Virtus Global Multi-Sector Income Fund

N-CSR/A 1 d865429dncsra.htm VIRTUS GLOBAL MULTI-SECTOR INCOME FUND Virtus Global Multi-Sector Income Fund

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 811-22608

Virtus Global Multi-Sector Income Fund

(Exact name of registrant as specified in charter)

101 Munson Street

Greenfield, MA 01301-9683

(Address of principal executive offices) (Zip code)

Jennifer Fromm, Esq.

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: (866) 270-7788

Date of fiscal year end: November 30

Date of reporting period: November 30, 2023

The Registrant is filing this amendment to its Form N-CSR for the period ended November 30, 2023, originally filed with the Securities and Exchange Commission on February 5, 2024 (Accession Number 0001193125-24-024157). The purpose of this amendment is to revise the certifications required by Rule 30a-2 in order to correct the time period referenced therein. Except as set forth above (and the dates included on the signature page and the certifications required by Rule 30a-2(a) and Rule 30a-2(b)), this amendment does not amend, update or change any other items or disclosures found in the original Form N-CSR filing.

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.

ANNUAL REPORT

November 30, 2023

Virtus Global Multi-Sector Income Fund

Not FDIC Insured • No Bank Guarantee • May Lose Value

Table of Contents

Virtus Global Multi-Sector Income Fund

(“Global Multi-Sector Income Fund”)

Message toShareholders	1
Manager’s Discussion of FundPerformance	2
Portfolio Holdings SummaryWeightings	5
Key InvestmentTerms	6
Schedule ofInvestments	7
Statement of Assets andLiabilities	26
Statement ofOperations	27
Statements of Changes in NetAssets	28
Statement of CashFlows	29
FinancialHighlights	30
Notes to FinancialStatements	31
Report of Independent Registered Public AccountingFirm	42
Tax InformationNotice	43
Investment Objective, Principal Strategies and PrincipalRisks	45
Automatic Reinvestment and Cash PurchasePlan	49
Consideration of Advisory and Subadvisory Agreements by the Board ofTrustees	52
Fund ManagementTables	56

Table of Contents

MESSAGE TO SHAREHOLDERS

Dear Virtus Global Multi-Sector Income Fund Shareholder:

I am pleased to present this annual report, which reviews the performance of your fund for the 12 months ended November 30, 2023.

This report contains commentary from the portfolio management team at Newfleet Asset Management about the financial markets and the performance of the Fund’s investments.

The fiscal year saw a generalized recovery from the volatility that characterized much of 2022. But investor sentiment swung between optimism and pessimism depending on the outlook for inflation and interest rates. For the 12 months ended November 30, 2023, the Fund’s net asset value (“NAV”) returned 7.19%, including $0.96 in reinvested distributions, and its market price returned 2.66%. For the same period, the Fund’s benchmark, the Bloomberg Global Aggregate Bond Index, returned 2.05%.

Please call our customer service team at 866-270-7788 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, Chief Executive Officer, and Trustee
Virtus Global Multi-Sector Income Fund
January 2024

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.

Table of Contents

GLOBAL MULTI-SECTOR INCOME FUND
MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited)

November 30, 2023

About the Fund:

Virtus Global Multi-Sector Income Fund’s (NYSE: VGI) (the “Fund”) investment objective is to maximize current income while preserving capital. The Fund seeks to achieve its investment objective by applying extensive credit research to capitalize on opportunities across undervalued areas of the global bond markets. There is no guarantee that the Fund will achieve its investment objective.

The use of leverage allows the Fund to borrow at short-term rates with the expectation to invest at higher yields on its investments. As of November 30, 2023, the Fund’s leverage consisted of $43 million of borrowings made pursuant to a line of credit, which represented approximately 31% of the Fund’s total assets.

Manager Comments – Newfleet Asset Management (Newfleet)

Newfleet’s multi-sector fixed income strategies team manages the Fund, leveraging the knowledge and skills of investment professionals with expertise in every sector of the bond market, including evolving, specialized, and out-of-favor sectors. The team employs active sector rotation and disciplined risk management for portfolio construction, avoiding interest rate bets and remaining duration neutral. The following commentary is provided by the respective portfolio team at Newfleet and covers the Fund’s portfolio for the year ended November 30, 2023.

How did the markets perform during the Fund’s fiscal year ended November 30, 2023?

