ETFis Series Trust I

 

INFRACAP REIT PREFERRED ETF

VIRTUS INFRACAP U.S. PREFERRED STOCK ETF

VIRTUS LIFESCI BIOTECH CLINICAL TRIALS ETF

VIRTUS LIFESCI BIOTECH PRODUCTS ETF

VIRTUS NEWFLEET MULTI-SECTOR BOND ETF

VIRTUS PRIVATE CREDIT STRATEGY ETF

VIRTUS REAL ASSET INCOME ETF

Virtus WMC International Dividend ETF

INFRACAP MLP ETF

ANNUAL REPORT
October 31, 2021

Table of Contents

Page (s)

Shareholder Letter

1

Management’s Discussion of Fund Performance

2

Portfolio Composition

26

Shareholder Expense Examples

29

InfraCap REIT Preferred ETF

Virtus InfraCap U.S. Preferred Stock ETF

Virtus LifeSci Biotech Clinical Trials ETF

Virtus LifeSci Biotech Products ETF

Virtus Newfleet Multi-Sector Bond ETF

Virtus Private Credit Strategy ETF

Virtus Real Asset Income ETF

Virtus WMC International Dividend ETF

Schedules of Investments

30

Statements of Assets and Liabilities

55

Statements of Operations

57

Statements of Changes in Net Assets

59

Statement of Cash Flows

63

Financial Highlights

64

Notes to Financial Statements

72

InfraCap MLP ETF

Schedule of Investments

84

Statement of Assets and Liabilities

86

Statement of Operations

87

Statements of Changes in Net Assets

88

Statement of Cash Flows

89

Financial Highlights

90

Notes to Financial Statements

91

Reports of Independent Registered Public Accounting Firm

99

Statement Regarding Liquidity Risk Management Program

102

Trustees and Officers of the Trust

103

Supplemental Information

107

1

Shareholder Letter (unaudited)

December 2021

Dear Fellow ETFis Funds Shareholder:

On behalf of Virtus ETF Advisers LLC (the “Adviser”), I am pleased to present the shareholder report for the ETFis Series Trust I (the “Trust”) for the annual fiscal period ended October 31, 2021.

The Adviser is part of Virtus Investment Partners, a distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and institutional investors.

The report provides financial statements and portfolio information for the following funds within the Trust:

InfraCap REIT Preferred ETF (PFFR)

Virtus InfraCap U.S. Preferred Stock ETF (PFFA)

Virtus LifeSci Biotech Clinical Trials ETF (BBC)

Virtus LifeSci Biotech Products ETF (BBP)

Virtus Newfleet Multi-Sector Bond ETF (NFLT)

Virtus Private Credit Strategy ETF (VPC)

Virtus Real Asset Income ETF (VRAI)

Virtus WMC International Dividend ETF (VWID)

InfraCap MLP ETF (AMZA)

On behalf of Virtus ETF Advisers LLC (the “Adviser”) and our fund Sub-Advisers, thank you for your investment. If you have questions, please contact your financial adviser, or call 1-888-383-0553. For more information about the fund and the other ETFs we offer, we invite you to visit our website, www.virtusetfs.com.

Sincerely,

William Smalley
President

ETFis Series Trust I

This material must be accompanied or preceded by the prospectus.

2

Management’s Discussion of Fund Performance (unaudited)

October 31, 2021

InfraCap REIT Preferred ETF

Management’s Discussion of Operations

Overview

The InfraCap REIT Preferred ETF (the “Fund”) seeks to track the investment results, before fees and expenses, of an index composed of preferred shares listed on U.S. Exchanges and issued by Real Estate Investment Trusts (“REITs”), as represented by the Indxx REIT Preferred Stock Index (the “Index”). Although the Fund generally intends to replicate the component securities of the Index, the Fund may utilize a representative sampling strategy when a replication strategy might be detrimental to shareholders. The Fund may invest in a representative sample of securities included in the Index that collectively has a profile similar to the Index. If the Fund uses a representative sampling strategy, the Fund may or may not own all of the securities that are included in the Index.

Market Update

In the fiscal year ended October 31, 2021, the Fund’s total return based on net asset value was 18.93%, while the Index returned 22.70% during the same period. During the period, businesses reopened and the US gradually lifted strict social distancing measures that had been implemented in an effort to slow the spread of Covid-19.

Two of the strongest contributors to the Fund’s absolute performance during the period were preferred securities of Hersha Hospitality Trust (“Hersha”) and Digital Bridge Group Inc (“Digital Bridge”). Hersha is a hotel-focused REIT that directly benefited from the containment of the Covid-19 virus and an increase in US travel. Digital Bridge Group is a global REIT that owns, operates and invests across a full spectrum of digital infrastructure and real estate including, but not limited to, cell towers, data centers, fiber, small cells, and edge infrastructure. Digital Bridge demonstrated increased revenues over the period and attracted institutional inflows. Hersha HT D and Digital Bridge DBRG J were up 79.78% and 28.95%, respectively, during the fiscal year.

Two of the weaker contributors to the Fund’s absolute performance during the period were preferred securities of Public Storage, PSA M and PSA O. These preferred securities of Public Storage unperformed preferred securities of Public Storage with higher stated yields. PSA M and PSA O were down -1.94% and -1.50%, respectively, during the fiscal year. The Fund sold its preferred shares in PSA M during the fiscal year.

Preferred shares are fixed income securities, and prices are influenced by changes in long-term interest rates. During the fiscal year, the yield on the 30-year U.S. Treasury bond was 1.63% as of November 2, 2020 and increased 30 basis points to 1.93%, as of October 29, 20211. We believe this increase demonstrated renewed investor confidence over the fiscal year and belief that the duration and economic impacts of the Covid-19 Pandemic were limited.

1Treasury.gov. 2021. Daily Treasury Par Yield Curve Rates. [online] Available at: <https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/textview.aspx?data=yield> [Accessed 17 December 2021].

Dividend Payment

In the fiscal year ended October 31, 2021, the Fund made monthly dividend payments in the amount of $0.12 per share. While the Fund plans to continue paying monthly dividends, dividends are not guaranteed. The Fund seeks to maintain relatively stable monthly distributions although the amount of income earned by the Fund varies from period to period. In seeking to maintain a relatively stable monthly distribution, the Fund may distribute less than the full amount of income earned during a specific period, preserving income for distribution in future periods. Consequently, the amount of income distributed in any one period may be more or less than the actual amount of income earned in that period.

Outlook

We believe REIT preferred securities continue to offer an attractive way to access current market dislocations that remain from the effects of the Covid-19 pandemic. Economies appear to be returning to normal operations and federal monetary policy and stimulus have supported market recovery. Interest rates remain low, and we believe they will continue to be low even after anticipated rate hikes in 2022. We believe preferred securities will continue to offer attractive yields and investors can still access REIT preferred securities at discounted prices.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

3

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap REIT Preferred ETF (continued)

EXPOSURE BY RATING (%) as of 10/31/21

A-

7.59%

BBB+

0.0%

BBB

4.74%

BBB-

2.98%

BB+

5.35%

BB

0.0%

BB-

9.66%

B-

0.0%

NR

69.78%

Credit quality ratings on underlying securities of the Fund are received from S&P, Moody’s, and Fitch and converted to the equivalent S&P major rating category. This breakdown is provided by Infrastructure Capital Advisors, LLC and takes the median rating of the three agencies when all three agencies rate a security, the lower of the two ratings if only two agencies rate a security, and one rating if that is all that is provided. Unrated securities do not necessarily indicate low quality. A credit rating below investment-grade is represented by a rating of BB and below. Ratings and portfolio credit quality may change over time. This discussion includes information based on data and calculations sourced from Bloomberg and index constituents. While we believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

Indxx REIT
Preferred
Stock Index
1

1 Year

18.93%

19.55%

22.70%

Since Inception2

 5.55%

 5.50%

 6.66%

1 The Indxx REIT Preferred Stock Index is a market cap weighted index designed to provide diversified exposure to high yielding liquid preferred securities issued by Real Estate Investment Trusts listed in the U.S. 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 is not available for direct investment.

