VIRTUS INTERNATIONAL FUNDS Subadvised by Vontobel Asset Management. June 30, 2018

Transcription

1 VIRTUS INTERNATIONAL FUNDS Subadvised by Vontobel Asset Management June 30, 2018

2 IMPORTANT RISK CONSIDERATIONS Equity Securities Foreign & Emerging Markets Geographic Concentration Industry/Sector Concentration Prospectus The market price of equity securities may be adversely affected by financial market, industry, or issuerspecific events. Focus on a particular style or on small or medium-sized companies may enhance that risk. Investing internationally, especially in emerging markets, involves additional risks such as currency, political, accounting, economic, and market risk. A fund that focuses its investments in a particular geographic location will be highly sensitive to financial, economic, political, and other developments affecting the fiscal stability of that location. A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund. For additional information on risks, please see the fund s prospectus. 2

3 VIRTUS INVESTMENT PARTNERS Virtus is an independent publicly traded asset management company (NASDAQ: VRTS) Disciplined, institutional-quality money management through wholly owned subsidiaries and select subadvisers, each with a distinct investment philosophy and style Investment products include: Virtus Mutual Funds Closed-End Funds Separately Managed Accounts (B/D sponsored and Private Client) Institutional Accounts Variable Insurance Trust UCITS ETFs 3

4 VIRTUS INVESTMENT PARTNERS * * * * * * * * * * *Virtus Investment Partners retains an ownership interest in the firm. 4

5 VONTOBEL ASSET MANAGEMENT, INC. New York based SEC registered investment adviser, established in 1984 Subadvising four investment strategies for Virtus $34.8 billion under management as of 6/30/18 Recognized leader in global investing based in New York 5

6 VONTOBEL ASSET MANAGEMENT, INC. Virtus Vontobel Emerging Markets Opportunities Fund Matthew Benkendorf, Lead Portfolio Manager Brian Bandsma, Deputy PM Jin Zhang, CFA, Deputy PM Virtus Vontobel Foreign Opportunities Fund Matthew Benkendorf, Lead Portfolio Manager Daniel Kranson, CFA, Deputy PM David Souccar, Deputy PM Matthew Benkendorf Chief Investment Officer 21 Years Industry Experience Portfolio Managers Research Virtus Vontobel Global Opportunities Fund Matthew Benkendorf, Lead Portfolio Manager Ramiz Chelat, Deputy PM Peter Newell, Client Portfolio Manager 34 Years Industry Experience Ben Falcone, Client Portfolio Manager 22 Years Industry Experience Virtus Vontobel Greater European Opportunities Fund Daniel Kranson, CFA, Lead Portfolio Manager Analyst Industry Experience Consumer Discretionary Consumer Staples Energy Financials Health Care Information Technology Industrials Materials Real Estate Telecom Services Utilities Generalist Matthew Benkendorf, Sr. Research Analyst 21 Years Daniel Kranson, CFA, Sr. Research Analyst 19 Years Edwin Walczak, Sr. Research Analyst 40 Years Brian Bandsma, Sr. Research Analyst 20 Years Ramiz Chelat, Sr. Research Analyst 19 Years Igor Krutov, Director of Research 24 Years David Souccar, Sr. Research Analyst 22 Years Jin Zhang, CFA, Sr. Research Analyst 18 Years Robert Berner, Sr. Research Analyst/Investigative Business Analyst 33 Years Peter Choi, Sr. Research Analyst 21 Years Mara Der Hovanesian, Sr. Research Analyst/Investigative Business Analyst 28 Years Markus Hansen, Sr. Research Analyst 24 Years Chul Chang, Sr. Research Analyst/Quantitative/Risk Analyst 18 Years Zhen Li, Research Analyst/Investigative Business Analyst 13 Years Davit Khachatryan, Research Analyst 3 Years Rob Hansen, Research Analyst 14 Years Maggie Chau, Research Analyst 12 Years Ian Chun, Research Analyst 15 Years Investment Team Facts: ~170 invested companies across all portfolios companies per analyst 6

7 WHAT WE BELIEVE Interests must be aligned. CLIENT MANAGER INVESTMENT COMPANY We provide clarity. The client provides choice. 7

