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, 2021

 

 

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, 2021
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
As permitted by regulations adopted by the Securities and Exchange Commission, paper copies of each Fund’s shareholder reports like this one will no longer be sent by mail, unless specifically requested from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action.
You may elect at any time to receive not only shareholder reports but also certain other communications from the Fund electronically, or you may elect to receive paper copies of all future shareholder reports free of charge to you. If you own your shares directly with the Fund, you may make such elections by calling the Fund at 1-800-243-1574 or, with respect to requesting electronic delivery, by visiting www.virtus.com. An election made directly with the Fund will apply to all Virtus Mutual Funds in which you own shares directly. If you own your shares through a financial intermediary, please contact your financial intermediary to make your request and to determine whether your election will apply to all funds in which you own shares through that intermediary.
Not FDIC Insured • No Bank Guarantee • May Lose Value

Table of Contents
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Fund Fund
Summary 		Schedule
of
Investments
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11 44
13 46
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17 48
19 50
21 51
23 52
25 53
27 54
29 55
31 56
34 57
37 58
39 59
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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.

Table of Contents
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, 2021.
During this fiscal year, markets expressed optimism about the economic reopening that was driven by the release of COVID-19 vaccines, monetary support, and fiscal stimulus. Doubts crept in during the period, however, as the Delta variant impacted productivity and cascading supply chain issues led to higher prices. Strong corporate profitability drove equity markets higher for much of the period, although concerns about inflation and interest rates hindered fixed income markets.
Domestic and international equity indexes delivered strong returns for the 12 months ended September 30, 2021. U.S. large-capitalization stocks returned 30.00%, as measured by the S&P 500® Index, but were outpaced by small-cap stocks, which gained 47.68%, as measured by the Russell 2000® Index. Within international equities, developed markets, as measured by the MSCI EAFE® Index (net), returned 25.73%, while emerging markets, as measured by the MSCI Emerging Markets Index (net), gained 18.20%.
In fixed income markets, the yield on the 10-year Treasury rose sharply to 1.52% on September 30, 2021, from 0.69% on September 30, 2020, based on fears of rising inflation. The broader U.S. fixed income market, as represented by the Bloomberg U.S. Aggregate Bond Index, was down 0.90% for the 12-month period, but non-investment grade bonds, as measured by the Bloomberg U.S. Corporate High Yield Bond Index, were up 11.28%.
On behalf of our investment managers, I thank you for entrusting the Virtus Funds with your assets. Please call our customer service team at 800-243-1574 if you have questions about your account or require assistance. We appreciate your business and remain committed to your long-term financial success.
Sincerely,
George R. Aylward
President, Virtus Funds
November 2021
Refer to the Manager’s Discussion 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

Table of Contents
VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited)
FOR THE SIX-MONTH PERIOD OF April 1, 2021 TO September 30, 2021
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, 2021.
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, 2021 		  Ending
Account Value
September 30, 2021 		  Annualized
Expense
Ratio 		  Expenses
Paid
During
Period*
KAR Capital Growth Fund
                
  Class A $ 1,000.00   $ 1,102.80   1.20 %   $ 6.33
  Class C 1,000.00   1,098.10   2.06   10.83
  Class I 1,000.00   1,103.90   1.00   5.27
  Class R6 1,000.00   1,105.30   0.73   3.85
KAR Equity Income Fund
                
  Class A 1,000.00   1,016.90   1.26   6.37
  Class C 1,000.00   1,012.80   2.00   10.09
  Class I 1,000.00   1,018.00   1.01   5.11
  Class R6 1,000.00   1,018.50   0.96   4.86
KAR Global Quality Dividend Fund
                
  Class A 1,000.00   1,020.80   1.35   6.84
  Class C 1,000.00   1,016.50   2.10   10.62
  Class I 1,000.00   1,022.20   1.10   5.58
  Class R6 1,000.00   1,023.40   0.78   3.96
KAR Mid-Cap Core Fund
                
  Class A 1,000.00   1,095.90   1.20   6.30
  Class C 1,000.00   1,091.90   1.95   10.23
  Class I 1,000.00   1,097.10   0.95   4.99
  Class R6 1,000.00   1,097.70   0.87   4.57
KAR Mid-Cap Growth Fund
                
