Virtus Diversified Income & Convertible Fund Discloses Sources of Distribution – Section 19(a) Notice

Key Terms

managed distribution plan financial

A managed distribution plan is a company’s program to pay regular, predictable cash amounts to shareholders by setting a fixed schedule and target payout, often funded from operating cash, reserves, or return of capital. Think of it like a household budget that guarantees a monthly allowance: it provides steady income for investors but can mask when distributions exceed sustainable earnings, which may reduce the company’s capital over time and affect long‑term value.

net investment income financial

Net investment income is the money an investor or fund actually keeps from its investments after subtracting the costs of running those investments (like management fees, interest, and losses). Think of it as your paycheck from owning assets: gross returns minus the bills needed to earn them. Investors watch it because it shows how profitable the investment activities are, influences dividend payouts and cash available for growth, and helps compare true performance across funds or companies.

return of capital financial

Return of capital is when an investor receives money from their investment that is not considered profit or earnings but rather a portion of the original amount they invested. It’s similar to getting back part of your initial savings rather than gains from it. This matters because it can affect how much money an investor still has in the investment and may have tax implications.

net asset value (nav) financial

Net asset value (NAV) is the per-share value of an investment fund calculated by totaling the fund’s assets, subtracting its liabilities, and dividing the remainder by the number of outstanding shares. Think of it like a price tag on each share of a collective piggy bank: investors use NAV to see what each share is worth, to compare funds, and, for many funds, it’s the price at which shares are bought or redeemed.

short-term capital gains financial

Profit from selling an investment held for a short period that is taxed at ordinary income rates rather than the lower long-term rates. Think of it like flipping a gadget quickly for a gain: because you didn’t hold it long, the taxman treats the profit like regular pay, which can reduce the after-tax return and influence decisions about how long investors keep assets.

long-term capital gains financial

Profit realized when an investor sells an asset they have owned longer than the legally specified holding period; these gains are taxed under “long-term” rules that typically carry lower tax rates than gains on assets sold quickly. It matters to investors because lower tax rates increase the amount of money they keep after a sale, so holding an investment longer can be like letting a high-interest coupon compound before withdrawing the cash, affecting decisions about when to sell and overall portfolio returns.

fiscal year-to-date financial

Fiscal year-to-date (YTD) measures a company's cumulative performance—such as revenue, profit or expenses—from the first day of its fiscal year up through the current date. Investors use it like a running scorecard since the season started: it reveals trends, shows whether management is on track for annual goals, and lets analysts compare progress before full-year results are published.

form 1099-div regulatory

Form 1099-DIV is a U.S. tax document brokers, mutual funds and other financial institutions send to investors showing dividends and other distributions paid during the year. Investors use it like an annual receipt to report taxable income — including regular dividends, dividends that may qualify for lower tax rates, and capital gains distributions — so it directly affects tax liability and helps reconcile brokerage records with a tax return.

HARTFORD, Conn.--(BUSINESS WIRE)-- Virtus Diversified Income & Convertible Fund (NYSE: ACV) previously announced the following monthly distribution on November 19, 2025:

Ticker	Amount of Distribution	Ex-Date/Record Date	Payable Date
ACV	$0.18	January 12, 2026	January 29, 2026

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 provides this estimate of the sources of its distributions:

Distribution Estimates	January 2026 (MTD)		Fiscal Year-to-Date (YTD) (1)
(Sources)	Per Share Amount	Percentage of Current Distribution	Per Share Amount	Percentage of Current Distribution
Net Investment Income	$ 0.000	0.0%	$ 0.053	2.1%
Net Realized Short-Term Capital Gains	0.028	15.6%	1.978	77.7%
Net Realized Long-Term Capital Gains	0.152	84.4%	0.513	20.2%
Return of Capital (or other Capital Source)	0.000	0.0%	0.000	0.0%
Total Distribution	$ 0.180	100.0%	$ 2.544	100.0%
(1) Fiscal year started February 1, 2025. Per share amount includes the special year-end distribution of $0.384 per share paid January 9, 2026 to shareholders of record at the close of business on December 29, 2025 sourced from net realized short-term gains and net realized long-term gains.

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 31, 2025
Average Annual Total Return on NAV for the 5-year period (2)	6.70%
Annualized Current Distribution Rate (3)	8.62%
Fiscal YTD Cumulative Total Return on NAV (4)	18.95%
Fiscal YTD Cumulative Distribution Rate (5)	9.43%
(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 ($0.18 per share) 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 (inclusive of the special year-end distribution) as a percentage of the Fund's NAV at month end. The Fiscal YTD Cumulative Distribution Rate would be 7.90% if the special year-end distribution of $0.384 per share was excluded.

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, LLC, a registered investment adviser affiliated with Virtus Investment Partners, 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 can be accessed through the Closed-End Funds section of virtus.com and 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 products and services from our investment 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:

Shareholder Services

(866) 270-7788

closedendfunds@virtus.com

Source: Virtus Diversified Income & Convertible Fund