8 POTENTIAL ADVANTAGES OF STYLE Aim to generate investment results as consistent as the earnings of the underlying companies Vontobel Seeks Consistent Earnings Growth Virtus Vontobel Emerging Opportunities Fund EPS Growth vs MSCI EM EPS Growth Rate 50% 40% 30% 20% 10% 0% Virtus Emerging Markets Opportunities Fund MSCI EM -10% Consistent Earnings Growth Has Compounded Faster Virtus Vontobel Emerging Opportunities Fund Cumulative EPS Growth** $1,000 $800 Virtus Emerging Markets Opportunities Fund MSCI EM $600 $400 $200 $ Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end. * The growth rates are calculated as a weighted average of the full year s EPS progression for the companies held in the portfolio and benchmark as of calendar year end excluding outliers. These figures are calculated in local currency and ex-cash. **The graph represents the cumulative growth of $100 based on earnings growth. The MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that measures 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 is not available for direct investment. Source: FactSet. 8

9 INVESTMENT PROCESS OVERVIEW SCREEN AND IDEA GENERATION ANALYZE PAST RESULTS ANALYZE FUTURE OPPORTUNITIES PRICE PORTFOLIO CONSTRUCTION Pass high hurdle rates Profits > $50 million Low to moderate leverage (high interest rate coverage) High return on equity (ROE) return on assets (ROA) Free cash flow Stable earnings and operating margins Screen for a history of profitability and stability Understand the business and quality of earnings Defensible franchise Consistent and durable business Pricing power Low-to-moderate need for capital Coherent business strategy Transparent accounting Replicate and exceed past success Ability to sustain growth Ability to maintain high ROA with low-to-moderate leverage Ability to earn high ROE on a growing equity base Sensible price Identify businesses which have demonstrated predictable, sustainable growth at a sensible price Develop and maintain fiveyear profit forecasts for each actual and prospective investment that we monitor Seek to buy and hold shares selling below our appraisal of the intrinsic value Benchmark unconstrained Avoid the artificial and backward-looking constraints of the index weightings Common sense risk diversification/ dependability of income stream Initial position size depends on degree of conviction and price Build a high conviction portfolio 9

10 AN EMPHASIS ON QUALITY CHARACTERISTICS VIRTUS VONTOBEL EMERGING MARKETS OPPORTUNITIES FUND 1 I shares: HIEMX VIRTUS VONTOBEL FOREIGN OPPORTUNITIES FUND 2 I shares: JVXIX 40% Net Margin ROA ROE ROIC Net Margin ROA ROE ROIC 40% 30% 30% 20% 20% 10% 10% 0% PERCENTILE % VIRTUS VONTOBEL GLOBAL OPPORTUNITIES FUND 3 I shares: WWOIX VIRTUS VONTOBEL GREATER EUROPEAN OPPORTUNITIES FUND 4 I shares: VGEIX 40% Net Margin ROA ROE ROIC Net Margin ROA ROE ROIC 40% 30% 30% 20% 20% 10% 10% 0% PERCENTILE % Past performance is not indicative of future results. Fund Benchmark Peer Group As of 6/30/18. Class I shares. Source: Morningstar Direct. 1. Peer Group: Morningstar Diversified Emerging Markets Category. Number of Funds Ranked: 891 (875 for ROIC). Benchmark: MSCI Emerging Markets Index (net). 2. Peer Group: Morningstar Foreign Large Growth, Foreign Large Blend, and Foreign Large Value Categories. Number of Funds Ranked: 1,619 (1,618 for ROIC). Benchmark: MSCI EAFE Index (net). 3. Peer Group: Morningstar World Stock Category. Number of Funds Ranked: 950 (950 for ROIC). Benchmark: MSCI AC World Index (net). 4. Peer Group: Morningstar Europe Stock Category. Number of Funds Ranked: 153. Benchmark: MSCI Europe Index (net). The Morningstar Percentile Ranking compares a Fund s Morningstar risk and return scores with all the Funds in the same Category, where 1% = Best and 100% = Worst Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Characteristics are defined on page

11 SELL DISCIPLINE Better alternative identified Price target met Deterioration in fundamentals Major merger/acquisition-related activity Portfolio considerations 11

12 PORTFOLIO CONSTRUCTION AND RISK MANAGEMENT Risk Management We believe the main sources of risk are stock specific, i.e. Did we get the company fundamentals right? Did we overpay? Could the earnings implode? Cash Fully invested Position Size Maximum position size: 7% Sector At least 5 sectors at all times Country 20% absolute overweight relative to benchmark Volatility No tracking error restrictions 12