  Class A 1,000.00   1,099.50   1.27   6.68
  Class C 1,000.00   1,095.20   2.00   10.50
  Class I 1,000.00   1,100.80   1.01   5.32
  Class R6 1,000.00   1,101.80   0.83   4.37
KAR Small-Cap Core Fund
                
  Class A 1,000.00   1,035.60   1.26   6.43
  Class C 1,000.00   1,032.00   1.98   10.09
  Class I 1,000.00   1,037.10   0.99   5.06
  Class R6 1,000.00   1,037.50   0.91   4.65
KAR Small-Cap Growth Fund
                
  Class A 1,000.00   1,055.70   1.34   6.91
  Class C 1,000.00   1,052.00   2.05   10.55
  Class I 1,000.00   1,057.00   1.07   5.52
  Class R6 1,000.00   1,057.50   0.97   5.00
2

Table of Contents
VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2021 TO September 30, 2021
    Beginning
Account Value
April 1, 2021 		  Ending
Account Value
September 30, 2021 		  Annualized
Expense
Ratio 		  Expenses
Paid
During
Period*
KAR Small-Cap Value Fund
                
  Class A $1,000.00   $ 985.20   1.21%   $ 6.02
  Class C 1,000.00   981.50   1.97   9.79
  Class I 1,000.00   986.30   0.96   4.78
  Class R6 1,000.00   986.60   0.91   4.53
KAR Small-Mid Cap Core Fund
                
  Class A 1,000.00   1,043.00   1.30   6.66
  Class C 1,000.00   1,039.50   2.05   10.48
  Class I 1,000.00   1,045.00   1.00   5.13
  Class R6 1,000.00   1,045.40   0.97   4.97
KAR Small-Mid Cap Growth Fund
                
  Class A 1,000.00   1,093.00   1.30   6.82
  Class C 1,000.00   1,088.00   2.05   10.73
  Class I 1,000.00   1,093.90   1.05   5.51
  Class R6 1,000.00   1,094.90   0.99   5.20
KAR Small-Mid Cap Value Fund**
                
  Class A 1,000.00   964.00   1.17   1.83
  Class C 1,000.00   963.00   1.92   2.99
  Class I 1,000.00   964.00   0.92   1.44
  Class R6 1,000.00   965.00   0.82   1.28
SGA Emerging Markets Growth Fund
                
  Class A 1,000.00   928.30   1.48   7.15
  Class C 1,000.00   925.10   2.23   10.76
  Class I 1,000.00   930.10   1.23   5.95
  Class R6 1,000.00   930.30   1.05   5.08
SGA Global Growth Fund
                
  Class A 1,000.00   1,057.20   1.38   7.12
  Class C 1,000.00   1,053.20   2.15   11.07
  Class I 1,000.00   1,058.60   1.13   5.83
  Class R6 1,000.00   1,059.90   0.90   4.65
SGA New Leaders Growth Fund
                
  Class A 1,000.00   1,025.00   1.39   7.06
  Class C 1,000.00   1,021.20   2.14   10.84
  Class I 1,000.00   1,026.00   1.14   5.79
  Class R6 1,000.00   1,026.90   0.91   4.62
Tactical Allocation Fund
                
  Class A 1,000.00   1,072.50   1.02   5.30
  Class C 1,000.00   1,068.50   1.78   9.23
  Class I 1,000.00   1,072.90   0.79   4.11
  Class R6 1,000.00   1,074.20   0.63   3.28
    
* 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.
** August 4, 2021, is the date the Fund started accruing expenses. Expenses are equal to the 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 (58) 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.
3

Table of Contents
VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2021 TO September 30, 2021
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.
    Beginning
Account Value
April 1, 2021 		  Ending
Account Value
September 30, 2021 		  Annualized
Expense
Ratio 		  Expenses
Paid
During
Period*
KAR Capital Growth Fund
                
  Class A $ 1,000.00   $ 1,019.05   1.20 %   $ 6.07
  Class C 1,000.00   1,014.74   2.06   10.40
  Class I 1,000.00   1,020.05   1.00   5.06
  Class R6 1,000.00   1,021.41   0.73   3.70
KAR Equity Income Fund
                
