UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-CSR
CERTIFIED
SHAREHOLDER REPORT OF
REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment
Company Act File Number:
811-21432
Reaves
Utility Income Fund
(Exact
Name of Registrant as Specified in Charter)
1700
Broadway, Suite 1850
Denver,
CO 80290
(Address
of Principal Executive Offices) (Zip Code)
Chris
Moore
Reaves
Utility Income Fund
1700
Broadway, Suite 1850
Denver,
CO 80290
(Name
and Address of Agent for Service)
Registrant’s
Telephone Number, including Area Code:
800.644.5571
Date
of Fiscal Year End: October 31st
Date
of Reporting Period: November 1, 2022 - April 30, 2023
Item
1. Reports to Stockholders.
| (a) | The
Report to Stockholders is attached herewith. |
Section
19(b) Disclosure
April
30, 2023 (Unaudited)
Reaves
Utility Income Fund (the “Fund”), acting pursuant to a Securities and Exchange Commission (“SEC”) exemptive
order and with the approval of the Fund’s Board of Trustees (the “Board”), has adopted a plan, consistent with
its investment objectives and policies to support a level distribution of income, capital gains and/or return of capital (the
“Plan”). In accordance with the Plan, the Fund currently distributes $0.19 per share on a monthly basis.
The
fixed amount distributed per share is subject to change at the discretion of the Fund’s Board. Under the Plan, the Fund
will distribute all available investment income to its shareholders, consistent with its primary investment objectives and as
required by the Internal Revenue Code of 1986, as amended (the “Code”). If sufficient investment income is not available
on a monthly basis, the Fund will distribute long-term capital gains and/or return of capital to shareholders in order to maintain
a level distribution. Each monthly distribution to shareholders is expected to be at the fixed amount established by the Board,
except for extraordinary distributions and potential distribution rate increases or decreases to enable the Fund to comply with
the distribution requirements imposed by the Code.
Shareholders
should not draw any conclusions about the Fund’s investment performance from the amount of these distributions or from the
terms of the Plan. The Fund’s total return performance on net asset value is presented in its financial highlights table.
The
Board may amend, suspend or terminate the Fund’s Plan without prior notice if it deems such action to be in the best interest
of the Fund or its shareholders. The suspension or termination of the Plan could have the effect of creating a trading discount
(if the Fund’s stock is trading below net asset value) or widening an existing trading discount. The Fund is subject to
risks that could have an adverse impact on its ability to maintain level distributions. Examples of potential risks include, but
are not limited to, economic downturns impacting the markets, increased market volatility, companies suspending or decreasing
corporate dividend distributions and changes in the Code.
Please
refer to the Additional Information section of this report for a cumulative summary of the Section 19(a) notices for the Fund’s
current fiscal period. Section 19(a) notices for the Fund, as applicable, are available on the Fund’s website at www.utilityincomefund.com.
Reaves Utility Income Fund |
Table of Contents |
Shareholder Letter |
2 |
Statement of Investments |
7 |
Statement of Assets and Liabilities |
10 |
Statement of Operations |
11 |
Statements of Changes in Net Assets |
12 |
Statement of Cash Flows |
13 |
Financial Highlights |
14 |
Notes to Financial Statements |
19 |
Additional Information |
26 |
Semi-Annual Report | April
30, 2023 |
1 |
Reaves Utility Income Fund |
Shareholder Letter |
April
30 2023 (Unaudited)
To
our Shareholders:
Investment
Portfolio Returns: 6 months ended April 30, 2023
Total
net assets of the Fund were $2.16 billion on April 30, 2023, or $28.88 of net asset value (“NAV”) per common share.
On October 31, 2022, net assets totaled $1.99 billion representing $27.71 of NAV per common share.
Changes
in the market price of the Fund can and do differ from the underlying changes in the net asset value per common share. As a result,
the market return to common shares can be higher or lower than the NAV return.
The
market return for shareholders in the first half of fiscal 2023 was 8.64%, as is reflected in the table below. The share price
of the Fund traded at a discount of 0.10% to NAV at April 30, 2023 versus a discount of 0.32% at the beginning of the fiscal year.
|
6
months |
One
Year |
Three
Years^ |
Five
Years^ |
Ten Years^ |
Since
Inception^* |
UTG (NAV)** |
8.40% |
-5.39% |
6.68% |
5.66% |
6.89% |
9.61% |
UTG (Market)** |
8.64% |
-6.34% |
5.61% |
7.56% |
7.30% |
9.34% |
S&P
500 Utilities Index1 |
4.92% |
-0.21% |
9.86% |
9.54% |
8.94% |
9.59% |
Dow
Jones Utility Average2 |
6.98% |
-0.65% |
10.99% |
9.93% |
9.71% |
10.62% |
| * | Index
data since February 29, 2004. |
| ** | Assumes
all distributions being reinvested. |
| 1 | S&P
500 Utilities Index is a capitalization-weighted index containing 29 Electric and Gas
Utility stocks (including multi-utilities and independent power producers). Prior to
July 1996, this index included telecommunications equities. |
| 2 | The
Dow Jones Utility Average is a price-weighted average of 15 utility stocks traded in
the United States. |
The
performance data quoted represents past performance. Past performance is no guarantee of future results.
Distributions
to Common Shareholders
The
Fund’s monthly distribution amount of $0.19 per share was unchanged. For the first half of the 2023 fiscal year, the Fund
expects total distributions to come from earned income (dividend income) and capital gains. For any given month, however, part
of the distribution may be temporarily classified as a return of capital given the irregular realization of capital gains over
the course of the year.
Leverage
Facility
The
Fund ended the period with $520 million in leverage, up $20 million from October 31, the end of fiscal-year 2022. Leverage was
about 24% of net assets on April 30, 2023. For details about the leverage facility, please refer to Note 5 of the accompanying
financial statements.
Portfolio
Discussion and Outlook
The
Reaves Utility Income Fund continued to generate tax advantaged income for investors. The Fund maintained its leverage in the
low 20% range of net assets, which we think is a prudent level given market conditions. The individual companies in which the
Fund invests proved resilient during the period. Most holdings grew earnings and increased dividends throughout the year, highlighting
the defensiveness of the business models in which the Fund invests.
www.utilityincomefund.com |
2 |
Reaves Utility Income Fund |
Shareholder Letter |
April
30 2023 (Unaudited)
In
the six-month period ending April 30, 2023, the Fund generated a total return of about 8.40%. It paid approximately $83 million
($1.14 per share) in investor distributions. The results coincided with a generally strong equity market as well, as the S&P
500 Index was also up 8.64% in the period. Longer-term interest rates fell during the six month period and supported the market
as investors gained confidence that inflation was in decline. For example, the U.S. Ten-Year Treasury Bond yield fell from 4.05%
on October 31, 2022, to 3.42% on April 30, 2023. However, short-term interest rates continued to rise following a series of Federal
Reserve target rate increases from 3.25% on October 31, 2022, to 5.00% on April 30, 2023.
Most
companies held by the Fund generated a positive return in the period. Returns were led by foreign stocks, cable, data center,
and utility investments. The enthusiasm that came with declining inflation led to increasing risk appetites which generally benefited
stocks that had underperformed in the previous year. In the short-term, the Fed’s interest rate decisions at the next couple
meetings will likely be the main driver of market direction, so we expect continued focus and volatility around each economic
data point.
Fundamentally,
we believe that the utility industry is well-positioned to benefit from the transition away from fossil fuels. The declining cost
of renewable power plus long-term tax credits could lead to a growing investment opportunity for the industry and lower-cost power
for customers. Grid reliability, especially with the potential introduction of significant amounts of intermittent renewable power,
will remain an important issue as well. Between the two, utility backlogs over the next decade could be well above historic levels.
The
cost of natural gas and power have fallen over the last six months, easing customer bill pressure. This type of environment can
reduce a utility’s ability to increase its level of capital investment, as the decline in the commodity portion of the bill
can offset the increase related to the infrastructure investment portion resulting in minimal overall changes to customer bills.
We believe the sweet spot for a utility is when it can limit bill increases to two to three percent while growing its investment
rate base in the high single digit range, and commodity price declines can help utility companies achieve this goal.
Communications
companies roared back in the first half of the fiscal year. Outside of the wireless tower industry, all communications companies
in the Fund generated positive results. Foreign telecom companies specifically were the strongest segment, helped by the weakness
of the U.S. Dollar. Cable and data center stocks were also strong, reversing the weak results of last year. Concerns about growth
for both segments eased, helping the stocks.
Wireless
towers, on the other hand, remained weak amid concerns of a pause in growth. The tower industry has one of the best business models
in our universe. Revenues come largely from long-term contracts with prices tied to inflation. However, capital cycle timing and
rising short-term interest rates mean that growth next year may appear weaker than historic norms.
We
remain optimistic about digital connectivity growth and fifth generation wireless networks. In the U.S., telecom giants will need
to continue to construct and improve fifth generation wireless networks. While this is a highly competitive market, we expect
infrastructure companies like wireless towers and data centers to be key beneficiaries of this buildout. In Canada, where competition
is less acute, we are optimistic that population and economic growth will continue to underpin growing dividend income.
While
the Fund invests primarily in utilities and telecommunications, we also retain a small portion of the portfolio in midstream energy,
transportation, and logistics for diversification and inflation sensitivity.
Here, midstream returns were negatively impacted by declining commodity prices while transportation stocks suffered after a railroad
accident in Ohio.
Semi-Annual Report | April
30, 2023 |
3 |
Reaves Utility Income Fund |
Shareholder Letter |
April
30 2023 (Unaudited)
Thank
you for your investment in the Fund. We encourage you to thoroughly read all of the information provided in this report and to
contact us with any questions. The investment team at Reaves remains committed to achieving the Fund’s investment objectives
and we look forward to keeping you updated on our progress.
Sincerely,
Timothy
O. Porter, CFA, Portfolio Manager, Reaves Asset Management-CIO
John P. Bartlett, CFA, Portfolio Manager, Reaves Asset Management-President
Jay Rhame, Fund President, Portfolio Manager, Reaves Asset Management-CEO
Sources
of distributions to shareholders may include net investment income, net realized short-term capital gains, net realized long-term
capital gains and return of capital. If a distribution includes anything other than net investment income, the Fund provides a
Section 19(a) notice of the best estimate of its distribution sources at that time. Please refer to the Additional Information
section of this report for a cumulative summary of the Section 19(a) notices for the Fund’s current period. The actual amounts
and sources of distributions 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 estimates may not match the final tax characterization
(for the full year’s distributions) contained in the shareholder’s Form 1099-DIV. Distribution payments are not guaranteed;
distribution rates may vary.
You
cannot invest directly in an index.
