growth Fund

               
  Class A $ 1,000.00   $ 1,018.90   1.23 %   $ 6.23
  Class C 1,000.00   1,014.64   2.08   10.50
  Class I 1,000.00   1,019.80   1.05   5.32
  Class R6 1,000.00   1,021.26   0.76   3.85
KAR Equity Income Fund

               
  Class A 1,000.00   1,018.80   1.25   6.33
  Class C 1,000.00   1,015.04   2.00   10.10
  Class I 1,000.00   1,020.00   1.01   5.11
  Class R6 1,000.00   1,020.26   0.96   4.86
KAR Global Quality Dividend Fund

               
  Class A 1,000.00   1,018.15   1.38   6.98
  Class C 1,000.00   1,014.39   2.13   10.76
  Class I 1,000.00   1,019.40   1.13   5.72
  Class R6 1,000.00   1,021.01   0.81   4.10
KAR Mid-Cap Core Fund

               
  Class A 1,000.00   1,018.90   1.23   6.23
  Class C 1,000.00   1,015.14   1.98   10.00
  Class I 1,000.00   1,020.16   0.98   4.96
  Class R6 1,000.00   1,020.56   0.90   4.56
KAR Mid-Cap Growth Fund

               
  Class A 1,000.00   1,018.70   1.27   6.43
  Class C 1,000.00   1,014.24   2.16   10.91
  Class I 1,000.00   1,019.70   1.07   5.42
  Class R6 1,000.00   1,020.76   0.86   4.36
KAR Small-Cap Core Fund

               
  Class A 1,000.00   1,018.60   1.29   6.53
  Class C 1,000.00   1,014.89   2.03   10.25
  Class I 1,000.00   1,019.90   1.03   5.22
  Class R6 1,000.00   1,020.31   0.95   4.81
KAR Small-Cap Growth Fund

               
  Class A 1,000.00   1,018.25   1.36   6.88
  Class C 1,000.00   1,014.44   2.12   10.71
  Class I 1,000.00   1,019.45   1.12   5.67
  Class R6 1,000.00   1,019.95   1.02   5.16
KAR Small-Cap Value Fund

               
  Class A 1,000.00   1,018.85   1.24   6.28
  Class C 1,000.00   1,014.99   2.01   10.15
  Class I 1,000.00   1,019.95   1.02   5.16
  Class R6 1,000.00   1,020.41   0.93   4.71
KAR Small-Mid Cap Core Fund

               
  Class A 1,000.00   1,018.50   1.31   6.63
  Class C 1,000.00   1,014.59   2.09   10.56
  Class I 1,000.00   1,019.70   1.07   5.42
  Class R6 1,000.00   1,020.05   1.00   5.06
KAR Small-Mid Cap Growth Fund

               
  Class A 1,000.00   1,018.40   1.33   6.73
  Class C 1,000.00   1,014.64   2.08   10.50
  Class I 1,000.00   1,019.65   1.08   5.47
  Class R6 1,000.00   1,019.95   1.02   5.16
KAR Small-Mid Cap Value Fund

               
  Class A 1,000.00   1,019.00   1.21   6.12
  Class C 1,000.00   1,015.29   1.95   9.85
  Class I 1,000.00   1,020.31   0.95   4.81
  Class R6 1,000.00   1,020.81   0.85   4.31
4


VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2022 TO September 30, 2022
    Beginning
Account Value
April 1, 2022
  Ending
Account Value
September 30, 2022
  Annualized
Expense
Ratio
  Expenses
Paid
During
Period*
SGA Emerging Markets Growth Fund

               
  Class A $1,000.00   $1,017.50   1.51%   $ 7.64
  Class C 1,000.00   1,013.74   2.26   11.41
  Class I 1,000.00   1,018.75   1.26   6.38
  Class R6 1,000.00   1,019.65   1.08   5.47
SGA Global Growth Fund

               
  Class A 1,000.00   1,018.00   1.41   7.13
  Class C 1,000.00   1,014.24   2.16   10.91
  Class I 1,000.00   1,019.25   1.16   5.87
  Class R6 1,000.00   1,020.41   0.93   4.71
SGA New Leaders Growth Fund

               
  Class A 1,000.00   1,018.15   1.38   6.98
  Class C 1,000.00   1,014.34   2.14   10.81
  Class I 1,000.00   1,019.35   1.14   5.77
  Class R6 1,000.00   1,020.36   0.94   4.76
Tactical Allocation Fund

               
  Class A 1,000.00   1,019.95   1.02   5.16
  Class C 1,000.00   1,016.14   1.78   9.00
  Class I 1,000.00   1,021.11   0.79   4.00
  Class R6 1,000.00   1,021.91   0.63   3.19
    
* Expenses are equal to the relevant Fund’s annualized expense ratio, which is net of waived fees and reimbursed expenses, if applicable, multiplied by the average account value over the period, multiplied by the number of days (183) expenses were accrued in the most recent fiscal half-year, then divided by 365 to reflect the one-half year period.
For Funds which may invest in other funds, the annualized expense ratios noted above do not reflect fees and expenses associated with any underlying funds. If such fees and expenses had been included, the expenses would have been higher.
You can find more information about a Fund’s expenses in the Financial Statements section that follows. For additional information on operating expenses and other shareholder costs, refer to that Fund’s prospectus.
5


VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited)
September 30, 2022
American Depositary Receipt (“ADR”)
Represents shares of foreign companies traded in U.S. dollars on U.S. exchanges that are held by a U.S. bank or a trust. Foreign companies use ADRs in order to make it easier for Americans to buy their shares.
Bloomberg U.S. Aggregate Bond Index
The Bloomberg 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 it is not available for direct investment.
Bloomberg U.S. Corporate High Yield Bond Index
The Bloomberg U.S. Corporate High Yield Bond Index measures the U.S. dollar-denominated, high yield, fixed-rate corporate 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 it is not available for direct investment.
Build America Municipal Insured (“BAM”)
Build America Municipal Insured Bonds are municipal bonds insured against default by Build America Mutual, a Financial Guaranty insurance company.
European Central Bank (“ECB”)
The ECB is responsible for conducting monetary policy for the euro area. The ECB was established as the core of the Eurosystem and the European System of Central Banks (“ESCB”). The ESCB comprises the ECB and the National Central Banks (“NCBs”) of all 17 European Union Member States whether they have adopted the Euro or not.
Exchange-Traded Fund (“ETF”)
An open-end fund that is traded on a stock exchange. Most ETFs have a portfolio of stocks or bonds that track a specific market index.
Federal Reserve (the “Fed”)
The Central Bank of the U.S., the Fed is responsible for controlling money supply, interest rates and credit with the goal of keeping the U.S. economy and currency stable. Governed by a seven-member board, the system includes 12 regional Federal Reserve Banks, 25 branches and all national and state banks that are part of the system.
Global Quality Dividend Linked Benchmark
Performance of the Global Quality Dividend Linked benchmark is that of the MSCI World High Dividend Yield Index. Performance of the Global Quality Dividend Linked benchmark prior to February 1, 2017 is that of the Russell 1000® Value Index and from February 1, 2017 to December 31, 2018, it is that of the Russell Developed Large Cap Index (net). The indexes are unmanaged and not available for direct investment.
London Interbank Offered Rate (“LIBOR”)
A benchmark rate that some of the world’s leading banks charge each other for short-term loans and that serves as the first step to calculating interest rates on various loans throughout the world.
MSCI All Country World Growth Index (net)
The MSCI All Country World Growth Index (net) is a free float-adjusted market capitalization-weighted index that measures equity performance of large and mid-cap securities exhibiting overall growth style characteristics across developed and emerging markets. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.
MSCI All Country World Index (ACWI) (net)
The MSCI All Country World Index (net) is a free float-adjusted market capitalization-weighted index that measures equity performance of developed and emerging markets. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.
MSCI ACWI ex USA SMID Cap Index (net)
The MSCI ACWI ex USA SMID Cap Index (net) is a free float-adjusted market capitalization-weighted index that measures mid- and small-cap performance across 22 of 23 Developed Market countries (excluding the U.S.) and 24 Emerging Markets countries. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.
MSCI All Country World Mid-Cap Index (net)
The MSCI All Country World Mid Cap Index (net) is a free float-adjusted market capitalization-weighted index that measures mid cap equity performance of developed and emerging markets. The index is calculated on a total return basis with net dividends reinvested.
6


VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited) (Continued)
September 30, 2022
MSCI EAFE® Index (net)
The MSCI EAFE® (Europe, Australasia, Far East) Index (net) is a free float-adjusted market capitalization-weighted index that measures developed foreign market equity performance, excluding the U.S. and Canada. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment.
MSCI Emerging Markets Index (net)
The MSCI Emerging Markets Index (net) is a free float-adjusted market capitalization-weighted index designed to measure equity market performance in the global emerging markets. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment.
MSCI USA High Dividend Yield Index (net)
The MSCI USA High Dividend Yield Index is based on the MSCI USA Index, its parent index, and includes large and mid-cap stocks. The index is designed to reflect the performance of equities in the parent index (excluding REITs) with higher dividend income and quality characteristics than average dividend yields that are both sustainable and persistent. The index also applies quality screens and reviews 12-month past performance to omit stocks with potentially deteriorating fundamentals that could force them to cut or reduce dividends. The index is calculated on a total return basis with net dividends reinvested; it is unmanaged; its returns do not reflect any fees, expenses or sales charges; and it is not available for direct investment.
MSCI USA Index (net)
The MSCI USA Index is designed to measure the performance of the large and mid-cap segments of the US market. With 625 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in the US.
MSCI World High Dividend Yield Index (net)
The MSCI World High Dividend Yield Index (net) is based on the MSCI World Index, its parent index, and includes large- and mid-cap stocks across 23 developed markets countries. The index is designed to reflect the performance of equities in the parent index (excluding REITs) with higher dividend income and quality characteristics than average dividend yields that are both sustainable and persistent. The index also applies quality screens and reviews 12-month past performance to omit stocks with potentially deteriorating fundamentals that could force them to cut or reduce dividends. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment.
MSCI World Index (net)
The MSCI World Index (net) is a free float-adjusted market capitalization-weighted index that measures developed global market equity performance. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment.
Real Estate Investment Trust (“REIT”)
A publicly traded company that owns, develops and operates income-producing real estate such as apartments, office buildings, hotels, shopping centers and other commercial properties.
Russell 1000® Growth Index
The Russell 1000® Growth Index is a market capitalization-weighted index of growth-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 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 it is not available for direct investment.
Russell 1000® Value Index
The Russell 1000® Value Index is a market capitalization-weighted index of value-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 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 it is not available for direct investment.
Russell 2000® Growth Index
The Russell 2000® Growth Index is a market capitalization-weighted index of growth-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 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 it is not available for direct investment.
Russell 2000® Index
The Russell 2000® Index is a market capitalization-weighted index of the 2,000 smallest companies in the Russell Universe, which comprises the 3,000 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 it is not available for direct investment.
7


VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited) (Continued)
September 30, 2022
Russell 2000® Value Index
The Russell 2000® Value Index is a market capitalization-weighted index of value-oriented stocks of the smallest 2,000 companies in the Russell Universe, which comprises the 3,000 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 it is not available for direct investment.
Russell 2500TM Index
The Russell 2500TM Index is a market capitalization-weighted index of the 2,500 smallest companies in the Russell Universe, which comprises the 3,000 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.
Russell 2500TM Growth Index
The Russell 2500TM Growth Index is a market capitalization-weighted index of growth-oriented stocks of the 2,500 smallest companies in the Russell Universe, which comprises the 3,000 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.
Russell 2500TM Value Index
The Russell 2500TM Value Index is a market capitalization-weighted index of value-oriented stocks of the 2,500 smallest companies in the Russell Universe, which comprises the 3,000 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.
Russell Developed Large Cap Index (net)
The Russell Developed Large Cap Index (net) is a free-float market capitalization-weighted index constructed to provide a comprehensive and unbiased barometer for the large-cap segment in the developed world. The index is calculated on a total return basis with net dividends reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and it is not available for direct investment.
Russell Midcap® Growth Index
The Russell Midcap® Growth Index is a market capitalization-weighted index of medium-capitalization, growth-oriented stocks of 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 it is not available for direct investment.
Russell Midcap® Index
The Russell Midcap® Index is a market capitalization-weighted index of medium-capitalization stocks of 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 it is not available for direct investment.
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 it is not available for direct investment.
Secured Overnight Financing Rate (“SOFR”)
SOFR is a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities.
Sponsored ADR
An ADR which is issued with the cooperation of the company whose stock will underlie the ADR. Sponsored ADRs generally carry the same rights normally given to stockholders, such as voting rights. ADRs must be sponsored to be able to trade on a major U.S. exchange such as the New York Stock Exchange.
Tactical Allocation Fund Linked Benchmark
The Tactical Allocation Fund Linked Benchmark consists of 45% Russell 1000® Growth Index (a market capitalization-weighted index of growth-oriented stocks of the 1,000 largest companies in the Russell Universe, which comprises the 3,000 largest U.S. companies, calculated on a total return basis with dividends reinvested), 15% MSCI ACWI ex USA SMID Cap Index (a free float-adjusted market capitalization-weighted index that measures mid- and small-cap foreign market equity performance, calculated on a total return basis with net dividends reinvested), and 40% Bloomberg U.S. Aggregate Bond Index (an index that measures the U.S. investment grade fixed rate bond market, 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. Performance of the Tactical Allocation Fund Linked Benchmark between 9/7/2016 and 6/3/2019 represents an allocation consisting of 45% Russell 1000® Growth Index, 15% MSCI EAFE® Index, and 40% Bloomberg U.S. Aggregate Bond Index. Prior to 9/7/2016, the allocation consisted of 50% S&P 500® Index and 50% Bloomberg U.S. Aggregate Bond Index.
8


VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited) (Continued)
September 30, 2022
Yield Curve
A yield curve is a line on a graph plotting the interest rates, at a set point in time, of bonds having equal credit quality but different maturity dates.
9


  Ticker Symbols:
  Class A: PSTAX
  Class C: SSTFX
  Class I: PLXGX
  Class R6: VCGRX
KAR Capital Growth Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital growth. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -36.54%, Class C shares at NAV returned -37.07%, Class I shares at NAV returned -36.45%, and Class R6 shares at NAV returned -36.27%. For the same period, the Russell 1000® Growth Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -22.59%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also
fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell 1000® Growth Index for the fiscal year ended September 30, 2022. Poor stock selection in information technology and consumer discretionary detracted from performance. An overweight in financials and an underweight in utilities contributed to performance.
The biggest contributors to performance during the period were Progressive, AutoZone, Fair Isaac, HealthEquity, and Monster Beverage.
The biggest detractors from performance during the period were Bill.com, NVIDIA, Amazon.com, Meta Platforms, and Netflix.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Technology Concentration: Because the Fund is presently heavily weighted in the technology sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Information Technology   34%
Consumer Discretionary 23
Health Care 9
Industrials 8
Financials 7
Consumer Staples 7
Communication Services 5
Other (includes short-term investment) 7
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
10