  Class A 1,000.00   1,018.75   1.26   6.38
  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   1,018.30   1.35   6.83
  Class C 1,000.00   1,014.54   2.10   10.61
  Class I 1,000.00   1,019.55   1.10   5.57
  Class R6 1,000.00   1,021.16   0.78   3.95
KAR Mid-Cap Core Fund
                
  Class A 1,000.00   1,019.05   1.20   6.07
  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   1,020.71   0.87   4.41
KAR Mid-Cap Growth Fund
                
  Class A 1,000.00   1,018.70   1.27   6.43
  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   1,020.91   0.83   4.20
KAR Small-Cap Core Fund
                
  Class A 1,000.00   1,018.75   1.26   6.38
  Class C 1,000.00   1,015.14   1.98   10.00
  Class I 1,000.00   1,020.10   0.99   5.01
  Class R6 1,000.00   1,020.51   0.91   4.61
KAR Small-Cap Growth Fund
                
  Class A 1,000.00   1,018.35   1.34   6.78
  Class C 1,000.00   1,014.79   2.05   10.35
  Class I 1,000.00   1,019.70   1.07   5.42
  Class R6 1,000.00   1,020.21   0.97   4.91
KAR Small-Cap Value Fund
                
  Class A 1,000.00   1,019.00   1.21   6.12
  Class C 1,000.00   1,015.19   1.97   9.95
  Class I 1,000.00   1,020.26   0.96   4.86
  Class R6 1,000.00   1,020.51   0.91   4.61
KAR Small-Mid Cap Core Fund
                
  Class A 1,000.00   1,018.55   1.30   6.58
  Class C 1,000.00   1,014.79   2.05   10.35
  Class I 1,000.00   1,020.05   1.00   5.06
  Class R6 1,000.00   1,020.21   0.97   4.91
KAR Small-Mid Cap Growth Fund
                
  Class A 1,000.00   1,018.55   1.30   6.58
  Class C 1,000.00   1,014.79   2.05   10.35
  Class I 1,000.00   1,019.80   1.05   5.32
  Class R6 1,000.00   1,020.10   0.99   5.01
4

Table of Contents
VIRTUS EQUITY TRUST
DISCLOSURE OF FUND EXPENSES (Unaudited) (Continued)
FOR THE SIX-MONTH PERIOD OF April 1, 2021 TO September 30, 2021
    Beginning
Account Value
April 1, 2021 		  Ending
Account Value
September 30, 2021 		  Annualized
Expense
Ratio 		  Expenses
Paid
During
Period*
KAR Small-Mid Cap Value Fund**
                
  Class A $1,000.00   $1,006.09   1.17%   $ 1.86
  Class C 1,000.00   1,004.89   1.92   3.06
  Class I 1,000.00   1,006.48   0.92   1.47
  Class R6 1,000.00   1,006.64   0.82   1.31
SGA Emerging Markets Growth Fund
                
  Class A 1,000.00   1,017.65   1.48   7.49
  Class C 1,000.00   1,013.89   2.23   11.26
  Class I 1,000.00   1,018.90   1.23   6.23
  Class R6 1,000.00   1,019.80   1.05   5.32
SGA Global Growth Fund
                
  Class A 1,000.00   1,018.15   1.38   6.98
  Class C 1,000.00   1,014.29   2.15   10.86
  Class I 1,000.00   1,019.40   1.13   5.72
  Class R6 1,000.00   1,020.56   0.90   4.56
SGA New Leaders Growth Fund
                
  Class A 1,000.00   1,018.10   1.39   7.03
  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   1,020.51   0.91   4.61
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.
** August 4, 2021, is the date the Fund started accruing expenses. Expenses are equal to the 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 (58) 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

Table of Contents
VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited)
September 30, 2021
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.
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 AC World Growth Index (net)
The MSCI AC 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 AC World Index (ACWI) (net)
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.
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 AC World Mid-Cap Index (net)
The MSCI AC 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.
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.
6

Table of Contents
VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited) (Continued) September 30, 2021
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.
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.
7

Table of Contents
VIRTUS EQUITY TRUST
KEY INVESTMENT TERMS (Unaudited) (Continued) September 30, 2021
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 (“American Depositary Receipt”)
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 Virtus 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.
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.
8