The
S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy
through changes in the aggregate market value of 500 stocks representing all major industries.
The
10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance.
www.utilityincomefund.com |
4 |
Reaves Utility Income Fund |
Shareholder Letter |
April
30, 2023 (Unaudited)
Growth
of a hypothetical $10,000 investment
The
graph below illustrates the growth of a hypothetical $10,000 investment assuming the purchase of common shares at NAV or the closing
market price (NYSE American: UTG) of $27.87 on April 30, 2013, and tracking its progress through April 30, 2023.
Past
performance does not guarantee future results. Performance will fluctuate with changes in market conditions. Current performance
may be lower or higher than the performance data shown. Performance information does not reflect the deduction of taxes that shareholders
would pay on Fund distributions or the sale of Fund shares. An investment in the Fund involves risk, including loss of principal.
Semi-Annual Report | April
30, 2023 |
5 |
Reaves Utility Income Fund |
Shareholder Letter |
April
30, 2023 (Unaudited)
INDUSTRY
ALLOCATION AS OF APRIL 30, 2023
Industries
are displayed as a % of net assets. Holdings are subject to change.
www.utilityincomefund.com |
6 |
Reaves Utility Income Fund |
Statement of Investments |
April 30, 2023
(Unaudited)
| |
SHARES | | |
VALUE | |
COMMON STOCKS - 121.84% | |
| | | |
| | |
Diversified Telecommunications Services - 18.20% | |
| | | |
| | |
BCE, Inc. | |
| 1,885,500 | | |
$ | 90,635,984 | |
Cogent Communications Holdings, Inc.(a) | |
| 10,000 | | |
| 690,400 | |
Deutsche Telekom AG | |
| 4,268,042 | | |
| 102,901,047 | |
Rogers Communications, Inc., Class B | |
| 1,265,000 | | |
| 62,500,720 | |
Telus Corp. | |
| 4,020,100 | | |
| 85,217,753 | |
Verizon Communications, Inc.(a) | |
| 1,313,924 | | |
| 51,019,669 | |
| |
| | | |
| 392,965,573 | |
Electric Utilities - 26.12% | |
| | | |
| | |
American Electric Power Co., Inc.(a) | |
| 600,000 | | |
| 55,452,000 | |
Duke Energy Corp.(a) | |
| 956,000 | | |
| 94,529,280 | |
Edison International(a) | |
| 200,000 | | |
| 14,720,000 | |
Entergy Corp. | |
| 1,000,000 | | |
| 107,580,000 | |
Exelon Corp. | |
| 1,149,961 | | |
| 48,804,345 | |
FirstEnergy Corp. | |
| 448,100 | | |
| 17,834,380 | |
Fortis, Inc. | |
| 53,000 | | |
| 2,327,230 | |
NextEra Energy, Inc. | |
| 1,150,000 | | |
| 88,124,500 | |
Pinnacle West Capital Corp. | |
| 698,000 | | |
| 54,765,080 | |
PPL Corp. | |
| 2,706,000 | | |
| 77,716,320 | |
Southern Co. | |
| 25,600 | | |
| 1,882,880 | |
| |
| | | |
| 563,736,015 | |
Independent Power and Renewable Electricity Producers - 3.17% | |
| | | |
| | |
Constellation Energy Corp. | |
| 885,333 | | |
| 68,524,800 | |
| |
| | | |
| | |
Media - 5.04% | |
| | | |
| | |
Charter Communications, Inc., Class A(a)(b) | |
| 70,500 | | |
| 25,993,350 | |
Comcast Corp., Class A(a) | |
| 2,000,000 | | |
| 82,740,000 | |
| |
| | | |
| 108,733,350 | |
Multi-Utilities - 43.95% | |
| | | |
| | |
Alliant Energy Corp.(a) | |
| 1,733,100 | | |
| 95,563,134 | |
Ameren Corp.(a) | |
| 1,149,000 | | |
| 102,226,530 | |
CMS Energy Corp.(a) | |
| 1,400,500 | | |
| 87,195,130 | |
DTE Energy Co.(a) | |
| 839,200 | | |
| 94,334,472 | |
Enel SpA | |
| 6,465,257 | | |
| 44,162,253 | |
NiSource, Inc. | |
| 3,265,966 | | |
| 92,949,392 | |
OGE Energy Corp. | |
| 1,876,645 | | |
| 70,449,253 | |
PG&E Corp.(a)(b) | |
| 4,106,300 | | |
| 70,258,793 | |
Public Service Enterprise Group, Inc. | |
| 1,234,000 | | |
| 77,988,800 | |
Sempra Energy | |
| 354,800 | | |
| 55,167,852 | |
WEC Energy Group, Inc.(a) | |
| 890,578 | | |
| 85,646,886 | |
See
Accompanying Notes to Financial Statements.
Semi-Annual Report | April
30, 2023 |
7 |
Reaves Utility Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
Multi-Utilities - 43.95% (continued) | |
| | | |
| | |
Xcel Energy, Inc. | |
| 1,040,300 | | |
$ | 72,727,373 | |
| |
| | | |
| 948,669,868 | |
| |
| | | |
| | |
Oil, Gas & Consumable Fuels - 5.74% | |
| | | |
| | |
DT Midstream, Inc. | |
| 570,000 | | |
| 28,083,900 | |
TC Energy Corp. | |
| 1,150,000 | | |
| 47,771,000 | |
Williams Cos., Inc. | |
| 1,590,000 | | |
| 48,113,400 | |
| |
| | | |
| 123,968,300 | |
| |
| | | |
| | |
Real Estate Investment Trusts (REITs) - 9.54% | |
| | | |
| | |
American Tower Corp.(a) | |
| 144,072 | | |
| 29,446,876 | |
Crown Castle International Corp.(a) | |
| 312,500 | | |
| 38,465,625 | |
Digital Realty Trust, Inc.(a) | |
| 377,737 | | |
| 37,452,624 | |
Equinix, Inc.(a) | |
| 56,000 | | |
| 40,548,480 | |
Rexford Industrial Realty, Inc. | |
| 225,000 | | |
| 12,548,250 | |
SBA Communications Corp., Class A | |
| 181,700 | | |
| 47,403,713 | |
| |
| | | |
| 205,865,568 | |
| |
| | | |
| | |
Road & Rail - 6.83% | |
| | | |
| | |
Canadian Pacific Kansas City Ltd. | |
| 562,000 | | |
| 44,308,080 | |
Norfolk Southern Corp. | |
| 225,100 | | |
| 45,702,053 | |
Union Pacific Corp. | |
| 292,900 | | |
| 57,320,530 | |
| |
| | | |
| 147,330,663 | |
| |
| | | |
| | |
Water Utilities - 2.66% | |
| | | |
| | |
American Water Works Co., Inc.(a) | |
| 387,619 | | |
| 57,464,517 | |
| |
| | | |
| | |
Wireless Telecommunication Services - 0.59% | |
| | | |
| | |
Telenor ASA | |
| 1,012,388 | | |
| 12,629,854 | |
| |
| | | |
| | |
TOTAL COMMON STOCKS | |
| | | |
| | |
(Cost $2,483,066,555) | |
| | | |
| 2,629,888,508 | |
| |
| | | |
| | |
CORPORATE BONDS - 0.23% | |
| | | |
| | |
Cable & Satellite - 0.09% | |
| | | |
| | |
CSC Holdings, LLC, 6/1/2024, 5.250% | |
| 2,000,000 | | |
| 1,952,628 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
8 |
Reaves Utility Income Fund |
Statement of Investments |
April
30, 2023 (Unaudited)
| |
SHARES | | |
VALUE | |
Pipelines - 0.14% | |
| | | |
| | |
TC Pipelines, L.P., 3/13/2025, 4.375% | |
| 2,952,000 | | |
$ | 2,901,944 | |
| |
| | | |
| | |
TOTAL CORPORATE BONDS | |
| | | |
| | |
(Cost $4,799,226) | |
| | | |
| 4,854,572 | |
| |
| | | |
| | |
PREFERRED STOCKS - 0.04% | |
| | | |
| | |
Utilities - 0.04% | |
| | | |
| | |
SCE Trust III, Class H, Perpetual Maturity, 5.750%(a) | |
| 15,473 | | |
| 331,122 | |
SCE Trust IV, Class J, Perpetual Maturity, 5.375%(a) | |
| 29,927 | | |
| 609,015 | |
| |
| | | |
| 940,137 | |
| |
| | | |
| | |
TOTAL PREFERRED STOCKS | |
| | | |
| | |
(Cost $846,585) | |
| | | |
| 940,137 | |
| |
| | | |
| | |
MONEY MARKET FUNDS - 1.70% | |
| | | |
| | |
Federated Treasury Obligations Money Market Fund, 4.690% (7-Day Yield) | |
| 36,697,212 | | |
| 36,697,212 | |
TOTAL MONEY MARKET FUNDS | |
| | | |
| | |
(Cost $36,697,212) | |
| | | |
| 36,697,212 | |
| |
| | | |
| | |
TOTAL INVESTMENTS - 123.81% | |
| | | |
| | |
(Cost $2,525,409,578) | |
| | | |
| 2,672,380,429 | |
| |
| | | |
| | |
Leverage Facility - (24.09)% | |
| | | |
| (520,000,000 | ) |
| |
| | | |
| | |
Other Assets in Excess of Liabilities - 0.28% | |
| | | |
| 6,191,631 | |
| |
| | | |
| | |
NET ASSETS - 100% | |
| | | |
$ | 2,158,572,060 | |
| (a) | Pledged
security; a portion or all of the security is pledged as collateral for borrowings as
of April 30, 2023. (Note 5) |
| (b) | Non-income
producing security. |
Percentages
are stated as a percent of the net assets applicable to common shareholders.
See
Accompanying Notes to Financial Statements.