KAR Capital Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2   -36.54 %   6.90 %  10.64 %   — %
Class A shares at POP3,4   -40.03   5.70 10.01
Class C shares at NAV2 and with CDSC4   -37.07 6.04 9.77
Class I shares at NAV2   -36.45 6.99 10.82
Class R6 shares at NAV2   -36.27 4.41 1/30/18
Russell 1000® Growth Index   -22.59 12.17 13.70 9.69 5
Fund Expense Ratios6: Class A shares: Gross 1.20%, Net 1.20%; Class C shares: Gross 2.00%, Net 2.00%; Class I shares: Gross 1.00%, Net 1.00%; Class R6 shares: Gross 0.91%, Net 0.73%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
11


KAR Capital Growth Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
12


  Ticker Symbols:
  Class A: PDIAX
  Class C: PGICX
  Class I: PXIIX
  Class R6: VECRX
KAR Equity Income Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has investment objectives of capital appreciation and current income. There is no guarantee that the Fund will meet its objectives.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -7.01%, Class C shares at NAV returned -7.67%, Class I shares at NAV returned -6.74%, and Class R6 shares at NAV returned -6.74%. For the same period, the MSCI USA High Dividend Yield Index (net), which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -8.08%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund outperformed the MSCI USA High Dividend Yield Index (net) for the fiscal year ended September 30, 2022. Positive stock selection in industrials and positive stock selection and an underweight in information technology contributed to performance. Poor stock selection and an underweight in health care as well as poor stock selection in consumer discretionary detracted from performance.
The biggest contributors to performance during the period were BAE Systems, Kellogg, Pfizer, Merck & Co., and Paychex.
The biggest detractors from performance during the period were Verizon Communications, V.F., Eastman Chemical, U.S. Bancorp, and Leggett & Platt.
The preceding information is the opinion of portfolio management only through the end of the period
stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Financials   18%
Health Care 13
Consumer Staples 13
Utilities 11
Industrials 11
Communication Services 9
Materials 8
Other (includes short-term investment) 17
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
13


KAR Equity Income Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -7.01 %   6.73 %   10.19 %   — %
Class A shares at POP3,4   -12.13 5.53 9.57
Class C shares at NAV2 and with CDSC4   -7.67 5.93 9.36
Class I shares at NAV2   -6.74 7.00 10.45
Class R6 shares at NAV2   -6.74 5.51 1/30/18
MSCI USA High Dividend Yield Index (net)   -8.08 4.89 8.75 2.97 5
Fund Expense Ratios6: Class A shares: Gross 1.32%, Net 1.20%; Class C shares: Gross 2.10%, Net 1.95%; Class I shares: Gross 1.08%, Net 0.95%; Class R6 shares: Gross 1.00%, Net 0.91%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
14


KAR Equity Income Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
15


  Ticker Symbols:
  Class A: PPTAX
  Class C: PPTCX
  Class I: PIPTX
  Class R6: VGQRX
KAR Global Quality Dividend Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of total return, consisting of both capital appreciation and current income. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -10.21%, Class C shares at NAV returned -10.93%, Class I shares at NAV returned -10.00%, and Class R6 shares at NAV returned -9.73%. For the same period, the MSCI World High Dividend Yield Index (net), which serves as the Fund’s broad-based index, returned -10.90% and the Global Quality Dividend Linked Benchmark, the Fund’s style-specific Index, returned -10.90%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund performed in line with the MSCI World High Dividend Yield Index (net) for the fiscal year ended September 30, 2022. Positive stock selection in industrials and positive stock selection and an underweight in information technology contributed to performance. An underweight in health care and poor stock selection in consumer discretionary detracted from performance.
The biggest contributors to performance during the period were BAE Systems, Pfizer, Southern Company, Merck & Co., and Coca-Cola Company.
The biggest detractors from performance during the period were Adecco, Telenor, V.F., Verizon Communications, and IGM Financial.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to
change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Foreign Investing: Investing in foreign securities subjects the Fund to additional risks such as increased volatility; currency fluctuations; less liquidity; less publicly available information about the foreign investment; and political, regulatory, economic, and market risk.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Financials   22%
Communication Services 16
Utilities 12
Industrials 10
Consumer Staples 10
Health Care 8
Materials 6
Other (includes short-term investment and securities lending collateral) 16
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
16


KAR Global Quality Dividend Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -10.21 % 1.42 %   5.93 %   — %
Class A shares at POP3,4   -15.15 0.28 5.34
Class C shares at NAV2 and with CDSC4   -10.93 0.66 5.13 
Class I shares at NAV2   -10.00 1.68 6.19 
Class R6 shares at NAV2   -9.73 -0.20 8/1/19
MSCI World High Dividend Yield Index (net)   -10.90 2.58 5.74   1.75 5
Global Quality Dividend Linked Benchmark   -10.90 2.69 8.42  1.75 5
Fund Expense Ratios6: Class A shares: Gross 1.51%, Net 1.35%; Class C shares: Gross 2.29%, Net 2.10%; Class I shares: Gross 1.26%, Net 1.10%; Class R6 shares: Gross 1.15%, Net 0.78%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
17