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 21.98%, Class C shares at NAV returned 21.00%, Class I shares at NAV returned 22.23%, and Class R6 shares at NAV returned 22.55%. 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 27.32%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell 1000® Growth Index for the fiscal year ended September 30, 2021. Poor stock selection in consumer discretionary and communication services detracted from performance. Strong stock selection in information technology, as well as strong stock selection and an underweight in health care, contributed positively to performance.
The biggest contributors to performance during the period were Bill.com, NVIDIA, Paycom Software, Facebook, and MercadoLibre.
The biggest detractors from performance during the period were Alibaba, Tencent, Duck Creek Technologies, McCormick & Company, and Las Vegas Sands.
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.
Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Information Technology 42%
Consumer Discretionary 21
Communication Services 13
Industrials 7
Health Care 6
Financials 5
Consumer Staples 4
Other (includes short-term investment) 2
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
9

Table of Contents
KAR Capital Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   21.98 % 21.93 % 18.76 % — % —
Class A shares at POP3,4   15.28 20.56 18.09 — —
Class C shares at NAV2 and with CDSC4   21.00  20.98  17.86  —  —
Class I shares at NAV2   22.23  22.07  18.99  —  —
Class R6 shares at NAV2   22.55  —  —  19.45  1/30/18
Russell 1000® Growth Index   27.32 22.84 19.68 20.63 5 —
Fund Expense Ratios6: Class A shares: 1.23%; Class C shares: 2.00%; Class I shares: 1.01%; Class R6 shares: Gross 0.94%, 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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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 February 1, 2022. 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.
10

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 20.23%, Class C shares at NAV returned 19.31%, Class I shares at NAV returned 20.49%, and Class R6 shares at NAV returned 20.55%. 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 20.32%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed
large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund performed in line with the MSCI USA High Dividend Yield Index (net) for the fiscal year ended September 30, 2021. Strong stock selection and an overweight in materials, as well as strong stock selection in information technology, contributed positively to performance. Poor stock selection and an underweight in consumer discretionary, as well as an underweight in energy, detracted from performance.
The biggest contributors to performance during the period were PNC Financial Services Group, Bank of Hawaii, Eastman Chemical, Cisco Systems, and Omnicom Group.
The biggest detractors from performance during the period were Kimberly-Clark, Verizon Communications, Clorox, GlaxoSmithKline, and Merck.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Financials 16%
Consumer Staples 13
Industrials 13
Information Technology 11
Health Care 11
Utilities 9
Materials 8
Other (includes short-term investment and securities lending collateral) 19
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
11

Table of Contents
KAR Equity Income Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   20.23 % 12.95 % 13.85 % — % —
Class A shares at POP3,4   13.62 11.68 13.20 — —
Class C shares at NAV2 and with CDSC4   19.31  12.09  12.98  —  —
Class I shares at NAV2   20.49  13.22  14.12  —  —
Class R6 shares at NAV2   20.55  —  —  9.11  1/30/18
MSCI USA High Dividend Yield Index (net)   20.32 9.54 12.20 6.21 5 —
Fund Expense Ratios6: Class A shares: Gross 1.35%, Net 1.20%; Class C shares: Gross 2.11%, Net 1.95%; Class I shares: Gross 1.10%, Net 0.95%; Class R6 shares: Gross 1.03%; 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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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 February 1, 2022. 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

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 18.42%, Class C shares at NAV returned 17.52%, Class I shares at NAV returned 18.78%, and Class R6 shares at NAV returned 19.15%. The MSCI World High Dividend Yield Index (net), which serves as the Fund’s broad-based index, returned 20.84% and the Global Quality Dividend Linked Benchmark, the Fund’s style-specific Index, returned 20.84%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the MSCI World High Dividend Yield Index (net) for the fiscal year ended September 30, 2021. Poor stock selection and an underweight in consumer discretionary, as well as poor stock selection in industrials, detracted from performance. Strong stock selection and an underweight in health care, as well as an underweight in consumer staples, contributed positively to performance.
The biggest contributors to performance during the period were Royal Bank of Canada, PNC Financial Services Group, BCE, Patterson Companies, and Cisco Systems.
The biggest detractors from performance during the period were Verizon Communications, Unilever, Terna, GlaxoSmithKline, and Kimberly-Clark.
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.
Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Financials 21%
Communication Services 19
Industrials 12
Utilities 10
Consumer Staples 10
Health Care 9
Information Technology 7
Other (includes short-term investment) 12
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
13

