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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 – October 31, 2023
Item
1. Reports to Stockholders.
| (a) | The
Report to Stockholders is attached herewith. |
![](https://www.sec.gov/Archives/edgar/data/1263994/000199937124000156/reavesncsr001.jpg)
Section
19(b) Disclosure
October
31, 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 Additional Information 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 www.utilityincomefund.com.
Reaves Utility Income Fund |
Table of Contents |
Annual Report | October 31,
2023 |
1 |
Reaves Utility Income Fund |
Shareholder Letter |
October
31, 2023 (Unaudited)
To
our Shareholders:
Fiscal
2023 Investment Portfolio Returns
Total
net assets of the Fund were $1.894 billion on October 31, 2023, or $24.53 of net asset value (“NAV”) per common share.
One year ago, net assets totaled $1.994 billion representing $27.71 of net asset value per common share.
The
changes include distributions to shareholders totaling $170.2 million or $2.28 per 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
fiscal 2023 market return for shareholders was -3.40% as is reflected in the table below. The share price of the Fund traded at
a premium of 0.12% to the NAV at fiscal year-end versus a discount of 0.32% at the beginning of the fiscal year.
|
One
Year |
Three
Years^ |
Five
Years^ |
Ten
Years^ |
Since
Inception^* |
UTG (NAV)** |
-3.83% |
-0.20% |
1.86% |
5.69% |
8.69% |
UTG (Market)** |
-3.40% |
-0.88% |
2.79% |
6.48% |
8.44% |
S&P
500 Utilities Index1 |
-7.72% |
1.67% |
5.51% |
8.05% |
8.62% |
Dow Jones
Utility Average2 |
-6.40% |
2.20% |
5.88% |
8.81% |
9.58% |
* | Index
data since February 29, 2004 |
** | Assumes
all dividends being reinvested |
1 | S&P
500 Utilities Index is a capitalization-weighted index containing 30 Electric and Gas Utility stocks (including multi-utilities
and independent power producers). |
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
Since
the Fund’s first distribution in April 2004, distributions to shareholders have totaled over $1.3 billion consisting of
dividend income and realized capital gains with no returns of capital.
The
monthly distribution has increased on 12 occasions from the initial monthly amount of $0.0967 per share to the current amount
of $0.19 per share, representing a cumulative increase of 96.5%. The Trustees of the Fund regularly review the amount of the monthly
distribution.
For
the calendar year 2022, all distributions from the Fund were paid from net investment income including realized capital gains.
We anticipate that all distributions for the 12 months ending December 31, 2023, will also be characterized as paid from net investment
income and realized capital gains.
Leverage
Facility
The
Fund ended the fiscal year with $520 million in debt, up from $500 million at the end of fiscal 2022. Leverage stood at 27.46%
(21.44% on total assets) versus 25.07% of net assets (20.02% on total assets) on October 31, 2022. For details about the facility
please refer to Note 5 of the accompanying financial statements.
www.utilityincomefund.com |
2 |
Reaves Utility Income Fund |
Shareholder Letter |
October
31, 2023 (Unaudited)
Overview
The
Federal Reserve continued its efforts to rein in inflation, raising the Federal Funds rate six times from a range of 3.00%-3.25%
to 5.25%-5.50% in the 12-month period ending October 31, 2023. Yields of U.S. Treasury securities also moved higher, with the
2-year and 10-year notes ending the period at 5.07% and 4.88%, respectively. The rise in both the short and long end of the interest
rate curve created a macroeconomic headwind for many of the Fund’s investments as the dividend yields of many holdings became
less competitive in this environment. Elevated borrowing costs also negatively impacted the Fund.
After
a relatively strong 2022, utilities have been the worst performing market sector year-to-date. Most of the weakness can be attributed
to rising interest rates as fixed income alternatives became more attractive for income investors. Despite the negative returns,
we believe that the financial impact of the current macroeconomic backdrop for most companies in the sector will be small. For
regulated utilities, expenses are passed through to customers, leaving previously forecasted long-term growth rates achievable,
though there can be a lag between when the company experiences higher costs and when customer bills increase to allow recovery.
Companies possessing weaker balance sheets have been forced to sell assets and raise equity, but this financial repair has largely
been accomplished, leaving the sector in a much better place entering 2024.
In
communications infrastructure, where the Fund invests in cable, data centers, wireless towers and traditional telecom, returns
were mixed. Cable stocks rebounded after poor performance in the prior fiscal year. Data centers also contributed to performance
due to the continued migration of enterprises to cloud computing, in addition to the potential tailwinds from Artificial Intelligence.
These utility-like businesses offer the steady revenue and dividend growth we seek, and their increasing electricity consumption
offers another potential reason to be enthused about our core electric utility holdings.
Wireless
tower stocks were negatively impacted by a slowdown in wireless carrier capital spending. We believe carriers will need to spend
significantly more with towers in future years as they continue to make 5G technology and infrastructure ubiquitous, but we acknowledge
that a reacceleration in spending may take a few quarters to develop.
The
Fund’s pipeline and rail investments contributed positively to performance. Both industries benefited from stronger than
expected economic activity. Pipeline companies generate more free cash flow and carry less balance sheet leverage than they have
historically, while rails continue to focus on improving operating metrics.
Despite
the challenging macroeconomic environment, the Fund continues to pay distributions to shareholders from earned dividends and long-term
capital gains with no returns of capital. Looking forward, we anticipate that the Federal Reserve is near the end of its tightening
cycle, which could usher in a more supportive backdrop for utilities and other income-oriented equities.
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 Additional Information for
a cumulative summary of the Section 19(a) notices for the Fund’s current period. The actual
Annual Report | October 31,
2023 |
3 |
Reaves Utility Income Fund |
Shareholder Letter |
October
31, 2023 (Unaudited)
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.
www.utilityincomefund.com |
4 |
Reaves Utility Income Fund |
Shareholder Letter |
October
31, 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: UTG) of $25.92 on October 31, 2013, and tracking its progress through October 31, 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.
Annual Report | October 31,
2023 |
5 |
Reaves Utility Income Fund |
Shareholder Letter |
October
31, 2023 (Unaudited)
INDUSTRY
ALLOCATION AS OF OCTOBER 31, 2023
Industries
are displayed as a % of net assets. Holdings are subject to change.
www.utilityincomefund.com |
6 |
|
Report
of Independent Registered |
Reaves
Utility Income Fund |
Public
Accounting Firm |
To
the shareholders and the Board of Trustees of Reaves Utility Income Fund
Opinion on the Financial Statements and Financial
Highlights
We
have audited the accompanying statement of assets and liabilities of Reaves Utility Income Fund (the “Fund”), including
the statement of investments, as of October 31, 2023, the related statements of operations and cash flows for the year then ended,
the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each
of the ten years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights
present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations
and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the ten years in the period then ended in conformity with accounting principles generally
accepted in the United States of America.