Semi-Annual Report |
April 30, 2023 |
9 |
Reaves Utility Income Fund |
Statement of Assets and Liabilities |
April
30, 2023 (Unaudited)
ASSETS: | |
| |
Investments at value | |
| |
Cost ($2,525,409,578) | |
$ | 2,672,380,430 | |
Cash | |
| 910,669 | |
Receivable for investments sold | |
| 10,669,757 | |
Dividends receivable | |
| 3,230,589 | |
Interest receivable | |
| 220,395 | |
Receivable for shares sold | |
| 206,619 | |
Prepaid offering costs (Note 4) | |
| 53,319 | |
Total Assets | |
| 2,687,671,778 | |
| |
| | |
LIABILITIES: | |
| | |
Loan payable | |
| 520,000,000 | |
Interest payable on loan outstanding | |
| 1,120,214 | |
Payable for investments purchased | |
| 6,221,820 | |
Investment advisory fees payable (Note 7) | |
| 1,261,646 | |
Administration fees payable (Note 7) | |
| 302,936 | |
Trustees' fees payable (Note 7) | |
| 23,961 | |
Accrued expenses and other payables | |
| 169,141 | |
Total Liabilities | |
| 529,099,718 | |
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS | |
$ | 2,158,572,060 | |
| |
| | |
NET ASSETS (APPLICABLE TO COMMON SHAREHOLDERS) CONSIST OF: | |
| | |
Paid-in capital | |
| 1,980,414,764 | |
Total distributable earnings | |
| 178,157,296 | |
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS | |
$ | 2,158,572,060 | |
| |
| | |
Shares of common stock outstanding of no par value, unlimited shares authorized | |
| 74,730,887 | |
Net asset value per common share | |
$ | 28.88 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
10 |
Reaves Utility Income Fund |
Statement
of Operations |
For the Six Months Ended April 30, 2023 (Unaudited)
INVESTMENT INCOME: | |
|
Dividends | |
|
(net of foreign withholding taxes $1,511,856) | |
$ | 47,809,513 | |
Total Investment Income | |
| 47,809,513 | |
| |
| | |
EXPENSES: | |
| | |
Interest on loan | |
| 12,939,510 | |
Loan commitment fees | |
| 26,875 | |
Investment advisory fees | |
| 7,491,178 | |
Administration fees | |
| 1,804,721 | |
Trustees' fees | |
| 188,513 | |
Miscellaneous fees | |
| 247,533 | |
Total Expenses | |
| 22,698,330 | |
Net Investment Income | |
| 25,111,183 | |
| |
| | |
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | |
| | |
Net realized gain/(loss) on: | |
| | |
Investments | |
| 71,861,571 | |
Foreign currency related transactions | |
| (36,322 | ) |
Net realized gain | |
| 71,825,249 | |
Net change in unrealized appreciation/(depreciation) on: | |
| | |
Investments | |
| 71,676,989 | |
Foreign currency related translations | |
| 7,302 | |
Net change in unrealized appreciation | |
| 71,684,291 | |
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS | |
| 143,509,540 | |
NET
INCREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS | |
$ | 168,620,723 | |
See Accompanying Notes to Financial Statements.
Semi-Annual Report | April 30, 2023 |
11 |
Reaves Utility Income Fund |
Statements of
Changes in Net Assets |
| |
For the
Six Months Ended
April 30, 2023
(Unaudited) | |
For the
Year Ended
October 31, 2022 |
OPERATIONS: | |
| | | |
| | |
Net investment income | |
$ | 25,111,183 | | |
$ | 35,285,674 | |
Net realized gain | |
| 71,825,249 | | |
| 134,244,184 | |
Net change in unrealized appreciation/(depreciation) | |
| 71,684,291 | | |
| (391,548,851 | ) |
Net
Increase/(Decrease) in Net Assets Applicable to Common Shareholders Resulting from Operations | |
| 168,620,723 | | |
| (222,018,993 | ) |
| |
| | | |
| | |
DISTRIBUTIONS TO COMMON SHAREHOLDERS: | |
| | | |
| | |
From distributable earnings | |
| (83,646,026 | ) | |
| (157,015,699 | ) |
Total Distributions: Common Shareholders | |
| (83,646,026 | ) | |
| (157,015,699 | ) |
| |
| | | |
| | |
CAPITAL SHARE TRANSACTIONS: | |
| | | |
| | |
Dividends reinvested | |
| 2,436,279 | | |
| 5,313,072 | |
Shares sold, net of offering costs (Note 4) | |
| 76,443,740 | | |
| 210,386,361 | |
Net Increase in Net Assets from Capital Share Transactions | |
| 78,880,019 | | |
| 215,699,433 | |
| |
| | | |
| | |
Net
Increase/(Decrease) in Net Assets Applicable to Common Shareholders | |
| 163,854,716 | | |
| (163,335,259 | ) |
| |
| | | |
| | |
NET ASSETS: | |
| | | |
| | |
Beginning of period | |
| 1,994,717,344 | | |
| 2,158,052,603 | |
End of period | |
$ | 2,158,572,060 | | |
$ | 1,994,717,344 | |
See Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
12 |
Reaves Utility Income Fund |
Statement of Cash Flows |
For the Six Months Ended April 30, 2023 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES: | |
|
Net increase in net assets from operations | |
$ | 168,620,723 | |
Adjustments to reconcile change in net assets from
operations to net cash provided by operating activities: | |
| | |
Purchase of investment securities | |
| (553,814,990 | ) |
Net sales of short-term investment securities | |
| 72,252,332 | |
Proceeds from disposition of investment securities | |
| 439,481,426 | |
Amortization of premium and accretion of discount on investments | |
| (50,030 | ) |
Net realized (gain)/loss on: | |
| | |
Investments | |
| (71,861,571 | ) |
Net change in unrealized appreciation/depreciation on: | |
| | |
Investments | |
| (71,676,989 | ) |
(Increase)/Decrease in assets: | |
| | |
Dividends receivable | |
| (875,145 | ) |
Interest receivable | |
| (63,688 | ) |
Prepaid offering costs | |
| 50,225 | |
Increase/(Decrease) in liabilities: | |
| | |
Interest payable on loan outstanding | |
| (22,626 | ) |
Loan commitment fees | |
| (20,000 | ) |
Investment advisory fees | |
| 82,736 | |
Administration fees | |
| 12,958 | |
Trustee fees | |
| 1,381 | |
Accrued expenses and other payables | |
| 136,241 | |
Net Cash Used in Operating Activities | |
| (17,747,017 | ) |
| |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
Proceeds from bank borrowing | |
$ | 20,000,000 | |
Proceeds from sales of shares, net of offering costs | |
| 79,241,613 | |
Cash distributions paid on common shares | |
| (81,209,748 | ) |
Net Cash Provided by Financing Activities | |
| 18,031,865 | |
| |
| | |
Net increase in cash | |
| 284,848 | |
Cash, beginning balance | |
$ | 625,821 | |
Cash, ending balance | |
$ | 910,669 | |
| |
| | |
SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFORMATION | |
| | |
Cash paid for interest on loan outstanding during the period was: | |
$ | 12,962,136 | |
Non-cash financing activities not included in herein consist of
reinvestment of distributions of: | |
| 2,436,279 | |
See Accompanying Notes to Financial Statements.
Semi-Annual Report | April 30, 2023 |
13 |
Reaves Utility Income Fund |
Financial
Highlights |
Contained below is selected data
for a share of common stock outstanding, total investment return, ratios to average net assets and other supplemental data for
the periods indicated. This information has been determined based upon information provided in the financial statements and market
price data for the Fund’s shares.
OPERATING
PERFORMANCE: |
Net asset value — Beginning
of Period |
INCOME FROM INVESTMENT OPERATIONS: |
Net investment income(a) |
Net realized and unrealized gain/(loss)
on investments |
Net Increase/(Decrease) from
Operations Applicable to Common Shareholders |
DISTRIBUTIONS TO COMMON SHAREHOLDERS: |
Distributions from net investment income |
Distributions from net realized
capital gains |
Total Distributions
Paid to Common Shareholders |
CAPITAL SHARE TRANSACTIONS: |
Change due to rights offering(b) |
Common share offering costs charged
to paid-in capital |
Total Capital
Share Transactions |
Common Share Net Asset Value —
End of Period |
Common Share Market Price —
End of Period |
Total Return, Net Asset Value(d) |
Total Return, Market Price(d) |
RATIOS AND SUPPLEMENTAL DATA |
Net Assets Applicable to Common Shareholders, End of Period (000s) |
Ratio of operating expenses to average net assets attributable to
common shares |
Ratio of operating expenses excluding interest to average net assets
attributable to common shares |
Ratio of net investment income to average net assets attributable
to common shares |
Portfolio turnover rate |
BORROWINGS AT END OF PERIOD |
Aggregate Amount Outstanding (000s) |
Asset Coverage Per $1,000(f) |
See Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
14 |
Reaves Utility Income Fund |
Financial
Highlights |
For the Six
Months
Ended
April 30, 2023
(Unaudited) | |
For the Year
Ended
October 31,
2022 | |
For the Year
Ended
October 31,
2021 | |
For the Year
Ended
October 31,
2020 | |
For the Year
Ended
October 31,
2019 | |
For the Year
Ended
October 31,
2018 |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 27.71 | | |
$ | 33.09 | | |
$ | 30.77 | | |
$ | 36.52 | | |
$ | 31.74 | | |
$ | 33.14 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 0.34 | | |
| 0.51 | | |
| 0.57 | | |
| 0.65 | | |
| 0.65 | | |
| 0.84 | |
| 1.97 | | |
| (3.61 | ) | |
| 3.95 | | |
| (4.24 | ) | |
| 6.21 | | |
| (0.25 | ) |
| 2.31 | | |
| (3.10 | ) | |
| 4.52 | | |
| (3.59 | ) | |
| 6.86 | | |
| 0.59 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1.14 | ) | |
| (0.53 | ) | |
| (0.57 | ) | |
| (0.85 | ) | |
| (0.64 | ) | |
| (0.83 | ) |
| – | | |
| (1.75 | ) | |
| (1.63 | ) | |
| (1.31 | ) | |
| (1.44 | ) | |
| (1.16 | ) |
| (1.14 | ) | |
| (2.28 | ) | |
| (2.20 | ) | |
| (2.16 | ) | |
| (2.08 | ) | |
| (1.99 | ) |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 0.00 | (c) |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| – | | |
| – | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| – | | |
| 0.00 | (c) |
$ | 28.88 | | |
$ | 27.71 | | |
$ | 33.09 | | |
$ | 30.77 | | |
$ | 36.52 | | |
$ | 31.74 | |
$ | 28.85 | | |
$ | 27.62 | | |
$ | 33.96 | | |
$ | 31.45 | | |
$ | 37.09 | | |
$ | 30.36 | |
| 8.40 | % | |
| (10.05 | %) | |
| 14.92 | % | |
| (9.89 | %) | |
| 22.38 | % | |
| 2.39 | % |
| 8.64 | % | |
| (12.64 | %) | |
| 15.39 | % | |
| (9.32 | %) | |
| 29.94 | % | |
| 4.63 | % |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 2,158,572 | | |
$ | 1,994,717 | | |
$ | 2,158,053 | | |
$ | 1,659,754 | | |
$ | 1,779,985 | | |
$ | 1,544,961 | |
| 2.17 | %(e) | |
| 1.42 | % | |
| 1.23 | % | |
| 1.50 | % | |
| 2.06 | % | |
| 1.90 | % |
| 0.93 | %(e) | |
| 1.04 | % | |
| 1.05 | % | |
| 1.09 | % | |
| 1.17 | % | |
| 1.10 | % |
| 2.40 | %(e) | |
| 1.60 | % | |
| 1.70 | % | |
| 2.00 | % | |
| 1.93 | % | |
| 2.62 | % |
| 18 | % | |
| 37 | % | |
| 20 | % | |
| 38 | % | |
| 22 | % | |
| 24 | % |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 520,000 | | |
$ | 500,000 | | |
$ | 450,000 | | |
$ | 345,000 | | |
$ | 445,000 | | |
$ | 445,000 | |
| 5,151 | | |
| 4,989 | | |
| 5,796 | | |
| 5,811 | | |
| 5,000 | | |
| 4,472 | |
See Accompanying Notes to Financial Statements.