Table of Contents
KAR Global Quality Dividend Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   18.42 % 6.11 % 9.57 % — % —
Class A shares at POP3,4   11.91 4.91 8.95 — —
Class C shares at NAV2 and with CDSC4   17.52  5.31  8.75  —  —
Class I shares at NAV2   18.78  6.37  9.85  —  —
Class R6 shares at NAV2   19.15  —  —  4.53  8/1/19
MSCI World High Dividend Yield Index (net)   20.84 7.73 8.83 8.17 5 —
Global Quality Dividend Linked Benchmark   20.84 9.30 12.67 8.17 5 —
Fund Expense Ratios6: Class A shares: Gross 1.61%, Net 1.35%; Class C shares: Gross 2.35%, Net 2.10%; Class I shares: Gross 1.40%, Net 1.10%; Class R6 shares: Gross 1.27%, 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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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 February 1, 2022. 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.
14

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 36.25%, Class C shares at NAV returned 35.23%, Class I shares at NAV returned 36.59%, and Class R6 shares at NAV returned 36.67%. 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 38.11%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell Midcap Index for the fiscal year ended September 30, 2021. Poor stock selection in financials and communication services detracted from performance. Strong stock selection in information technology and an underweight in utilities contributed positively to performance.
The biggest contributors to performance during the period were Brooks Automation, Zebra Technologies, West Pharmaceutical Services, Globus Medical, and SiteOne Landscape Supply.
The biggest detractors from performance during the period were Latham Group, Autohome, W. R. Berkley, Aspen Technology, and Lamb Weston.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Industrials 33%
Health Care 18
Information Technology 18
Financials 13
Consumer Discretionary 10
Consumer Staples 3
Real Estate 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.
15

Table of Contents
KAR Mid-Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   36.25 % 18.29 % 17.07 % — % —
Class A shares at POP3,4   28.76 16.96 16.41 — —
Class C shares at NAV2 and with CDSC4   35.23  17.40  16.20  —  —
Class I shares at NAV2   36.59  18.58  17.37  —  —
Class R6 shares at NAV2   36.67  —  —  16.02  1/30/18
Russell Midcap® Index   38.11 14.39 15.52 12.55 5 —
Fund Expense Ratios6: Class A shares: Gross 1.35%, Net 1.21%; Class C shares: Gross 2.10%, Net 1.96%; Class I shares: Gross 1.10%, Net 0.96%; Class R6 shares: Gross 1.01%, Net 0.88%.            
    
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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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 February 1, 2022. 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.
16

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 23.07%, Class C shares at NAV returned 22.13%, Class I shares at NAV returned 23.35%, and Class R6 shares at NAV returned 23.57%. 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 30.45%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell Midcap® Growth Index for the fiscal year ended September 30, 2021. Poor stock selection in health care, as well as poor stock selection and an overweight in consumer discretionary, detracted from performance. Strong stock selection, as well as overweights in information technology and financials, contributed positively to performance.
The biggest contributors to performance during the period were Bill.com, MercardoLibre, Gartner, SiteOne Landscape Supply, and Paycom Software.
The biggest detractors from performance during the period were Teladoc Health, New Oriental Education & Technology Group, Vital Farms, Autohome, and Gaotu Techedu.
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.
Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Information Technology 39%
Consumer Discretionary 19
Health Care 11
Industrials 9
Consumer Staples 9
Financials 8
Communication Services 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.
17

Table of Contents
KAR Mid-Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   23.07 % 27.61 % 20.12 % — % —
Class A shares at POP3,4   16.30 26.17 19.44 — —
Class C shares at NAV2 and with CDSC4   22.13  26.65  19.22  —  —
Class I shares at NAV2   23.35  27.90  20.41  —  —
Class R6 shares at NAV2   23.57  —  —  27.23  1/30/18
Russell Midcap® Growth Index   30.45 19.27 17.54 17.60 5 —
Fund Expense Ratios6: Class A shares: 1.28%; Class C shares: 2.04%; Class I shares: 1.05%; Class R6 shares: Gross 0.95%, Net 0.85%.            
    