Basis
for Opinion
These
financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to
express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement,
whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial
reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as
of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed
other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Denver,
Colorado
December
22, 2023
We
have served as the auditor of Reaves Utility Income Fund since 2005.
Annual Report | October 31,
2023 |
7 |
Reaves
Utility Income Fund |
Statement
of Investments |
|
October
31, 2023 |
| |
SHARES | | |
VALUE | |
COMMON STOCKS - 124.04% | |
| | | |
| | |
Diversified Telecommunications Services - 17.70% | |
| | | |
| | |
BCE, Inc. | |
| 1,946,500 | | |
$ | 72,273,545 | |
Cogent Communications Holdings, Inc.(a) | |
| 185,000 | | |
| 12,021,300 | |
Deutsche Telekom AG | |
| 4,268,042 | | |
| 92,465,437 | |
Rogers Communications, Inc., Class B | |
| 1,365,000 | | |
| 50,574,148 | |
Telus Corp. | |
| 4,170,100 | | |
| 67,238,822 | |
Verizon Communications, Inc.(a) | |
| 1,153,102 | | |
| 40,508,473 | |
| |
| | | |
| 335,081,725 | |
Electric Utilities - 30.37% | |
| | | |
| | |
American Electric Power Co., Inc. | |
| 675,000 | | |
| 50,989,500 | |
Duke Energy Corp.(a) | |
| 906,000 | | |
| 80,534,340 | |
Edison International(a) | |
| 835,000 | | |
| 52,655,100 | |
Entergy Corp. | |
| 918,900 | | |
| 87,837,652 | |
Exelon Corp.(a) | |
| 1,175,161 | | |
| 45,760,769 | |
FirstEnergy Corp.(a) | |
| 348,100 | | |
| 12,392,360 | |
Fortis, Inc. | |
| 53,000 | | |
| 2,105,690 | |
NextEra Energy, Inc. | |
| 1,100,000 | | |
| 64,130,000 | |
Pinnacle West Capital Corp. | |
| 698,000 | | |
| 51,777,640 | |
PPL Corp. | |
| 3,315,046 | | |
| 81,450,680 | |
Southern Co. | |
| 677,300 | | |
| 45,582,290 | |
| |
| | | |
| 575,216,021 | |
Gas Utilities - 0.22% | |
| | | |
| | |
Atmos Energy Corp.(a) | |
| 20,000 | | |
| 2,153,200 | |
Northwest Natural Holding Co. | |
| 55,000 | | |
| 2,019,050 | |
| |
| | | |
| 4,172,250 | |
Independent Power and Renewable Electricity Producers - 3.75% | |
| | | |
| | |
Constellation Energy Corp. | |
| 600,667 | | |
| 67,827,318 | |
Vistra Corp.(a) | |
| 100,000 | | |
| 3,272,000 | |
| |
| | | |
| 71,099,318 | |
Media - 5.86% | |
| | | |
| | |
Charter Communications, Inc., Class A(a)(b) | |
| 70,500 | | |
| 28,397,400 | |
Comcast Corp., Class A(a) | |
| 2,000,000 | | |
| 82,580,000 | |
| |
| | | |
| 110,977,400 | |
Multi-Utilities - 36.32% | |
| | | |
| | |
Alliant Energy Corp.(a) | |
| 1,503,103 | | |
| 73,336,395 | |
Ameren Corp.(a) | |
| 716,000 | | |
| 54,208,360 | |
CMS Energy Corp.(a) | |
| 1,570,500 | | |
| 85,340,970 | |
DTE Energy Co. | |
| 580,200 | | |
| 55,919,676 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
8 |
Reaves
Utility Income Fund |
Statement
of Investments |
|
|
|
October
31, 2023 |
| |
SHARES | | |
VALUE | |
Multi-Utilities - 36.32% (continued) | |
| | | |
| | |
Enel SpA | |
| 6,465,257 | | |
$ | 40,963,251 | |
NiSource, Inc.(a) | |
| 3,804,966 | | |
| 95,732,945 | |
OGE Energy Corp. | |
| 1,739,971 | | |
| 59,507,008 | |
PG&E Corp.(b) | |
| 2,517,500 | | |
| 41,035,250 | |
Public Service Enterprise Group, Inc. | |
| 813,000 | | |
| 50,121,450 | |
Sempra Energy | |
| 809,600 | | |
| 56,696,288 | |
WEC Energy Group, Inc.(a) | |
| 123,300 | | |
| 10,035,387 | |
Xcel Energy, Inc.(a) | |
| 1,096,300 | | |
| 64,977,701 | |
| |
| | | |
| 687,874,681 | |
Oil, Gas & Consumable Fuels - 8.16% | |
| | | |
| | |
DT Midstream, Inc. | |
| 770,000 | | |
| 41,556,900 | |
ONEOK, Inc.(a) | |
| 250,000 | | |
| 16,300,000 | |
TC Energy Corp. | |
| 1,220,000 | | |
| 42,029,000 | |
Williams Cos., Inc.(a) | |
| 1,590,000 | | |
| 54,696,000 | |
| |
| | | |
| 154,581,900 | |
Real Estate Investment Trusts (REITs) - 9.69% | |
| | | |
| | |
American Tower Corp.(a) | |
| 267,072 | | |
| 47,589,560 | |
Crown Castle, Inc.(a) | |
| 312,500 | | |
| 29,056,250 | |
Digital Realty Trust, Inc.(a) | |
| 152,000 | | |
| 18,902,720 | |
Equinix, Inc.(a) | |
| 51,000 | | |
| 37,211,640 | |
Rexford Industrial Realty, Inc. | |
| 295,000 | | |
| 12,755,800 | |
SBA Communications Corp., Class A | |
| 181,700 | | |
| 37,908,071 | |
| |
| | | |
| 183,424,041 | |
Road & Rail - 8.20% | |
| | | |
| | |
Canadian National Railway Co. | |
| 80,000 | | |
| 8,462,400 | |
Canadian Pacific Kansas City Ltd. | |
| 562,000 | | |
| 39,885,140 | |
Norfolk Southern Corp. | |
| 235,100 | | |
| 44,854,729 | |
Union Pacific Corp.(a) | |
| 299,100 | | |
| 62,096,151 | |
| |
| | | |
| 155,298,420 | |
Water Utilities - 2.34% | |
| | | |
| | |
American Water Works Co., Inc.(a) | |
| 376,619 | | |
| 44,309,225 | |
| |
| | | |
| | |
Wireless Telecommunication Services - 1.43% | |
| | | |
| | |
Telenor ASA | |
| 1,012,388 | | |
| 10,345,055 | |
See
Accompanying Notes to Financial Statements.