2February 7, 2017.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Preferred Stocks: Preferred stocks may decline in price, fail to pay dividends, or be illiquid.

Real Estate Investments: The Fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management.

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets.

Passive Strategy/Index Risk: A passive investment strategy seeking to track the performance of the Underlying Index may result in the fund holding securities regardless of market conditions or their current or projected performance. This could cause the Fund’s returns to be lower than if the Fund employed an active strategy.

4

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap REIT Preferred ETF (continued)

Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index.

Market Volatility: Securities in the Fund may go up or down in response to the prospects of individual companies and general economic conditions. Price changes may be short or long term.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

5

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus InfraCap U.S. Preferred Stock ETF

Management’s Discussion of Operations

Overview

Virtus InfraCap U.S. Preferred Stock ETF (the “Fund”) seeks to provide current income and, secondarily, capital appreciation through an actively-managed portfolio of high quality U.S. preferred stocks. Callable preferred securities exhibiting a low or negative yield to call are generally excluded from the portfolio. The Fund may utilize options strategies and leverage to enhance income and total return.

Market Update

In the twelve months ending October 31, 2021, the Fund’s total return based on net asset value was 41.52%. The Fund’s benchmark index, the S&P U.S. Preferred Stock Index, returned 13.38% during the same period.

The fiscal year ended October 31, 2021 can be characterized as period of extraordinary recovery from the volatility experienced in the financial markets in 2020. The negative market and economic effects that resulted from the onset of the Covid-19 global pandemic in February 2020 largely subsided during the period. Global economies continued to reopen and reduce social distancing measures. The Federal Reserve and the U.S. Treasury continued to implement measures to stabilize the economy and global financial markets during the period, which we believe have been successful. Rates on 10-year and 30-year U.S. Treasury bonds remained low. The economy and financial markets rebounded sharply as a consequence of the monetary and fiscal stimulus. Cyclical segments of the economy outperformed during the period and benefited from rotational allocations away from Covid-19 or stay-at-home technology related securities.

Two of the Fund’s strongest contributors during the period were preferred securities of Braemar Hotels and Resorts (“Braemar”) and DCP Midstream LP (“DCP Midstream). Braemar is a real estate investment trust (“REIT”) focused on luxury hotels and resorts. Braemar benefited from the containment of the Covid-19 virus and an increase in US travel. In addition, Braemar did not have significant debt maturities in 2020 and 2021, which allowed it to successfully operate during periods of distress. DCP Midstream is one of the largest NGL producers and gas processors in the United States. It maintained a strong and diversified customer base, disciplined capital management with respect to its investments, and a focus on reducing leverage to strengthen its balance sheet. In addition, DCP Midstream had a sizeable portion of unhedged commodity exposure, which benefited from rising prices and contributed to its strong performance. Braemar’s BHR PRB and DCP Midstream’s DCP B were up 89.56% and 56.84%, respectively, during the fiscal year.

Two of the Fund’s weaker contributors during the period were preferred securities of South Jersey Industries Inc. (“South Jersey”) and Dominion Energy Inc. (“Dominion”). Based in New Jersey, South Jersey is an energy services company that focuses on delivering natural gas utilities, clean energy solutions, and energy production facilities. Dominion Energy is a US based utility, power, and energy company that is currently focused on delivering reliable, affordable, clean energy. South Jersey’s SJI V and Dominion’s DCUE were up 10.55% and 3.72%, respectively, during the fiscal year.

The Fund’s portfolio composition emphasizes issuers that own long-lived assets that generate free cash flow. Preferred stocks issued by REITs, Pipelines and Industrials comprised approximately 45%, 14%, and 15% of the Fund’s total assets, respectively, at fiscal year-end. This compares to weightings of approximately 11%, 2%, and 2.3% in the benchmark index. Such overweighting positively contributed to Fund performance during the period. In addition, at fiscal year-end preferred stocks issued by financial companies only comprised about 5% of the Fund’s total assets, while the Fund’s benchmark index was weighted approximately 48%. This significant underweighting of financials positively contributed to the Fund’s outperformance during the period.

Approximately 49% of the Fund’s total assets were fixed-to-floating rate preferred stocks at fiscal year-end. This compares to about 25% for the benchmark index. These securities have a fixed rate coupon at issue but become a floating rate security after a specified period of time, typically five or ten years after issuance. This structure generally provides investors with some protection from a rising interest rate environment while offering a higher current yield than that available on securities with coupon rates that float currently. During the period, this overweighting positively contributed to Fund performance.

6

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus InfraCap U.S. Preferred Stock ETF (continued)

Dividend Payments

In the fiscal year ended October 31, 2021, the Fund made dividend payments in the amount of $0.15 per share in October, November and December of 2020, while paying monthly dividend payments in 2021 of $0.16 per share for the remainder the fiscal year.

The Fund’s dividend policy is reviewed on an annual basis with the expectation that, under normal market conditions, the announced dividend rate can be sustained for a period of 12 – 24 months. The Fund’s targeted dividend is expected to be covered by its investment company taxable income (which includes ordinary income and short-term capital gains less expenses). For the purpose of calculating income available for distribution, some cash payments from REITs or MLPs treated as Return of Capital for tax or GAAP purposes may be included. Expenses include an 80 basis point advisory fee, leverage costs, and other miscellaneous fees.

The Fund seeks to maintain relatively stable monthly distributions although the amount of income earned by the Fund varies from period-to-period. In seeking to maintain a relatively stable monthly distribution, the Fund may distribute less than the full amount of income earned during a specific period to preserve income for distribution in future periods. Consequently, the amount of income distributed in any one period may be more or less than the actual amount of income earned in that period.

The Fund’s current 30-day SEC yield based on its closing price on the New York Stock Exchange on October 31, 2021 ($25.10) was 8.10%. The Fund’s current indicated yield based on its Net Asset Value (NAV) per share ($25.16) was 7.65%. The Fund’s distribution rate as of fiscal year end was 7.69%.

Use of Leverage

As described in the Fund’s prospectus, the Fund may use leverage to help achieve its current income objective. The leverage ratio is expected to be maintained in a range of 10-35% of the Fund’s total assets over the long term. As of October 31, 2021, The Fund’s leverage was approximately 29% of the Fund’s net asset value. The Fund’s use of leverage positively impacted Fund performance during the period.

The Fund’s cost of borrowing fell during the fiscal year, and borrowed funds generated an attractive positive spread. The Fund borrows at a 120 basis point premium to the 3-month LIBOR rate, which remained extraordinarily low at 0.132% as of October 29, 2021.

Use of Options

As described in the prospectus, the Fund may utilize options strategies to boost the amount of income available to distribute to shareholders. The primary activity is covered call writing, which is focused on a small number of common stocks and ETFs owned by the Fund. However, due to limited use of options during the fiscal year, the option activity had a minor positive impact on the Fund’s performance.

