Company: NCZ-PA
Filing Date: 2025-04-11
Form Type: N-CSR
Source: 0001193125-25-079060
Chunk: 9

Company: Virtus Convertible & Income Fund II
Filing Date: 2025-04-11
Form: N-CSR
Chunk 9
---
 net asset value (“NAV”) returned 19.01%, while its market price returned 24.58%. For the same period, the Fund’s composite benchmark, which consists of 60% ICE BofA U.S. Convertibles Index
(representing convertible securities) and 40% ICE BofA U.S. High Yield Index (representing high yield bonds), returned 13.17%. The underlying indexes returned 15.43% for convertible securities and 9.67% for high yield bonds.

The Fund delivered consistent income and a
positive total return for the 12-month period. The portfolio benefited from strength across risk assets including convertible securities and high yield bonds.

Among convertible securities, most sectors
finished higher, led by technology, financials, and consumer discretionary. Software and semiconductor positioning was the primary source of the Fund’s strength in technology. Financials were aided by gains in a health care real estate
investment trust (“REIT”), an alternative asset manager, and a consumer finance issuer. Cruise line exposure was the largest driver of performance in consumer discretionary, with additional gains from issues in e-commerce and
entertainment services. Conversely, two sectors—media and telecom—detracted from performance due to weakness in advertising and wired telecommunications, respectively.

With respect to the high yield allocation,
all industries finished higher and contributed to performance for the period. Financial services, energy, and technology had the greatest impact on the Fund. In financial services, consumer lending holdings were the primary drivers of performance.
Gains in energy were broad, with every position closing higher for the fiscal year. Technology was led by cybersecurity and data storage holdings. There were no industries that detracted from performance for the 12-month period.

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

The preceding information is the opinion of
portfolio management only through the end of the period of the report as stated on the cover. Any such opinions are subject to change at any time based upon market conditions and should