Virtus Diversified Income & Convertible Fund Discloses Sources of Distribution – Section 19(a) Notice
Virtus Diversified Income & Convertible Fund (ACV) announced a monthly distribution of $0.18 per share on January 30, 2024, payable to shareholders of record on January 12, 2024. The Fund aims to maintain a consistent distribution level from net investment income and realized capital gains, but may distribute from its assets if necessary.
The announcement of the Virtus Diversified Income & Convertible Fund's monthly distribution is a significant event for investors and stakeholders. The distribution of $0.18 per share indicates the fund's current cash flow and income-generating ability. Investors typically look for consistency in distributions as it may reflect the fund's operational stability and asset management strategies.
It is crucial to analyze the source of the distribution. If it is primarily from net investment income and realized capital gains, it suggests the fund is performing well and generating sufficient returns. However, if distributions are supplemented by a return of capital, it means that the payouts are not fully covered by income and gains, which could imply a potential depletion of the fund's assets over time.
Stakeholders should closely monitor the fund's performance to ensure that distributions are sustainable. A return of capital could impact the fund's net asset value (NAV) and might signal a need for a review of the investment strategy if it becomes a regular occurrence.
From a market perspective, the distribution announcement by ACV could influence investor sentiment towards the fund. Consistent and predictable distributions can make the fund attractive to income-focused investors, potentially leading to increased demand for the fund's shares.
However, the market will also react to the composition of the distribution. A reliance on return of capital could be viewed unfavorably, as it may indicate that the fund's income and capital gains are not sufficient to cover the distributions. This could lead to a reassessment of the fund's valuation by the market and affect its stock price.
Furthermore, the Managed Distribution Plan suggests an active approach to maintaining distribution levels, which might be appealing to investors seeking regular income. The plan's effectiveness in maintaining distribution levels without eroding the fund's capital will be a key factor in the fund's market reputation and performance.
The tax implications of the fund's distributions are an important consideration for investors. Distributions that are classified as a return of capital are typically not taxable as income in the year they are received, but they do reduce the investor's cost basis in the fund, potentially leading to higher capital gains taxes when the shares are sold.
Investors should be aware of the tax consequences of these distributions, especially if a significant portion of the distribution is a return of capital. It is advisable for shareholders to consult with tax professionals to understand the impact on their individual tax situations and to plan accordingly for any potential future tax liabilities.
01/22/2024 - 04:15 PM
HARTFORD, Conn. --(BUSINESS WIRE)--
Virtus Diversified Income & Convertible Fund (NYSE: ACV) previously announced the following monthly distribution on November 16, 2023:
Ticker
Amount of Distribution
Ex-Date
Record Date
Payable Date
ACV
$0.18
January 11, 2024
January 12, 2024
January 30, 2024
Under the terms of its Managed Distribution Plan, the Fund will seek to maintain a consistent distribution level that may be paid in part or in full, from net investment income and realized capital gains, or a combination thereof. Shareholders should note, however, that if the Fund's aggregate net investment income and net realized capital gains are less than the amount of the distribution level, the difference will be distributed from the Fund's assets and will constitute a return of the shareholder's capital. You should not draw any conclusions about the Fund’s investment performance from the amount of this distribution or from the terms of the Fund’s Managed Distribution Plan.
The Fund estimates that it has distributed more than its income and capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with ‘yield’ or ‘income’.
The Fund provides this estimate of the sources of its distributions:
Distribution Estimates
January 2024 (MTD)
Fiscal Year-to-Date (YTD) (1)
(Sources)
Per Share
Amount
Percentage
Per Share
Percentage
of Current
Net Investment Income
$
-
0.0%
$
0.019
0.9%
Net Realized Short-Term Capital Gains
-
0.0%
-
0.0%
Net Realized Long-Term Capital Gains
-
0.0%
-
0.0%
Return of Capital (or other Capital Source)
0.180
100.0%
2.141
99.1%
Total Distribution
$
0.180
100.0%
$
2.160
100.0%
(1) Fiscal year started February 1, 2023.