Outlook

We believe that there continue to be opportunities for active managers to select preferred stocks that are inefficiently priced. We place special emphasis on maximizing the Fund’s yield-to-call and believe that avoiding issues that are callable and trading at prices above the call price will assist in achieving that result. We believe many preferred stock investors, especially passive funds, ignore the risk of owning issues with a negative yield-to-call.

We expect the market’s uncertainty surrounding the duration and magnitude of rising inflation to be a leading theme for the forthcoming fiscal year. We have seen the divergence of performance based on credit ratings as lower-rated, higher-yielding credits have outperformed on correlation to equity markets and higher-rated, lower-yielding credits underperformed on correlation to treasury yields. We expect this trend to continue as inflation remains high, fiscal and monetary policies tighten, and interest rates rise. We believe that high-yield preferred stocks will continue to trade higher under these market conditions, and we look to opportunistically add new issues to maintain an above-average yield-to-call versus the Fund’s benchmark. We believe for the next fiscal year, non-investment grade preferred securities in sectors including, REITs, Utilities, Pipelines and Industrials will outperform the financial sector and investment grade preferreds.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser and sub-adviser make no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized. This discussion includes information based on data and calculations sourced from Bloomberg and index constituents. While we believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information.

7

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus InfraCap U.S. Preferred Stock ETF (continued)

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

S&P U.S.
Preferred
Stock Index
1

1 Year

41.52%

41.79%

13.38%

Since Inception2

 9.79%

 9.67%

 8.12%

1 The S&P U.S. Preferred Stock Index measures performance of the U.S. preferred stock market. Preferred stocks pay dividends at a specified rate and receive preference over common stocks in terms of dividend payments and liquidation of assets. The index is calculated on a total return basis with dividend reinvested. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

2May 15, 2018.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Preferred Stocks: Preferred stocks may decline in price, fail to pay dividends, or be illiquid.

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

Leverage: When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded.

Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets.

Sector Focus: To the extent the Fund has significant exposure to one or more sectors, this may make the Fund particularly susceptible to adverse economic, political or regulatory occurrences and changes affecting companies in those sectors.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

8

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus InfraCap U.S. Preferred Stock ETF (continued)

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

9

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus LifeSci Biotech Clinical Trials ETF

The Virtus LifeSci Biotech Clinical Trials ETF (the “Fund”) seeks to track the investment results, before fees and expenses, of the LifeSci Biotechnology Clinical Trials Index (the “Index”), which is composed of U.S.-listed biotechnology stocks with a lead drug in the clinical trial stage of development.

For the fiscal year ended October 31, 2021, the Fund’s total return based on market price was 13.91%. The Fund’s total return based on net asset value was 13.85%. The Index returned 14.59% during the same period.

Top-performing stocks for the Fund’s fiscal year included Prothena, a clinical-stage neuroscience company. Prothena focuses on the discovery and development of novel therapies to change the course of devastating diseases. Another leading contributor was Amyris, which engages in the provision of bioscience solutions. The company offers its products to the health and wellness, clean beauty, and flavor and fragrance markets. Intellia Therapeutics, a biotechnology company, was positive for Fund performance during the fiscal year. The company focuses on the research and clinical development of gene editing therapies for patients with genetically-based diseases. In addition, the Fund benefited from its positions in BioCryst Pharmaceuticals and Rubius Therapeutics. The Fund sold its stock in BioCryst Pharmaceuticals during the fiscal year.

Detractors from the Fund’s performance during the 12-month period included Nkarta, a biopharmaceutical company that engages in the discovery, development, and commercialization of natural killer cell therapies for the treatment of cancer. Immunovant, a clinical-stage biopharmaceutical company, detracted from performance. The firm focuses on enabling normal lives for patients with autoimmune diseases. It is developing a novel, fully human monoclonal antibody, IMVT-1401, that selectively binds to and inhibits the neonatal fragment crystallizable receptor. Another detractor was Black Diamond Therapeutics, which operates as a biotechnology company and develops medicines for patients with genetically defined cancers. In addition, TCR2 Therapeutics and Annovis Bio detracted from Fund returns during the fiscal year.

The preceding information is the opinion of the investment adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

LifeSci
Biotechnology
Clinical Trials
Index
1

S&P 500®
Index
2

1 Year

13.85%

13.91%

14.59%

42.91%

5 Years

19.97%

19.89%

20.82%

18.93%

Since Inception3

 8.95%

 8.95%

 9.63%

15.34%

1 The LifeSci Biotechnology Clinical Trials Index is designed to track the performance of U.S.-listed biotechnology stocks with a lead drug in the clinical trial stage of development, typically a Phase 1, Phase 2 or Phase 3 trial, but prior to receiving marketing approval. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

2 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 is not available for direct investment.

3December 16, 2014.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

10

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus LifeSci Biotech Clinical Trials ETF (continued)

Biotechnology Industry Risk: The Fund’s assets will be concentrated in investments in the securities of issuers engaged primarily in the biotechnology industry. Companies within the biotechnology industry spend heavily on research and development, which may not necessarily lead to commercially successful products in the near or long term. In order to fund operations, these companies may require financing from the capital markets, which may not always be available on satisfactory terms or at all. The biotechnology industry is also subject to significant governmental regulation, and the need for governmental approvals, including, without limitation, FDA approval. The securities of biotechnology companies, especially those of smaller or newer companies, tend to be more volatile than those of companies with larger capitalizations or markets generally.

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

11

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus LifeSci Biotech Products ETF

The Virtus LifeSci Biotech Products ETF (the “Fund”) seeks to track the investment results, before fees and expenses, of the LifeSci Biotechnology Products Index (the “Index”), which is composed of U.S.-listed biotechnology stocks with at least one drug therapy approved by the U.S. Food & Drug Administration (“FDA”) for marketing.

For the fiscal year ended October 31, 2021, the Fund’s total return based on market price was 7.32%; the Fund’s total return based on net asset value was 7.56%. The Index returned 8.44% for the same period.

The top performers for the Fund were BioNTech and Moderna, both of which were instrumental in the development of COVID-19 vaccines. BioNTech is a next-generation immunotherapy company that treats cancer and other serious diseases through the development of novel biopharmaceuticals. Moderna engages in the development of transformative medicines based on messenger ribonucleic acid (mRNA). Another top contributor was Enanta Pharmaceuticals, a biotechnology company that engages in the discovery and development of drugs for the treatment of viral infections and liver diseases. Travere Therapeutics and Intra-Cellular Therapies were also leading contributors to Fund performance during the fiscal year.

Detractors from Fund performance included Esperion Therapeutics, which develops and markets medical devices. The company produces therapies for the treatment of patients with elevated levels of cholesterol and other risk factors for heart disease. Another top detractor was Epizyme, which develops and discovers therapeutics for the treatment of cancer and other diseases. Karyopharm Therapeutics also made a negative contribution during the fiscal year. Karyopharm is a commercial-stage pharmaceutical company pioneering novel cancer therapies. Rounding out the leading detractors from Fund returns were Y-mAbs Therapeutics and ACADIA Pharmaceuticals.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

LifeSci
Biotechnology
Products
Index
1

S&P 500®
Index
2

1 Year

 7.56%

 7.32%

 8.44%

42.91%

5 Years

12.42%

12.39%

13.41%

18.93%

Since Inception3

11.43%

11.41%

12.36%

15.34%

1 The LifeSci Biotechnology Products Index is designed to track the performance of U.S.-listed biotechnology stocks with at least one drug therapy approved by the FDA for marketing. The index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

2 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 is not available for direct investment.