Annual Report | October 31,
2023 |
9 |
Reaves
Utility Income Fund |
Statement
of Investments |
|
|
|
October
31, 2023 |
| |
SHARES | | |
VALUE | |
Wireless Telecommunication Services - 1.43% (continued) | |
| | | |
| | |
T-Mobile US, Inc.(b) | |
| 116,700 | | |
$ | 16,788,462 | |
| |
| | | |
| 27,133,517 | |
TOTAL COMMON STOCKS | |
| | | |
| | |
(Cost $2,510,720,602) | |
| | | |
| 2,349,168,498 | |
| |
| | | |
| | |
CORPORATE BONDS - 0.10% | |
| | | |
| | |
Cable & Satellite - 0.10% | |
| | | |
| | |
CSC Holdings, LLC, 6/1/2024, 5.250% | |
| 2,000,000 | | |
| 1,871,816 | |
| |
| | | |
| | |
TOTAL CORPORATE BONDS | |
| | | |
| | |
(Cost $1,952,806) | |
| | | |
| 1,871,816 | |
| |
| | | |
| | |
LIMITED PARTNERSHIPS - 0.14% | |
| | | |
| | |
Energy - 0.14% | |
| | | |
| | |
Enterprise Products Partners L.P. | |
| 100,000 | | |
| 2,604,000 | |
| |
| | | |
| | |
TOTAL LIMITED PARTNERSHIPS | |
| | | |
| | |
(Cost $2,744,890) | |
| | | |
| 2,604,000 | |
| |
| | | |
| | |
PREFERRED STOCKS - 0.09% | |
| | | |
| | |
Utilities - 0.09% | |
| | | |
| | |
SCE Trust III, Class H, Perpetual Maturity, 5.750%(a)(c) | |
| 15,473 | | |
| 373,518 | |
SCE Trust IV, Class J, Perpetual Maturity, 5.375%(a)(c) | |
| 63,125 | | |
| 1,240,406 | |
| |
| | | |
| 1,613,924 | |
TOTAL PREFERRED STOCKS | |
| | | |
| | |
(Cost $1,485,034) | |
| | | |
| 1,613,924 | |
| |
| | | |
| | |
MONEY MARKET FUNDS - 3.40% | |
| | | |
| | |
Federated Treasury Obligations Money Market Fund, 5.220% (7-Day Yield) | |
| 64,383,095 | | |
| 64,383,095 | |
TOTAL MONEY MARKET FUNDS | |
| | | |
| | |
(Cost $64,383,095) | |
| | | |
| 64,383,095 | |
| |
| | | |
| | |
TOTAL INVESTMENTS - 127.77% | |
| | | |
| | |
(Cost $2,581,286,427) | |
| | | |
| 2,419,641,333 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com |
10 |
Reaves
Utility Income Fund |
Statement
of Investments |
|
October
31, 2023 |
| |
VALUE | |
| |
| | |
Leverage Facility - (27.46)% | |
| (520,000,000 | ) |
| |
| | |
Other Liabilities in Excess of Assets - (0.31%) | |
| (5,872,735 | ) |
| |
| | |
NET ASSETS - 100% | |
$ | 1,893,768,598 | |
(a) | Pledged
security; a portion or all of the security is pledged as collateral for borrowings as of October 31, 2023. |
(b) | Non-income
producing security. |
(c) | This
security has no contractual maturity date, is not redeemable and contractually pays an indefinite stream of interest. |
Percentages
are stated as a percent of the net assets applicable to common shareholders.
See
Accompanying Notes to Financial Statements.
Annual Report | October 31,
2023 |
11 |
Reaves Utility
Income Fund |
Statement
of Assets and Liabilities |
ASSETS: | |
| |
Investments at value | |
| |
Cost ($2,581,286,427) | |
$ | 2,419,641,333 | |
Cash | |
| 693,755 | |
Foreign currency, at value (Cost $299,072) | |
| 300,763 | |
Dividends receivable | |
| 3,440,020 | |
Interest receivable | |
| 322,823 | |
Receivable for shares sold | |
| 894,552 | |
Prepaid offering costs (Note 4) | |
| 22,008 | |
Total Assets | |
| 2,425,315,254 | |
| |
| | |
LIABILITIES: | |
| | |
Loan payable | |
| 520,000,000 | |
Interest payable on loan outstanding | |
| 778,531 | |
Payable for investments purchased | |
| 9,263,058 | |
Investment advisory fees payable (Note 7) | |
| 1,172,840 | |
Administration fees payable (Note 7) | |
| 288,904 | |
Trustees’ fees payable (Note 7) | |
| 2,352 | |
Accrued expenses and other payables | |
| 40,971 | |
Total Liabilities | |
| 531,546,656 | |
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS | |
$ | 1,893,768,598 | |
| |
| | |
NET ASSETS (APPLICABLE TO COMMON SHAREHOLDERS) CONSIST OF: | |
| | |
Paid-in capital | |
| 2,045,165,667 | |
Total distributable earnings | |
| (151,397,069 | ) |
NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS | |
$ | 1,893,768,598 | |
| |
| | |
Shares of common stock outstanding of no par value, unlimited shares authorized | |
| 77,203,272 | |
Net asset value per common share | |
$ | 24.53 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com | 12 |
Reaves
Utility Income Fund |
Statement
of Operations |
|
For the Year Ended
October 31, 2023 |
INVESTMENT INCOME: | |
| |
Dividends | |
| |
(net of foreign withholding taxes $3,128,447) | |
$ | 88,701,971 | |
Total Investment Income | |
| 88,701,971 | |
| |
| | |
EXPENSES: | |
| | |
Interest on loan | |
| 28,454,389 | |
Loan commitment fees | |
| 26,875 | |
Investment advisory fees | |
| 14,859,528 | |
Administration fees | |
| 3,593,187 | |
Trustees’ fees | |
| 415,532 | |
Miscellaneous fees | |
| 448,026 | |
Total Expenses | |
| 47,797,537 | |
Net Investment Income | |
| 40,904,434 | |
| |
| | |
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS: | |
| | |
Net realized gain/(loss) on: | |
| | |
Investments | |
| 121,523,568 | |
Written options | |
| 191,936 | |
Foreign currency related transactions | |
| (56,827 | ) |
Net realized gain | |
| 121,658,677 | |
Net change in unrealized appreciation/(depreciation) on: | |
| | |
Investments | |
| (236,938,957 | ) |
Foreign currency related translations | |
| 4,469 | |
Net change in unrealized depreciation | |
| (236,934,488 | ) |
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS | |
| (115,275,811 | ) |
NET DECREASE IN NET ASSETS APPLICABLE TO COMMON SHAREHOLDERS RESULTING FROM OPERATIONS | |
$ | (74,371,377 | ) |
See
Accompanying Notes to Financial Statements.
