Company: NCZ-PA
Filing Date: 2025-04-11
Form Type: N-CSR
Source: 0001193125-25-079060
Chunk: 20

Company: Virtus Convertible & Income Fund II
Filing Date: 2025-04-11
Form: N-CSR
Chunk 20
---
 Conversely, an overweight in real estate and an underweight in industrials detracted for the 12-month period.

The Fund employs an options overlay strategy
in which calls are written on a portion of the portfolio’s equity holdings. In the options sleeve, many written options positions expired below the strike price, and the portfolio was able to retain the set premiums.

### Voya Investment Management (Voya IM)
How did the convertible securities markets perform during the
Funds’ fiscal year?

Risk assets
advanced during the reporting period, with the ICE BofA U.S. Convertibles Index returning 15.43% for the 12 months ended January 31, 2025. Convertible securities were positively impacted by underlying stock price strength and credit spread
tightening. Spread refers to the additional yield over the yield of a risk-free government bond. Sector performance was mostly positive, and primary market activity increased.

Against this backdrop, corporate earnings
results were generally better than expected, with most companies beating top- and bottom-line forecasts. The U.S. economy expanded, inflation continued to normalize, the unemployment rate remained low, and the manufacturing sector began to
stabilize. The U.S. Federal Reserve (the “Fed”) cut interest rates by a total of 1.00% during the 12-month period.

<div align='center'>For information regarding the indexes and certain key investment terms, see
Key Investment Terms starting on page 18.

11</div>

#### Dividend, Interest &
Premium Strategy Fund (NFJ)

<div align='center'>**MANAGER’S DISCUSSION OF FUND
PERFORMANCE (Unaudited) (Continued)**</div>

#### January 31, 2025
What factors affected the performance of the Fund’s
convertible securities portfolio during the fiscal year?

For the 12 months ended January 31, 2025, the
Fund’s convertible securities portfolio returned 19.50% (gross of fees and expenses). For the same period, the ICE BofA U.S. Convertibles Index returned 15.43%.

Top contributors to performance were led by a
software company with bitcoin exposure and a semiconductor company that consistently exceeded expectations due to strong demand for its chips, which train and deploy generative artificial intelligence (“AI”) applications. Other
outperformers included an e-commerce company capitalizing on secular trends around AI and cloud migration, a cruise line operator benefiting from increased travel demand, and a security device manufacturer exhibiting core business strength and a