13 STRONG PERFORMANCE ACROSS MARKET CYCLES Virtus Vontobel Emerging Markets Opportunities Fund UP/DOWN CAPTURE RATIO 3 YEARS UP/DOWN CAPTURE RATIO 5 YEARS % % 92.29% 91.03% 78.89% 77.20% % % 92.08% 85.29% 88.24% 91.05% Upside Upside Virtus Vontobel Emerging Markets Opportunities Fund Class I MSCI Emerging Markets Morningstar Category 1 Virtus Vontobel Emerging Markets Opportunities Fund Class I MSCI Emerging Markets Morningstar Category 1 Alpha 0.56% 0.00% 0.04% Beta Sharpe Ratio Standard Deviation 13.28% 16.05% 14.92% Alpha -0.04% 0.00% -0.09% Beta Sharpe Ratio Standard Deviation 13.25% 14.85% 14.15% Virtus Vontobel Emerging Markets Opportunities Fund MSCI Emerging Markets Morningstar Category 1 Past performance is not indicative of future results. 1 Morningstar category represents the Morningstar Diversified Emerging Markets Category based on 690 funds 3 year, and 491 funds 5 year. As of 6/30/18. Characteristics are defined on page 41. Source: Virtus Analytics and Morningstar. 13

14 CHANGING DEMOGRAPHICS CREATE GLOBAL OPPORTUNITIES Globally, demand from the middle class may grow from USD 21 trillion to USD 56 trillion by 2030 over 80% of the growth in demand comes from Asia. Shares of Global Middle Class Consumption Past performance is not indicative of future results. Source: The Organization for Economic Cooperation and Development. OECD Development Centre, Working Paper No. 285, The Emerging Middle Class in Developing Countries, by Homi Kharas, January, Vontobel s industry trends and observations are the result of research conducted by the portfolio management/research team. These observations reflect their industry expertise and have been prepared using sources of information generally believed to be reliable; however, their accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice. 14

15 PORTFOLIO CHARACTERISTICS AS OF 6/30/18 Virtus Vontobel Emerging Markets Opportunities Fund Characteristics Virtus Vontobel Emerging Markets Opportunities Fund MSCI Emerging Markets Index Top Ten Holdings % of Fund HDFC Bank Limited 5.3 Alibaba Group Holding Ltd. Sponsored ADR 4.9 Capitalization ($ bn), weighted average Capitalization ($ bn), median P/E - Forecast 12-month, weighted harmonic average Yr Historical EPS Growth (%) Return on Equity, weighted average (%) Unilever NV Cert. of shs 3.7 Ambev SA Sponsored ADR 3.7 Tata Consultancy Services Limited 3.6 Fomento Economico Mexicano SAB de CV Sponsored ADR Class B 3.4 PT Telekomunikasi Indonesia, Tbk Class B 3.3 Housing Development Finance Corporation Limited 3.2 Heineken NV 3.0 Taiwan Semiconductor Manufacturing Co., Ltd. 3.0 Total 37.1 Past performance is not indicative of future results. 15

16 SECTOR ALLOCATION AS OF 6/30/18 Virtus Vontobel Emerging Markets Opportunities Fund 28.5% 27.9% 25.7% 22.8% 21.7% Virtus Vontobel Emerging Markets Opportunities Fund MSCI Emerging Markets Index 11.7% 9.8% 6.7% 4.6% 4.3% 3.6% 2.4% 7.2% 5.2% 3.0% 1.8% 1.4% 1.1% 7.6% 3.2% 0.0% 0.0% Consumer Staples Financials Information Technology Consumer Discretionary Telecom Services Utilities Industrials Energy Real Estate Materials Health Care Past performance is not indicative of future results. Sector allocations are subject to change. The MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that measures 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 is not available for direct investment. 16

17 COUNTRY ALLOCATION AS OF 6/30/18 Country Virtus Vontobel Emerging Markets Opportunities Fund MSCI EM Index Difference India China Brazil Mexico Netherlands Korea (South) Indonesia Hong Kong Taiwan Thailand South Africa Malaysia Singapore Belgium Country Virtus Vontobel Emerging Markets Opportunities Fund MSCI EM Index Difference Peru Poland Colombia Russia Chile Philippines Qatar Turkey United Arab Emirates Greece Hungary Czech Republic Egypt Pakistan United States Country weightings are subject to change. MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that measures 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 is not available for direct investment. 17

18 WALKING THE WALK 1 YEAR 3 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE YEARS 10 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE Virtus Vontobel Emerging Markets Opportunities Fund (HIEMX) Benchmark Peer Group Past performance is not indicative of future results. As of 6/30/18. Class I shares. Source: Morningstar Direct. Peer Group: Morningstar Diversified Emerging Markets Category. Number of Funds: year, year, year, year. Benchmark: MSCI Emerging Markets Index (net). The Morningstar Percentile Ranking compares a Fund s Morningstar risk and return scores with all the Funds in the same Category, where 1% = Best and 100% = Worst Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Statistics defined on page