Annual
Report | October 31, 2023 | 13 |
Reaves Utility Income Fund |
Statements
of
Changes in Net Assets |
| |
For the
Year Ended
October 31, 2023 | | |
For the
Year Ended
October 31, 2022 | |
| |
| | |
| |
OPERATIONS: | |
| | | |
| | |
Net investment income | |
$ | 40,904,434 | | |
$ | 35,285,674 | |
Net realized gain | |
| 121,658,677 | | |
| 134,244,184 | |
Net change in unrealized depreciation | |
| (236,934,488 | ) | |
| (391,548,851 | ) |
Net Decrease in Net Assets Applicable to Common Shareholders Resulting from Operations | |
| (74,371,377 | ) | |
| (222,018,993 | ) |
| |
| | | |
| | |
DISTRIBUTIONS TO COMMON SHAREHOLDERS: | |
| | | |
| | |
From distributable earnings | |
| (170,208,291 | ) | |
| (157,015,699 | ) |
Total Distributions: Common Shareholders | |
| (170,208,291 | ) | |
| (157,015,699 | ) |
| |
| | | |
| | |
CAPITAL SHARE TRANSACTIONS: | |
| | | |
| | |
Dividends reinvested | |
| 7,820,219 | | |
| 5,313,072 | |
Shares sold, net of offering costs (Note 4) | |
| 135,810,703 | | |
| 210,386,361 | |
Net
Increase in Net Assets from Capital Share Transactions | |
| 143,630,922 | | |
| 215,699,433 | |
| |
| | | |
| | |
Net Decrease in Net Assets Applicable to Common Shareholders | |
| (100,948,746 | ) | |
| (163,335,259 | ) |
| |
| | | |
| | |
NET ASSETS: | |
| | | |
| | |
Beginning of period | |
| 1,994,717,344 | | |
| 2,158,052,603 | |
End of period | |
$ | 1,893,768,598 | | |
$ | 1,994,717,344 | |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com | 14 |
Reaves
Utility Income Fund |
Statement
of Cash Flows |
|
For the year ended
October 31, 2023 |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| |
Net decrease in net assets from operations | |
$ | (74,371,377 | ) |
Adjustments to reconcile change in net assets from operations to net cash provided by operating activities: | |
| | |
Purchase of investment securities | |
| (877,486,812 | ) |
Net sales of short-term investment securities | |
| 44,566,450 | |
Proceeds from disposition of investment securities | |
| 798,274,278 | |
Amortization of premium and accretion of discount on investments | |
| (98,215 | ) |
Premiums received from written options transactions | |
| 301,116 | |
Net realized (gain)/loss on: | |
| | |
Investments | |
| (121,523,568 | ) |
Written options | |
| (191,936 | ) |
Net change in unrealized (appreciation)/depreciation on: | |
| | |
Investments | |
| 236,938,957 | |
(Increase)/Decrease in assets: | |
| | |
Dividends receivable | |
| (1,084,576 | ) |
Interest receivable | |
| (166,116 | ) |
Prepaid offering costs | |
| 81,536 | |
Increase/(Decrease) in liabilities: | |
| | |
Interest payable on loan outstanding | |
| (364,309 | ) |
Loan commitment fees | |
| (20,000 | ) |
Investment advisory fees | |
| (6,071 | ) |
Administration fees | |
| (1,074 | ) |
Trustee fees | |
| (20,228 | ) |
Accrued expenses and other payables | |
| 8,071 | |
Net Cash Provided by Operating Activities | |
| 4,836,126 | |
| |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
| | |
Proceeds from bank borrowing | |
$ | 20,000,000 | |
Proceeds from sales of shares, net of offering costs | |
| 137,920,643 | |
Cash distributions paid on common shares | |
| (162,388,072 | ) |
Net Cash Used in Financing Activities | |
| (4,467,429 | ) |
| |
| | |
Net increase in cash | |
| 368,697 | |
Cash, beginning balance | |
$ | 625,821 | |
Cash and foreign cash, ending balance | |
$ | 994,518 | |
| |
| | |
SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFORMATION | |
| | |
Cash paid for interest on loan outstanding during the period was: | |
$ | 28,818,698 | |
Non-cash financing activities not included in herein consist of reinvestment of distributions of: | |
| 7,820,219 | |
See
Accompanying Notes to Financial Statements.
Annual
Report | October 31, 2023 | 15 |
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(e) |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com | 16 |
Reaves
Utility Income Fund |
Financial Highlights |
For
the Year
Ended
October 31, 2023 | | |
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 | |
| | |
| | |
| | |
| | |
| |
$ | 27.71 | | |
$ | 33.09 | | |
$ | 30.77 | | |
$ | 36.52 | | |
$ | 31.74 | |
| | | |
| | | |
| | | |
| | | |
| | |
| 0.55 | | |
| 0.51 | | |
| 0.57 | | |
| 0.65 | | |
| 0.65 | |
| (1.45 | ) | |
| (3.61 | ) | |
| 3.95 | | |
| (4.24 | ) | |
| 6.21 | |
| (0.90 | ) | |
| (3.10 | ) | |
| 4.52 | | |
| (3.59 | ) | |
| 6.86 | |
| | | |
| | | |
| | | |
| | | |
| | |
| (0.53 | ) | |
| (0.53 | ) | |
| (0.57 | ) | |
| (0.85 | ) | |
| (0.64 | ) |
| (1.75 | ) | |
| (1.75 | ) | |
| (1.63 | ) | |
| (1.31 | ) | |
| (1.44 | ) |
| (2.28 | ) | |
| (2.28 | ) | |
| (2.20 | ) | |
| (2.16 | ) | |
| (2.08 | ) |
| | | |
| | | |
| | | |
| | | |
| | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| — | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| 0.00 | (c) | |
| — | |
$ | 24.53 | | |
$ | 27.71 | | |
$ | 33.09 | | |
$ | 30.77 | | |
$ | 36.52 | |
$ | 24.56 | | |
$ | 27.62 | | |
$ | 33.96 | | |
$ | 31.45 | | |
$ | 37.09 | |
| (3.83 | %) | |
| (10.05 | %) | |
| 14.92 | % | |
| (9.89 | %) | |
| 22.38 | % |
| (3.40 | %) | |
| (12.64 | %) | |
| 15.39 | % | |
| (9.32 | %) | |
| 29.94 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 1,893,769 | | |
$ | 1,994,717 | | |
$ | 2,158,053 | | |
$ | 1,659,754 | | |
$ | 1,779,985 | |
| 2.32 | % | |
| 1.42 | % | |
| 1.23 | % | |
| 1.50 | % | |
| 2.06 | % |
| 0.94 | % | |
| 1.04 | % | |
| 1.05 | % | |
| 1.09 | % | |
| 1.17 | % |
| 1.98 | % | |
| 1.60 | % | |
| 1.70 | % | |
| 2.00 | % | |
| 1.93 | % |
| 32 | % | |
| 37 | % | |
| 20 | % | |
| 38 | % | |
| 22 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 520,000 | | |
$ | 500,000 | | |
$ | 450,000 | | |
$ | 345,000 | | |
$ | 445,000 | |
| 4,642 | | |
| 4,989 | | |
| 5,796 | | |
| 5,811 | | |
| 5,000 | |
See
Accompanying Notes to Financial Statements.