KAR Global Quality Dividend Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds.
The indexes are unmanaged and not available for direct investment; therefore, their performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
18


  Ticker Symbols:
  Class A: VMACX
  Class C: VMCCX
  Class I: VIMCX
  Class R6: VRMCX
KAR Mid-Cap Core Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -21.10%, Class C shares at NAV returned -21.70%, Class I shares at NAV returned -20.91%, and Class R6 shares at NAV returned -20.84%. For the same period, the Russell Midcap® Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -19.39%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell Midcap® Index for the fiscal year ended September 30, 2022. Poor stock selection and an overweight in health care as well as an underweight in energy detracted from performance. Positive stock selection in financials and information technology contributed to performance.
The biggest contributors to performance during the period were Aspen Technology, Lamb Weston, LPL Financial, W. R. Berkley, and Tractor Supply.
The biggest detractors from performance during the period were Azenta, Zebra Technologies, West Pharmaceutical Services, Cooper Companies, and Latham Group.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to
change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Industrial Concentration: Because the Fund is presently heavily weighted in the industrial sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
19


KAR Mid-Cap Core Fund (Continued)
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Industrials   32%
Financials 17
Information Technology 16
Health Care 15
Consumer Discretionary 8
Consumer Staples 5
Real Estate 2
Short-Term Investment 5
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
20


KAR Mid-Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -21.10 %   9.22 %   11.77 %   — %
Class A shares at POP3,4   -25.44 7.99 11.14
Class C shares at NAV2 and with CDSC4   -21.70 8.40 10.93
Class I shares at NAV2   -20.91 9.49 12.04
Class R6 shares at NAV2   -20.84 6.90 1/30/18
Russell Midcap® Index   -19.39 6.48 10.30 4.78 5
Fund Expense Ratios6: Class A shares: Gross 1.31%, Net 1.20%; Class C shares: Gross 2.06%, Net 1.95%; Class I shares: Gross 1.05%, Net 0.95%; Class R6 shares: Gross 0.97%, Net 0.87%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
21


KAR Mid-Cap Core Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
22


  Ticker Symbols:
  Class A: PHSKX
  Class C: PSKCX
  Class I: PICMX
  Class R6: VRMGX
KAR Mid-Cap Growth Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of capital appreciation. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -38.11%, Class C shares at NAV returned -38.62%, Class I shares at NAV returned -37.98%, and Class R6 shares at NAV returned -37.86%. For the same period, the Russell Midcap® Growth Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -29.50%.
    See footnote 3 on page 25.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also
fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell Midcap® Growth Index for the fiscal year ended September 30, 2022. Poor stock selection in information technology and financials detracted from performance. Positive stock selection in communication services and an overweight in consumer staples contributed to performance.
The biggest contributors to performance during the period were Celsius, Fair Isaac, HealthEquity, Silk Road Medical, and Devon Energy.
The biggest detractors from performance during the period were Bill.com, DocuSign, SiteOne Landscape Supply, Goosehead Insurance, and MercadoLibre.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Technology Concentration: Because the Fund is presently heavily weighted in the technology sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Information Technology   29%
Consumer Discretionary 18
Health Care 16
Consumer Staples 13
Industrials 9
Financials 6
Communication Services 5
Other (includes short-term investment) 4
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
23


KAR Mid-Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -38.11 % 3   11.60 %   11.59 % — %
Class A shares at POP4,5   -41.51 10.35 10.96
Class C shares at NAV2 and with CDSC5   -38.62  3 10.75  10.74  — 
Class I shares at NAV2   -37.98  3 11.85  11.85  — 
Class R6 shares at NAV2   -37.86  3 —  —  9.12  1/30/18
Russell Midcap® Growth Index   -29.50   7.62 10.85   5.39 6
Fund Expense Ratios7: Class A shares: Gross 1.24%, Net 1.24%; Class C shares: Gross 1.99%, Net 1.99%; Class I shares: Gross 1.00%, Net 1.00%; Class R6 shares: Gross 0.89%, Net 0.83%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
24


KAR Mid-Cap Growth Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 Total Return for the report period presented in the table differs from the return in the Financial Highlights. The total return presented in the above table is calculated based on the NAV at which shareholder transactions were processed. The total return presented in the Financial Highlights section of the report is calculated in the same manner, but also takes into account certain adjustments that are necessary under generally accepted accounting principles required in the annual report and semiannual report.
4 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
5 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
6 The since inception index return is from the inception date of Class R6 shares.
7 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
25


  Ticker Symbols:
  Class A: PKSAX
  Class C: PKSCX
  Class I: PKSFX
  Class R6: VSCRX
KAR Small-Cap Core Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation, with dividend income a secondary consideration. There is no guarantee that the Fund will meet its objectives.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -11.73%, Class C shares at NAV returned -12.37%, Class I shares at NAV returned -11.51%, and Class R6 shares at NAV returned -11.42%. For the same period, the Russell 2000® Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -23.50%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund outperformed the Russell 2000® Index for the fiscal year ended September 30, 2022. Positive stock selection and an overweight in industrials as well as positive stock selection in information technology contributed to performance. Poor stock selection and an underweight in energy as well as an underweight in utilities detracted from performance.
The biggest contributors to performance during the period were FTI Consulting, BancFirst, Aspen Technology, Jack Henry & Associates, and RLI.
The biggest detractors from performance during the period were Rightmove, Moelis & Co., Simpson Manufacturing, CorVel, and Watts Water Technologies.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to
change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Industrial Concentration: Because the Fund is presently heavily weighted in the industrial sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
26