Semi-Annual Report | April 30, 2023 |
15 |
Reaves Utility Income Fund |
Financial
Highlights |
OPERATING
PERFORMANCE: |
Net
asset value — Beginning of Period |
INCOME FROM INVESTMENT
OPERATIONS: |
Net investment income(a) |
Net
realized and unrealized gain/(loss) on investments |
Net
Increase/(Decrease) from Operations Applicable to Common Shareholders |
DISTRIBUTIONS TO
COMMON SHAREHOLDERS: |
Distributions from
net investment income |
Distributions
from net realized capital gains |
Total
Distributions Paid to Common Shareholders |
CAPITAL SHARE TRANSACTIONS: |
Change due to rights
offering(b) |
Common
share offering costs charged to paid-in capital |
Total
Capital Share Transactions |
Common
Share Net Asset Value — End of Period |
|
|
Common Share Market
Price — End of Period |
Total Return, Net
Asset Value(d) |
Total Return, Market
Price(d) |
RATIOS AND SUPPLEMENTAL
DATA |
Net Assets Applicable
to Common Shareholders, End of Period (000s) |
Ratio of operating
expenses to average net assets attributable to common shares |
Ratio of operating
expenses excluding interest to average net assets attributable to common shares |
Ratio of net investment
income to average net assets attributable to common shares |
Portfolio turnover
rate |
BORROWINGS AT END
OF PERIOD |
Aggregate Amount Outstanding
(000s) |
Asset Coverage Per
$1,000(f) |
See Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
16 |
Reaves Utility Income Fund |
Financial
Highlights |
For the Year
Ended
October 31, 2017 | |
For the Year
Ended
October 31, 2016 | |
For the Year
Ended
October 31, 2015 | |
For the Year
Ended
October 31, 2014 | |
For the Year
Ended
October 31, 2013 |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 32.53 | | |
$ | 30.29 | | |
$ | 32.71 | | |
$ | 27.91 | | |
$ | 25.66 | |
| | | |
| | | |
| | | |
| | | |
| | |
| 1.00 | | |
| 0.84 | | |
| 0.84 | | |
| 1.80 | | |
| 1.14 | |
| 3.87 | | |
| 3.89 | | |
| (1.47 | ) | |
| 4.64 | | |
| 2.69 | |
| 4.87 | | |
| 4.73 | | |
| (0.63 | ) | |
| 6.44 | | |
| 3.83 | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1.04 | ) | |
| (0.99 | ) | |
| (0.89 | ) | |
| (1.50 | ) | |
| (1.51 | ) |
| (1.80 | ) | |
| (0.83 | ) | |
| (0.90 | ) | |
| (0.14 | ) | |
| (0.07 | ) |
| (2.84 | ) | |
| (1.82 | ) | |
| (1.79 | ) | |
| (1.64 | ) | |
| (1.58 | ) |
| | | |
| | | |
| | | |
| | | |
| | |
| (1.42 | ) | |
| (0.67 | ) | |
| – | | |
| – | | |
| – | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | |
| (1.42 | ) | |
| (0.67 | ) | |
| – | | |
| – | | |
| – | |
$ | 33.14 | | |
$ | 32.53 | | |
$ | 30.29 | | |
$ | 32.71 | | |
$ | 27.91 | |
$ | 31.02 | | |
$ | 30.00 | | |
$ | 29.67 | | |
$ | 30.88 | | |
$ | 25.92 | |
| 11.04 | % | |
| 14.31 | % | |
| (1.78 | %) | |
| 24.24 | % | |
| 15.73 | % |
| 12.70 | % | |
| 7.62 | % | |
| 1.91 | % | |
| 26.29 | % | |
| 9.05 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 1,612,865 | | |
$ | 1,116,576 | | |
$ | 878,952 | | |
$ | 949,088 | | |
$ | 809,731 | |
| 1.66 | % | |
| 1.59 | % | |
| 1.62 | % | |
| 1.71 | % | |
| 1.71 | % |
| 1.09 | % | |
| 1.14 | % | |
| 1.15 | % | |
| 1.16 | % | |
| 1.21 | % |
| 2.97 | % | |
| 2.66 | % | |
| 2.67 | % | |
| 6.10 | % | |
| 4.33 | % |
| 15 | % | |
| 34 | % | |
| 32 | % | |
| 26 | % | |
| 30 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 320,000 | | |
$ | 320,000 | | |
$ | 320,000 | | |
$ | 290,000 | | |
$ | 290,000 | |
| 6,040 | | |
| 4,489 | | |
| 3,747 | | |
| 4,273 | | |
| 3,792 | |
See Accompanying Notes to Financial Statements.
Semi-Annual Report | April 30, 2023 |
17 |
Reaves Utility Income Fund |
Financial
Highlights |
| (a) | Calculated based on the average number of common shares outstanding during each fiscal period.
|
| (b) | Effect of rights offerings for common shares at a price below market price. |
| (c) | Amount represents less than $0.005 per common share. |
| (d) | Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during each fiscal period. Total return based on common share market
value assumes the purchase of common shares at the market price on the first day and sale of common shares at the market price
on the last day of the period indicated. Dividends and distributions, if any, are assumed to be reinvested at prices obtained under
the Fund's distribution reinvestment plan. |
| (f) | Calculated by subtracting the Fund's total liabilities (excluding the principal
amount of Leverage Facility) from the Fund's total assets and dividing by the principal amount of the Leverage Facility and then
multiplying by $1,000. |
See Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
18 |
Reaves Utility Income Fund |
Notes
to Financial Statements |
April
30, 2023 (Unaudited)
NOTE
1. SIGNIFICANT ACCOUNTING AND OPERATING POLICIES
Reaves
Utility Income Fund (the “Fund”) is registered under the Investment Company Act of 1940, as amended (the “1940
Act”), as a closed-end management investment company. The Fund was organized under the laws of the state of Delaware by
an Agreement and Declaration of Trust dated September 15, 2003. The Fund’s investment objective is to provide a high level
of after-tax income and total return consisting primarily of tax-advantaged dividend income and capital appreciation. The Fund
is a diversified investment company for purpose of the 1940 Act. The Agreement and Declaration of Trust provides that the Trustees
may authorize separate classes of shares of beneficial interest. The Fund’s common shares are listed on the NYSE American
LLC (the “Exchange”) and trade under the ticker symbol “UTG”.
The
following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
The preparation of financial statements is in accordance with generally accepted accounting principles in the United States of
America (“U.S. GAAP”), which requires management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from those estimates. The Fund is considered an investment
company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies in the Financial
Accounting Standards Board Accounting Standards Codification Topic 946.
Investment
Valuation: The net asset value per common share (“NAV”) of the Fund is determined no less frequently than daily,
on each day that the Exchange is open for trading, as of the close of regular trading on the Exchange (normally 4:00 p.m. New
York time). The NAV is determined by dividing the value of the Fund’s total assets less its liabilities by the number of
shares outstanding.
The
Board of Trustees (the “Board”) has established the following procedures for valuation of the Fund’s asset values
under normal market conditions. For domestic equity securities, foreign equity securities and funds that are traded on an exchange,
the market price is usually the closing sale or official closing price on that exchange. In the case of a domestic and foreign
equity security not traded on an exchange, or if such closing prices are not otherwise available, the mean of the closing bid
and ask price will be used. The fair value for debt obligations is generally the evaluated mean price supplied by the Fund’s
primary and/or secondary independent third-party pricing service, approved by the Board. An evaluated mean is considered to be
a daily fair valuation price which may use a matrix, formula or other objective method that takes into consideration various factors,
including, but not limited to: structured product markets, fixed income markets, interest rate movements, new issue information,
trading, cash flows, yields, spreads, credit quality and other pertinent information as determined by the pricing services evaluators
and methodologists. If the Fund’s primary and/ or secondary independent third-party pricing services are unable to supply
a price, or if the price supplied is deemed to be unreliable, the market price may be determined using quotations received from
one or more broker-dealers that make a market in the security. Investments in non-exchange traded funds are fair valued at their
respective net asset values.
Pursuant
to Rule 2a-5 under the 1940 Act, the Board has designated the Fund's investment adviser, Reaves Asset Management ("Reaves"
or the "Adviser"), as the valuation designee with respect to the fair valuation of the Fund's portfolio securities,
subject to oversight by and periodic reporting to the Board. Fair valued securities are those for which market quotations are
not readily available, including circumstances under which the Adviser determines that prices received are not reflective of their
market values. In fair valuing the Fund’s investments, consideration is given to several factors, which may include, among
others, the following: the fundamental business data relating to the issuer, borrower or counterparty; an evaluation of the forces
which influence the market in which the
investments are purchased and sold; the type, size and cost of the investment; the information as to any transactions in or offers
for the investment; the price and extent of public trading in similar securities (or equity securities) of the issuer, or comparable
companies; the coupon payments, yield data/cash flow data; the quality, value and saleability of collateral, if any, securing
the investment; the business prospects of the issuer, borrower or counterparty, as applicable, including any ability to obtain
money or resources from a parent or affiliate and an assessment of the issuer’s, borrower’s or counterparty’s
management; the prospects for the industry of the issuer, borrower or counterparty, as applicable, and multiples (of earnings
and/or cash flow) being paid for similar businesses in that industry; one or more non-affiliated independent broker quotes for
the sale price of the portfolio security; and other relevant factors.
Semi-Annual Report | April
30, 2023 |
19 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
The
Fund discloses the classification of its fair value measurements following a three-tier hierarchy based on the inputs used to
measure fair value. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability,
including assumptions about risk. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants
would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting
entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions market participants would
use in pricing the asset or liability that are developed based on the best information available.