Annual
Report | October 31, 2023 | 17 |
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(e) |
See
Accompanying Notes to Financial Statements.
www.utilityincomefund.com | 18 |
Reaves
Utility Income Fund |
Financial Highlights |
For
the Year
Ended
October 31, 2018 | | |
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 | |
| | |
| | |
| | |
| | |
| |
$ | 33.14 | | |
$ | 32.53 | | |
$ | 30.29 | | |
$ | 32.71 | | |
$ | 27.91 | |
| | | |
| | | |
| | | |
| | | |
| | |
| 0.84 | | |
| 1.00 | | |
| 0.84 | | |
| 0.84 | | |
| 1.80 | |
| (0.25 | ) | |
| 3.87 | | |
| 3.89 | | |
| (1.47 | ) | |
| 4.64 | |
| 0.59 | | |
| 4.87 | | |
| 4.73 | | |
| (0.63 | ) | |
| 6.44 | |
| | | |
| | | |
| | | |
| | | |
| | |
| (0.83 | ) | |
| (1.04 | ) | |
| (0.99 | ) | |
| (0.89 | ) | |
| (1.50 | ) |
| (1.16 | ) | |
| (1.80 | ) | |
| (0.83 | ) | |
| (0.90 | ) | |
| (0.14 | ) |
| (1.99 | ) | |
| (2.84 | ) | |
| (1.82 | ) | |
| (1.79 | ) | |
| (1.64 | ) |
| | | |
| | | |
| | | |
| | | |
| | |
| 0.00 | (c) | |
| (1.42 | ) | |
| (0.67 | ) | |
| — | | |
| — | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| 0.00 | (c) | |
| (1.42 | ) | |
| (0.67 | ) | |
| — | | |
| — | |
$ | 31.74 | | |
$ | 33.14 | | |
$ | 32.53 | | |
$ | 30.29 | | |
$ | 32.71 | |
$ | 30.36 | | |
$ | 31.02 | | |
$ | 30.00 | | |
$ | 29.67 | | |
$ | 30.88 | |
| 2.39 | % | |
| 11.04 | % | |
| 14.31 | % | |
| (1.78 | %) | |
| 24.24 | % |
| 4.63 | % | |
| 12.70 | % | |
| 7.62 | % | |
| 1.91 | % | |
| 26.29 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 1,544,961 | | |
$ | 1,612,865 | | |
$ | 1,116,576 | | |
$ | 878,952 | | |
$ | 949,088 | |
| 1.90 | % | |
| 1.66 | % | |
| 1.59 | % | |
| 1.62 | % | |
| 1.71 | % |
| 1.10 | % | |
| 1.09 | % | |
| 1.14 | % | |
| 1.15 | % | |
| 1.16 | % |
| 2.62 | % | |
| 2.97 | % | |
| 2.66 | % | |
| 2.67 | % | |
| 6.10 | % |
| 24 | % | |
| 15 | % | |
| 34 | % | |
| 32 | % | |
| 26 | % |
| | | |
| | | |
| | | |
| | | |
| | |
$ | 445,000 | | |
$ | 320,000 | | |
$ | 320,000 | | |
$ | 320,000 | | |
$ | 290,000 | |
| 4,472 | | |
| 6,040 | | |
| 4,489 | | |
| 3,747 | | |
| 4,273 | |
See
Accompanying Notes to Financial Statements.
Annual
Report | October 31, 2023 | 19 |
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. |
| (e) | 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 | 20 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
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. Exchange-traded options are valued at the close price.
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
Annual Report | October 31,
2023 |
21 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
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.
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. |
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22 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
The
following is a summary of the Fund’s investments in the fair value hierarchy as of October 31, 2023:
Investments in Securities at Value* | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Common Stocks | |
$ | 2,349,168,498 | | |
$ | — | | |
$ | — | | |
$ | 2,349,168,498 | |
Corporate Bonds | |
| — | | |
| 1,871,816 | | |
| — | | |
| 1,871,816 | |
Limited Partnerships | |
| 2,604,000 | | |
| — | | |
| — | | |
| 2,604,000 | |
Preferred Stocks | |
| 1,613,924 | | |
| — | | |
| — | | |
| 1,613,924 | |
Money Market Funds | |
| 64,383,095 | | |
| — | | |
| — | | |
| 64,383,095 | |
TOTAL | |
$ | 2,417,769,517 | | |
$ | 1,871,816 | | |
$ | — | | |
$ | 2,419,641,333 | |
* | For
detailed descriptions and other security classifications, see the accompanying Statement
of Investments. |
The
Fund may hold assets and/or liabilities in which the fair value approximates the carrying amount for financial statement purposes.
As of October 31, 2023 the Fund’s outstanding borrowings of $520,000,000 under its Credit Agreement are categorized as Level
2 within the fair value hierarchy.
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 identified
cost basis for both financial reporting and income tax purposes.
Options
Writing/Purchasing: The Fund may purchase or write (sell) put and call options. The Fund utilizes options to generate return,
facilitate portfolio management and mitigate risks. One of the risks associated with purchasing an option among others, is that
the Fund pays a premium whether or not the option is exercised. Additionally, the Fund bears the risk of loss of premium and change
in value should the counterparty not perform under the contract. The cost of securities acquired through the exercise of call
options is increased by premiums paid. The proceeds from securities sold through the exercise of put options are decreased by
the premiums paid. The Fund is obligated to
Annual Report | October 31,
2023 |
23 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
pay
interest to the broker for any debit balance of the margin account relating to options. The Fund pledges cash or liquid assets
as collateral to satisfy the current obligations with respect to written options.
When
the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently
adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated
by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting
a closing purchase transaction, including brokerage commissions, is recorded as a realized gain or loss. If a call option is exercised,
the premium is added to the proceeds from the sale of the underlying security or currency in determining whether the Fund has
realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund.
The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written
option. The Fund engaged in written options during the year ended October 31, 2023.