KAR Small-Cap Core Fund (Continued)
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Industrials   38%
Financials 24
Information Technology 14
Consumer Discretionary 8
Health Care 5
Communication Services 4
Consumer Staples 1
Other (includes short-term investment) 6
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
27


KAR Small-Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -11.73 %   12.15 %   13.39 %   — %
Class A shares at POP3,4   -16.58 10.89 12.75
Class C shares at NAV2 and with CDSC4   -12.37  11.33  12.56  — 
Class I shares at NAV2   -11.51  12.45  13.68  — 
Class R6 shares at NAV2   -11.42  12.54  —  13.36  11/12/14
Russell 2000® Index   -23.50 3.55 8.55   5.79 5
Fund Expense Ratios6: Class A shares: 1.26%; Class C shares: 1.99%; Class I shares: 1.00%; Class R6 shares: 0.92%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
28


KAR Small-Cap Core Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
29


  Ticker Symbols:
  Class A: PSGAX
  Class C: PSGCX
  Class I: PXSGX
  Class R6: VRSGX
KAR Small-Cap Growth Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -31.04%, Class C shares at NAV returned -31.52%, Class I shares at NAV returned -30.85%, and Class R6 shares at NAV returned -30.80%. For the same period, the Russell 2000® Growth Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -29.27%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell 2000® Growth Index for the fiscal year ended September 30, 2022. Poor stock selection in information technology and consumer discretionary detracted from performance. Positive stock selection and an overweight in financials as well as positive stock selection and an underweight in health care contributed to performance.
The biggest contributors to performance during the period were Ryan Specialty, Aspen Technology, Grocery Outlet, The Chefs’ Warehouse, and Ollie’s Bargain Outlet.
The biggest detractors from performance during the period were Bill.com, Duck Creek Technologies, Fox Factory, Rightmove, and Auto Trader Group.
The preceding information is the opinion of portfolio management only through the end of the period
stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Foreign Investing: Investing in foreign securities subjects the Fund to additional risks such as increased volatility, currency fluctuations, less liquidity, and political, regulatory, economic, and market risk.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Sector Focused Investing: Events negatively affecting a particular industry or market sector in which the Fund focuses its investments may cause the value of the Fund to decrease.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
30


KAR Small-Cap Growth Fund (Continued)
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Financials   30%
Information Technology 24
Consumer Discretionary 15
Communication Services 11
Industrials 10
Health Care 6
Consumer Staples 3
Other (includes short-term investment and securities lending collateral) 1
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
31


KAR Small-Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2     -31.04 %   10.71 %   14.78 %   — %
Class A shares at POP3,4   -34.83 9.47 14.13
Class C shares at NAV2 and with CDSC4   -31.52  9.92  13.94  — 
Class I shares at NAV2   -30.85  11.00  15.07  — 
Class R6 shares at NAV2   -30.80  —  —  8.57  1/30/18
Russell 2000® Growth Index   -29.27 3.60 8.81 1.91 5
Fund Expense Ratios6: Class A shares: 1.34%; Class C shares: 2.05%; Class I shares: 1.07%; Class R6 shares: 0.98%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
32


KAR Small-Cap Growth Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
33


  Ticker Symbols:
  Class A: PQSAX
  Class C: PQSCX
  Class I: PXQSX
  Class R6: VQSRX
KAR Small-Cap Value Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -24.26%, Class C shares at NAV returned -24.84%, Class I shares at NAV returned -24.08%, and Class R6 shares at NAV returned -24.03%. For the same period, the Russell 2000® Value Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -17.69%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell 2000® Value Index for the fiscal year ended September 30, 2022. Poor stock selection and an overweight in consumer discretionary as well as an underweight in energy detracted from performance. Positive stock selection in industrials and financials contributed to performance.
The biggest contributors to performance during the period were Stock Yards Bancorp, Jack Henry & Associates, RBC Bearings, MGM Growth Properties, and RLI.
The biggest detractors from performance during the period were Scotts Miracle-Gro, Azenta, Latham Group, SiteOne Landscape Supply, and Thor Industries.
The preceding information is the opinion of portfolio management only through the end of the period
stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Industrial Concentration: Because the Fund is presently heavily weighted in the industrial sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Sector Focused Investing: Events negatively affecting a particular industry or market sector in which the Fund focuses its investments may cause the value of the Fund to decrease.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issue, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
34


KAR Small-Cap Value Fund (Continued)
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Industrials   37%
Financials 23
Consumer Discretionary 18
Information Technology 10
Consumer Staples 5
Health Care 3
Materials 2
Short-Term Investment 2
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
35