19 VIRTUS VONTOBEL EMERGING MARKETS OPPORTUNITIES FUND Performance Review as of 6/30/18 QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception* HIEMX MSCI Emerging Markets Index (Net) n/a MORNINGSTAR RATINGS TM Overall 3 Year 5 Year 10 Year Diversified Emerging Markets Category 688 Funds 688 Funds 489 Funds 203 Funds *Inception: Class I: 10/20/97. Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end. The fund class gross expense ratio is 1.29% and reflects the direct and indirect expenses paid by the Fund. The gross expense ratio minus the indirect expenses incurred by the underlying funds in which the Fund invests is 1.28%. Average annual total return is the annual compound return for the indicated period and reflects the change in share price and the reinvestment of all dividends and capital gains. Returns for periods of one year or less are cumulative returns. Class I shares have no sales charges or distribution or service fees, therefore their returns do not reflect these expenses. Fees and expenses vary, and other share classes are subject to sales charges and fees. Class I shares are offered primarily to eligible institutional investors who purchase the minimum amounts required as described in the prospectus and may not be available to all investors. For fund performance on other share classes, please visit The MSCI Emerging Markets Index (Net) is a free float-adjusted market capitalization index that measures 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 is not available for direct investment. Please see page 42 for additional Morningstar disclosure. 19

20 STRONG PERFORMANCE ACROSS MARKET CYCLES Virtus Vontobel Foreign Opportunities Fund UP/DOWN CAPTURE RATIO 3 YEARS UP/DOWN CAPTURE RATIO 5 YEARS 92.71% % % 91.01% 89.40% 70.66% 85.58% % % 92.85% 92.04% 74.66% Upside Upside Virtus Vontobel Foreign Opportunities Fund Class I MSCI EAFE Morningstar Category 1 Virtus Vontobel Foreign Opportunities Fund Class I MSCI EAFE Morningstar Category 1 Alpha 3.84% 0.00% -0.07% Beta Sharpe Ratio Standard Deviation 11.35% 12.09% 11.51% Alpha 1.87% 0.00% 0.06% Beta Sharpe Ratio Standard Deviation 10.78% 11.62% % Virtus Vontobel Foreign Opportunities Fund MSCI EAFE Morningstar Category 1 Past performance is not indicative of future results. 1 Morningstar category represents the Morningstar Foreign Large Growth, Foreign Large Blend, and Foreign Large Value Categories based on 1,239 funds 3 year, and 1,059 funds 5 year. As of 6/30/18. Characteristics are defined on page 41. Source: Virtus Analytics and Morningstar. 20

21 PORTFOLIO CHARACTERISTICS AS OF 6/30/18 Virtus Vontobel Foreign Opportunities Fund Characteristics Virtus Vontobel Foreign Opportunities Fund Class I MSCI EAFE Capitalization ($ bn), weighted average Capitalization ($ bn), median P/E - Forecast 12-month, weighted harmonic average Yr Historical EPS Growth (%) Return on Equity, weighted average (%) Top Ten Holdings % of Fund HDFC Bank Limited 4.2 Housing Development Finance Corporation Limited 3.6 Unilever NV Cert. of shs 3.4 Booking Holdings Inc. 3.4 Mastercard Incorporated Class A 3.2 Alimentation Couche-Tard Inc. Class B 3.0 Reckitt Benckiser Group plc 2.8 Constellation Software Inc. 2.8 Paddy Power Betfair plc 2.8 Nestle S.A. 2.6 Total 31.8 Past performance is not indicative of future results. 21

22 SECTOR ALLOCATION AS OF 6/30/18 Virtus Vontobel Foreign Opportunities Fund 24.1% Virtus Vontobel Foreign Opportunities Fund MSCI EAFE Index 20.1% 19.8% 18.0% 16.9% 14.3% 11.3% 12.4% 12.5% 10.7% 6.8% 5.4% 8.2% 6.1% 3.3% 3.6% 3.5% 1.7% 1.4% 0.0% 0.0% 0.0% Consumer Staples Information Technology Industrials Consumer Discretionary Financials Health Care Materials Utilities Energy Telecom Services Real Estate Past performance is not indicative of future results. Sector allocations are subject to change. MSCI EAFE Index (Net) is a free float-adjusted market capitalization 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 is not available for direct investment. 22

23 COUNTRY ALLOCATION AS OF 6/30/18 Country Virtus Vontobel Foreign Opportunities Fund MSCI EAFE Index Difference Country Virtus Vontobel Foreign Opportunities Fund MSCI EAFE Index Difference United States United Kingdom India Canada France Netherlands Spain Ireland Germany China Switzerland Japan Taiwan Belgium Australia Hong Kong Brazil South Africa Sweden Italy Denmark Singapore Finland Norway Israel Austria New Zealand Portugal Country weightings are subject to change. MSCI EAFE Index (Net) is a free float-adjusted market capitalization 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 is not available for direct investment. 23

