Reaves Utility Income Fund Section 19(a) Notice
- Reaves Utility Income Fund (UTG) paid a monthly distribution of $0.19 per share on March 28, 2024.
- The distribution consisted of 32.61% net investment income, 0% net realized short-term capital gain, 43.62% net realized long-term capital gain, and 23.77% return of capital.
- The Fund estimates it has distributed more than its income and net realized gains, potentially resulting in a return of capital.
- Shareholders may receive a Form 1099-DIV for tax reporting purposes.
- The Fund's performance includes an 8.79% annualized distribution rate as a percentage of NAV and a cumulative total return on NAV of 3.66% for the fiscal year to date.
- None.
Insights
The disclosed monthly distribution by Reaves Utility Income Fund highlights a mix of income sources, with a notable portion attributed to net realized long-term capital gains and return of capital. The distribution's structure reflects the fund's investment strategy and the current market conditions, which may influence investor sentiment and the fund's attractiveness. Analyzing the percentages, the return of capital component, while not uncommon in closed-end funds, can indicate that the fund is returning some of the investor's original investment back to them. This could be due to a variety of reasons, such as the fund generating insufficient income or capital gains to cover the distribution. Investors should be aware that a return of capital can reduce the fund's net asset value over time.
Additionally, the annualized distribution rate compared to the Net Asset Value (NAV) is a critical figure for assessing the fund's performance. An 8.79% distribution rate might seem appealing, but it's essential to consider the cumulative total return on NAV, which provides a more comprehensive view of the fund's actual growth, including reinvested distributions. The slight discrepancy between the distribution rate and the cumulative total return could be a point of analysis for understanding the fund's operational efficiency and market positioning. Investors typically look for consistency in performance and distributions, which can be a deciding factor for long-term investments.
From a taxation perspective, the characterization of distributions is a vital consideration for shareholders. The Fund's notice indicates that the distribution may not fully align with the income tax regulations, which could lead to differences in how distributions are taxed. Investors should anticipate the potential tax implications of the fund's distributions, as a portion may be considered taxable income. The estimated nature of these announcements means that shareholders must wait for the finalized tax character, which will be determined at the fiscal year's end.
Understanding the tax treatment of these distributions is essential, especially when a return of capital is involved. This can affect the cost basis of the investment and may lead to different tax outcomes than if the distribution were entirely from income or capital gains. Shareholders should consult with tax professionals to ensure they understand the tax consequences of these distributions and to plan accordingly for their individual tax situations.
Examining the Fund's performance metrics, such as the cumulative total return on NAV and the five-year average annual total return, provides a snapshot of the Fund's historical success in generating value for shareholders. The figures presented suggest a stable performance, with the cumulative total return slightly outpacing the distribution rate. However, investors should be cautious about extrapolating past performance into future expectations. The market's volatility and the ever-changing landscape of utility investments can significantly impact future returns.
Furthermore, the Fund's NAV performance relative to the market price can indicate the level of investor confidence and market demand for the Fund's shares. A disparity between the NAV and market price can result from various factors, including investor perception and broader market trends. It's important for investors to consider both the NAV performance and the market price when evaluating the Fund's overall health and making investment decisions.
DENVER, CO / ACCESSWIRE / March 28, 2024 / On March 28, 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
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 | 0.06196 | |
Net Realized Short-Term Capital Gain | 0.00000 | |
Net Realized Long-Term Capital Gain | 0.08288 | |
Return of Capital or other Capital Source | 0.04516 | |
Total (per common share) | 0.19000 | |
Fiscal Year-to-Date Cumulative | ||
Distributions from: | ||
Per Share ($) | % | |
Net Investment Income | 0.23465 | |
Net Realized Short-Term Capital Gain | 0.00000 | |
Net Realized Long-Term Capital Gain | 0.67019 | |
Return of Capital or other Capital Source | 0.04516 | |
Total (per common share) | 0.95000 |
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. 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.'
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 2/29/2024) | |
Annualized Distribution Rate as a Percentage of NAV^ | |
Cumulative Distribution Rate on NAV^+ | |
Cumulative Total Return on NAV* | |
Average Annual Total Return on NAV for the 5 Year Period Ended 2/29/2024** | |
^ Based on the Fund's NAV as of February 29, 2024.
+Cumulative distribution rate is based on distributions paid to date for the period November 1, 2023 through
March 28, 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 February 29, 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:
Website: https://www.utilityincomefund.com
Email: info@utilityincomefund.com
SOURCE: Reaves Utility Income Fund
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FAQ
What was the monthly distribution per share paid by Reaves Utility Income Fund (UTG) on March 28, 2024?
What percentage of the distribution was attributed to net investment income?
Was there any net realized short-term capital gain in the distribution?
What percentage of the distribution was from net realized long-term capital gain?
What portion of the distribution was classified as a return of capital?
What is the estimated tax implication for shareholders receiving this distribution?
What is the Fund's annualized distribution rate as a percentage of NAV?
What is the cumulative total return on NAV for the fiscal year to date?
