SRH Total Return Fund, Inc. Section 19(a) Notice
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Insights
The SRH Total Return Fund's announcement of a distribution of $0.1375 per share is a concrete reflection of the fund's performance and strategy. Notably, the distribution is not solely from net investment income but also includes net realized capital gains, both short-term and long-term and a significant portion as a return of capital. This mix indicates the fund's active management approach and potential capital appreciation of its investments. However, investors should be aware that a return of capital reduces the cost basis of their investment and is not derived from the fund's earnings, which may not be sustainable in the long run.
The fund's utilization of capital gains for distributions, as permitted by an SEC exemptive order, demonstrates flexibility in managing distributions. This could be attractive to income-focused investors seeking regular cash flows. Still, it's essential to consider the tax implications of such distributions, as different components are taxed differently. Investors would benefit from understanding the fund's underlying assets and market conditions that allowed for these realized gains.
Examining the tax implications of the SRH Total Return Fund's distribution is crucial for investors. The breakdown between net investment income, short-term capital gains, long-term capital gains and return of capital has distinct tax consequences. Short-term capital gains are taxed as ordinary income, whereas long-term capital gains benefit from lower tax rates. The significant portion classified as a return of capital is generally not taxable immediately; instead, it reduces the investor's cost basis and may increase capital gains taxes when the shares are sold.
It's important for shareholders to consult with tax professionals to understand the impact on their individual tax situations and to adjust their investment strategy accordingly. This is particularly relevant for those in higher tax brackets or those who might be subject to the net investment income tax.
From a market perspective, the SRH Total Return Fund's distribution strategy could signal to investors how the fund is positioned within the broader market. The current distribution mix, with a large portion attributed to return of capital, might suggest that the fund's income generation is not keeping pace with its distribution policy. This could be a point of concern for potential long-term sustainability if not supported by substantial fund growth.
Furthermore, the fund's performance relative to its peers and the market benchmarks would provide additional context. If the fund's approach to capital gains realization is out of step with industry norms, it could either indicate a unique value proposition or a potential risk. Analysts would compare the fund's returns, distribution rates and asset allocation with comparable funds to assess its competitive standing.
Statement Pursuant to Section 19(a) of the Investment Company Act of 1940
DENVER, CO / ACCESSWIRE / January 31, 2024 / On January 31, 2024, SRH Total Return Fund, Inc. (NYSE:STEW) (the "Fund"), a closed-end investment company, will pay a distribution on its common stock of
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 in the table. In addition, the table shows the percentages of the total distribution amount per share attributable to (i) 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. 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 ($) | Percentage (%) | |
| Net Investment Income | 0.00147 | |
| Net Realized Short-Term Capital Gains | 0.00537 | |
| Net Realized Long-Term Capital Gains | 0.04260 | |
| Return of Capital or other Capital Source | 0.08806 | |
| Total (per common share) | 0.13750 | |
| Fiscal Year-to-Date Cumulative | ||
| Distributions from[1]: | ||
Per Share ($) | Percentage (%) | |
| Net Investment Income | 0.00147 | |
| Net Realized Short-Term Capital Gains | 0.00537 | |
| Net Realized Long-Term Capital Gains | 0.04260 | |
| Return of Capital or other Capital Source | 0.08806 | |
| Total (per common share) | 0.13750 |
[1] The Fund's fiscal year is December 1 to November 30. Information shown is for the period beginning December 1, 2023.
Stockholders 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 amounts and sources of distributions reported in this 19(a) Notice are only estimates, are likely to change over time, and are not being provided for tax reporting purposes.
The Fund estimates that it has distributed more than its income and net realized 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 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.
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 the distribution declaration date. While the NAV performance may be indicative of the Fund's investment performance, it does not measure the value of a stockholder's investment in the Fund. The value of a stockholder'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 & Distribution Rate Information
| Annualized Distribution Rate as a Percentage of NAV^ | |
| Cumulative Distribution Rate as a Percentage of NAV* | |
| Cumulative Total Return as a Percentage of NAV** | |
| Average Annual Total Return*** |
^ Based on the Fund's NAV as of December 31, 2023 and the quarterly distribution of
*Based on the Fund's NAV as of December 31, 2023 and includes distributions through January 31, 2024.
**Cumulative Total Return is the percentage change in the Fund's NAV including distributions paid and assuming reinvestment of these distributions for the period December 1, 2023 through December 31, 2023.
***Average Annual Total Return represents the compound average of the Annual NAV Total Returns of the Fund for the five-year period ending December 31, 2023. Annual NAV Total Return is the percentage change in the Fund's NAV over a year including distributions paid and assuming reinvestment of these distributions.
The Fund has a managed distribution policy that seeks to deliver the Fund's long term total return potential through regular quarterly distributions declared at a fixed rate per share. Distributions may be paid in part or in full from net investment income, realized capital gains and by returning capital, or a combination thereof. Stockholders 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 stockholder's capital. A return of capital is not taxable; rather it reduces a stockholder's tax basis in his or her shares of the Fund.
The Fund's Board of Directors reviews the amount of any distributions made pursuant to the Fund's distribution policy and considers the income earned and capital gains realized by the Fund, as well as the Fund's available capital. The Board of Directors will continue to monitor the Fund's distribution level, taking into consideration, among other things, the Fund's net asset value and market conditions. The Fund's distribution policy is subject to modification, suspension or termination by the Board of Directors at any time, which could have an adverse effect on the market price of the Fund's shares. The distribution rate should not be considered the dividend yield or total return on an investment in the Fund.
For more information on the Fund, please visit us on the web at www.srhtotalreturnfund.com.
NOT FDIC INSURED | May Lose Value | No Bank Guarantee
Contact info:
Website: https://srhtotalreturnfund.com/
Email: stewclientinquiries@paralel.com
SOURCE: SRH Total Return Fund, Inc.
View the original press release on accesswire.com
FAQ
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