For
the year ended October 31, 2023, the effects of derivative instruments on the Statement of Operations were as
follows:
Risk Exposure | |
Statement of Operations Location | |
Realized Gain/ (Loss) on Derivatives | | |
Change in Unrealized Appreciation/ (Depreciation) on Derivatives | |
Equity Contracts
(Written Options) | |
Net realized gain on written options/Net change in unrealized appreciation on written options | |
$ | 191,936 | | |
$ | — | |
Total | |
| |
$ | 191,936 | | |
$ | — | |
The
average monthly notional value of written option contracts, for the period the Fund held written options, was $8,386,000 during
the year ended October 31, 2023.
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.
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
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24 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
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.
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 year ended October 31, 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
Annual Report October 31,
2023 |
25 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
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, 2023 | |
Distributions Paid From: | |
| | |
Ordinary Income | |
$ | 39,221,471 | |
Long-Term Capital Gain | |
| 130,986,820 | |
Total | |
$ | 170,208,291 | |
| |
| |
| |
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 October 31, 2023, the components of distributable earnings on a tax basis were as follows:
Accumulated Capital Gain | |
$ | 12,145,833 | |
Unrealized Depreciation | |
| (163,542,902 | ) |
Total | |
$ | (151,397,069 | ) |
The
tax components of distributable earnings are determined in accordance with income tax regulations which may differ from composition
of net assets reported under U.S. GAAP.
The
tax basis components of capital differ from the amounts reflected in the Statement of Assets and Liabilities due to temporary
book/tax differences primarily arising from wash sales and investments in partnership.
As
of October 31, 2023, net unrealized appreciation/depreciation of investments based on federal tax cost were as follows:
Gross appreciation (excess of value over tax cost) | |
| 148,691,941 | |
Gross depreciation (excess of tax cost over value) | |
| (312,226,038 | ) |
Net depreciation of foreign currency | |
| (8,805 | ) |
Net unrealized depreciation | |
$ | (163,542,902 | ) |
Cost of investments for income tax purposes | |
$ | 2,583,175,430 | |
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26 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
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.
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 year ended October 31, 2023, 4,937,304 common shares were sold totaling $135,810,703 in proceeds to the Fund, net of offering
costs of $86,398. For the shares sold during the year ended October 31, 2023 pursuant to the Distribution Agreement, commissions
totaling $1,372,716 were paid, of which $274,543 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 October 31, 2023 are approximately
$22,008.
Transactions
in common shares were as follows:
| | |
Year Ended October 31, 2023 | | |
Year Ended
October 31, 2022 | |
Common Shares outstanding - beginning of period | | |
| 71,977,353 | | |
| 65,211,164 | |
Common Shares issued from sale of shares | | |
| 4,937,304 | | |
| 6,600,257 | |
Common Shares issued as reinvestment of dividends | | |
| 288,615 | | |
| 165,932 | |
Common Shares outstanding - end of period | | |
| 77,203,272 | | |
| 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.
Annual Report | October 31,
2023 |
27 |
Reaves Utility Income Fund |
Notes to Financial Statements |
October
31, 2023
For
the year ended October 31, 2023, the average amount borrowed under the Credit Agreement was $517,643,836, at a weighted average
rate of 5.42%. As of October 31, 2023, the amount of outstanding borrowings was $520,000,000, the interest rate was 5.99% and
the value of pledged collateral was $ $1,040,000,020.
NOTE
6. PORTFOLIO SECURITIES
Purchases
and sales of investment securities, other than short-term securities, for the year ended October 31, 2023, aggregated $886,372,831
and $792,376,453, respectively.
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.
www.utilityincomefund.com |
28 |
Reaves Utility Income Fund |
Additional Information |
October
31, 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
Annual Report | October 31,
2023 |
29 |
Reaves Utility Income Fund |
Additional Information |
October
31, 2023 (Unaudited)
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.
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., 333 West 11th
Street, 5th Floor, Kansas City, Missouri 64105.
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.
www.utilityincomefund.com |
30 |
Reaves Utility Income Fund |
Additional Information |
October
31, 2023 (Unaudited)
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.
PRIVACY
STATEMENT
Pursuant
to SEC Regulation S-P (Privacy of Consumer Financial Information) the Board established the following policy regarding information
about the Fund’s shareholders. We consider all shareholders data to be private and confidential, and we hold ourselves to
the highest standards in its safekeeping and use.
The
Fund has in effect the following policy with respect to nonpublic personal information about its customers:
Only
such information received from customers, through application forms or otherwise, and information about customers’ Fund
transactions will be collected. None of such information about customers (or former customers) will be disclosed to anyone, except
as permitted by law (which includes disclosure to employees necessary to service your account). Policies and procedures (including
physical, electronic and procedural safeguards) are in place that are designed to protect the confidentiality and properly disposal
of such information. The Fund does not currently obtain consumer information. If the Fund were to obtain consumer information
at any time in the future, it would employ appropriate procedural safeguards that comply with federal standards to protect against
unauthorized access to and properly dispose of consumer information.
TAX
INFORMATION
The
Fund designates the following for federal income tax purposes for distributions made during the calendar year ended December 31,
2022 qualified dividend income (“QDI”) and as qualifying for the corporate dividends received deduction (“DRD”):
|
QDI |
DRD |
Reaves Utility Income Fund |
100% |
100% |
In
early 2023, if applicable, shareholders of record received this information for the distributions paid to them by the Fund during
the calendar year 2022 via Form 1099. The Fund will notify shareholders in early 2024 of amounts paid to them by the Fund, if
any, during the calendar year 2023.
Pursuant
to Section 852(b)(3) of the Internal Revenue Code, the Fund designated $130,986,820 as long-term capital gain distribution for
the year ended October 31, 2023.
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.
Annual Report | October 31,
2023 |
31 |
Reaves Utility Income Fund |
Additional Information |
October
31, 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
year ended October 31, 2023 |
%
Breakdown of the Total Cumulative
Distributions for the fiscal year ended October 31, 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 |
$0.58175 |
$1.69825 |
$— |
$2.28000 |
25.52% |
74.48% |
—% |
100.00% |
The
Fund’s dividend 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 dividend 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 dividends 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.
Shareholders
should not draw any conclusions about the Fund’s investment performance from the amount of the distribution or from the terms
of the Fund’s Plan.
www.utilityincomefund.com |
32 |
Reaves Utility Income Fund |
Trustees & Officers |
October
31, 2023 (Unaudited)
The
following table includes information regarding the Fund’s trustees and officers, and their principal occupations and other
affiliations during the past five years. The address for all trustees is 1700 Broadway, Suite 1850, Denver, CO 80290. The “independent
trustees” consist of those trustees who are not “interested persons” of the Fund, as that term is defined under
the 1940 Act.
NON-INTERESTED
TRUSTEES
Name
and
Age |
Position(s)
Held with
Fund |
Term
of
Office and
Length
of Time
Served(1) |
Principal
Occupation(s)
During Past 5 Years |
Number
of
Portfolios
in Fund
Complex
Overseen by
Trustee(2) |
Other
Directorships
Held by Trustee or
Nominee(3) |
Mary K.
