Cohen & Steers Infrastructure Fund, Inc. (UTF) Notification of Sources of Distribution Under Section 19(a)
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Insights
The managed distribution policy of Cohen & Steers Infrastructure Fund, Inc. is indicative of a strategic approach to provide shareholders with predictable and regular income streams. By declaring fixed-rate monthly distributions, the Fund is leveraging its flexibility to realize capital gains across the fiscal year and distribute them evenly. This method can potentially smooth out distribution amounts over time, which might be appealing to income-focused investors who prefer consistency in their investment returns.
However, the reliance on capital gains to fund distributions can be a double-edged sword. In robust market conditions, this may work favorably, but in downturns, the Fund may erode capital to maintain its distribution policy. The distribution breakdown, with a significant portion stemming from net realized long-term capital gains, suggests a healthy turnover of profitable investments. Nonetheless, it's crucial to monitor the sustainability of these gains, as a persistent return of capital could indicate that the Fund is distributing more than it earns, which could lead to a depletion of assets over time.
From a tax perspective, the composition of the Fund's distributions is particularly noteworthy. The differentiation between net investment income, short-term capital gains, long-term capital gains and return of capital has substantial implications for shareholders' tax liabilities. Long-term capital gains are generally taxed at a lower rate than short-term gains, which can provide a tax advantage to investors. However, a return of capital reduces an investor's cost basis in the Fund, which could result in higher capital gains taxes upon the sale of shares.
Investors should be aware that the tax characteristics provided at each distribution are estimates and subject to change. The final determination, provided on Form 1099-DIV, will dictate the actual tax impact. Shareholders should consult with tax professionals to understand the potential tax consequences of these distributions, particularly in the context of their personal tax situations and any changes in tax laws.
The announcement reflects broader trends in the investment management industry, where funds are increasingly adopting managed distribution policies to attract investors seeking regular income. The Fund's decision to distribute a fixed rate per share monthly is aligned with investor demand for predictable cash flows. However, it is important to analyze market conditions and the Fund's asset allocation to assess the long-term viability of this policy.
Investors should consider the Fund's performance relative to its peers and the market benchmarks. A consistent policy could be a sign of strength if the Fund's underlying investments are performing well. However, if the market conditions deteriorate or the Fund's performance lags, the fixed distribution policy could become unsustainable without adjustments. The Fund's Board of Directors retains the discretion to amend, terminate, or suspend the policy, which could affect the share price and should be closely watched by investors.
In March 2015, the Fund implemented a managed distribution policy in accordance with exemptive relief issued by the Securities and Exchange Commission. The managed distribution policy seeks to deliver the Fund's long-term total return potential through regular monthly distributions declared at a fixed rate per common share. This policy gives the Fund greater flexibility to realize long-term capital gains throughout the year and to distribute those gains on a regular monthly basis to shareholders. The Board of Directors of the Fund may amend, terminate or suspend the managed distribution policy at any time, which could have an adverse effect on the market price of the Fund's shares.
The Fund's monthly distributions may include long-term capital gains, short-term capital gains, net investment income and/or return of capital for federal income tax purposes. Return of capital includes distributions paid by the Fund in excess of its net investment income and net realized capital gains and such excess is distributed from the Fund's assets. A return of capital is not taxable; rather, it reduces a shareholder's tax basis in his or her shares of the Fund. In addition, distributions from the Fund's investments in MLPs are attributed to various sources, including net investment income and return of capital. The amount of monthly distributions may vary depending on a number of factors, including changes in portfolio and market conditions.
At the time of each monthly distribution, information will be posted to cohenandsteers.com and mailed to shareholders in a concurrent notice. However, this information may change at the end of the year because the final tax characteristics of the Fund's distributions cannot be determined with certainty until after the end of the calendar year. Final tax characteristics of all of the Fund's distributions will be provided on Form 1099-DIV, which is mailed after the close of the calendar year.
The following table sets forth the estimated amounts of the current distribution and the cumulative distributions paid this fiscal year-to-date from the sources indicated. All amounts are expressed per common share.
DISTRIBUTION ESTIMATES | February 2024 | YEAR-TO-DATE (YTD) February 29, 2024* | ||
Source | Per Share | % of Current | Per Share | % of 2024 |
Net Investment Income | 56.52 % | 29.87 % | ||
Net Realized Short-Term Capital Gains | 0.00 % | 9.77 % | ||
Net Realized Long-Term Capital Gains | 43.48 % | 57.26 % | ||
Return of Capital (or other Capital Source) | 0.00 % | 3.10 % | ||
Total Current Distribution | 100.00 % | 100.00 % | ||
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 policy. 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 amounts and sources of distributions reported in this Notice are only estimates, are likely to change over time, and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for accounting and 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 amounts and sources of distributions year-to-date may be subject to additional adjustments.
*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.
The Fund's Year-to-date Cumulative Total Return for fiscal year 2024 (January 1, 2024 through January 31, 2024) is set forth below. Shareholders should take note of the relationship between the Year-to-date Cumulative Total Return with the Fund's Cumulative Distribution Rate for 2024. In addition, the Fund's Average Annual Total Return for the five-year period ending January 31, 2024 is set forth below. Shareholders should note the relationship between the Average Annual Total Return with the Fund's Current Annualized Distribution Rate for 2024. The performance and distribution rate information disclosed in the table is based on the Fund's net asset value per share (NAV). The Fund's NAV is calculated as the total market value of all the securities and other assets held by the Fund minus the total liabilities, divided by the total number of shares outstanding. While NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a shareholder's individual 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.
Fund Performance and Distribution Rate Information:
Year-to-date January 1, 2024 to January 31, 2024 | |
Year-to-date Cumulative Total Return1 | -3.49 % |
Cumulative Distribution Rate2 | 1.41 % |
Five-year period ending January 31, 2024 | |
Average Annual Total Return3 | 5.55 % |
Current Annualized Distribution Rate4 | 8.48 % |
1. | Year-to-date Cumulative Total Return is the percentage change in the Fund's NAV over the year-to-date time period including distributions paid and assuming reinvestment of those distributions. |
2. | Cumulative Distribution Rate for the Fund's current fiscal period (January 1, 2024 through February 29, 2024) measured on the dollar value of distributions in the year-to-date period as a percentage of the Fund's NAV as of January 31, 2024. |
3. | Average Annual Total Return represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ending January 31, 2024. Annual NAV Total Return is the percentage change in the Fund's NAV over a year including distributions paid and assuming reinvestment of those distributions. |
4. | The Current Annualized Distribution Rate is the current fiscal period's distribution rate annualized as a percentage of the Fund's NAV as of January 31, 2024. |
Investors should consider the investment objectives, risks, charges and expense of the Fund carefully before investing. You can obtain the Fund's most recent periodic reports, when available, and other regulatory filings by contacting your financial advisor or visiting cohenandsteers.com. These reports and other filings can be found on the Securities and Exchange Commission's EDGAR Database. You should read these reports and other filings carefully before investing.
Shareholders should not use the information provided here in preparing their tax returns. Shareholders will receive a Form 1099-DIV for the calendar year indicating how to report Fund distributions for federal income tax purposes.
Website: https://www.cohenandsteers.com
Symbol: (NYSE: CNS)
About Cohen & Steers. Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, the firm is headquartered in
Forward-Looking Statements
This press release and other statements that Cohen & Steers may make may contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the company's current views with respect to, among other things, its operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative versions of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties.
Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. The company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
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SOURCE Cohen & Steers, Inc.
FAQ
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