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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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 February 1, 2022. 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.
18

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 28.68%, Class C shares at NAV returned 27.74%, Class I shares at NAV returned 29.03%, and Class R6 shares at NAV returned 29.14%. 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 47.68%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell 2000® Index for the fiscal year ended September 30, 2021. Poor stock selection in communication services and information technology detracted from performance. Strong stock selection, an underweight in health care, and an underweight in utilities contributed positively to performance.
The biggest contributors to performance during the period were First Hawaiian, Teledyne Technologies, EMCOR Group, Moelis, and Manhattan Associates.
The biggest detractors from performance during the period were Autohome, Aspen Technology, Jack
Henry & Associates, Clearwater Analytics, and Dril-Quip.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Industrials 37%
Financials 20
Information Technology 16
Communication Services 8
Health Care 6
Consumer Discretionary 5
Consumer Staples 2
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.
19

Table of Contents
KAR Small-Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   28.68 % 21.27 % 17.10 % — % —
Class A shares at POP3,4   21.60 19.91 16.44 — —
Class C shares at NAV2 and with CDSC4   27.74  20.38  16.24  —  —
Class I shares at NAV2   29.03  21.60  17.40  —  —
Class R6 shares at NAV2   29.14  21.70  —  17.49  11/12/14
Russell 2000® Index   47.68 13.45 14.63 10.89 5 —
Fund Expense Ratios6: Class A shares: 1.28%; Class C shares: 2.01%; Class I shares: 1.00%; Class R6 shares: 0.93%.            
    
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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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.
20

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 20.46%, Class C shares at NAV returned 19.60%, Class I shares at NAV returned 20.77%, and Class R6 shares at NAV returned 20.88%. 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 33.27%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time
in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell 2000® Growth Index for the fiscal year ended September 30, 2021. Poor stock selection in communication services, as well as poor stock selection and an underweight in industrials, detracted from performance. An underweight in health care and an overweight in information technology contributed positively to performance.
The biggest contributors to performance during the period were Bill.com, Fox Factory, Morningstar, Blackline, and Avalara.
The biggest detractors from performance during the period were Autohome, Ollie’s Bargain Outlet, MediaAlpha, Grocery Outlet, and Duck Creek 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.
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.
Market Volatility: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Information Technology 32%
Financials 22
Communication Services 15
Consumer Discretionary 13
Industrials 7
Health Care 4
Consumer Staples 3
Short-Term Investment 4
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
21

Table of Contents
KAR Small-Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   20.46 % 26.21 % 21.37 % — % —
Class A shares at POP3,4   13.83 24.79 20.68 — —
Class C shares at NAV2 and with CDSC4   19.60  25.28  20.47  —  —
Class I shares at NAV2   20.77  26.54  21.68  —  —
Class R6 shares at NAV2   20.88  —  —  22.75  1/30/18
Russell 2000® Growth Index   33.27 15.34 15.74 12.58 5 —
Fund Expense Ratios6: Class A shares: 1.36%; Class C shares: 2.08%; Class I shares:1.10%; Class R6 shares: 1.00%.            
    
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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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.
22

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 37.45%, Class C shares at NAV returned 36.44%, Class I shares at NAV returned 37.83%, and Class R6 shares at NAV returned 37.85%. 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 63.92%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell 2000® Value Index for the fiscal year ended September 30, 2021. Poor stock selection in consumer discretionary and industrials detracted from performance. An underweight in utilities and strong stock selection in consumer staples contributed positively to performance.
The biggest contributors to performance during the period were Brooks Automation, National Beverage, SiteOne Landscape Supply, RBC Bearings, and The Cheesecake Factory.
The biggest detractors from performance were Latham Group, Leslie’s, Jack Henry & Associates, Anika Therapeutics, and UniFirst.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Industrials 27%
Consumer Discretionary 22
Financials 17
Information Technology 14
Consumer Staples 6
Materials 5
Real Estate 4
Other (includes short-term investment) 5
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
23

