Summary

• Convertible securities advanced in the first quarter of 2026 as fourth quarter reporting season topped expectations and finished strong with year-over-year earnings growth nearing 14% for the S&P 500® Index.
• Quarterly new issuance in the convertible securities market saw 37 issues priced, raising $27.0 billion in proceeds.
• Within technology, security selection in tech hardware & equipment was the primary driver of outperformance, more than offsetting a negative selection impact in software.
• In healthcare, negative selection within medical products and pharmaceuticals detracted from relative performance, with an additional adverse impact from overweight positioning in the latter.
• The conversion premium at quarter-end was roughly 32%, and Virtus Investment Partners believes the Fund is well positioned to participate in the upside and mitigate on the downside.

General Market Environment

Convertible securities advanced in the first quarter of 2026. Escalating geopolitical tensions were the dominant macro-overhang with the Iran conflict disrupting global supply chains and driving energy prices higher. The fourth quarter reporting