KAR Small-Cap Value Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year 5 Years 10 Years Since
inception
Inception
date
Class A shares at NAV2   -24.26 %  3.32 %  9.19 %  — %
Class A shares at POP3,4   -28.43 2.16 8.58
Class C shares at NAV2 and with CDSC4   -24.84  2.55 8.38  — 
Class I shares at NAV2   -24.08  3.57 9.47  — 
Class R6 shares at NAV2   -24.03  3.65 —  8.07  11/3/16
Russell 2000® Value Index   -17.69 2.87 7.94 6.78 5
Fund Expense Ratios6: Class A shares: 1.20%; Class C shares: 1.96%; Class I shares: 0.96%; Class R6 shares: 0.89%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on September 30, 2012, for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
36


KAR Small-Cap Value Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on September 30, 2012, for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the inception date of Class R6 shares.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
37


  Ticker Symbols:
  Class A: VKSAX
  Class C: VKSCX
  Class I: VKSIX
  Class R6: VKSRX
KAR Small-Mid Cap Core Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation, with dividend income a secondary consideration. There is no guarantee that the Fund will meet its objectives.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -26.69%, Class C shares at NAV returned -27.25%, Class I shares at NAV returned -26.47%, and Class R6 shares at NAV returned -26.51%. For the same period, the Russell 2500™ Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -21.11%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
What factors affected the Fund’s performance during its fiscal year?
The Fund underperformed the Russell 2500TM Index for the fiscal year ended September 30, 2022. Poor stock selection in materials and an underweight in energy detracted from performance. Positive stock selection in financials and an underweight in communication services contributed to performance.
The biggest contributors to performance during the period were LPL Financial, W. R. Berkley, Aspen Technology, Jack Henry & Associates, and Rollins.
The biggest detractors from performance during the period were Scotts Miracle-Gro, Zebra Technologies, Charles River Laboratories, SiteOne Landscape Supply, and Bentley Systems.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to change at any time based upon market or other
conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Industrial Concentration: Because the Fund is presently heavily weighted in the industrial sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Technology Concentration: Because the Fund is presently heavily weighted in the technology sector, it will be impacted by that sector’s performance more than a fund with broader sector diversification.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
38


KAR Small-Mid Cap Core Fund (Continued)
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Industrials   27%
Information Technology 25
Financials 16
Consumer Discretionary 15
Health Care 12
Materials 2
Short-Term Investment 3
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
39


KAR Small-Mid Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year Since
inception
Inception
date
Class A shares at NAV2     -26.69 %  7.43 % 3/7/18
Class A shares at POP3,4   -30.72 6.11 3/7/18
Class C shares at NAV2 and with CDSC4   -27.25  6.63  3/7/18
Class I shares at NAV2   -26.47  7.71  3/7/18
Class R6 shares at NAV2   -26.51  7.77  3/7/18
Russell 2500™ Index   -21.11 4.33 5
Fund Expense Ratios6: Class A shares: Gross 1.30%, Net 1.30%; Class C shares: Gross 2.03%, Net 2.05%; Class I shares: Gross 1.01%, Net 1.02%; Class R6 shares: Gross 0.92%, Net 0.97%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on March 7, 2018 (inception date of the Fund), for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
40


KAR Small-Mid Cap Core Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on March 7, 2018 (inception date of the Fund), for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
Growth of $2,500,000 for periods ended 9/30

This chart assumes an initial investment of $2,500,000 made on March 7, 2018 (inception date of the Fund), for Class R6 shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
1 Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gain distributions.
2 “NAV” (Net Asset Value) total returns do not include the effect of any sales charge.
3 “POP” (Public Offering Price) total returns include the effect of the maximum front-end 5.50% sales charge.
4 “CDSC” (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC for certain redemptions of Class A shares made within 18 months of a finder’s fee being paid and all Class C shares are 1% within the first year and 0% thereafter.
5 The since inception index return is from the Fund’s inception date.
6 The expense ratios of the Fund are set forth according to the prospectus for the Fund effective January 28, 2022, as supplemented and revised, and may differ from the expense ratios disclosed in the Financial Highlights tables in this report. See the Financial Highlights for more current expense ratios. Net Expense: Expenses reduced by a contractual expense limitation in effect through January 31, 2023. Gross Expense: Does not reflect the effect of the expense limitation. Expense ratios include fees and expenses associated with any underlying funds. Expense ratios include fees and expenses associated with any underlying funds.
The index is unmanaged and not available for direct investment; therefore, its performance does not reflect the expenses associated with active management of an actual portfolio.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
41