Table of Contents
KAR Small-Cap Value Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year 5 Years 10 Years Since
inception 		Inception
date
Class A shares at NAV2   37.45 % 14.41 % 13.94 % — % —
Class A shares at POP3,4   29.89 13.12 13.29 — —
Class C shares at NAV2 and with CDSC4   36.44  13.58  13.09  —  —
Class I shares at NAV2   37.83  14.70  14.23  —  —
Class R6 shares at NAV2   37.85  —  —  16.12  11/3/16
Russell 2000® Value Index   63.92 11.03 13.22 12.59 5 —
Fund Expense Ratios6: Class A shares: 1.23%; Class C shares: 1.98%; Class I shares: 0.99%; 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, 2011, for Class A shares, Class C shares, and Class I 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.
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 February 1, 2021, 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.
24

Table of Contents
  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, 2021, the Fund’s Class A shares at NAV returned 29.38%, Class C shares at NAV returned 28.39%, Class I shares at NAV returned 29.72%, and Class R6 shares at NAV returned 29.82%. 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 45.03%.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance during its fiscal year?
The Fund delivered positive performance but underperformed the Russell 2500TM Index for the fiscal year ended September 30, 2021. Poor stock selection in consumer discretionary and materials detracted from performance. Strong stock selection, an underweight in health care, and an underweight in utilities contributed positively to performance.
The biggest contributors to performance during the period were Zebra Technologies, Charles River Laboratories, MSCI, SiteOne Landscape Supply, and Teradyne.
The biggest detractors from performance during the period were Duck Creek Technologies, Bright
Horizons Family Solutions, Chemed, Jack Henry & Associates, and Rollins.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Information Technology 26%
Industrials 20
Consumer Discretionary 17
Health Care 14
Financials 14
Materials 4
Short-Term Investment 5
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
25

Table of Contents
KAR Small-Mid Cap Core Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    1 Year Since
inception 		Inception
date
Class A shares at NAV2   29.38 % 19.56 % 3/7/18
Class A shares at POP3,4   22.27 17.68 3/7/18
Class C shares at NAV2 and with CDSC4   28.39  18.68  3/7/18
Class I shares at NAV2   29.72  19.87  3/7/18
Class R6 shares at NAV2   29.82  19.97  3/7/18
Russell 2500™ Index   45.03 12.83 5 —
Fund Expense Ratios6: Class A shares: Gross 1.40%, Net 1.31%; Class C shares: Gross 2.08%, Net 2.06%; Class I shares: Gross 1.10%, Net 1.06%; Class R6 shares: Gross 1.00%, Net 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 March 7, 2018 (inception date of the Fund), for Class A shares, Class C shares, Class I shares, and Class R6 shares including any applicable sales charges or fees. 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 February 1, 2021, 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 February 1, 2022. 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.
26

Table of Contents
  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 period December 8, 2020 (inception date) through September 30, 2021, the Fund’s Class A shares at NAV returned 7.00%*, Class C shares at NAV returned 6.30%*, Class I shares at NAV returned 7.20%*, and Class R6 shares at NAV returned 7.30%*. 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 9.46%*.
   * Returns less 1 year are not annualized.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance from its inception on December 8, 2020 through September 30, 2021?
The Fund delivered positive performance but underperformed the Russell 2500TM Growth Index for the period from the Fund’s inception on December 8, 2020, through September 30, 2021. Poor stock selection in information technology and financials detracted from performance. Strong stock selection and an underweight in health care, as well as an underweight in materials, contributed positively to performance.
The biggest contributors to performance during the period were Bentley Systems, West Pharmaceutical Services, SiteOne Landscape Supply, Old Dominion Freight Line, and Copart.
The biggest detractors from performance during the period were MediaAlpha, MarketAxess, Ollie’s Bargain Outlet, nCino, and Fair Isaac.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Information Technology 31%
Industrials 22
Health Care 22
Financials 10
Consumer Discretionary 9
Communication Services 4
Consumer Staples 2
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
27

Table of Contents
KAR Small-Mid Cap Growth Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    Since
inception 		Inception
date
Class A shares at NAV2   7.00 % 12/8/20
Class A shares at POP3,4   1.12 12/8/20
Class C shares at NAV2   6.30  12/8/20
Class C shares with CDSC4   5.30 12/8/20
Class I shares at NAV2   7.20  12/8/20
Class R6 shares at NAV2   7.30  12/8/20
Russell 2500™ Growth Index   9.46  5 —
Fund Expense Ratios6: Class A shares: Gross 1.40%, Net 1.30%; Class C shares: Gross 2.09%, Net 2.05%; Class I shares: Gross 1.14%, Net 1.05%; Class R6 shares: Gross 1.05%, 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, Class C shares, Class I shares, and Class R6 shares including any applicable sales charges or fees. 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 February 1, 2021, 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 February 1, 2022. 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.
28

