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Virtus Artificial Intelligence & Technology Opportunities Fund Discloses Sources of Distribution – Section 19(a) Notice

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Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO) has announced a monthly distribution of $0.15 per share, with an ex-date of January 11, 2024, record date of January 12, 2024, and payable date of January 30, 2024. The Fund aims to maintain a consistent distribution level from net investment income and realized capital gains, or a combination thereof. Shareholders should be aware that if the Fund's income and gains are less than the distribution level, the difference will be distributed from the Fund's assets, constituting a return of the shareholder's capital.
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The announcement by Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) of a monthly distribution of $0.15 per share is a pivotal financial event for shareholders. The distribution is significant as it represents a return on investment and can be a reflection of the fund's performance. It's essential to note that distributions can come from various sources, such as net investment income, realized capital gains, or a return of capital. A consistent distribution level can be attractive to income-focused investors, but the sustainability of these payments hinges on the fund's ability to generate sufficient income and gains.

The mention of potential return of capital is a crucial detail. If distributions exceed the fund's earnings and realized gains, it can erode the fund's asset base, which may not be sustainable in the long run. Investors should be aware of the composition of distributions, as a return of capital could indicate that the fund is not generating enough income from its investments. This could impact the fund's future growth prospects and share price.

The use of a Managed Distribution Plan by AIO suggests a strategy to provide shareholders with a predictable income stream. This approach can be particularly appealing in volatile markets, where investors seek stability. However, the market's response to such distributions can vary. If investors perceive the distributions as a sign of strong fund performance and effective asset management, it could lead to increased demand for AIO shares, potentially raising the share price.

Conversely, if the market views these distributions as unsustainable or masking underlying performance issues, there could be negative pressure on the stock. It's important for investors to look beyond the headline distribution figures and understand the underlying performance metrics of the fund, including its portfolio composition, dividend yield from investments and the total return, which includes both income and capital gains.

From an economic perspective, the distribution policy of investment funds like AIO can reflect broader economic conditions. In a low-interest-rate environment, for example, the yield generated by traditional fixed-income investments may be insufficient, prompting funds to seek alternative income sources or utilize capital gains to maintain attractive distribution levels. This could indicate a shift in asset allocation strategies within the fund, potentially increasing exposure to higher-risk investments to chase yield.

Furthermore, the long-term implications of such distributions on capital preservation are significant. While providing short-term income, the fund must balance this with the need to maintain and grow its capital base to ensure it can continue to meet its distribution objectives in the future. This balance is critical for the fund's health and can be an indicator of the fund's resilience in different economic cycles.

HARTFORD, Conn.--(BUSINESS WIRE)-- Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO) previously announced the following monthly distribution on November 16, 2023:

Ticker

Amount of Distribution

Ex-Date

Record Date

Payable Date

AIO

$0.15

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

of Current

Distribution

Per Share

Amount

Percentage

of Current

Distribution

Net Investment Income

$

-

0.0

%

$

0.008

0.4

%

Net Realized Short-Term Capital Gains

 

-

0.0

%

 

-

0.0

%

Net Realized Long-Term Capital Gains

 

0.099

66.1

%

 

0.203

11.3

%

Return of Capital (or other Capital Source)

 

0.051

33.9

%

 

1.589

88.3

%

Total Distribution

$

0.150

100.0

%

$

1.800

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)

11.94

%

Annualized Current Distribution Rate (3)

8.88

%

Fiscal YTD Cumulative Total Return on NAV (4)

10.81

%

Fiscal YTD Cumulative Distribution Rate (5)

8.14

%

(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. AIO incepted October 31, 2019, and thus returns represent inception to date returns.

(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 Artificial Intelligence & Technology Opportunities Fund is a diversified closed-end fund that seeks to provide total return through a combination of current income, current gains, and long-term capital appreciation. A multi-asset approach based on fundamental research is employed, dynamically allocating to attractive segments of a company's debt and equity in order to offer an attractive risk/reward profile. The Fund has a limited term and will terminate on or around October 29, 2031, absent approval by the Fund’s Board of Trustees to extend the Fund’s term by up to 18 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.

For Further Information:

Shareholder Services

(866) 270-7788

closedendfunds@virtus.com

Source: Virtus Artificial Intelligence & Technology Opportunities Fund

FAQ

What is the monthly distribution announced by Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO)?

The monthly distribution announced is $0.15 per share.

When is the ex-date for the distribution announced by Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO)?

The ex-date is January 11, 2024.

When is the record date for the distribution announced by Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO)?

The record date is January 12, 2024.

When is the payable date for the distribution announced by Virtus Artificial Intelligence & Technology Opportunities Fund (NYSE: AIO)?

The payable date is January 30, 2024.

How does the Fund aim to maintain a consistent distribution level?

The Fund aims to maintain a consistent distribution level from net investment income and realized capital gains, or a combination thereof.

What happens if the Fund's income and gains are less than the distribution level?

If the Fund's income and gains are less than the distribution level, the difference will be distributed from the Fund's assets, constituting a return of the shareholder's capital.

Virtus Artificial Intelligence & Technology Opportunities Fund

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