As the end of 2023 approached, economic transitions were proceeding across the globe. China was struggling with a slowing economy amid calls for more stimulus, despite having ended its strict zero-COVID policies earlier in the year. Europe, too, was wrestling with a slowing economy and inflation that remained above official targets. In the meantime, the U.S. economy proved remarkably resilient – unlike other major world economies, it defied expectations of a slowdown, leading to a growing consensus that the Federal Reserve (the Fed) might be able to pull off the often-elusive soft landing. The main risk to this scenario remained the unpredictable cumulative effect of 18 months of monetary tightening on the economy. Because monetary policy works on the economy with a lag, it presents a challenge to central bankers who are trying to return inflation to target without the associated economic pain of higher interest rates.

During the 12 months ended November 30, 2023, the Fed raised its main policy interest rate by 1.50% in its continuing fight to tame inflation. This resulted in significant progress on headline inflation readings as supply chains healed, demand shifted from goods to services, and energy prices rebalanced. Core readings of inflation, however, remained stubbornly above targets at the end of the period. That said, market expectations held that most major global central banks were approaching the end of their interest rate increases.

Despite the volatility during the fiscal year, financial market performance was resilient, with most risk assets outperforming U.S. Treasuries. The U.S. Treasury yield curve shifted higher during the period and remained inverted as of November 30, 2023. The 2-year Treasury yield increased 0.37%, the 5-year Treasury yield increased by 0.53%, the 10-year Treasury yield increased by 0.72%, and the 30-year Treasury yield moved 0.76% higher.

For information regarding the indexes and certain key investment terms, see Key Investment Terms starting on page 6.

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GLOBAL MULTI-SECTOR INCOME FUND
MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited) (Continued)

November 30, 2023

What factors affected the Fund’s performance during fiscal year?

For the fiscal year ended November 30, 2023, the Fund’s net asset value (“NAV”) returned 7.19%, while its market price returned 2.66%. The Bloomberg Global Aggregate Bond Index, which serves as the Fund’s benchmark, returned 2.05%.

The Fund’s underweight to U.S. Treasuries contributed to performance during the fiscal year. Allocation and positioning within corporate high yield, high yield bank loans, and investment grade corporates had a positive impact on performance for the 12-month period. Issue selection within emerging markets high yield contributed to performance.

The Fund’s overweight to emerging markets high yield detracted during the 12-month period. The underweight to non-U.S. dollar-denominated securities also had a negative impact.

Level distribution practice

The Fund has a practice of seeking to maintain a specified level of monthly distributions to shareholders, which may be changed at any time. As a result of this practice, the Fund may pay distributions in excess of the Fund’s taxable net investment income and net realized gains. During the most recent fiscal year, the practice did not have a material impact on the Fund’s investment strategy. Please refer to the financial highlights and federal income tax information note in this report for further information about the Fund’s distributions and its effect on net asset value.

The preceding information is the opinion of portfolio management only through the end of the period of the report as stated on the cover. Any such opinions are subject to change at any time based upon market conditions and should not be relied upon as investment advice.

The Fund’s portfolio holdings are subject to change and may not be representative of the portfolio managers’ current or future investment decisions. The mention of individual securities held by the Fund is for informational purposes only and should not be construed as a recommendation to purchase or sell any securities. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies discussed should consult their financial professional.

For information regarding the indexes and certain key investment terms, see Key Investment Terms starting on page 6.

Table of Contents

GLOBAL MULTI-SECTOR INCOME FUND
MANAGER’S DISCUSSION OF FUND PERFORMANCE (Unaudited) (Continued)

November 30, 2023

Average Annual Total Returns¹ for periods ended 11/30/23

	1 Year	5 Years	10 Years
Market Value^1,2	2.66%	1.99%	3.28%
Net Asset Value^1,2	7.19%	2.30%	3.38%
Bloomberg Global Aggregate Bond Index^1,3	2.05%	-0.73%	-0.09%

All returns represent past performance which is no guarantee of future results. Current performance may be higher or lower than the performance shown. Please visit Virtus.com for performance data current to the most recent month-end.

Growth of $10,000 for periods ended 11/30

This graph shows the change in value of a hypothetical investment of $10,000 in the Fund for the years indicated. For comparison, the same investment is shown in the indicated index.