3December 16, 2014.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Biotechnology Industry Risk: The Fund’s assets will be concentrated in investments in the securities of issuers engaged primarily in the biotechnology industry. Companies within the biotechnology industry spend heavily on research and development, which may not necessarily lead to commercially successful products in the near or long term. In order to fund operations, these companies may require financing from the capital markets, which may not always be available on satisfactory terms or at all. The biotechnology industry is also subject to significant governmental regulation, and the need for governmental approvals, including, without limitation, FDA approval. The securities of biotechnology companies, especially those of smaller or newer companies, tend to be more volatile than those of companies with larger capitalizations or markets generally.

12

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus LifeSci Biotech Products ETF (continued)

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

13

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Newfleet Multi-Sector Bond ETF

The Virtus Newfleet Multi-Sector Bond ETF (the “Fund”) seeks to provide a high level of current income and, secondarily, capital appreciation.

How did the markets perform during the Fund’s fiscal year ended October 31, 2021?

The 12-month period included a variety of market conditions, but most front and center was the continued impact of COVID-19 on the globe. Monetary and fiscal policy response continued to evolve in order to support economic activity and allow market disruptions to heal. The final quarter of 2020 was marked by vaccine development and distribution, the U.S. presidential election, and a trade deal between the U.K. and the EU.

The first three quarters of 2021 brought a new U.S. administration, more fiscal stimulus, and bursts of optimism as the world continued its recovery from the COVID-19-related economic lockdowns that dominated early 2020. The virus continued to pose a global challenge to health care systems and policymakers, however, as they sought the correct mix of protective measures to contain it. Though variants of the virus emerged during the period, vaccines proved effective against them. Global vaccine distribution and the resulting growth in protected populations continued to seem to bring the world closer to containing the virus.

Since the economic recovery remained on track, the Federal Reserve (the “Fed”) began removing some of its monetary support, announcing the completion of the wind-down of its secondary market corporate credit facility during the third quarter of 2021. The Fed remained committed to its communication strategy during the fiscal year, and indicated no desire to tighten financial conditions.

During the 12-month period, the fixed income markets experienced a significant rebound from their March 2020 lows, with spread sectors (non-governmental fixed income investments) outperforming U.S. Treasuries. Those sectors that had experienced the greatest degree of underperformance during the first quarter of 2020 led the way during the fiscal year recovery.

During the fiscal year, the Fed left its target interest rate unchanged at a range of 0-0.25%, the rate that was set in late March of 2020 in response to the pandemic.

Additionally, over the 12-month period, the U.S Treasury yield curve steepened, shifting broadly higher, especially for maturities up to five years.

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

For the fiscal year ended October 31, 2021, the Fund’s total return based on market price was 5.81%. The Fund’s total return based on net asset value was 5.71%. For the same period, the Fund’s benchmark, the Bloomberg U.S. Aggregate Bond Index, returned -0.48%.

An underweight to U.S. Treasuries in favor of spread sectors was a driver of the Fund’s outperformance for the fiscal year ended October 31, 2021. Among fixed income sectors, the Fund’s allocations to corporate high yield and high yield bank loans contributed to relative performance for the fiscal year. Issue selection within corporate high quality securities was also beneficial for relative performance.

The Fund’s underweight to the corporate high quality sector negatively impacted performance for the 12-month period, despite the fact that issue selection within the sector was positive.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

14

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Newfleet Multi-Sector Bond ETF (continued)

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

Bloomberg
U.S. Aggregate
Bond Index
1

1 Year

5.71%

5.81%

(0.48)%

5 Years

4.27%

4.47%

3.10%

Since Inception2

4.68%

4.72%

3.31%

1The 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 is not available for direct investment.

2August 10, 2015.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities.

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

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

ABS/MBS: Changes in interest rates can cause both extension and prepayment risks for asset- and mortgage-backed securities. These securities are also subject to risks associated with the repayment of underlying collateral.

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

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

15

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Newfleet Multi-Sector Bond ETF (continued)

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

16

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Private Credit Strategy ETF

The Virtus Private Credit Strategy ETF (the “Fund”) strives to deliver an alternative source of yield to traditional fixed income by focusing on the private credit market, particularly companies involved in lending to non-investment grade, small- to mid-sized U.S. companies.

The Fund seeks to track the investment results, before fees and expenses, of the Indxx Private Credit Index (the “Index”), which is composed of U.S.-listed business development companies (“BDCs”) and closed-end funds that provide significant exposure to private credit.

For the fiscal year ended October 31, 2021, the Fund’s total return based on market price was 61.61%; the Fund’s total return based on net asset value was 61.32%. The Index returned 63.59% during the same period.

The leading positive contributors to Fund performance during the 12-month period were BDCs, which seek to maximize total return by investing in debt and equity financing, including collateralized loan obligation (CLO) vehicles. These included Oxford Lane Capital, which operates as a closed-end fund investing primarily in corporate debt instruments. Oxford Lane invests principally in the equity and junior debt of CLO vehicles. Eagle Point Credit, which operates as a closed-end management investment company, also contributed to Fund performance during the fiscal year. Eagle Point’s investment objective is to generate high current income, with a secondary objective of generating capital appreciation, by investing in the equity and junior debt of CLOs. Another top contributor was Apollo Investment, which allocates to debt investments that include senior secured loans, subordinated, and mezzanine investments, as well as equity in private middle-market companies.

Detractors from Fund performance included Portman Ridge Finance, a closed-end, externally managed, non-diversified management investment company. Portman Ridge originates, structures, finances, and manages a portfolio of term loans, mezzanine investments, and select equity securities of middle market U.S. companies. Eaton Vance Floating-Rate Income Trust, another detractor, is a newly organized, diversified, closed-end management investment company. The Fund seeks to provide a high level of current income by investing primarily in senior, secured floating rate loans that are rated below investment grade. BlackRock Floating Rate Income Strategies Fund also detracted from the Fund’s returns.

The preceding information is the opinion of the investment adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

Indxx
Private
Credit Index
1

1 Year

61.32%

61.61%

63.59%

Since Inception2

10.92%

10.98%

12.14%

1 The Indxx Private Credit Index is an index of listed business development companies (“BDCs”) and closed end funds (“CEFs”) with a private credit focus. The Index is designed to serve as a broad-based benchmark for long-only investments in private credit. The Index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

2February 7, 2019.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Private Credit Funds: Private credit funds that invest in closed-end funds and business development companies bear the risk of these underlying assets, including liquidity, industry, currency, valuation and credit risks.

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.

17

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Private Credit Strategy ETF (continued)

Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities.

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

Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets.

Passive Strategy/Index Risk: A passive investment strategy seeking to track the performance of the Underlying Index may result in the fund holding securities regardless of market conditions or their current or projected performance. This could cause the Fund’s returns to be lower than if the Fund employed an active strategy.

Fund of Funds: Because the Fund can invest in other funds, it indirectly bears its proportionate share of the operating expenses and management fees of the underlying fund(s).

Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index.