Various
inputs are used in determining the value of the Fund’s investments as of the end of the reporting period. When inputs used
fall into different levels of the fair value hierarchy, the level in the hierarchy within which the fair value measurement falls
is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The designated
input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized
in the following hierarchy under applicable financial accounting standards:
Level 1 |
— |
Unadjusted quoted prices
in active markets for identical investments, unrestricted assets or liabilities that the Fund has the ability to access at
the measurement date; |
|
|
|
Level 2 |
— |
Quoted prices which are not active, quoted prices
for similar assets or liabilities in active markets or inputs other than quoted prices that are observable (either directly
or indirectly) for substantially the full term of the asset or liability; and |
|
|
|
Level 3 |
— |
Significant unobservable prices or inputs (including
the Fund’s own assumptions in determining the fair value of investments) where there is little or no market activity
for the asset or liability at the measurement date. |
www.utilityincomefund.com |
20 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
The
following is a summary of the Fund’s investments in the fair value hierarchy as of April 30, 2023:
Investments in Securities at Value* | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Common Stocks | |
$ | 2,629,888,508 | | |
$ | – | | |
$ | – | | |
$ | 2,629,888,508 | |
Corporate Bonds | |
| – | | |
| 4,854,572 | | |
| – | | |
| 4,854,572 | |
Preferred Stocks | |
| 940,137 | | |
| – | | |
| – | | |
| 940,137 | |
Money Market Funds | |
| 36,697,212 | | |
| – | | |
| – | | |
| 36,697,212 | |
TOTAL | |
$ | 2,667,525,857 | | |
$ | 4,854,572 | | |
$ | – | | |
$ | 2,672,380,429 | |
| * | For
detailed descriptions and other security classifications, see the accompanying Statement of Investments. |
Foreign
Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Investment valuations and other assets
and liabilities initially expressed in foreign currencies are converted each business day the Exchange is open into U.S. dollars
based upon current exchange rates. Prevailing foreign exchange rates may generally be obtained at the close of the Exchange (normally,
4:00 p.m. New York time). The portion of realized and unrealized gains or losses on investments due to fluctuations in foreign
currency exchange rates is not separately disclosed and is included in realized and unrealized gains or losses on investments,
when applicable.
Distributions
to Shareholders: The Fund intends to make a level distribution each month to common shareholders after payment of interest
on any outstanding borrowings. The level distribution rate may be modified by the Board from time to time. Any net capital gains
earned by the Fund are distributed at least annually. Distributions to shareholders are recorded by the Fund on the ex-dividend
date.
Income
Taxes: The Fund’s policy is to comply with the provisions of the Code applicable to regulated investment companies and
to distribute all of its taxable income and gains to its shareholders. See Note 3.
Investment
Transactions: Investment security transactions are accounted for as of trade date. Dividend income is recorded on the ex-dividend
date, or as soon as information is available to the Fund. Interest income, which includes amortization of premium and accretion
of discount, is accrued as earned. Realized gains and losses from investment transactions are determined using the first-in first-out
basis for both financial reporting and income tax purposes.
NOTE
2. RISKS
The
Fund may have elements of risk, including the risk of loss of equity. There is no assurance that the investment process will consistently
lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than
a more broadly diversified investment.
Concentration
Risk. The Fund invests a significant portion of its total assets in securities of utility companies, which may include companies
in the electric, gas, water, and telecommunications sectors, as well as other companies engaged in other infrastructure operations.
This may make the Fund particularly susceptible to adverse economic, political or regulatory occurrences affecting those sectors.
As concentration of the Fund’s investments in a sector increases, so does the potential for fluctuation in the net asset
value of common shares.
Semi-Annual Report | April 30, 2023 |
21 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
Risk
of Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers
involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation
of currencies, the inability to repatriate foreign currency, less complete financial information about companies and possible
future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less
liquid and their prices more volatile than those of securities of comparable U.S. issuers.
Market
Disruption and Geopolitical Risk. The value of your investment in the Fund is based on the values of the Fund’s investments,
which may change due to economic and other events that affect markets generally, as well as those that affect particular regions,
countries, industries, companies or governments. These movements, sometimes called volatility, may be greater or less depending
on the types of securities the Fund owns and the markets in which the securities trade. Securities in the Fund’s portfolio
may underperform due to inflation (or expectations for inflation), interest rates, global demand for particular products or resources,
natural disasters, pandemics, epidemics, terrorism, regulatory events and governmental or quasi-governmental actions. The occurrence
of global events similar to those in recent years, such as the war in Ukraine, terrorist attacks around the world, natural disasters,
social and political discord or debt crises and downgrades, among others, may result in market volatility and may have long term
effects on both the U.S. and global financial markets. The occurrence of such events may be sudden and unexpected, and it is difficult
to predict when similar events affecting the U.S. or global financial markets may occur, the effects that such events may have
and the duration of those effects. Any such event(s) could have a significant adverse impact on the value, liquidity and risk
profile of the Fund’s portfolio, as well as its ability to sell securities to meet redemptions. There is a risk that you
may lose money by investing in the Fund.
Social,
political, economic and other conditions and events, such as natural disasters, health emergencies (e.g., epidemics and pandemics),
tariffs and trade disruptions, recession, changes in currency rates, terrorism, wars, conflicts and social unrest, may occur and
could significantly impact issuers, industries, governments and other systems, including the financial markets. As global systems,
economies and financial markets are increasingly interconnected, events that once had only local impact are now more likely to
have regional or even global effects. Events that occur in one country, region or financial market will, more frequently, adversely
impact issuers in other countries, regions or markets. For example, developments in the banking or financial services sectors
could adversely impact a wide range of companies and issuers. These impacts can be exacerbated by failures of governments and
societies to adequately respond to an emerging event or threat. These types of events quickly and significantly impact markets
in the U.S. and across the globe leading to extreme market volatility and disruption. The extent and nature of the impact on supply
chains or economies and markets from these events is unknown. These events could reduce consumer demand or economic output, result
in market closures, travel restrictions or quarantines, and generally have a significant impact on the economies and financial
markets and the Adviser’s investment advisory activities and services of other service providers, which in turn could adversely
affect the Fund’s investments and other operations. The value of the Fund’s investments may decrease as a result of
such events, particularly if these events adversely impact the operations and effectiveness of the Adviser or key service providers
or if these events disrupt systems and processes necessary or beneficial to the investment advisory or other activities on behalf
the Fund.
www.utilityincomefund.com |
22 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
NOTE
3. INCOME TAXES AND TAX BASIS INFORMATION
The
Fund complies with the requirements under Subchapter M of the Code applicable to regulated investment companies and intends to
distribute substantially all of its net taxable income and net capital gains, if any, each year. The Fund is not subject to income
taxes to the extent such distributions are made.
As
of and during the period ended April 30, 2023, the Fund did not have a liability for any unrecognized tax benefits in the accompanying
financial statements. The Fund files U.S. federal, state, and local tax returns as required. The Fund’s tax returns are
subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally
three years after the filing of the tax return but which can be extended to six years in certain circumstances. Tax returns for
open years have incorporated no uncertain tax positions that require a provision for income taxes.
Net
investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of distributions
made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ
from the fiscal year in which the income or realized gain was recorded by the Fund.
The
tax character of the distributions paid by the Fund were as follows:
| |
For the Year Ended October 31, 2022 | |
Distributions Paid From: | |
| | |
Ordinary Income | |
$ | 36,286,616 | |
Long-Term Capital Gain | |
| 120,729,083 | |
Total | |
$ | 157,015,699 | |
As
of April 30, 2023, net unrealized appreciation/depreciation of investments based on federal tax cost were as follows:
Gross appreciation (excess of value over tax cost) | |
| 275,940,434 | |
Gross depreciation (excess of tax cost over value) | |
| (130,908,584 | ) |
Net depreciation of foreign currency | |
| (5,972 | ) |
Net unrealized appreciation | |
$ | 145,025,878 | |
Cost of investments for income tax purposes | |
$ | 2,527,348,580 | |
NOTE
4. CAPITAL TRANSACTIONS
Common
Shares: There are an unlimited number of no par value common shares of beneficial interest authorized.
The
Fund has a registration statement on file with the SEC (the “Shelf Registration Statement”), pursuant to which the
Fund may offer common shares, from time to time, in one or more offerings, up to a maximum aggregate offering price of $600,000,000
on terms to be determined at the time of the offering.
Semi-Annual Report | April 30, 2023 |
23 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
On
September 19, 2022, the Fund entered into a distribution agreement (the “Distribution Agreement”) with Paralel Distributors
LLC (“Paralel Distributors”), pursuant to which the Fund may offer and sell up to 8,000,000 of the Fund’s common
shares from time to time through Paralel Distributors and a sub-placement agent in transactions deemed to be “at the market”
as defined in Rule 415 under the Securities Act of 1933, as amended.
The
Distribution Agreement replaced the materially similar distribution agreement (“ADI Agreement”) between the Fund and
ALPS Distributors, Inc. (“ADI”), which originally became effective November 14, 2019 and continued through September
19, 2022. Under the ADI Agreement, the Fund could offer up offer and sell up to 23,000,000 of the Fund’s common shares through
ADI and a sub-placement agent in transactions deemed to be “at the market.”
During
the period ended April 30, 2023, 2,668,278 common shares were sold totaling $76,443,740, in proceeds to the Fund, net of offering
costs of $55,087. For the shares sold during the period ended April 30, 2023 pursuant to the Distribution Agreement, commissions
totaling $772,729 were paid, of which $154,545 was retained by Paralel Distributors with the remainder paid to a sub-placement
agent.
Offering
costs paid as a result of the Fund’s Shelf Registration Statement but not yet incurred as of April 30, 2023 are approximately
$53,319.
Transactions
in common shares were as follows:
| | |
Period Ended April 30, 2023 | | |
Year Ended October 31, 2022 | |
Common Shares outstanding - beginning of period | | |
| 71,977,354 | | |
| 65,211,164 | |
Common Shares issued from sale of shares | | |
| 2,668,278 | | |
| 6,600,257 | |
Common Shares issued as reinvestment of dividends | | |
| 85,255 | | |
| 165,932 | |
Common Shares outstanding - end of period | | |
| 74,730,887 | | |
| 71,977,353 | |
NOTE
5. BORROWINGS
On
April 27, 2022, the Fund entered into a Credit Agreement with State Street Bank and Trust Company. Under the terms of the Credit
Agreement, the Fund is allowed to borrow up to $650,000,000 (“Commitment Amount”). Interest is charged at a rate of
the one month SOFR (“Secured Overnight Financing Rate”) plus 0.65%. Borrowings under the Credit Agreement are secured
by all or a portion of assets of the Fund that are held by the Fund’s custodian in a memo-pledged account (the “pledged
collateral”). Borrowing commenced under the terms of the Credit Agreement on April 27, 2022. Under the terms of the Credit
Agreement, effective June 27, 2022, a commitment fee applies when the amount outstanding is less than 80% of the Commitment Amount.