24 WALKING THE WALK 1 YEAR 3 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE YEARS 10 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE Virtus Vontobel Foreign Opportunities Fund (JVXIX) Benchmark Peer Group Past performance is not indicative of future results. As of 6/30/18. Class I shares. Source: Morningstar Direct. Peer Group: Morningstar Foreign Large Growth, Foreign Large Blend, and Foreign Large Value Categories. Number of Funds: 1,516 1 year, 1,239 3 year, 1,059 5 year, year. Benchmark: MSCI EAFE Index (net). The Morningstar Percentile Ranking compares a Fund s Morningstar risk and return scores with all the Funds in the same Category, where 1% = Best and 100% = Worst Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Statistics defined on page

25 VIRTUS VONTOBEL FOREIGN OPPORTUNITIES FUND Performance Review as of 6/30/18 QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception* JVXIX MSCI EAFE Index (Net) MORNINGSTAR RATINGS TM Overall 3 Year 5 Year 10 Year Foreign Large Growth Category 344 Funds 344 Funds 304 Funds 218 Funds *Inception: Class I: 5/15/06. Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end. The fund class gross expense ratio is 1.17% and reflects the direct and indirect expenses paid by the Fund. The gross expense ratio minus the indirect expenses incurred by the underlying funds in which the Fund invests is 1.16%. Average annual total return is the annual compound return for the indicated period and reflects the change in share price and the reinvestment of all dividends and capital gains. Returns for periods of one year or less are cumulative returns. Class I shares have no sales charges or distribution or service fees, therefore their returns do not reflect these expenses. Fees and expenses vary, and other share classes are subject to sales charges and fees. Class I shares are offered primarily to eligible institutional investors who purchase the minimum amounts required as described in the prospectus and may not be available to all investors. For fund performance on other share classes, please visit MSCI EAFE Index (Net) is a free float-adjusted market capitalization 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 is not available for direct investment. Please see page 42 for additional Morningstar disclosure. 25

26 IT S ABOUT COMPANIES, NOT COUNTRIES The world is changing. Where a company is headquartered is increasingly overshadowed by where it earns its profits and charts its future. The distinction between domestic and foreign markets is growing stale. Shares of Revenue 1 as of 6/30/18 in % Philip Morris International Mastercard S&P 500 Index Anheuser-Busch InBev Unilever MSCI EAFE Index U.S. Europe Other Developed Markets Emerging & Frontier Data Unavailable Past performance is not indicative of future results. 1 Source: FactSet. Companies shown are for illustrative purposes only and are not representative of any Virtus strategy. Totals may not equal 100% because revenue source data for some companies is incomplete. The S&P 500 Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies. The MSCI EAFE 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 indexes are calculated on a total return basis with net dividends reinvested. The indexes are unmanaged, their returns do not reflect any fees, expenses, or sales charges, and are not available for direct investment. 26

27 STRONG PERFORMANCE ACROSS MARKET CYCLES Virtus Vontobel Global Opportunities Fund UP/DOWN CAPTURE RATIO 3 YEARS UP/DOWN CAPTURE RATIO 5 YEARS % % % 98.09% 98.74% 98.07% % % 98.35% 97.23% 72.52% 78.45% Upside Upside Virtus Vontobel Global Opportunities Fund Class I MSCI AC World Morningstar Category 1 Virtus Vontobel Global Opportunities Fund Class I MSCI AC World Morningstar Category 1 Alpha 4.21% 0.00% -0.30% Beta Sharpe Ratio Standard Deviation 10.17% 10.67% 10.74% Alpha 2.85% 0.00% 0.13% Beta Sharpe Ratio Standard Deviation 9.97% 10.18% 10.45% Virtus Vontobel Global Opportunities Fund MSCI AC World Morningstar Category 1 Past performance is not indicative of future results. 1 Morningstar category represents the Morningstar World Stock Category based on 727 funds 3 Year, and 600 funds 5 Year. As of 6/30/18. Characteristics are defined on page 41. Source: Virtus Analytics and Morningstar. 27