Closed-End Funds: Closed-end funds may trade at a discount from their net asset values, which may affect whether the fund will realize gains or losses. They may also employ leverage, which may increase volatility.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

18

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Real Asset Income ETF

The Virtus Real Asset Income ETF (the “Fund”) aims to provide passive exposure to high income-producing real asset securities. The Fund seeks to track the investment results, before fees and expenses, of the Indxx Real Asset Income Index (the “Index”), which is composed of U.S.-listed securities with a history of dividend growth across three real asset categories:

real estate, including real estate development and real estate investment trusts (“REITs”);

natural resources, including oil, coal, precious metals, steel, agricultural commodities, and forest products; and

infrastructure, including electric utilities, telecommunications, transportation and master limited partnerships (“MLPs”).

For the fiscal year ended October 31, 2021, the Fund’s total return based on market price was 50.51%; the Fund’s total return based on net asset value was 50.16%. The Index returned 52.28% during the same period.

The top contributors to Fund performance for the 12-month period included pipeline companies, oil & gas names, and producers of iron and steel. Canadian Natural Resources, an oil and natural gas production company, was a positive contributor. The company engages in the exploration, development, marketing, and production of crude oil and natural gas. Another top performer was Marathon Petroleum, an independent company that engages in the refining, marketing, and transportation of petroleum products in the U.S. ONEOK, which engages in the gathering, processing, fractionating, transporting, storing, and marketing of natural gas, made a positive contribution to the Fund’s returns. ONEOK operates through the following segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. Rounding out the top contributors were Delek US Holdings and Valero Energy.

The largest detractors from Fund performance were stocks involved in mining, electric generation, chemicals, and real estate. They included Agnico Eagle Mines, which engages in the exploration and production of gold, and DRDGOLD, which engages in the business of retreatment of surface gold. Another detractor was Enel Chile, which engages in the development, operation, generation, and distribution of electricity. Enel Chile operates through the following segments: Generation, Transmission, and Distribution.

The preceding information is the opinion of the investment adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

Indxx Real
Asset Income
Index
1

1 Year

50.16%

50.51%

52.28%

Since Inception2

 6.93%

 6.89%

 7.80%

1 The Indxx Real Asset Income Index tracks the performance of US-listed securities in the Real Asset space (Real Estate, Natural Resources and Infrastructure) emphasizing dividend growth. The Index is unmanaged, its returns do not reflect any fees, expenses, or sales charges, and is not available for direct investment.

2February 7, 2019.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

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.

19

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus Real Asset Income ETF (continued)

Equity REITs: The Fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management.

Natural Resources: A fund that focuses its investments in natural resources companies will be more sensitive to conditions affecting their business or operations.

Infrastructure: A fund that focuses its investments in infrastructure-related companies will be more sensitive to conditions affecting their business or operations.

Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets.

MLPs: Investments in Master Limited Partnerships may be adversely impacted by tax law changes, regulation, or factors affecting underlying assets.

Passive Strategy/Index Risk: A passive investment strategy seeking to track the performance of the Underlying Index may result in the fund holding securities regardless of market conditions or their current or projected performance. This could cause the Fund’s returns to be lower than if the Fund employed an active strategy.

Correlation to Index: The performance of the Fund and its index may vary somewhat due to factors such as Fund flows, transaction costs, and timing differences associated with additions to and deletions from its index.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

20

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus WMC International Dividend ETF

The Virtus WMC International Dividend ETF (the “Fund”) is an actively managed ETF designed to provide above market yield while seeking to be more diversified than traditional equity income approaches. It targets a below market beta relative to core equities. Securities that end up in the portfolio are selected because their high yield characteristics help meet the Fund’s income objective or their ability to help diversify risks in the portfolio. The names that are intended to help diversify risk in the portfolio are often names that 1) are members of the core index but not the high yield benchmark and 2) exhibit characteristics that high yielding stocks in aggregate tend to lack, such as growth.

During the period, the high yielding non-US equities, as measured by the MSCI World ex USA High Dividend Yield Index, posted positive absolute returns but underperformed core equities (as measured by MSCI World ex USA Index, respectively). Certain higher yielding segments of the market that make up a larger portion of the equity income universe than core, such as utilities companies, underperformed during the period. Meanwhile, higher growth stocks including technology companies, which are the companies that do not typically pay dividends and are therefore not as prevalent in the equity income universe, outperformed. Headwinds from these exposures resulted in weaker absolute returns for dividend paying stocks relative to core equities during the period.

During the period presented, the Virtus WMC International Dividend ETF NAV rose by 27.41%, underperforming its benchmark, the MSCI World ex US High Dividend Yield Index (Net), which rose by 28.93%.

The Fund’s structurally lower beta exposure was the main detractor from relative returns during the period. Because we believe that equity income allocations should provide some defensive characteristics relative to core equities, the portfolio targets a below market beta. While we expect this positioning to be beneficial over a full market cycle, this structural underweight exposure was a headwind during the period presented, as global markets rose.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser makes no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized.

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

MSCI World
Ex USA High
Dividend
Yield Index
(net)
1

1 Year

27.41%

27.72%

28.93%

Since Inception2

 7.20%

 7.37%

 3.45%

1The MSCI World Ex USA High Dividend Yield Index (net) is based on the MSCI World Index, its parent index, and includes large and mid cap stocks across 48 Developed Markets (DM) and Emerging Market (EM) 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; it is unmanaged; its returns do not reflect any fees, expenses or sales charges; and it is not available for direct investment.

2October 10, 2017.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deduction of taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-end performance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-point of the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the Cboe BZX Exchange, Inc. (“Cboe”), ordinarily 4:00 p.m. Eastern time, on each day during which the Cboe is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

Dividend Paying Securities: Issuers that have paid regular dividends or distributions may not continue to do so in the future and can fall out of favor with the market, which may cause the portfolio to underperform. Securities with higher dividend yields can be sensitive to interest rate movements: when interest rates rise, the prices of these securities may fall.

21

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

Virtus WMC International Dividend ETF (continued)

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

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

Geographic Concentration: Events negatively affecting the fiscal stability of a state, country, or region will cause the value of the Fund’s shares to decrease. Because the Fund concentrates its assets in a state, country, or region, the Fund is more vulnerable to those areas’ financial, economic, or other political developments.

Equity REITs: The Fund may be negatively affected by factors specific to the real estate market, including interest rates, leverage, property, and management.

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

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

22

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap MLP ETF

Management’s Discussion of Operations

Overview

InfraCap MLP ETF (the “Fund”) is an actively-managed portfolio of midstream energy master limited partnerships (“MLPs”) and related general partners. The Fund may utilize options strategies and leverage to enhance income and total return.

The Fund focuses on the midstream MLP sector because most of these companies have a long-term history of relatively stable and growing cash distributions. These companies are typically involved in the production, gathering, transportation, storage, and processing of oil, natural gas, natural gas liquids, and refined products.

Market Update

In the fiscal year ended October 31, 2021, the Fund’s total return based on net asset value was 121.30%. The Fund’s benchmark index, the Alerian MLP Infrastructure Index, returned 86.89% during same period, while the S&P 500 Index returned 42.91%%.

Fiscal year 2021 witnessed an unparalleled recovery from the volatility in WTI Crude Oil prices from the preceding year. In 2020, the emergence of the Covid-19 pandemic produced the sharpest decline in global economic activity ever recorded, and demand for crude oil and refined products plummeted. WTI Crude Oil prices fell from the low $60’s per barrel to an all-time low in the futures market to negative $37 per barrel. During the fiscal year, WTI Crude Oil prices rebounded and as of October 29, 2021 were $83.57.