  Ticker Symbols:
  Class A: VAKSX
  Class C: VCKSX
  Class I: VIKSX
  Class R6: VRKSX
KAR Small-Mid Cap Growth Fund
Fund Summary (Unaudited)
Portfolio Manager Commentary by
Kayne Anderson Rudnick Investment Management, LLC
The Fund is diversified and has an investment objective of long-term capital appreciation. There is no guarantee that the Fund will meet its objective.
For the fiscal year ended September 30, 2022, the Fund’s Class A shares at NAV returned -27.76%, Class C shares at NAV returned -28.22%, Class I shares at NAV returned -27.52%, and Class R6 shares at NAV returned -27.49%. For the same period, the Russell 2500™ Growth Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -29.39%.
All performance figures assume reinvestment of distributions and exclude the effect of sales charges. 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 above. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end.
How did the markets perform during the Fund’s fiscal year ended September 30, 2022?
After strong performance in 2021, markets became volatile in 2022, with both equities and fixed income entering bear markets. Signs of weakness and headwinds began in the fourth quarter of 2021 as market breadth narrowed. Returns for the S& P 500® Index in 2021 were heavily skewed by the performance of some large-cap stocks.
Meanwhile, the Federal Reserve (the Fed) began tapering its bond purchases in October 2021, after providing support to the fixed income markets during the pandemic. And, while the inflation that spiked after massive pandemic spending, supply chain bottlenecks, and COVID lockdowns at first appeared transitory, inflation quickly escalated in the second quarter of 2022 and became a major risk to the economy. The Russian invasion of Ukraine also
fueled inflation and once again pressured fragile supply chains.
The Fed raised interest rates five times during the fiscal year in an effort to tame record-high inflation. To make matters more challenging, robust employment became an obstacle in slowing spending, with the Fed saying it could make additional rate increases to attempt to bring down inflation. Investor pessimism and market sentiment soured to new lows for the duration of the fiscal year.
On the international front, China’s enforcement of its zero-COVID policy forced continued lockdowns, which rattled important supply chains. In addition, China’s significant regulatory crackdowns destroyed certain industries and gave investors pause to invest elsewhere in the country. Tensions with Taiwan also presented new risks due to U.S. semiconductor dependence and the role that plays in the digital transformation of the U.S.
For the fiscal year ended September 30, 2022, the S&P 500® Index declined 15.47%, while small-capitalization stocks, as represented by the Russell 2000® Index, were down 23.50%. International developed markets, as measured by the MSCI EAFE® Index (net), lost 25.13%, while the MSCI Emerging Markets Index (net) declined 28.11% for the period. Value stocks outperformed growth stocks for the fiscal year, with the Russell 1000® Value Index down 11.36% and the Russell 1000® Growth Index down 22.59%.
The Fund outperformed the Russell 2500TM Growth Index for the fiscal year ended September 30, 2022. Positive stock selection and overweight positions in health care and financials contributed to performance. Poor stock selection in information technology and an underweight in energy detracted from performance.
The biggest contributors to performance during the period were Ryan Specialty, Lamb Weston, Jack Henry & Associates, HealthEquity, and Fair Isaac.
The biggest detractors from performance during the period were Copperleaf Technologies, West Pharmaceutical Services, SiteOne Landscape Supply, Bentley Systems, and TransUnion.
The preceding information is the opinion of portfolio management only through the end of the period stated on the cover. Any such opinions are subject to change at any time based upon market or other conditions and should not be relied upon as investment advice. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.
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.
Limited Number of Investments: Because the Fund has a limited number of securities, it may be more susceptible to factors adversely affecting its securities than a fund with a greater number of securities.
Market Volatility: The value of the securities in the Fund may go up or down in response to the prospects of individual companies and/or general economic conditions. Price changes may be short- or long-term. Local, regional or global events such as war (e.g., Russia’s invasion of Ukraine), acts of terrorism, the spread of infectious illness (e.g., COVID-19 pandemic) or other public health issues, recessions, or other events could have a significant impact on the Fund and its investments, including hampering the ability of the Fund’s manager(s) to invest the Fund’s assets as intended.
Prospectus: For additional information on risks, please see the Fund’s prospectus.
 Asset Allocation
The following table presents asset allocation within certain sectors as a percentage of total investments as of September 30, 2022.
Information Technology   25%
Health Care 23
Industrials 18
Financials 13
Consumer Discretionary 5
Consumer Staples 3
Communication Services 3
Short-Term Investment 10
Total   100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
42


KAR Small-Mid Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/22

    1 Year Since
inception
Inception
date
Class A shares at NAV2    -27.76 %  -13.25 % 12/8/20
Class A shares at POP3,4   -31.73 -15.92 12/8/20
Class C shares at NAV2 and with CDSC4   -28.22  -13.87  12/8/20
Class I shares at NAV2   -27.52  -13.01  12/8/20
Class R6 shares at NAV2   -27.49  -12.94  12/8/20
Russell 2500™ Growth Index   -29.39 -13.26 5
Fund Expense Ratios6: Class A shares: Gross 4.06%, Net 1.30%; Class C shares: Gross 4.88%, Net 2.05%; Class I shares: Gross 3.83%, Net 1.05%; Class R6 shares: Gross 3.79%, Net 0.99%.
    
All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The above table and graph below do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of shares. Please visit Virtus.com for performance data current to the most recent month-end.
Growth of $10,000 for periods ended 9/30

This chart assumes an initial investment of $10,000 made on December 8, 2020 (inception date of the Fund), for Class A shares and Class C shares including any applicable sales charges or fees. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
43


KAR Small-Mid Cap Growth Fund (Continued)
Growth of $100,000 for periods ended 9/30

This chart assumes an initial investment of $100,000 made on December 8, 2020 (inception date of the Fund), for Class I shares. The performance of the other share class may be greater or less than that shown based on differences in inception dates, fees, and sales charges. Performance assumes reinvestment of dividends and capital gain distributions.
Growth of $2,500,000 for periods ended 9/30