28 PORTFOLIO CHARACTERISTICS AS OF 6/30/18 Virtus Vontobel Global Opportunities Fund Characteristics Virtus Vontobel Global Opportunities Fund Class I MSCI AC World Top Ten Holdings % of Fund HDFC Bank Limited 4.3 Unilever NV Cert. of shs 3.6 Capitalization ($ bn), weighted average $140.5 $121.5 Capitalization ($ bn), weighted median $68.7 $5.9 Amazon.com, Inc. 3.5 UnitedHealth Group Incorporated 3.5 P/E - Forecast 12-month, weighted harmonic average Visa Inc. Class A Yr Historical EPS Growth (%) Return on Equity, weighted average (%) Mastercard Incorporated Class A 3.4 Alphabet Inc. Class C 3.1 Alimentation Couche-Tard Inc. Class B 3.1 Housing Development Finance Corporation Limited 3.1 SAP SE 2.8 Total 33.9 Past performance is not indicative of future results. 28

29 SECTOR ALLOCATION AS OF 6/30/18 Virtus Vontobel Global Opportunities Fund Virtus Vontobel Global Opportunities Fund 21.1% 20.7% 20.4% 19.6% MSCI AC World Index 17.4% 17.5% 12.4% 11.1% 10.3% 10.5% 8.1% 7.2% 6.8% 5.2% 3.0% 1.6% 1.3% 2.9% 2.8% 0.0% 0.0% 0.0% Consumer Discretionary Information Technology Consumer Staples Financials Health Care Industrials Real Estate Materials Energy Utilities Telecom Services Past performance is not indicative of future results. Sector allocations are subject to change. The MSCI AC 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. 29

30 COUNTRY ALLOCATION AS OF 6/30/18 Country Virtus Vontobel Global Opportunities Fund MSCI AC World Index Difference United States India Netherlands Canada Ireland United Kingdom China Germany Taiwan Belgium France Spain Switzerland Korea (South) Brazil Japan Australia Hong Kong Sweden Italy South Africa Country Virtus Vontobel Global Opportunities Fund MSCI AC World Index Difference Denmark Russia Singapore Mexico Finland Malaysia Thailand Norway Indonesia Israel Chile Poland Philippines Qatar Turkey Austria United Arab Emirates New Zealand Colombia Portugal Peru Country weightings are subject to change. The MSCI AC 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. 30

31 WALKING THE WALK 1 YEAR 3 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE Virtus Vontobel Global Opportunities Fund (WWOIX) Benchmark Peer Group Past performance is not indicative of future results. As of 6/30/18. Class I shares. Source: Morningstar Direct. Peer Group Morningstar World Stock Category. Number of Funds: year, year, year. Benchmark MSCI AC World Index (net) The Morningstar Percentile Ranking compares a Fund s Morningstar risk and return scores with all the Funds in the same Category, where 1% = Best and 100% = Worst Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Statistics defined on page

32 VIRTUS VONTOBEL GLOBAL OPPORTUNITIES FUND Performance Review as of 6/30/18 QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception* WWOIX n/a MSCI AC World Index (Net) n/a MORNINGSTAR RATINGS TM Overall 3 Year 5 Year 10 Year n/a World Stock Category 721 Funds 721 Funds 596 Funds n/a *Inception: 8/8/12. Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end. The fund class gross expense ratio is 1.19% and reflects the direct and indirect expenses paid by the Fund. The gross expense ratio minus the indirect expenses incurred by the underlying funds in which the Fund invests is 1.18%. Average annual total return is the annual compound return for the indicated period and reflects the change in share price and the reinvestment of all dividends and capital gains. Returns for periods of one year or less are cumulative returns. Class I shares have no sales charges or distribution or service fees, therefore their returns do not reflect these expenses. Fees and expenses vary, and other share classes are subject to sales charges and fees. Class I shares are offered primarily to eligible institutional investors who purchase the minimum amounts required as described in the prospectus and may not be available to all investors. For fund performance on other share classes, please visit The MSCI AC 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. Please see page 42 for additional Morningstar disclosure. 32

33 STRONG PERFORMANCE ACROSS MARKET CYCLES Virtus Vontobel Greater European Opportunities Fund UP/DOWN CAPTURE RATIO 3 YEARS UP/DOWN CAPTURE RATIO 5 YEARS 82.87% % % 89.04% 88.28% 73.43% % % 90.55% 91.78% 76.31% 74.46% Upside Upside Virtus Vontobel Greater European Opportunities Fund Class I MSCI Europe Morningstar Category 1 Virtus Vontobel Greater European Opportunities Fund Class I MSCI Europe Morningstar Category 1 Alpha 1.65% 0.00% 0.24% Beta Sharpe Ratio Standard Deviation 11.29% 12.78% 12.40% Alpha 0.23% 0.00% -0.01% Beta Sharpe Ratio Standard Deviation 10.89% 12.82% 12.55% Virtus Vontobel Greater European Opportunities Fund MSCI Europe Morningstar Category 1 Past performance is not indicative of future results. 1 Morningstar category represents the Morningstar Europe Stock Category based on 108 funds 3 year, and 76 funds 5 year. As of 6/30/18. Characteristics are defined on page 41. Source: Virtus Analytics and Morningstar. 33