The gradual return to normal business activity and OPEC+ agreements drove oil prices higher and supported MLP stock prices as there is a long-term need for North American oil and gas. Midstream companies benefited from the defensive nature of their business model with fee based contracts and added protections like minimum volume commitments. Many midstream companies have diversified customer bases or significant exposure to investment grade counterparties. During the earnings period, many management teams implemented steps to protect their balance sheet with cost saving initiatives and deferring capital spending. Moreover, many midstream companies announced actions to strengthen their financial flexibility, including streamlined maintenance capital costs and operating expenses. Cash flows remained stable during the fiscal year, with some MLPs pursuing shareholder friendly actions such as buy-backs, increased distributions or special distributions.

During the period, businesses reopened and the US gradually lifted strict social distancing measures that had been implemented in an effort to slow the spread of Covid-19. Two of the Fund’s stronger performing issuers during the period were Magellan Midstream Partners LP (“Magellan”) and DCP Midstream LP (“DCP Midstream”). Magellan’s business model is primarily focused on fee-based activities, which we believe facilitates consistent cash flows. Magellan demonstrated a commitment to maintaining: (1) a strong investment grade balance sheet, (2) its current distribution, (3) long standing maximum leverage targets, and (4) shareholder-friendly corporate actions, such as stock repurchase programs. DCP Midstream is one of the largest NGL producers and gas processors in the United States. It has maintained a strong and diversified customer base, disciplined capital management with respect to its investments, and a focus on reducing leverage to strengthen its balance sheet. In addition, DCP Midstream had a sizeable portion of unhedged commodity exposure which benefited from rising prices and contributed to its strong performance. During the period, Magellan and DCP Midstream were up 51.90% and 158.60%, respectively.

Two of the weaker performing positions during the period were Nustar Energy LP (“Nustar”) and Cheniere Energy Partners LP (“Cheniere”). Nustar is one of the largest independent liquids terminal and pipeline operators in the nation. Nustar lowered its 2021 adjusted EBITDA guidance related to asset sales. Chenerie has highly contracted LNG assets and thus, relative to its peers did not benefit as much from rising commodity prices. Nustar was up 18.70%, while Cheniere was up 29.60% during the period.

During the period, despite an increase in commodity prices, U.S. producers maintained capital discipline and kept their production outlook largely unchanged.

Dividend Payments

In the fiscal year ended October 31, 2021, the Fund made monthly dividend payments in the amount of $0.22 per share. While the Fund plans to continue paying monthly dividends, dividends are not guaranteed. The Fund seeks to maintain relatively stable monthly distributions although the amount of income earned by the Fund varies from period-to-period. In seeking to maintain a relatively stable monthly distribution, the Fund may distribute less than the full amount of income earned during a specific period, preserving income for distribution in future periods. Consequently, the amount of income distributed in any one period may be more or less than the actual amount of income earned in that period.

23

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap MLP ETF (continued)

Use of Leverage

The Fund’s policy is to maintain its leverage ratio in a range of 10-35% over the long term. The Fund effectively employed leverage over the fiscal year and made efforts to reduce its leverage during periods of increased volatility. The application of leverage positively contributed to Fund performance during the period. Leverage fluctuated within the targeted range during the fiscal year, consistent with the Fund’s investment objective to seek total return. Leverage represented 34.6% of net assets at year-end, which was near the upper end of the long-term target range. The Fund’s cost of borrowing fell during the fiscal year, which widened the spread on borrowed funds. The Fund borrows at a 120 basis point premium to the 3-month LIBOR rate, which remained extraordinarily low at 0.132% as of October 29, 2021. The yield on the Fund’s benchmark index, the Alerian MLP Infrastructure Index, was 7.40% on October 29, 2021.

Use of Options

The Fund seeks to generate additional income for distribution to investors by writing call and put options. The primary activity is writing “covered” call options on positions held by the Fund. However, due to high volatility within the asset class at times during the period, market conditions for covered call options were unfavorable to Fund performance for much of the fiscal year and as a result, the Fund’s manager reduced the frequency of this activity.

During the fiscal year, the Fund’s emphasis was on writing short-duration covered call options, and the average maturity of the option portfolio was less than 18 days. The Fund’s manager used these option strategies to seek to maximize the capture of premium decay and manage short term risks.

We believe consolidation within the MLP sector enhanced the liquidity in the single-stock options market as larger MLPs typically have more liquid markets for issued options.

Outlook

The Covid-19 pandemic caused midstream MLP stock prices to crash in 2020 despite having relatively stable businesses, particularly relative to more impacted sectors such as airlines, hotels, and restaurants. The fee-based contracts utilized in the midstream MLP sector have helped companies protect their cash flow generation. We will continue to monitor rising commodity prices, OPEC+ induced supply shocks, and macroeconomic factors related to infrastructure spending and Federal Reserve policy. Further, we expect US producers to remain disciplined and OPEC+ to slowly increase its output.

We continue to believe that there will be significant asset sales and acquisitions of entire companies over the next year as private equity firms and strategic acquirers take advantage of consolidations in midstream assets. We believe we are positioned to take advantage of M&A activity that we consider likely to occur in the recent future. In addition, we believe proposed increases in corporate taxes will decrease the advantages of MLP C-Corp conversions.

The Fund also maintains positions in large capitalization integrated pipelines and storage companies with stronger contractual protection and visible market demand. We believe these companies are less vulnerable during heightened periods of price volatility and are best suited to take advantage of opportunities that exist in the current market environment.

Importantly, many midstream companies implemented measures during the fiscal year to protect their balance sheets with cost saving initiatives and cancellations of growth and capital spending. Continuing in this development, midstream companies have transitioned to share buybacks as a means of returning cash opportunistically.

The preceding information is the opinion of the investment adviser and sub-adviser. 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. Statements of fact are from sources considered reliable, but the investment adviser and sub-adviser make no representation or warranty as to their completeness or accuracy. Past performance is no guarantee of future results, and there is no guarantee that market forecasts will be realized. This discussion includes information based on data and calculations sourced from Bloomberg and index constituents. While we believe that the data is reliable, we have not sought, nor have we received, permission from any third-party to include their information.

24

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap MLP ETF (continued)

Performance as of 10/31/2021

Average Annual Total Return

Fund
Net Asset
Value

Fund
Market
Price

Alerian MLP
Infrastructure
Index
1

S&P 500®
Index
2

1 Year

121.30%

120.44%

86.89%

42.91%

5 Years

  (9.07)%

  (9.14)%

 (1.55)%

18.93%

Since Inception3

 (13.39)%

 (13.44)%

 (6.16)%

15.15%

1 The Alerian MLP Infrastructure Index is a composite of energy infrastructure Master Limited Partnerships (MLPs), whose constituents earn the majority of their cash flow from the transportation, storage, and processing of energy commodities. The index is calculated using a float-adjusted, capitalization-weighted methodology 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.

2 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 is not available for direct investment.

3October 1, 2014.

Performance data quoted represents past performance and past performance does not guarantee future results. Investment returnand principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or lessthan the original cost. Current performance data may be higher or lower than actual data quoted. Returns do not reflect the deductionof taxes a shareholder would pay on Fund distributions or the redemption of Fund shares. For the most current month-endperformance data please visit www.virtusetfs.com or call toll free (800) 243-4361. Market price returns are based on the mid-pointof the highest bid and lowest offer for Fund shares as of the scheduled close of regular trading on the New York Stock Exchange Arca (“NYSE”), ordinarily 4:00 p.m. Eastern time, on each day during which the NYSE is open for trading, and do not represent the returns an investor would receive if shares were traded at other times.

