Company: NCZ-PA
Filing Date: 2025-04-11
Form Type: N-CSR
Source: 0001193125-25-079060
Chunk: 15

Company: Virtus Convertible & Income Fund II
Filing Date: 2025-04-11
Form: N-CSR
Chunk 15
---
 PERFORMANCE
(Unaudited)

#### January 31, 2025
About
the Fund:

Diversified Income &
Convertible Fund’s (NYSE: ACV) (the “Fund”) investment objective is to provide total return through a combination of current income and capital appreciation, while seeking to provide downside protection against capital loss. There is no guarantee that the Fund will achieve its investment objective.

The Fund has a blended capital structure
combining long-term fixed rates and short-term variable rates which enable the Fund to seek to enhance the returns and yields on its investments. As of January 31, 2025, the Fund’s leverage consisted of $105.0 million of borrowings made
pursuant to long-term senior notes, margin loan financing, and mandatory redeemable preferred shares, which represented approximately 30% of the Fund’s total assets.

Manager Comments - Voya Investment Management Co. LLC
(“Voya IM”)

Voya IM manages
the Fund. As the asset management business of Voya Financial (NYSE: VOYA), Voya IM seeks to understand and anticipate client needs, delivering differentiated solutions across public and private fixed income, equity, and multi-asset platforms,
including private markets and alternatives. The following commentary is provided by the portfolio team at Voya IM.

How did the markets perform during the Fund’s fiscal year
ended January 31, 2025?

Risk assets
advanced during the reporting period, with the equity, convertible securities, and high yield bond markets finishing higher for the 12 months ended January 31, 2025. The S&P
500 ® Index returned 26.38%, the ICE BofA U.S. Convertibles Index returned 15.43%, and the ICE BofA U.S. High Yield Index returned 9.67%.

Equities made multiple new all-time highs
during the reporting period, helped by strong corporate profitability, rising earnings estimates, and broad-based sector gains.

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.

Regarding high yield bonds, industry gains
were also widespread. Lower quality bonds outperformed higher quality bonds, new issuance was strong, and the trailing 12-month default rate remained low.

Against this backdrop, corporate earnings
results were generally better than expected, with most companies beating top- and bottom-line forecasts. The U.S. economy