¹	Past performance is not indicative of future results. Current performance may be lower or higher than performance in historical periods.
²	Total return on market value is calculated assuming a purchase of common shares on the opening of the first day and sale on the closing of the last day of each period reported. Dividends and distributions are assumed, for purposes of this calculation, to be reinvested at prices obtained under the Fund’s Automatic Reinvestment and Cash Purchase Plan. Total return on market value is not annualized for periods of less than one year. Brokerage commissions that a shareholder may pay are not reflected. Total return on market value does not reflect the deduction of taxes that a shareholder may pay on fund distributions or the sale of fund shares. Total return on net asset value uses the same methodology, but with use of net asset value for the beginning and ending values.
³	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 key investment terms, see Key Investment Terms starting on page 6.

Table of Contents

GLOBAL MULTI-SECTOR INCOME FUND
PORTFOLIO HOLDINGS SUMMARY WEIGHTINGS (Unaudited)

November 30, 2023

The following tables present the portfolio holdings within certain

sectors or countries as a percentage of total investments at November 30, 2023.

Asset Allocations

Corporate Bonds and Notes		49%
Energy	13%
Financials	13
Materials	3
All other Corporate Bonds and Notes	20
Foreign Government Securities		19
Mortgage-Backed Securities		10
Leveraged Loans		9
Asset-Backed Securities		8
U.S. Government Securities		2
Municipal Bonds		2
Other		1
Total		100%

Country Weightings

United States	58%
Mexico	6
Indonesia	3
Canada	3
Turkey	2
Saudi Arabia	2
Netherlands	2
Other	24
Total	100%

Table of Contents

GLOBAL MULTI-SECTOR INCOME FUND

KEY INVESTMENT TERMS (Unaudited)

November 30, 2023

Bloomberg Global Aggregate Bond Index

The Bloomberg Global Aggregate Bond Index is a market-weighted index of global government, government-related agencies, corporate and securitized fixed income investments. 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.

European Central Bank (“ECB”)

The ECB is responsible for conducting monetary policy for the Euro zone. The ECB was established as the core of the Eurosystem and the European System of Central Banks (“ESCB”). The ESCB comprises the ECB and the National Central Banks of all 17 European Union Member States whether or not they have adopted the Euro.

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., 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.

Headline Inflation

Headline inflation is the total inflation in an economy, as measured by inflation in the prices of a basket of goods that includes commodities like food and energy.

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.

Risk Assets

Risk assets are those that tend to demonstrate price volatility, such as equities, high yield bonds, currencies, and commodities.

Secured Overnight Financing Rate (“SOFR”)

A broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities.

Yield Curve

A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.

Table of Contents

Global Multi-Sector Income Fund

SCHEDULE OF INVESTMENTS
November 30, 2023

($ reported in thousands)

	Par Value⁽¹⁾	Value
U.S. Government Securities—3.1%
U.S. Treasury Bonds
1.250%, 5/15/50	$ 1,965	$ 965
3.625%, 5/15/53	1,425	1,216
U.S. Treasury Notes
1.375%, 12/31/28	475	411
3.375%, 5/15/33	450	416
Total U.S. Government Securities (Identified Cost $3,719)		3,008


Municipal Bonds—2.2%
California—0.7%
State of California, Build America Bond Taxable 7.500%, 4/1/34	570	667
Florida—0.3%
Broward County, Water & Sewer Utility Revenue Series A 4.000%, 10/1/47	300	299
Illinois—0.7%
State of Illinois, Build America Bond Taxable 6.900%, 3/1/35	700	730
New York—0.5%
Metropolitan Transportation Authority Bidding Group Series A 5.000%, 11/15/45	430	462
Total Municipal Bonds (Identified Cost $2,249)		2,158


Foreign Government Securities—27.4%
Arab Republic of Egypt
144A 7.600%, 3/1/29⁽²⁾	845	588
144A 8.500%, 1/31/47⁽²⁾	715	407

	Par Value⁽¹⁾	Value

Foreign Government Securities—continued
Bolivarian Republic of Venezuela RegS 7.650%, 4/21/25⁽³⁾⁽⁴⁾	$ 1,380	$ 215
Brazil Notas do Tesouro Nacional Series F 10.000%, 1/1/29	2,680 ^BRL	533
Dominican Republic
144A 4.875%, 9/23/32⁽²⁾	1,565	1,346
144A 6.850%, 1/27/45⁽²⁾	615

Amendment: SEC Form N-CSR/A filed by Virtus Global Multi-Sector Income Fund