MLPs: Investments in Master Limited Partnerships may be adversely impacted by tax law changes, regulation, or factors affecting underlying assets.

Industry/Sector Concentration: A fund that focuses its investments in a particular industry or sector will be more sensitive to conditions that affect that industry or sector than a non-concentrated fund.

Interest Rate Risk: As yield-based investments, MLPs carry interest rate risk and may underperform in rising interest rate environments. Additionally, when investors have heightened fears about the economy, the risk spread between MLPs and competing investment options can widen, which may have an adverse effect on the stock price of MLPs. Rising interest rates may increase the potential cost of MLPs financing projects or cost of operations, and may affect the demand for MLP investments, either of which may result in lower performance by or distributions from the Fund’s MLP investments.

Leverage: When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded.

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

Non-Diversified: The Fund is non-diversified and may be more susceptible to factors negatively impacting its holdings to the extent that each security represents a larger portion of the Fund’s assets.

Short Sales: The Fund may engage in short sales, and may experience a loss if the price of a borrowed security increases before the date on which the Fund replaces the security.

Exchange Traded Funds: The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track. The costs of owning the ETF may exceed the cost of investing directly in the underlying securities.

Market Price/NAV: Shares of ETFs often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the Fund’s NAV.

No Guarantee: There is no guarantee that the Fund will meet its objective.

Prospectus: For additional information on risks, please see the Fund’s prospectus. The Fund may not be suitable for all investors.

25

Management’s Discussion of Fund Performance (unaudited) (continued)

October 31, 2021

InfraCap MLP ETF (continued)

Value of a $10,000 Investment Since Inception at Net Asset Value

The chart above represents historical performance of a hypothetical investment of $10,000 over the life of the Fund, assuming reinvestment of distributions. Past performance does not guarantee future results.

26

Portfolio Composition (unaudited)

October 31, 2021

Asset Allocation as of 10/31/2021 (based on net assets)

InfraCap REIT Preferred ETF

Real Estate

59.7

%

Financials

38.7

%

Other Assets in Excess of Liabilities

1.6

%

Total

100.0

%

Virtus InfraCap U.S. Preferred Stock ETF

Real Estate

35.1

%*

Financials

30.9

%*

Energy

22.3

%

Utilities

20.0

%

Industrials

15.0

%

Consumer Discretionary

3.6

%

Communication Services

2.6

%

Health Care

0.1

%

Liabilities in Excess of Other Assets

(29.6

)%

Total

100.0

%

Virtus LifeSci Biotech Clinical Trials ETF

Health Care

98.4

%

Materials

0.5

%

Money Market Fund

9.1

%

Liabilities in Excess of Other Assets

(8.0

)%

Total

100.0

%

Virtus LifeSci Biotech Products ETF

Health Care

97.9

%

Money Market Fund

7.4

%

Liabilities in Excess of Other Assets

(5.3

)%

Total

100.0

%

*Amounts represent investments in particular sectors. No industry within these sectors represented more than 25% of the Fund’s total assets at the time of investment.

27

Portfolio Composition (unaudited) (continued)

October 31, 2021

Asset Allocation as of 10/31/2021 (based on net assets)

Virtus Newfleet Multi-Sector Bond ETF

Corporate Bonds

41.2

%

Term Loans

20.0

%

Foreign Bonds

15.8

%

Mortgage Backed Securities

7.2

%

U.S. Government Securities

6.6

%

Asset Backed Securities

6.1

%

Debt Fund

0.5

%

Municipal Bond

0.0

%*

Money Market Fund

2.6

%

Liabilities in Excess of Other Assets

(0.0

)%*

Total

100.0

%

Virtus Private Credit Strategy ETF

Financials

60.7

%

Closed-End Funds

37.8

%

Money Market Fund

12.5

%

Liabilities in Excess of Other Assets

(11.0

)%

Total

100.0

%

Virtus Real Asset Income ETF

Real Estate

32.4

%

Energy

24.0

%

Materials

18.8

%

Utilities

18.6

%

Communication Services

4.1

%

Industrials

1.1

%

Money Market Fund

1.4

%

Liabilities in Excess of Other Assets

(0.4

)%

Total

100.0

%

*Amount rounds to less than 0.05%.

28

Portfolio Composition (unaudited) (continued)

October 31, 2021

Asset Allocation as of 10/31/2021 (based on net assets)

Virtus WMC International Dividend ETF

Financials

22.4

%

Health Care

11.9

%

Consumer Staples

10.8

%

Industrials

9.9

%

Communication Services

9.6

%

Materials

8.9

%

Utilities

8.4

%

Consumer Discretionary

7.1

%

Information Technology

4.5

%

Energy

3.6

%

Real Estate

1.9

%

Preferred Stock

0.2

%

Other Assets in Excess of Liabilities

0.8

%

Total

100.0

%

InfraCap MLP ETF

Energy

134.7

%

Written Options

(0.1

)%

Liabilities in Excess of Other Assets

(34.6

)%

Total

100.0

%

29

Shareholder Expense Examples (unaudited)

October 31, 2021

We believe it is important for you to understand the impact of costs on your investment. All funds have operating expenses. As a shareholder of the InfraCap REIT Preferred ETF, Virtus InfraCap U .S. Preferred Stock ETF, Virtus LifeSci Biotech Clinical Trials ETF, Virtus LifeSci Biotech Products ETF, Virtus Newfleet Multi-Sector Bond ETF, Virtus Private Credit Strategy ETF, Virtus Real Asset Income ETF, Virtus WMC International Dividend ETF and InfraCap MLP ETF (each, a “Fund”) you may incur two types of costs: (1) transaction costs, which include brokerage commissions that you pay when purchasing or selling shares of a Fund; and (2) ongoing costs, which include advisory fees and other fund expenses, if any . The following example is intended to help you understand your ongoing costs (in dollars and cents) of investing in a Fund and to compare these costs with the ongoing costs of investing in other funds. The examples are based on an investment of $1,000 invested at the beginning of the period and held throughout the entire period (May 1, 2021 to October 31, 2021).

Actual expenses

The first line under each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, 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 first line for your Fund under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical example for comparison purposes

The second line under each Fund in the table provides information about hypothetical account values and hypothetical expenses based on each Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not each 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 each Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as brokerage commissions paid on purchases and sales of Fund shares. Therefore, the second line under each Fund in the table is useful in comparing ongoing Fund 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.