Anstine
Birth Year:
1940 |
Trustee |
Since
Inception
*** |
Ms. Anstine is also
a trustee of A.V. Hunter Trust. Ms. Anstine was formerly a Director of the Bank of Colorado (later purchased and now known
as Northern Trust Bank), and a member of The American Bankers Association and Trust Executive Committee. |
1 |
Ms. Anstine is a Trustee
of ALPS ETF Trust (23 funds); Financial Investors Trust (28 funds); and ALPS Variable Investment Trust (7 funds). |
Jeremy W.
Deems
Birth Year:
1976 |
Chairman
and
Trustee |
Chairman
Since 2017
Trustee
Since
2008** |
Mr. Deems is the Co-Founder, Chief Financial Officer of Green Alpha Advisors, LLC, a registered investment adviser, and Co-Portfolio Manager of
the AXS Green Alpha ETF. Prior to joining Green Alpha Advisors, Mr. Deems was Chief Financial Officer and Treasurer of Forward
Management, LLC, ReFlow Management, Co. LLC, ReFlow Fund, LLC, a private investment fund, and Sutton Place Management, LLC,
an administrative services company from 2004 to 2007. |
1 |
Mr. Deems is a Trustee
of ALPS ETF Trust (23 funds); Financial Investors Trust (28 funds); and ALPS Variable Investment Trust (7 funds). |
Michael F.
Holland
Birth Year:
1944 |
Trustee |
Since
Inception
*** |
Mr. Holland is Chairman
of Holland & Company, an investment management company. |
1 |
None |
Annual Report | October 31,
2023 |
33 |
Reaves
Utility Income Fund |
|
Trustees
& Officers |
|
|
|
|
October
31, 2023 (Unaudited) |
Name and
Age |
Position(s)
Held with
Fund |
Term
of
Office and
Length
of Time
Served(1) |
Principal
Occupation(s)
During Past 5 Years |
Number
of
Portfolios
in Fund
Complex
Overseen by
Trustee(2) |
Other
Directorships
Held by Trustee or
Nominee(3) |
JoEllen L.
Legg
Birth Year:
1961 |
Trustee |
Since
2022** |
Ms. Legg was formerly
Counsel with Practus, LLP, a law firm (2017-2019). |
1 |
None |
E. Wayne
Nordberg
Birth Year:
1938 |
Trustee |
Since
2012* |
Mr. Nordberg is currently
the Chairman and Co-Chief Investment Officer of Hollow Brook Wealth Management, LLC, a private investment management firm
and is a Director/Trustee for Riley Exploration Permian. Mr. Nordberg was formerly a Senior Director at Ingalls & Snyder
LLC, a privately owned registered investment adviser. |
1 |
Mr. Nordberg is a Director/
Trustee for Riley Exploration Permian. |
www.utilityincomefund.com |
34 |
Reaves
Utility Income Fund |
Trustees
& Officers |
|
October
31, 2023 (Unaudited) |
|
|
OFFICERS |
Name and
Age |
Position(s)
Held with
Fund |
Term
of
Office and
Length
of Time
Served(1) |
Principal
Occupation(s)
During Past 5 Years |
Number
of
Portfolios in
Fund Complex
Overseen by
Trustee(2) |
Other
Directorships
Held by
Trustee or
Nominee(3) |
Joseph
Rhame, III
Birth Year:
1981 |
President |
President
Since 2021 |
Mr.
Rhame is currently the CEO at Reaves Asset Management and prior to 2019 was Portfolio Manager and Analyst at Reaves. |
N/A |
N/A |
Jill Kerschen
Birth Year:
1975 |
Treasurer |
Treasurer
Since 2022 |
Ms. Kerschen joined
Paralel in 2021 and is currently Director of Fund Administration. Prior to joining Paralel she was Vice President at ALPS
Advisors, Inc. from 2019 to 2021 and from 2013 to 2019 she served as Vice President and Fund Controller at ALPS Fund Services,
Inc. |
N/A |
N/A |
Bradley J.
Swenson
Birth Year:
1972 |
Chief
Compliance
Officer |
Chief
Compliance
Officer Since
2022 |
Mr. Swenson is President
and Chief Compliance Officer, Paralel Distributors LLC, since May 2022; Chief Compliance Officer, Paralel Technologies, since
May 2022; President, TruePeak Consulting, LLC, since August 2021; President, ALPS Fund Services, Inc. (“ALPS”)
June 2019 to June 2021; Chief Operating Officer, ALPS 2015 to 2019 |
N/A |
N/A |
Annual Report | October 31,
2023 |
35 |
Reaves
Utility Income Fund |
|
Trustees
& Officers |
|
|
|
|
October
31, 2023 (Unaudited) |
|
|
|
|
|
Name and
Age |
Position(s)
Held with
Fund |
Term
of
Office and
Length
of Time
Served(1) |
Principal
Occupation(s)
During Past 5 Years |
Number
of
Portfolios in
Fund Complex
Overseen by
Trustee(2) |
Other
Directorships
Held by
Trustee or
Nominee(3) |
Christopher
Moore
Birth Year:
1984 |
Secretary |
Secretary
Since 2022 |
Mr. Moore is General
Counsel of Paralel Technologies LLC and Paralel Advisors LLC since 2021. Mr. Moore served as Deputy General Counsel and Legal
Operations Manager of RiverNorth Capital Management, LLC from 2020-2021; VP and Senior Counsel of ALPS Fund Services, Inc.
from 2016-2020 |
N/A |
N/A |
(1) | The
Trust commenced operations on February 24, 2004. The Trust’s Board of Trustees is divided into three classes, each class
serves for a term of three years. Each year the term of office of one class expires and the successors elected to such class serve
for a term of three years. |
|
* | Term
expires at the Trust’s 2024 Annual Meeting of Shareholders. |
|
** | Term
expires at the Trust’s 2025 Annual Meeting of Shareholders. |
|
*** | Term
expires at the Trust’s 2026 Annual Meeting of Shareholders. |
(2) | The
term “Fund Complex” means two or more registered investment companies that hold themselves out to investors as related
companies for purposes of investment and investor services; or have a common investment adviser or that have an investment adviser
that is an affiliated person of the investment adviser of any of the other registered investment companies. |
(3) | The
numbers enclosed in the parentheticals represent the number of funds overseen in each respective directorship held by the Trustee. |
www.utilityincomefund.com |
36 |
Reaves Utility Income Fund |
Summary of Fund Expenses |
October
31, 2023 (Unaudited)
The
following information is intended to assist investors in understanding the fees and expenses (annualized) that an investor in
common shares of the Fund would bear, directly or indirectly. The table is based on the capital structure of the Fund as of October
31, 2023.