This commitment fee is equal to 0.15% times the Commitment Amount less the amount outstanding under the Credit Agreement and is
computed daily and payable quarterly in arrears.
For
the period ended April 30, 2023, the average amount borrowed under the Credit Agreement was $515,248,619, at a weighted average
rate of 4.99%. As of April 30, 2023, the amount of outstanding borrowings was $520,000,000, the interest rate was 5.54% and the
fair value of pledged collateral was $1,043,227,360.
NOTE
6. PORTFOLIO SECURITIES
Purchases
and sales of investment securities, other than short-term securities, for the period ended April 30, 2023, aggregated $559,659,771
and $450,151,183, respectively.
www.utilityincomefund.com |
24 |
Reaves Utility Income Fund |
Notes to Financial Statements |
April
30, 2023 (Unaudited)
NOTE
7. MANAGEMENT FEES, ADMINISTRATION FEES AND TRANSACTIONS WITH AFFILIATES
Reaves
serves as the Fund’s investment adviser pursuant to an Investment Advisory and Management Agreement (the “Advisory
Agreement”) with the Fund. As compensation for its services to the Fund, Reaves receives an annual investment advisory fee
of 0.575% on assets up to $2.5 billion and 0.525% based on the Fund’s average daily total assets, computed daily and payable
monthly 0.575% annually on assets up to $2.5 billion and 0.525% annual on assets over $2.5 billion.
Paralel
Technologies LLC (“Paralel”) serves as the Fund’s administrator pursuant to an administration and fund accounting
agreement (the “Administration Agreement”) with the Fund. As compensation for its services to the Fund, Paralel receives
an annual administration fee based on the Fund’s average daily total assets, computed daily and payable monthly. From its
fees, Paralel pays all routine operating expenses incurred by the Fund with the exception of advisory fees; taxes and governmental
fees; expenses related to portfolio transactions and management of the portfolio; expenses associated with secondary offerings
of shares; trustee fees and expenses; expenses associated with tender offers and other share repurchases; and other extraordinary
expenses.
NOTE
8. INDEMNIFICATIONS
In
the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general
indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that
may be made against the Fund that have not yet occurred.
Semi-Annual Report | April 30, 2023 |
25 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
DIVIDEND
REINVESTMENT PLAN
Unless
the registered owner of Common Shares elects to receive cash by contacting DST Systems, Inc. (the “Plan Administrator”),
all dividends declared on Common Shares will be automatically reinvested by the Plan Administrator for shareholders in the Fund’s
Dividend Reinvestment Plan (the “Plan”), in additional Common Shares. Shareholders who elect not to participate in
the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record
(or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Administrator as dividend
disbursing agent. You may elect not to participate in the Plan and to receive all dividends in cash by contacting the Plan Administrator,
as dividend disbursing agent, at the address set forth below. Participation in the Plan is completely voluntary and may be terminated
or resumed at any time without penalty by notice if received and processed by the Plan Administrator prior to the dividend record
date; otherwise, such termination or resumption will be effective with respect to any subsequently declared dividend or other
distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional Common
Shares for you. If you wish for all dividends declared on your Common Shares to be automatically reinvested pursuant to the Plan,
please contact your broker.
The
Plan Administrator will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s
Common Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a “Dividend”)
payable in cash, nonparticipants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common
Shares. The Common Shares will be acquired by the Plan Administrator for the participants’ accounts, depending upon the
circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (“Newly
Issued Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open- Market Purchases”)
on the NYSE American LLC or elsewhere. If, on the payment date for any Dividend, the closing market price plus estimated brokerage
commissions per Common Share is equal to or greater than the net asset value per Common Share, the Plan Administrator will invest
the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be
credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the net asset
value per Common Share on the payment date; provided that, if the net asset value is less than or equal to 95% of the closing
market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common
Share on the payment date. If, on the payment date for any Dividend, the net asset value per Common Share is greater than the
closing market value plus estimated brokerage commissions, the Plan Administrator will invest the Dividend amount in Common Shares
acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any
Dividend, the Plan Administrator will have until the last business day before the next date on which the Common Shares trade on
an “ex-dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase
Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases. It is contemplated that the Fund
will pay monthly income Dividends. Therefore, the period during which Open-Market Purchases can be made will exist only from the
payment date of each Dividend through the date before the next “ex-dividend” date which typically will be approximately
ten days. If, before the Plan Administrator has completed its Open-Market Purchases, the market price per Common Share exceeds
the net asset value per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the
net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in
Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open- Market Purchases,
the Plan provides that if the Plan Administrator
is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts
to a market premium during the purchase period, the Plan Administrator may cease making Open-Market Purchases and may invest the
uninvested portion of the Dividend amount in Newly Issued Common Shares at the net asset value per Common Share at the close of
business on the Last Purchase Date, provided that, if the net asset value is less than or equal to 95% of the then current market
price per Common Share, the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.
www.utilityincomefund.com |
26 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
The
Plan Administrator maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions
in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant
will be held by the Plan Administrator on behalf of the Plan participant, and each shareholder proxy will include those shares
purchased or received pursuant to the Plan. The Plan Administrator will forward all proxy solicitation materials to participants
and vote proxies for shares held under the Plan in accordance with the instructions of the participants.
In
the case of Common Shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners,
the Plan Administrator will administer the Plan on the basis of the number of Common Shares certified from time to time by the
record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There
will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro
rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends
will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such
Dividends. Participants that request a sale of Common Shares through the Plan Administrator are subject to brokerage commissions.
The
Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases
in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.
All
correspondence or questions concerning the Plan should be directed to the Plan Administrator, DST Systems, Inc., 430 W 7th Street
Kansas City, MO 64105.
APPROVAL
OF INVESTMENT ADVISORY AGREEMENT
At
the March 17, 2023 meeting (the “Meeting”) of the Board of Trustees (the “Board” or the “Trustees”)
of Reaves Utility Income Fund (the “Fund”), the Board, including those Trustees who are not “interested persons”
of the Fund, as that term is defined in the 1940 Act (the “Independent Trustees”), approved the renewal of the investment
advisory agreement between W.H. Reaves & Co. Inc. (the “Adviser” or “Reaves”) and the Fund (the “Advisory
Agreement”), upon the terms and conditions set forth therein, for an additional one-year term.
At
the Meeting and throughout the process of considering the renewal of the Advisory Agreement, the Board, including a majority of
the Independent Trustees, was advised by its independent legal counsel.
In
approving the continuation of the Advisory Agreement, the Board considered such information as the Board deemed reasonably
necessary to evaluate the terms of the Advisory Agreement. In its deliberations, the Board did not identify any single factor
as being determinative. Rather, the Board’s approvals were based on each Trustee’s business judgment after
consideration of the information provided
as a whole. Individual Trustees may have weighed certain factors differently and assigned varying degrees of materiality to information
considered by the Board.
Semi-Annual Report | April 30, 2023 |
27 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
Although
not meant to be all-inclusive, the following discussion summarizes the factors considered and conclusions reached by the Trustees
in determining to approve the renewal of the Advisory Agreement.
Nature,
extent, and quality of services. The Trustees evaluated the nature, extent, and quality of the services that the Adviser provided
to the Fund. In assessing the quality of the Adviser’s services, the Trustees recognized the various challenges involved
in the operations of the Fund, such as the use of leverage and operations of its secondary offering program. The Board considered
the complexity of the market environment which the Fund operated in. The Trustees also reviewed the Fund’s investment performance
and considered its appraisal of the quality of the Adviser’s compliance program. The Trustees further examined the qualifications,
experience, and capability of the Adviser’s management team and other personnel, noting the continued diligence and care
that the Adviser showed in performing its duties and obligations. The Trustees also took into account information from the Adviser
regarding its overall financial strength and the resources that it had available to serve the Fund. Based on the foregoing, the
Trustees determined that they were satisfied with the nature, extent, and quality of the services that the Adviser provided to
the Fund.
Performance
of the Fund and the Adviser. The Trustees reviewed the Fund’s investment performance over time and compared that performance
to other funds in its peer group. In making its comparisons, the Trustees utilized a report from an independent provider of investment
company data (the “Data Provider”). As reported by the Data Provider, when compared to the Fund's peer group, the
Fund’s net total return (annualized) reflected below the peer group median’s short-term returns, while its longer-term
performance outpaced the peer group’s median return. The Trustees considered recent market events and the Adviser’s
management of the Fund through such events. The Board also considered the Adviser's successful management of the Fund’s
distributions, noting the steady, sustainable growth of the distribution over the Fund’s history, and acknowledging the
importance of these factors to many of the Fund’s shareholders.
Costs
of services and profitability. The Trustees considered the reasonableness of the compensation paid to the Adviser, in both
absolute and comparative terms, and also the profits realized by the Adviser from its relationship with the Fund. To facilitate
this analysis, the Trustees retained the Data Provider to furnish a report comparing the Fund’s management fee and other
expenses to the similar expenses of other comparable peer funds selected by the Data Provider. The Trustees reviewed, among other
things, information provided by the Data Provider comparing the Fund’s contractual management fee rate (at common asset
levels) and actual management fee rate (reflecting fee waivers, if any) as a percentage of total assets and as a percentage of
assets attributable to common stock to other funds in its Data Provider expense group. Based on the data provided on management
fee rates, the Trustees noted that the Fund’s contractual management fee rate and actual management fee rate were each lower
than the median of the Data Provider peer group.
The
Trustees also received comparative information from the Adviser with respect to its standard fees charged for investment advisory
clients other than the Fund. The Trustees noted that, among all accounts managed by the Adviser, the Fund’s advisory fee
rate was comparable to the Adviser’s standard fee schedule, while also noting the services provided by the Adviser to the
Fund were more extensive and demanding than the services provided to its other accounts. Furthermore, the Trustees considered,
based on the Adviser’s representation, that many of the Adviser’s other clients required different not be considered
“like accounts” of the Fund because these accounts are not of similar size and do not have the same investment objectives
as, or possess other characteristics similar to, the Fund.
www.utilityincomefund.com |
28 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
Profitability
and economies of scale. The Adviser also furnished the Trustees with copies of its financial statements and other information
regarding its expenses in providing services to the Fund. In reviewing those financial statements and other materials, the Trustees
examined the profitability to the Adviser, noting that its profitability was not unreasonable in consideration of the services
provided. The Trustees noted that there were no fee breakpoints in the Advisory Agreement and that any increases in the Fund’s
assets are primarily attributable to market appreciation, dividend reinvestments, rights offerings, and the at-the-market offering
program. In consideration of these factors and the fact that the Adviser's profitability was not unreasonable, the Board agreed
that such fee arrangement continued to be appropriate.