Beginning
Account Value
5/01/21

Ending
Account Value
10/31/21


Annualized
Expense Ratios
(2)

Expenses Paid
During the
Period
(3)

InfraCap REIT Preferred ETF

Actual

$1,000.00

$1,032.50

0.45%

$2.31

Hypothetical(1)

$1,000.00

$1,022.94

0.45%

$2.29

Virtus InfraCap U.S. Preferred Stock ETF

Actual

$1,000.00

$1,080.60

0.80%

$4.20

Hypothetical(1)

$1,000.00

$1,021.17

0.80%

$4.08

Virtus LifeSci Biotech Clinical Trials ETF

Actual

$1,000.00

$874.30

0.79%

$3.73

Hypothetical(1)

$1,000.00

$1,021.22

0.79%

$4.02

Virtus LifeSci Biotech Products ETF

Actual

$1,000.00

$963.40

0.79%

$3.91

Hypothetical(1)

$1,000.00

$1,021.22

0.79%

$4.02

Virtus Newfleet Multi-Sector Bond ETF

Actual

$1,000.00

$1,014.10

0.49%

$2.49

Hypothetical(1)

$1,000.00

$1,022.74

0.49%

$2.50

Virtus Private Credit Strategy ETF

Actual

$1,000.00

$1,091.40

0.75%

$3.95

Hypothetical(1)

$1,000.00

$1,021.42

0.75%

$3.82

Virtus Real Asset Income ETF

Actual

$1,000.00

$1,044.10

0.55%

$2.83

Hypothetical(1)

$1,000.00

$1,022.43

0.55%

$2.80

Virtus WMC International Dividend ETF

Actual

$1,000.00

$1,003.90

0.49%

$2.47

Hypothetical(1)

$1,000.00

$1,022.74

0.49%

$2.50

InfraCap MLP ETF

Actual

$1,000.00

$1,106.60

0.95%

$5.04

Hypothetical(1)

$1,000.00

$1,020.42

0.95%

$4.84

1Assuming 5% return before expenses.

2Annualized expense ratios reflect expenses net of waived fees or reimbursed expenses, if applicable.

3Expenses are calculated using each Fund’s annualized expense ratio, multiplied by the average account value for the period, multiplied by 184/365 (to reflect the six-month period).

Schedule of Investments — InfraCap REIT Preferred ETF

October 31, 2021

The accompanying notes are an integral part of these financial statements.

30

Security Description

Shares

Value

PREFERRED STOCKS — 98.4%

Financials — 38.7%

ACRES Commercial Realty Corp., 8.63%

31,684

$822,834

AG Mortgage Investment Trust, Inc.,
Series B, 8.00%

30,317

773,084

AG Mortgage Investment Trust, Inc.,
Series C, 8.00%

29,912

761,260

AGNC Investment Corp., Series D, 6.88%

48,222

1,235,930

AGNC Investment Corp., Series E, 6.50%

53,543

1,388,370

AGNC Investment Corp., Series F, 6.13%

57,050

1,445,077

Annaly Capital Management, Inc., Series F, 6.95%

101,838

2,581,593

Annaly Capital Management, Inc., Series G, 6.50%

64,684

1,645,561

Annaly Capital Management, Inc., Series I, 6.75%

78,419

2,061,636

ARMOUR Residential REIT, Inc., Series C, 7.00%

24,271

627,405

Brookfield Finance I UK PLC, 4.50% (Canada)

70,434

1,770,711

Brookfield Finance, Inc., Series 50, 4.63% (Canada)

93,701

2,382,816

Chimera Investment Corp., Series B, 8.00%

54,624

1,408,753

Chimera Investment Corp., Series C, 7.75%

42,072

1,079,988

Chimera Investment Corp., Series D, 8.00%

41,496

1,064,787

Dynex Capital, Inc., Series C, 6.90%

15,812

409,215

Invesco Mortgage Capital, Inc., Series B, 7.75%

30,261

770,142

Invesco Mortgage Capital, Inc., Series C, 7.50%

38,987

998,847

MFA Financial, Inc., Series C, 6.50%

38,823

936,023

New Residential Investment Corp., Series A, 7.50%

21,959

563,248

New Residential Investment Corp., Series B, 7.13%

37,873

950,612

New Residential Investment Corp., Series C, 6.38%

50,251

1,180,396

New York Mortgage Trust, Inc., Series B, 7.75%

21,770

552,740

New York Mortgage Trust, Inc., Series D, 8.00%

30,622

800,765

New York Mortgage Trust, Inc., Series E, 7.88%

41,851

1,083,104

PennyMac Mortgage Investment Trust, Series A, 8.13%

21,643

582,630

PennyMac Mortgage Investment Trust, Series B, 8.00%

34,440

911,282

Security Description

Shares

Value

PREFERRED STOCKS (continued)

Financials (continued)

Two Harbors Investment Corp., Series A, 8.13%

32,293

$854,473

Two Harbors Investment Corp., Series B, 7.63%

45,049

1,161,363

Two Harbors Investment Corp., Series C, 7.25%

42,333

1,066,792

Total Financials

33,871,437

Real Estate — 59.7%

American Finance Trust, Inc., Series A, 7.50%

115,274

3,074,358

American Finance Trust, Inc., Series C, 7.38%

66,736

1,766,502

Armada Hoffler Properties, Inc., Series A, 6.75%

68,947

1,920,863

Cedar Realty Trust, Inc., Series C, 6.50%

71,386

1,838,189

CorEnergy Infrastructure Trust, Inc.,
Series A, 7.38%

77,382

1,897,407

DiamondRock Hospitality Co., 8.25%

73,365

2,081,365

DigitalBridge Group, Inc., Series I, 7.15%

178,557

4,642,482

DigitalBridge Group, Inc., Series J, 7.13%

162,979

4,281,458

Diversified Healthcare Trust, 5.63%

200,250

4,856,063

Diversified Healthcare Trust, 6.25%

142,886

3,597,869

Healthcare Trust, Inc., Series A, 7.38%

57,602

1,455,027

Hersha Hospitality Trust, Series D, 6.50%

115,453

2,810,126

Hersha Hospitality Trust, Series E, 6.50%

55,346

1,357,084

Office Properties Income Trust, 6.38%

92,996

2,607,608

Public Storage, Series N, 3.88%

161,333

4,107,538

Public Storage, Series O, 3.90%

95,731

2,450,714

UMH Properties, Inc., Series D, 6.38%

109,906

2,877,339

Vornado Realty Trust, Series N, 5.25%

171,327

4,678,940

Total Real Estate

52,300,932

TOTAL INVESTMENTS — 98.4%

(Cost $82,650,321)

86,172,369

Other Assets in Excess of Liabilities — 1.6%

1,366,460

Net Assets — 100.0%

$87,538,829


The following table summarizes valuation of the Fund’s investments under the fair value hierarchy levels as of October 31, 2021.

Level 1

Level 2

Level 3

Total

Asset Valuation Inputs

Preferred Stocks

$86,172,369

$

$

$86,172,369

Total

$86,172,369

$

$

$86,172,369

Schedule of Investments — Virtus InfraCap U.S. Preferred Stock ETF

October 31, 2021

The accompanying notes are an integral part of these financial statements.

31

Security Description

Shares

Value

PREFERRED STOCKS — 129.6%

Communication Services — 2.6%

Liberty Broadband Corp., Series A, 7.00%(1)

46,110

$1,309,524

Qwest Corp., 6.50%(1)

13,364

343,054

Telephone and Data Systems, Inc.,
Series UU, 6.63%
(1)

45,716

1,253,990

Telephone and Data Systems, Inc.,
Series VV, 6.00%

403,093

10,569,099

United States Cellular Corp., 5.50%(1)

12,580

333,118

Total Communication Services

13,808,785

Consumer Discretionary — 3.6%

Ford Motor Co., 6.00%(1)

467,652

12,757,547

Ford Motor Co., 6.20%(1)

169,724

4,667,410

Franchise Group, Inc., Series A, 7.50%(1)

51,465

1,386,467

Total Consumer Discretionary

18,811,424

Energy — 22.3%

Crestwood Equity Partners LP, 9.25%(1)

2,106,119

21,545,597