Reaves Utility Income Fund Section 19(a) Notice
On February 29, 2024, Reaves Utility Income Fund (NYSE American: UTG) paid a monthly distribution of $0.19 per share to shareholders. The distribution sources include net investment income, long-term capital gains, and return of capital. The estimated distribution percentages for the current period and fiscal year-to-date were disclosed. The Fund's performance metrics show an annualized distribution rate of 8.76% of NAV, cumulative distribution rate of 2.92% on NAV, and cumulative total return of 8.47% on NAV for the fiscal year. Shareholders are advised on potential tax implications and reminded that past performance is not indicative of future results.
The Reaves Utility Income Fund's recent distribution announcement highlights a significant portion of the payout attributed to net realized long-term capital gains, which accounts for 75.36% of the current distribution. This could be indicative of the fund's active management strategy and successful investment choices in utilities, potentially leading to capital appreciation of its holdings. The distribution's composition suggests a tax implication for investors, as long-term capital gains are taxed differently than ordinary income. The fund's fiscal year-to-date cumulative distribution from net investment income is lower, at 22.72%, which may raise questions about the sustainability of the distribution amounts from income alone.
Additionally, the annualized distribution rate as a percentage of NAV is 8.76%, which is relatively high and could be attractive to income-focused investors. However, it's important to consider whether such a high payout is sustainable in the long term without eroding the principal. The cumulative total return on NAV of 8.47% is relatively close to the distribution rate, which might suggest that the fund's distributions are well-aligned with its actual performance, although this does not account for any potential return of capital.
An analysis of the Reaves Utility Income Fund's performance metrics, such as the 5-year average annual total return on NAV of 2.99%, provides insight into the fund's historical growth patterns. This figure is significantly lower than the annualized distribution rate, which could imply that the fund is distributing more than what it has historically earned through its investments. This discrepancy may lead to concerns about the fund's ability to maintain its distribution levels without potentially compromising asset growth.
Furthermore, the fund's NAV performance is an essential indicator of its investment strategy's success, but investors should be cautious about equating NAV performance with shareholder value. The market price of the fund, which can fluctuate based on market demand, ultimately determines the return on investment for shareholders. Therefore, while the NAV-based return figures are useful for assessing the fund's internal performance, they do not directly translate to market-based shareholder returns.
02/29/2024 - 06:59 AM
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / February 29, 2024 / On February 29, 2024, the Reaves Utility Income Fund (NYSE American:UTG) (the "Fund"), a closed-end sector fund, paid a monthly distribution on its common stock of $0.19 per share to shareholders of record at the close of business on February 16, 2024.
The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles ("GAAP"), the Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from:
Per Share ($)
%
Net Investment Income
0.04682
24.64%
Net Realized Short-Term Capital Gain
0.00000
0.00%
Net Realized Long-Term Capital Gain
0.14318
75.36%
Return of Capital or other Capital Source
0.00000
0.00%
Total (per common share)
0.19000
100.00%
Fiscal Year-to-Date Cumulative
Distributions from:
Per Share ($)
%
Net Investment Income
0.17269
22.72%
Net Realized Short-Term Capital Gain
0.00000
0.00%
Net Realized Long-Term Capital Gain
0.58731
77.28%
Return of Capital or other Capital Source
0.00000
0.00%
Total (per common share)
0.76000
100.00%
The timing and character of distributions for federal income tax purposes are determined in accordance with income tax regulations which may differ from GAAP. As such, all or a portion of this distribution may be reportable as taxable income on your 2024 federal income tax return. The final tax character of any distribution declared in 2024 will be determined in January 2025 and reported to you on IRS Form 1099-DIV.
The amounts and sources of distributions reported in this 19(a) Notice are only estimates and not for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund's investment experience during the remainder of its fiscal year and may be subject to changes based on tax regulations. The Fund will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Presented below are return figures, based on the change in the Fund's Net Asset Value per share ("NAV"), compared to the annualized distribution rate for this current distribution as a percentage of the NAV on the last day of the month prior to distribution record date.
Fund Performance & Distribution Information
Fiscal Year to Date (11/01/2023 through 1/31/2024)
Annualized Distribution Rate as a Percentage of NAV^
8.76%
Cumulative Distribution Rate on NAV^+
2.92%
Cumulative Total Return on NAV*
8.47%
Average Annual Total Return on NAV for the 5 Year Period Ended 1/31/2024**
2.99%
^ Based on the Fund's NAV as of January 31, 2024.
+ Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through February 29, 2024.
*Cumulative fiscal year-to-date return is based on the change in NAV including distributions paid and assuming reinvestment of these distributions for the period November 1, 2023 through January 31, 2024.
**The 5 year average annual total return is based on change in NAV including distributions paid and assuming reinvestment of these distributions and is through the last business day of the month prior to the month of the current distribution record date.
While the NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's investment in the Fund. The value of a shareholder's investment in the Fund is determined by the Fund's market price, which is based on the supply and demand for the Fund's shares in the open market. Past performance does not guarantee future results. Shareholders 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.
Furthermore, the Board of Trustees reviews the amount of any potential distribution and the income, capital gain or capital available. The Board of Trustees will continue to monitor the Fund's distribution level, taking into consideration the Fund's net asset value and the financial market environment. The Fund's distribution policy is subject to modification by the Board of Trustees at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
Paralel Distributors LLC, FINRA Member Firm.
Contact info: https://www.utilityincomefund.com info@utilityincomefund.com
SOURCE: Reaves Utility Income Fund
press release on accesswire.com
What was the amount of the monthly distribution paid by Reaves Utility Income Fund on February 29, 2024?
Reaves Utility Income Fund paid a monthly distribution of $0.19 per share to shareholders on February 29, 2024.
What are the sources of distribution for Reaves Utility Income Fund as disclosed in the PR?
The sources of distribution for Reaves Utility Income Fund include net investment income, net realized short-term capital gain, net realized long-term capital gain, and return of capital or other capital source.
What were the estimated percentages of the distribution sources for the current period and fiscal year-to-date for Reaves Utility Income Fund?
The estimated percentages for the current distribution were: Net Investment Income - 24.64%, Net Realized Short-Term Capital Gain - 0.00%, Net Realized Long-Term Capital Gain - 75.36%, Return of Capital or other Capital Source - 0.00%. For the fiscal year-to-date, the percentages were: Net Investment Income - 22.72%, Net Realized Short-Term Capital Gain - 0.00%, Net Realized Long-Term Capital Gain - 77.28%, Return of Capital or other Capital Source - 0.00%.
What is the annualized distribution rate of Reaves Utility Income Fund as a percentage of NAV for the fiscal year to date?
The annualized distribution rate of Reaves Utility Income Fund as a percentage of NAV for the fiscal year to date is 8.76%.
What is the cumulative total return on NAV for Reaves Utility Income Fund for the fiscal year to date?
The cumulative total return on NAV for Reaves Utility Income Fund for the fiscal year to date is 8.47%.
What advice is given to shareholders regarding potential tax implications in the PR?
Shareholders are advised that a portion of the distribution may be reportable as taxable income on their 2024 federal income tax return. The final tax character of any distribution will be determined in January 2025 and reported on IRS Form 1099-DIV.