Indirect
benefits. The Trustees considered indirect benefits to the Adviser from its relationship to the Fund, including increased
visibility among its institutional asset manager peer group and “sell side” research obtained from broker-dealers
that execute trades for the Fund.
Conclusion.
Based upon its evaluation of all material factors, including the foregoing, and assisted by the advice of independent legal
counsel, the Trustees concluded that the level of fees paid to the Adviser was fair and reasonable in light of the usual and customary
charges for such services, and that the continued retention of the Adviser as investment adviser to the Fund was in the best interests
of the Fund and its shareholders.
FUND
PROXY VOTING POLICIES & PROCEDURES
A
description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities
is available without charge upon request by calling toll-free 1-800-644-5571, or on the Fund’s website at https://www.utilityincomefund.com.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended
June 30 is also available without charge upon request by calling toll-free 1-800-644-5571, or on the SEC’s website at https://www.sec.gov.
PORTFOLIO
HOLDINGS
The
Fund files its complete schedule of portfolio holdings with the Commission for the first and third quarters of each fiscal year
on Form N-PORT. Copies of the Fund’s Forms N-PORT are available on the Commission’s website at https://www.sec.gov.
Quarterly Holdings statements as of the first and third quarter of each fiscal year, and information on the Fund’s Forms
N-PORT, are available on the Fund’s website at https://www.utilityincomefund.com, and are available without a charge, upon
request, by contacting the Fund at 1-800-644-5571.
NOTICE
Notice
is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may purchase at market prices
from time to time common shares in the open market.
SECTION
19(A) NOTICES
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 there under. 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 fiscal year-to-date cumulative distribution amount per
share for the Fund.
Semi-Annual Report | April 30, 2023 |
29 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
The
amounts and sources of distributions reported in these 19(a) notices 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. Shareholders will receive a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
Total Cumulative Distributions for the fiscal period ended April 30, 2023 | |
% Breakdown of the Total Cumulative Distributions for the fiscal period ended April 30, 2023 |
Net Investment | |
Net Realized Capital Gains | |
Return of Capital | |
Total Per Common Share | |
Net Investment Income | |
Net Realized Capital Gains | |
Return of Capital | |
Total Per Common Share |
$0.33217 | |
$0.80783 | |
$– | |
$1.14000 | |
29.14% | |
70.86% | |
–% | |
100.00% |
The
Fund’s distribution policy is to distribute all or a portion of its net investment income to its shareholders on a monthly
basis. In order to provide shareholders with a more stable level of distributions, the Fund may at times pay out less than the
entire amount of net investment income earned in any particular month and may at times in any particular month pay out such accumulated
but undistributed income in addition to net investment income earned in that month. As a result, the distributions paid by the
Fund for any particular month may be more or less than the amount of net investment income earned by the Fund during such month.
The Fund’s current accumulated but undistributed net investment income, if any, is disclosed in the Statement of Assets
and Liabilities, which comprises part of the financial information included in this report.
You
should not draw any conclusions about the Fund’s investment performance from the amount of the distributions or from the
terms of the Fund’s plan to support a level distribution.
ANNUAL
MEETING OF SHAREHOLDERS
On
April 4, 2023, the Annual Meeting of Shareholders of the Fund was held to elect two Trustees. On January 31, 2023, the record
date for the meeting, the Fund had 72,965,693 outstanding common shares. The votes cast at the meeting were as follows:
Proposal 1 – Proposal
to elect two Trustees:
Election of Mary K. Anstine as Trustee of the
Fund:
| |
# of Votes Cast | | |
% of Votes Cast | |
For | |
| 51,039,053 | | |
| 96.28 | % |
Against/Withhold | |
| 1,972,116 | | |
| 3.72 | % |
TOTAL | |
| 53,011,169 | | |
| 100.00 | % |
www.utilityincomefund.com |
30 |
Reaves Utility Income Fund |
Additional Information |
April
30, 2023 (Unaudited)
Election of Michael F. Holland as Trustee of the Fund:
| |
# of Votes Cast | | |
% of Votes Cast | |
For | |
| 51,302,730 | | |
| 96.78 | % |
Against/Withhold | |
| 1,708,439 | | |
| 3.22 | % |
TOTAL | |
| 53,011,169 | | |
| 100.00 | % |
Semi-Annual Report | April 30, 2023 |
31 |
REAVES
UTILITY INCOME FUND
1700
Broadway, Suite 1850
Denver,
CO 80290
1-800-644-5571
Paralel
Technologies LLC’s affiliate, Paralel Distributors LLC, a FINRA
member, serves as underwriter to the Fund’s at the
market offering.
Item
2. Code of Ethics.
Not
applicable to this report.
Item
3. Audit Committee Financial Expert.
Not
applicable to this report.
Item
4. Principal Accountant Fees and Services.
Not
applicable to this report.
Item
5. Audit Committee of Listed Registrants.
Not
applicable to this report.
Item
6. Investments.
| (a) | The
schedule of investments is included as part of the Reports to Stockholders filed under
Item 1(a) of this report. |
| (b) | Not
applicable to the Registrant. |
Item
7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not
applicable to this report.
Item
8. Portfolio Managers of Closed-End Management
Investment Companies.
As
of July 10, 2023, Joseph (Jay) Rhame, III is a named Co-Portfolio Manager of the Fund. Information
on Mr. Rhame is shown below:
Name |
Title |
Length
of Service |
Business
Experience 5 Years |
Joseph
Rhame, III |
Co-Portfolio
Manager |
Since
June 2023 |
PM,
Reaves Asset Management 2005-present |
Other
accounts managed by the Registrant’s Co-Portfolio Manager as of May 31, 2023:
Name |
Registered
Investment Companies, Total Assets |
Other
Pooled Investments Vehicles, Total Assets |
Other
Accounts, Total Assets |
Joseph
Rhame, III |
1
account
$42,421,438 |
0 |
593
accounts
$373,460,531 |
Conflicts
of Interest: There may be certain inherent conflicts of interest that arise in connection with the portfolio managers' management
of the registrant's investments and the investments of any other accounts they manage. Such conflicts could include aggregation
of orders for all accounts managed by a particular portfolio manager, the allocation of purchases across all such
accounts, the allocation of IPOs
and any soft dollar arrangements that the registrant's investment adviser may have in place that could benefit the registrant
and/or such other accounts. The investment adviser has adopted policies and procedures designed to address any such conflicts
of interest to ensure that all management time, resources and investment opportunities are allocated equitably.
None
of the accounts disclosed have an advisory fee based on the performance of an account.
Compensation
of Portfolio Managers. Compensation paid by Reaves Assets Management, Inc. (the "Adviser")
to the portfolio managers is
designed to be competitive and attractive, and primarily consists of a fixed base salary, based on market factors and each person's
level of responsibility, and a bonus. The amount of the bonus is based on the overall after-tax profitability of the Adviser,
each fiscal-year, and the contribution of
each portfolio manager to the Adviser's overall performance.
Individual
compensation is designed to reward the overall contribution of portfolio managers to the performance of the Adviser. To date,
the Adviser has not linked bonuses to the performance
of any particular portfolio. Compensation levels are set by senior management following a review
of overall performance. From time to time, the Adviser has engaged industry consultants to ensure that compensation remains competitive
and to identify and plan for new and emerging compensation trends. Equity holders within the Adviser, including the portfolio
managers, receive only a modest return on their capital investment, usually a mid-single digit percentage of their share of the
Adviser's book value. The Adviser believes this practice is consistent with industry standards and that it allows the Adviser
to maximize the incentive compensation pool. This pool is critical in the Adviser's ability to continue to attract and retain
professionals of the highest quality while simultaneously growing the intrinsic value of the Adviser. The Adviser has no deferred
compensation, stock option or other equity programs. Given the portfolio manager compensation policy described above and the fact
that the Adviser has no performance-based advisory relationships, the Adviser does not believe that any material compensation
conflicts exist.
Dollar
Range of Securities Owned by the Registrant's Portfolio Manager. Information
is shown as of May 31, 2023:
Portfolio
Manager |
Dollar
Range of Equity Securities Held in Registrant1 |
|
Joseph
Rhame, III |
$100,001
– $500,000 |
| 1 | "Beneficial
Ownership" is determined in accordance with Section 16a-l(a)(2) of the Securities
Exchange Act of 1934, as amended. |
Item
9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
None.
Item
10. Submission of Matters to a Vote of Security Holders.
No
material changes to the procedures by which the shareholders may recommend nominees to the registrant's Board of Trustees have
been implemented after the registrant last provided disclosure in response to the requirements of Item 407(c) (2)(iv) of Regulation
S-K (17 CFR 229.407) (as required by Item 22(b)(l5) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item
11. Controls and Procedures.
| (a) | Based
on an evaluation of the registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) under the 1940 Act), the registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure controls and procedures
are effective as of a date within 90 days of the filing date of this report. |
| (b) | There
were no significant changes in the registrant's internal control over financial reporting
that occurred during the period covered by this report that have materially affected,
or are reasonably likely to materially affect, the registrant's internal control over
financial reporting. |
Item
12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
None.
Item
13. Exhibits.
(a) | (1) |
Not applicable to semi-annual report. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
REAVES
UTILITY INCOME FUND
By: | /s/
Joseph Rhame III |
|
| Joseph Rhame III |
|
| President
(Principal Executive Officer) |
|
Date:
July 10, 2023
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/
Joseph Rhame III |
|
| Joseph Rhame III |
|
| President
(Principal Executive Officer) |
|
Date: July 10, 2023
By: | /s/
Jill Kerschen |
|
| Jill Kerschen |
|
| Treasurer
(Principal Financial Officer) |
|
Date: July 10, 2023
Ex.