34 PORTFOLIO CHARACTERISTICS AS OF 6/30/18 Virtus Vontobel Greater European Opportunities Fund Characteristics Virtus Vontobel Greater European Opportunities Fund Class I MSCI Europe Top Ten Holdings % of Fund Unilever NV Cert. of shs 5.4 Nestle S.A. 4.2 Capitalization ($ bn), weighted average $56.4 $60.2 Capitalization ($ bn), weighted median $21.2 $9.6 P/E - Forecast 12-month, weighted harmonic average Yr Historical EPS Growth (%) Return on Equity, weighted average (%) SAP SE 4.2 Reckitt Benckiser Group plc 3.8 British American Tobacco p.l.c. 3.6 Accenture Plc Class A 3.5 Booking Holdings Inc. 3.3 RELX NV 3.2 Grifols, S.A. Class B 3.0 Anheuser-Busch InBev SA/NV 2.7 Total 36.9 Past performance is not indicative of future results. 34

35 SECTOR ALLOCATION AS OF 6/30/18 Virtus Vontobel Greater European Opportunities Fund Virtus Vontobel Greater European Opportunities Fund 29.1% MSCI Europe Index 21.2% 19.3% 13.4% 13.0% 12.6% 12.5% 10.7% 10.7% 10.5% 9.7% 8.6% 8.5% 5.6% 5.4% 3.7% 3.3% 1.0% 1.5% 0.0% 0.0% 0.0% Consumer Staple Industrials Consumer Discretionary Health Care Information Technology Financials Materials Real Estate Energy Utilities Telecom Services Past performance is not indicative of future results. Sector allocations are subject to change. The MSCI Europe Index (Net) is a free float-adjusted market capitalization-weighted index that measures equity market performance of the developed markets in Europe. 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. 35

36 COUNTRY ALLOCATION AS OF 6/30/18 Country Virtus Vontobel Greater European Opportunities Fund MSCI Europe Index Difference Country Virtus Vontobel Greater European Opportunities Fund MSCI Europe Index Difference France United Kingdom Netherlands United States Germany Switzerland Spain Ireland Belgium Denmark Sweden Italy Finland Norway Austria Portugal Country weightings are subject to change. The MSCI Europe Index (Net) is a free float-adjusted market capitalization-weighted index that measures equity market performance of the developed markets in Europe. 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. 36

37 WALKING THE WALK 1 YEAR 3 YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE YEARS Annualized Return % Standard Deviation % Sharpe Ratio Capture Ratio PERCENTILE Virtus Vontobel Greater European Opportunities Fund (VGEIX) Benchmark Peer Group Past performance is not indicative of future results. As of 6/30/18. Class I shares. Source: Morningstar Direct. Peer Group Europe Stock Category. Number of Funds: year, year, 76 5 year. Benchmark MSCI Europe Index (net) The Morningstar Percentile Ranking compares a Fund s Morningstar risk and return scores with all the Funds in the same Category, where 1% = Best and 100% = Worst Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Statistics defined on page

38 VIRTUS VONTOBEL GREATER EUROPEAN OPPORTUNITIES FUND Performance Review as of 6/30/18 QTD YTD 1 Year 3 Year 5 Year 10 Year Since Inception* VGEIX n/a MSCI Europe Index (Net) n/a 9.46 MORNINGSTAR RATINGS TM Overall 3 Year 5 Year 10 Year n/a Europe Stock Category 107 Funds 107 Funds 76 Funds n/a *Inception: 4/21/09. Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. Please visit Virtus.com for performance data current to the most recent month-end. The fund class gross expense ratio is 1.71%. The net expense ratio is 1.20%, which reflects a contractual expense reimbursement in effect through 1/31/2019. Average annual total return is the annual compound return for the indicated period and reflects the change in share price and the reinvestment of all dividends and capital gains. Returns for periods of one year or less are cumulative returns. Class I shares have no sales charges or distribution or service fees, therefore their returns do not reflect these expenses. Fees and expenses vary, and other share classes are subject to sales charges and fees. Class I shares are offered primarily to eligible institutional investors who purchase the minimum amounts required as described in the prospectus and may not be available to all investors. For fund performance on other share classes, please visit The MSCI Europe Index (Net) is a free float-adjusted market capitalization-weighted index that measures equity market performance of the developed markets in Europe. 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. Please see page 42 for additional Morningstar disclosure. 38

