Reaves Utility Income Fund Section 19(a) Notice
Reaves Utility Income Fund (UTG) paid a monthly distribution of $0.19 per share to shareholders of record on December 29, 2023. The estimated sources of distribution include 12.59% net investment income, 87.41% net realized long-term capital gain, and 22.08% net investment income for the fiscal year-to-date cumulative distributions. The Fund's fiscal year-to-date return on NAV is 11.16%, with an average annual total return of 5.36% for the 5-year period ended 12/31/2023.
The Reaves Utility Income Fund's recent distribution announcement is a critical piece of information for current and potential investors, as it provides insight into the fund's profitability and capital gains strategy. The significant proportion of the distribution attributed to net realized long-term capital gains (87.41% of the current distribution) suggests a robust strategy in realizing profits from investments held longer than a year. This is advantageous for investors as long-term capital gains are typically taxed at a lower rate than short-term gains.
Furthermore, the fund's annualized distribution rate of 8.54% relative to its Net Asset Value (NAV) is a key indicator of the yield that investors might expect. When compared to the 5-year average annual total return on NAV of 5.36%, this rate demonstrates a strong performance in the short term, which could attract income-focused investors. However, investors should be cautious as high distribution rates can sometimes indicate a return of capital, which is not the case here, or unsustainable payouts.
From a taxation perspective, the distinction between the types of income distributed is paramount. The Reaves Utility Income Fund's distributions, predominantly classified as net realized long-term capital gains , will have different tax implications than ordinary income or short-term capital gains. Investors should note that the fund's announcement specifies that the tax character of distributions will be confirmed in January 2024, which will be crucial for accurate tax reporting.
The discrepancy between accounting principles and tax regulations is also noteworthy. The fund's statement alludes to potential differences in how distributions are treated for GAAP versus tax purposes, indicating that investors may need to adjust their expectations when filing taxes. The provision of IRS Form 1099-DIV will be essential for investors to accurately report income and understand the tax consequences of their investment in the fund.
Analyzing the fund's performance, the cumulative total return on NAV of 11.16% for the fiscal year-to-date is an impressive figure that indicates the fund's investment strategy is yielding positive results. This performance metric is essential for investors as it encapsulates the fund's overall health and operational efficiency. However, it is critical to juxtapose this with the fund's market price performance, which can diverge from the NAV due to market supply and demand dynamics.
Investors often look at the NAV to gauge a fund's intrinsic value, but the market price determines the realizable value of their investment. A disparity between these two can signal market perceptions and liquidity considerations. It is also important to consider that past performance is not indicative of future results, a standard caution in investment decision-making.
01/17/2024 - 05:59 AM
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / January 17, 2024 / On January 17, 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 $0.19 per share to shareholders of record at the close of business on December 29, 2023.
The following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles ("GAAP"), the Fund estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from:
Per Share ($)
%
Net Investment Income
0.02392
12.59%
Net Realized Short-Term Capital Gain
0.00000
0.00%
Net Realized Long-Term Capital Gain
0.16608
87.41%
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
0.12587
22.08%
Net Realized Short-Term Capital Gain
0.00000
0.00%
Net Realized Long-Term Capital Gain
0.44413
77.92%
Return of Capital or other Capital Source
0.00000
0.00%
Total (per common share)
0.57000
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 2023 federal income tax return. The final tax character of any distribution declared in 2023 will be determined in January 2024 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 12/31/2023)
Annualized Distribution Rate as a Percentage of NAV^
8.54%
Cumulative Distribution Rate on NAV^
2.14%
Cumulative Total Return on NAV*
11.16%
Average Annual Total Return on NAV for the 5 Year Period Ended 12/31/2023**
5.36%
^ Based on the Fund's NAV as of December 31, 2023.
*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 December 31, 2023.
**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 monthly distribution paid by Reaves Utility Income Fund (UTG)?
Reaves Utility Income Fund (UTG) paid a monthly distribution of $0.19 per share to shareholders of record at the close of business on December 29, 2023.
What are the estimated sources of distribution for the Fund?
The estimated sources of distribution include 12.59% net investment income, 87.41% net realized long-term capital gain, and 22.08% net investment income for the fiscal year-to-date cumulative distributions.
What is the fiscal year-to-date return on NAV for Reaves Utility Income Fund (UTG)?
The fiscal year-to-date return on NAV for Reaves Utility Income Fund (UTG) is 11.16%.