Table of Contents
  Ticker Symbols:
  Class A: VKSDX
  Class C: VKSEX
  Class I: VKSFX
  Class R6: VKSGX
KAR Small-Mid 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 period August 3, 2021 (inception date) through September 30, 2021, the Fund’s Class A shares at NAV returned -3.60%*, Class C shares at NAV returned -3.70%*, Class I shares at NAV returned -3.60%*, and Class R6 shares at NAV returned -3.50%*. For the same period, the Russell 2500™ Value Index, which serves as both the Fund’s broad-based and style-specific index appropriate the comparison, returned -0.75%*.
   * Returns less 1 year are not annualized.
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, 2021?
For the 12-month period, markets delivered positive performance across the board, slowing only at the end of September 2021 over mounting worries concerning the debt ceiling, infrastructure investments, increased taxes, supply-chain bottlenecks, and the reappointment of the Federal Reserve (the Fed) chairman. The S&P 500® Index notched gains and new highs throughout the period, primarily driven by strong earnings fueled by the economic reopening and boosted by federal stimulus, accommodative monetary policy, and COVID-19 vaccines. In fact, improving corporate profitability was the key catalyst behind significant equity returns since the recession that was triggered by COVID-19.
Small-company stocks, as measured by the Russell 2000® Index, significantly outperformed large-company stocks. Value stocks, for the first time in many years, outpaced growth stocks, as measured by the Russell 1000® Value and Russell 1000® Growth indexes. In an environment of rapidly accelerating economic growth, low-quality stocks tend to outperform high-quality businesses as investors seek out companies with more operating and financial leverage. Low-quality stocks also tend to outperform at the bottom of a recession, when economic activity is about to rapidly accelerate as the economy begins to recover. International and emerging markets notched positive performance but lagged the returns of U.S. stocks, and were hit particularly hard in the third quarter of 2021 as China imposed additional regulatory actions on many successful Chinese public companies.
For the fiscal year ended September 30, 2021, the S&P 500® Index returned 30.00%, while small-capitalization stocks, as represented by the Russell 2000® Index, soared to 47.68%. International developed markets, as measured by the MSCI EAFE Index (net), returned 25.73%, while the MSCI Emerging Markets Index (net) was up 18.20% in the period. Value stocks outperformed growth stocks over the fiscal year, with the Russell 1000® Value Index up 35.01% and the Russell 1000® Growth Index delivering a gain of 27.32%.
What factors affected the Fund’s performance from its inception on August 3, 2021 through September 30, 2021?
The Fund underperformed the Russell 2500TM Value Index from its inception on August 3, 2021, through September 30, 2021. Poor stock selection and overweight positions in industrials and information technology detracted from performance. Strong stock selection in health care, as well as strong stock selection and an underweight in real estate, contributed positively to performance.
The biggest contributors to performance during the period were CorVel, National Beverage, Lamar Advertising, American Software, and Thor Industries.
The biggest detractors from performance during the period were Scotts Miracle-Gro, Teradyne, Terminix
Global Holdings, Toro Company, and Zebra 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.
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: Local, regional, or global events such as war, acts of terrorism, the spread of infectious illness 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 portfolio 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, 2021.
Industrials 25%
Information Technology 23
Consumer Discretionary 15
Financials 14
Real Estate 7
Materials 6
Consumer Staples 5
Other (includes short-term investment) 5
Total 100%
For information regarding the indexes and certain investment terms, see the Key Investment Terms starting on page 6.
29

Table of Contents
KAR Small-Mid Cap Value Fund (Continued)
Average Annual Total Returns1 for periods ended 9/30/21
    Since
inception 		Inception
date
Class A shares at NAV2   -3.60 % 8/3/21
Class A shares at POP3,4   -8.90 8/3/21
Class C shares at NAV2   -3.70  8/3/21
Class C shares with CDSC4   -4.66 8/3/21
Class I shares at NAV2   -3.60  8/3/21
Class R6 shares at NAV2   -3.50  8/3/21
Russell 2500™ Value Index   -0.75 5