39 WHY VONTOBEL ASSET MANAGEMENT? Favorable risk/return results Demonstrated history of high alpha, low standard deviation, and low beta, relative to peer group and benchmark Disciplined application of the same investment approach over several market cycles Long-only portfolios structured to help our clients achieve long-term goals Focused exclusively on Global Equity management Consistent approach complements other asset classes and styles A history of long-term outperformance Focus on translating operating results of our investments into investment results for our clients 39

40 VIRTUS INTERNATIONAL EQUITIES CAPABILITIES Subadvised By Vontobel Asset Management Fund A Shares I Shares Virtus Vontobel Emerging Markets Opportunities Fund HEMZX HIEMX Virtus Vontobel Foreign Opportunities Fund JVIAX JVXIX Virtus Vontobel Global Opportunities Fund NWWOX WWOIX Virtus Vontobel Greater European Opportunities Fund VGEAX VGEIX Not all products or marketing materials are available at all firms. Please check with your firm s compliance department for availability. 40

41 DEFINITIONS Alpha A measure of performance on a risk-adjusted basis. Beta A quantitative measure of the volatility of a given portfolio relative to the overall market. Higher beta suggests higher volatility. Beta can also refer to relative volatility to a portfolio s stated benchmark. CAPEX (Capital Expenditure) Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operations. CFO (Cash Flow from Operating Activities) An accounting item indicating the money a company brings in from ongoing, regular business activities, such as manufacturing and selling goods or providing a service. Cash flow from operating activities does not include long-term capital or investment costs. It does include earnings before interest and taxes plus depreciation minus taxes. Also called operating cash flow or net cash from operating activities. Discount Rate The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank s discount window. The discount rate also refers to the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows. The discount rate in DCF analysis takes into account not just the time value of money, but also the risk or uncertainty of future cash flows; the greater the uncertainty of future cash flows, the higher the discount rate. A third meaning of the term discount rate is the rate used by pension plans and insurance companies for discounting their liabilities. EPS (Earnings Per Share) The portion of a company s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company s profitability. DPS (Dividend Per Share) The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. Maximum Drawdown The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the trough. Net Margin The ratio of net profits to revenues for a company or business segment that shows how much of each dollar earned by the company is translated into profits. OPM (Operating Profit Margin) A measurement of what proportion of a company s revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its fixed costs, such as interest on debt. ROA (Return on Assets) An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. ROE (Return on Equity) The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation s profitability by revealing how much profit a company generates with the money shareholders have invested. ROIC (Return on Invested Capital) A calculation used to assess a company s efficiency at allocating the capital under its control to profitable investments. The return on invested capital measure gives a sense of how well a company is using its money to generate returns. Sharpe Ratio A statistic that measures the efficiency, or excess return per unit of risk, of a manager s returns. It is calculated by taking the portfolio s annualized return, minus the annualized risk-free rate (typically the 30-Day T-Bill return), divided by the portfolio s annualized standard deviation. The greater the Sharpe Ratio, the better the portfolio s risk adjusted return. Standard Deviation Measures variability of returns around the average return for an investment portfolio. Higher standard deviation suggests greater risk. Terminal Multiple/Terminal Value The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as interest rates and the current value of the asset, and assuming a stable growth rate. In addition to bond and asset applications, terminal value can also refer to the value of an entire company at a specified future valuation date. Two common approaches are used to evaluate the terminal value of an asset: the perpetuity growth model and the exit approach. 41

42 MORNINGSTAR The Morningstar Rating TM for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for months of total returns, 60% five-year rating/40% three-year rating for months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. 42

43 Virtus (NASDAQ: VRTS) is a distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and institutional investors. We are not constrained by a single investment approach; rather, we provide access to independent, specialized investment philosophies through our multi-discipline, multi-strategy approach We have the flexibility, agility, and responsiveness of a boutique asset management firm with similar product breadth and investment talent of our larger peers We are committed to thoughtfully providing investment solutions, adhering to the highest standards of product quality, operational excellence, and fiduciary responsibility Please carefully consider a Fund s investment objectives, risks, charges, and expenses before investing. For this and other information about any Virtus mutual fund, contact your financial representative, call , or visit Virtus.com for a prospectus or summary prospectus. Read it carefully before investing. Not all products or marketing materials are available at all firms. Not insured by FDIC/NCUSIF or any federal government agency. No bank guarantee. Not a deposit. May lose value. Mutual Funds distributed by VP Distributors, LLC member FINRA and subsidiary of Virtus Investment Partners, Inc Virtus Mutual Funds