99.CERT
I,
Joseph Rhame, Chief Executive Officer (Principal Executive Officer) of the Reaves Utility Income Fund (the "registrant"),
certify that:
| 1. | I
have reviewed this report on Form N-CSR of the registrant; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial statements are
required to include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report; |
| 4. | The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) and internal control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based
on such evaluation; and |
| d) | Disclosed
in this report any change in the registrant's internal control over financial reporting
that occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's internal control over
financial reporting; and |
| 5. | The
registrant's other certifying officer(s) and I have disclosed to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing
the equivalent functions): |
| a) | All
significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize, and report financial information;
and |
| b) | Any
fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant's internal control over financial reporting. |
Date: July
10, 2023 |
By: |
/s/
Joseph Rhame, III |
|
|
|
Joseph Rhame, III |
|
|
|
President (Principal Executive
Officer) |
|
I,
Jill Kerschen, Chief Financial Officer (Principal Financial Officer) of the Reaves Utility Income Fund (the "registrant"),
certify that:
| 1. | I
have reviewed this report on Form N-CSR of the registrant; |
| 2. | Based
on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
| 3. | Based
on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results
of operations, changes in net assets, and cash flows (if the financial statements are
required to include a statement of cash flows) of the registrant as of, and for, the
periods presented in this report; |
| 4. | The
registrant's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment
Company Act of 1940) and internal control over financial reporting (as defined in Rule
30a-3(d) under the Investment Company Act of 1940) for the registrant and have: |
| a) | Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed
such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated
the effectiveness of the registrant's disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of a date within 90 days prior to the filing date of this report based
on such evaluation; and |
| d) | Disclosed
in this report any change in the registrant's internal control over financial reporting
that occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the registrant's internal control over
financial reporting; and |
| 5. | The
registrant's other certifying officer(s) and I have disclosed to the registrant's auditors
and the audit committee of the registrant's board of directors (or persons performing
the equivalent functions): |
| a) | All
significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant's ability to record, process, summarize, and report financial information;
and |
| b) | Any
fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant's internal control over financial reporting. |
Date: July
10, 2023 |
By: |
/s/
Jill Kerschen |
|
|
|
Jill Kerschen |
|
|
|
Treasurer
(Principal Financial Officer) |
|
Exhibit
99.906Cert
Certifications
Under Section 906 of the Sarbanes-Oxley Act of 2002
Joseph
Rhame, III, President and Principal Executive Officer, and Jill Kerschen, Treasurer and Principal Financial Officer of the Reaves
Utility Income Fund (the "registrant"), each certify to the best of their knowledge that:
| 1. | The
registrant's periodic report on Form N-CSR for the period ended April 30, 2023 (the "Form
N-CSR") fully complies with the requirements of sections 13(a) or 15(d) of the Securities
and Exchange Act of 1934, as amended; and |
| 2. | The
information contained in the Form N-CSR fairly presents, in all material respects, the
financial condition and results of operations of the registrant. |
By: | /s/
Joseph
Rhame III |
|
| Joseph Rhame III |
|
| President
(Principal Executive Officer) |
|
Date: July 10, 2023
By: | /s/
Jill Kerschen |
|
| Jill Kerschen |
|
| Treasurer
(Principal Financial Officer) |
|
Date: July 10, 2023
The
foregoing certification is being furnished pursuant to 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18
of the Securities Exchange Act of 1934, as amended, and it is not being incorporated by reference into any filing of the Company,
regardless of any general incorporation language in such filing.
REAVES
UTILITY INCOME FUND SECTION 19(a) NOTICE
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
On
November 30, 2022, the Reaves Utility Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid
a monthly distribution on its common stock of $0.19 per share to shareholders of record at the close of business on November 18,
2022.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.05221 |
27.48% |
Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net Realized Long-Term Capital Gain |
0.13779 |
72.52% |
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 |
0.05221 |
27.48% |
Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net Realized Long-Term Capital Gain |
0.13779 |
72.52% |
Return of Capital or other Capital Source |
0.00000 |
0.00% |
Total (per common share) |
0.19000 |
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 2022 federal
income tax return. The final tax character of any distribution declared in 2022 will be determined in January 2023 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 (11/01/2021 through 10/31/2022) | |
| |
Annualized Distribution Rate as a Percentage of NAV^ | |
| 8.23 | % |
Cumulative Distribution Rate on NAV^ | |
| 0.69 | % |
Cumulative Total Return on NAV* | |
| -10.05 | % |
Average Annual Total Return on NAV for the 5 Year Period Ended 10/31/2022** | |
| 3.14 | % |
| ^ | Based
on the Fund’s NAV as of October 31, 2022. |
| * | 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, 2021 through October 31, 2022. |
| ** | 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
REAVES
UTILITY INCOME FUND SECTION 19(a) NOTICE
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
On
December 30, 2022, the Reaves Utility Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid
a monthly distribution on its common stock of $0.19 per share to shareholders of record at the close of business on December 16,
2022.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.06017 |
31.67% |
Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net Realized Long-Term Capital Gain |
0.12983 |
68.33% |
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 |
0.11238 |
29.58% |
Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net Realized Long-Term Capital Gain |
0.26762 |
70.42% |
Return of Capital or other Capital Source |
0.00000 |
0.00% |
Total (per common share) |
0.38000 |
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 2022 federal
income tax return. The final tax character of any distribution declared in 2022 will be determined in January 2023 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
(11/01/2022 through 11/30/2022) |
|
Annualized Distribution
Rate as a Percentage of NAV^ |
7.55% |
Cumulative Distribution
Rate on NAV^ |
1.26% |
Cumulative Total
Return on NAV* |
9.60% |
Average Annual Total
Return on NAV for the 5 Year Period Ended 11/30/2022** |
4.45% |
| ^ | Based
on the Fund’s NAV as of November 30, 2022. |
| * | 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, 2022 through November 30, 2022. |
| ** | 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
REAVES
UTILITY INCOME FUND SECTION 19(a) NOTICE
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
On
January 17, 2023, the Reaves Utility Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid
a monthly distribution on its common stock of $0.19 per share to shareholders of record at the close of business on December 30,
2022.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.01951 |
10.27% |
Net Realized Short-Term Capital Gain |
0.00515 |
2.71% |
Net Realized Long-Term Capital Gain |
0.16534 |
87.02% |
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 |
0.13189 |
23.14% |
Net Realized Short-Term Capital Gain |
0.00515 |
0.90% |
Net Realized Long-Term Capital Gain |
0.43296 |
75.96% |
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 2022 federal
income tax return. The final tax character of any distribution declared in 2022 will be determined in January 2023 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 (11/01/2022 through 12/31/2022) |
|
Annualized Distribution Rate as a Percentage of NAV^ |
7.88% |
Cumulative Distribution Rate on NAV^ |
1.97% |
Cumulative Total Return on NAV* |
6.54% |
Average Annual Total Return on NAV for the 5 Year Period Ended 12/31/2022** |
3.95% |
| ^ | Based
on the Fund’s NAV as of December 31, 2022. |
| * | 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, 2022 through December 31, 2022. |
| ** | 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
REAVES UTILITY INCOME
FUND SECTION 19(a) NOTICE
Statement Pursuant
to Section 19(a) of the Investment Company Act of 1940
On February 28, 2023, the Reaves Utility
Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid a monthly distribution on its common
stock of $0.19 per share to shareholders of record at the close of business on February 16, 2023.
The following table sets forth the estimated
amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and the related
rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund estimates
the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year net investment
income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of capital or other
capital source as a percentage of the total distribution amount. These percentages are disclosed for the current distribution
as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.04817 |
25.35% |
Net Realized Short-Term Capital Gain |
0.01322 |
6.96% |
Net Realized Long-Term Capital Gain |
0.12861 |
67.69% |
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 |
0.18006 |
23.69% |
Net Realized Short-Term Capital Gain |
0.01837 |
2.42% |
Net Realized Long-Term Capital Gain |
0.56157 |
73.89% |
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 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 (11/01/2022 through 1/31/2023) | |
|
Annualized Distribution Rate as a Percentage of NAV^ | |
| 7.68% |
Cumulative Distribution Rate on NAV^ | |
| 2.56% |
Cumulative Total Return on NAV* | |
| 9.15% |
Average Annual Total Return on NAV for the 5
Year Period Ended 1/31/2023** | |
| 4.38% |
| ^ | Based on the Fund’s NAV as of January 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, 2022 through
January 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:
Website:
https://www.utilityincomefund.com
Email:
info@utilityincomefund.com
REAVES UTILITY INCOME FUND SECTION 19(a)
NOTICE
Statement Pursuant
to Section 19(a) of the Investment Company Act of 1940
On March 31, 2023, the Reaves Utility
Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid a monthly distribution on its common
stock of $0.19 per share to shareholders of record at the close of business on March 17, 2023.
The following table sets forth the
estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company Act of 1940, as amended, and
the related rules adopted thereunder. In accordance with generally accepted accounting principles (“GAAP”), the Fund
estimates the following percentages, of the total distribution amount per share, attributable to (i) current and prior fiscal year
net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term capital gain and (iv) return of
capital or other capital source as a percentage of the total distribution amount. These percentages are disclosed for the current
distribution as well as the fiscal year-to-date cumulative distribution amount per share for the Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.09399 |
49.47% |
Net Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net Realized Long-Term Capital Gain |
0.09601 |
50.53% |
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 |
0.27405 |
28.85% |
Net Realized Short-Term Capital Gain |
0.01837 |
1.93% |
Net Realized Long-Term Capital Gain |
0.65758 |
69.22% |
Return of Capital or other Capital Source |
0.00000 |
0.00% |
Total (per common share) |
0.95000 |
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 (11/01/2022 through 2/28/2023) | |
|
Annualized Distribution Rate as a Percentage of NAV^ | |
8.29% |
Cumulative Distribution Rate on NAV^ | |
3.46% |
Cumulative Total Return on NAV* | |
1.83% |
Average Annual Total Return on NAV for the 5 Year Period Ended 2/28/2023** | |
4.67% |
| ^ | Based on the Fund’s NAV as of February 28, 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, 2022 through February
28, 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:
Website: https://www.utilityincomefund.com
Email: info@utilityincomefund.com
REAVES
UTILITY INCOME FUND SECTION 19(a) NOTICE
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
On
April 28, 2023, the Reaves Utility Income Fund (NYSE American: UTG) (the “Fund”), a closed-end sector fund, paid a
monthly distribution on its common stock of $0.19 per share to shareholders of record at the close of business on April 19, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current Distribution from: |
|
|
|
Per Share ($) |
% |
Net Investment Income |
0.05812 |
30.59% |
Net Realized Short-Term Capital Gain |
0.01305 |
6.87% |
Net Realized Long-Term Capital Gain |
0.11883 |
62.54% |
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 |
0.33217 |
29.14% |
Net Realized Short-Term Capital Gain |
0.03142 |
2.76% |
Net Realized Long-Term Capital Gain |
0.77641 |
68.10% |
Return of Capital or other Capital Source |
0.00000 |
0.00% |
Total (per common share) |
1.14000 |
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 (11/01/2022 through 3/31/2023) | |
| |
Annualized Distribution Rate as a Percentage of NAV^ | |
| 8.06 | % |
Cumulative Distribution Rate on NAV^ | |
| 4.03 | % |
Cumulative Total Return on NAV* | |
| 5.49 | % |
Average Annual Total Return on NAV for the 5 Year Period Ended 3/31/2023** | |
| 5.24 | % |
| ^ | Based
on the Fund’s NAV as of March 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, 2022 through March 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:
Website:
https://www.utilityincomefund.com
Email:
info@utilityincomefund.com
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