Information regarding the Fund’s performance and distribution rates is set forth below. Please note that all performance figures are based on the Fund’s net asset value (NAV) and not the market price of the Fund’s shares. Performance figures are not meant to represent individual shareholder performance.
December 29, 2023
Average Annual Total Return on NAV for the 5-year period (2)
14.42%
Annualized Current Distribution Rate (3)
10.11%
Fiscal YTD Cumulative Total Return on NAV (4)
10.97%
Fiscal YTD Cumulative Distribution Rate (5)
9.27%
(2)
Average Annual Total Return on NAV is the annual compound return for the five-year period. It reflects the change in the Fund’s NAV and reinvestment of all distributions.
(3)
Annualized Current Distribution Rate is the current distribution rate annualized as a percentage of the Fund's NAV at month end.
(4)
Fiscal YTD Cumulative Total Return on NAV is the percentage change in the Fund's NAV from the first day of the fiscal year to this month end, including distributions paid and assuming reinvestment of those distributions.
(5)
Fiscal YTD Cumulative Distribution Rate is the dollar value of distributions from the first day of the fiscal year to this month end as a percentage of the Fund's NAV at month end.
The amounts and sources of distributions reported in this notice are estimates only and are not being provided for tax reporting purposes. The actual amounts and sources of the distributions for tax purposes will depend on the Fund’s investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund or your broker will send you a Form 1099-DIV for the calendar year that will tell you what distributions to report for federal income tax purposes.
About the Fund
Virtus Diversified Income & Convertible Fund is a diversified closed-end fund that seeks to provide total return through a combination of current income and capital appreciation, while seeking to provide downside protection against capital loss. The Fund strives to dynamically allocate across convertibles, equities, and income-producing securities. The Fund normally invests at least 50% of total managed assets in convertibles and has the latitude to write covered call options on the stocks held in the equity portion. The Fund has a limited term and will terminate on the first business day following the 15th anniversary of the effective date of its registration statement, May 22, 2030, absent approval by the Fund’s Board of Trustees to extend the Fund’s term by up to 12 months. Virtus Investment Advisers, Inc. is the investment adviser to the Fund and Voya Investment Management is its subadviser.
For more information on the Fund, contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com , or through the Closed-End Funds section of virtus.com .
Fund Risks
An investment in a fund is subject to risk, including the risk of possible loss of principal. A fund’s shares may be worth less upon their sale than what an investor paid for them. Shares of closed-end funds may trade at a premium or discount to their NAV. For more information about the Fund’s investment objective and risks, please see the Fund’s annual report. A copy of the Fund’s most recent annual report may be obtained free of charge by contacting “Shareholder Services” as set forth at the end of this press release.
About Virtus Investment Partners, Inc.
Virtus Investment Partners (NYSE: VRTS) is a distinctive partnership of boutique investment managers singularly committed to the long-term success of individual and institutional investors. We provide investment management products and services from our affiliated managers , each with a distinct investment style and autonomous investment process, as well as select subadvisers. Investment solutions are available across multiple disciplines and product types to meet a wide array of investor needs. Additional information about our firm, investment partners, and strategies is available at virtus.com .
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For Further Information:
closedendfunds@virtus.com
Source: Virtus Diversified Income & Convertible Fund
What is the ticker symbol for Virtus Diversified Income & Convertible Fund?
The ticker symbol for Virtus Diversified Income & Convertible Fund is ACV.
When is the monthly distribution of $0.18 per share payable?
The monthly distribution of $0.18 per share is payable on January 30, 2024.
What is the Ex-Date for the distribution?
The Ex-Date for the distribution is January 11, 2024.
How does the Fund maintain its distribution level?
The Fund aims to maintain a consistent distribution level from net investment income and realized capital gains, but may distribute from its assets if necessary.
What happens if the Fund's net investment income and net realized capital gains are less than the distribution level?
If the Fund's aggregate net investment income and net realized capital gains are less than the distribution level, the difference will be distributed from the Fund's assets and will constitute a return of the shareholder's capital.