The
table assumes the use of leverage in the form of amounts borrowed by the Fund under a credit agreement in an amount equal to 21.44%
of the Fund’s total assets as of October 31, 2023 (including the amounts of any additional leverage obtained through the
use of borrowed funds) and shows Fund expenses as a percentage of net assets attributable to common shares. The following table
should not be considered a representation of the Fund’s future expenses. Actual expenses may be greater or less than those
shown below. Interest payments on borrowings are included in the total annual expenses of the Fund.
Shareholder
Transaction Expenses (as a percentage of offering price)
Sales Load(a) |
—% |
Offering Expenses Borne by Common Shareholders(a) |
—% |
Dividend Reinvestment Plan Fees(b) |
None |
|
|
Annual Expenses |
Percentage of Net
Assets
Attributable to Common Shares |
Investment Advisory Fees(c) |
0.72% |
Interest Payments on Borrowed Funds(d) |
1.38% |
Other Expenses(e) |
0.22% |
Acquired Fund Fees & Expenses |
0.01% |
Total Annual Fund Operating Expenses |
2.33% |
Example
The
purpose of the following table is to help a holder of common shares understand the fees and expenses that such holder would bear
directly or indirectly. The following example illustrates the expenses that you would pay on a $1,000 investment in common shares
of the Fund assuming (1) that the Fund incurs total annual expenses of 2.33% of its net assets in years 1 through 10 (assuming
borrowing equal to 21.44% of the Fund’s total assets) and (2) a 5% annual return.
Annual Report | October 31,
2023 |
37 |
Reaves
Utility Income Fund |
Summary
of Fund Expenses |
|
October
31, 2023 (Unaudited) |
1 Year |
3 Years |
5
Years |
10
Years |
$24 |
$73 |
$124 |
$266 |
The
example should not be considered a representation of future expenses or rate of return. The example assumes that all dividends
and distributions are reinvested at NAV. The Fund’s actual rate of return may be greater or less than the hypothetical 5%
annual return shown in the example.
www.utilityincomefund.com |
38 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
The
following information in this annual report is a summary of certain information about the Fund and changes since the most recent
annual report dated October 31, 2022 (the “prior disclosure date”). This information may not reflect all of the changes
that have occurred since you purchased shares of the Fund.
Investment
Objective
There
have been no material changes in the Fund’s investment objective since the prior disclosure date that have not been approved
by shareholders. 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.
Principal
Investment Strategies.
There
have been no material changes in the Fund’s Principal Investment Strategies and Policies since the prior disclosure date.
The
Fund pursues its investment objective by investing at least 80% of its total assets in the securities of domestic and foreign
companies involved to a significant extent in providing products, services or equipment for (i) the generation or distribution
of electricity, gas or water, (ii) telecommunications activities or (iii) infrastructure operations, such as airports, toll roads
and municipal services (“Utilities” or the “Utility Industry”).
A
company will be deemed to be involved in the Utility Industry to a significant extent if at least 50% of its assets, gross income
or profits are committed to or derived from activities in the areas described above. The remaining 20% of the Fund’s total
assets may be invested in other securities including stocks, debt obligations and money market instruments, as well as certain
derivative instruments (described below) and other investments.
As
used in the Annual Report, as well as the Fund’s Prospectus Supplement and the accompanying Prospectus and Statement of
Additional Information, the terms “debt securities” and “debt obligations” refer to bonds, debentures
and similar long and intermediate term debt investments and do not include short-term fixed income securities such as money market
instruments in which the Fund may invest temporarily pending investment of the proceeds of an offering and during periods of abnormal
market conditions. The Fund may invest in preferred stocks and bonds of below investment grade quality (i.e., “junk bonds”).
Under
normal market conditions, the Fund invests at least 80% of its total assets in dividend-paying common and preferred stocks of
companies in the Utility Industry. In pursuing its objective, the Fund invests primarily in common and preferred stocks that pay
dividends that qualify for federal income taxation at rates applicable to long-term capital gains (“tax-advantaged dividends”).
The
Fund may invest in the securities of both domestic and foreign issuers, including those located in emerging market countries (i.e.,
a country not included in the MSCI World Index, a free float-adjusted market capitalization weighted index that is designed to
measure the equity market performance of developed markets).
As
an alternative to holding foreign-traded securities, the Fund may invest in dollar-denominated securities of foreign companies
that trade on U.S. exchanges or in the U.S. over-the-counter market (including depositary receipts, which evidence ownership in
underlying foreign securities).
To
date, the Fund’s derivatives usage has been limited to equity options, including writing covered calls, the purchase of
calls and the sale of puts. Options may be used as both hedges against the value of existing holdings or as speculative trades
as part of the Fund’s overall investment strategy.
Annual Report | October 31,
2023 |
39 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
In
addition, the Fund may choose to use interest rate swaps (or options thereon) from time to time for hedging purposes.
Although the Fund does not currently use interest rate swaps (or options thereon), the Fund may do so in the future,
depending on the interest rate outlook of W.H. Reaves & Co., Inc. (dba Reaves Asset Management, the
“Adviser”) and other factors. Such usage would be limited to no more than 20% of the Fund’s total assets.
The Fund may choose to use other derivatives from time to time, as described in the Statement of Additional
Information.
There
is no assurance that the Fund will achieve its investment objective. Further, the Fund’s ability to pursue its investment
objective, the value of the Fund’s investments and the Fund’s NAV may be adversely affected by changes in tax rates
and policies. Because the Fund’s investment objective is to provide a high level of after-tax yield and total return consisting
primarily of dividend and interest income and capital appreciation, the Fund’s ability to invest, and the attractiveness
of investing in, equity securities that pay qualified dividend income in relation to other investment alternatives will be affected
by changes in federal income tax laws and regulations, including changes in the qualified dividend income provisions. Any proposed
or actual changes in such rates, therefore, can significantly and adversely affect the after-tax returns of the Fund’s investments
in equity securities. Any such changes also could significantly and adversely affect the Fund’s NAV, as well as the Fund’s
ability to acquire and dispose of equity securities at desirable returns and price levels and the Fund’s ability to pursue
its investment objective. The Fund cannot assure you as to the portion, if any, of the Fund’s dividends that will be qualified
dividend income
Leverage
The
Fund currently uses leverage through borrowing. More specifically, the Fund has entered into a credit agreement (the “Credit
Agreement”) with State Street Bank and Trust Company (the “Bank”). As of October 31, 2023, the Fund had outstanding
$520,000,000 in principal amount of borrowings from the Credit Agreement representing approximately 21.44% of the Fund’s
total assets (including assets attributable to the Fund’s use of leverage). The Bank has the ability to terminate the Credit
Agreement upon 360-days’ notice. The provisions of the 1940 Act further provide that the Fund may borrow or issue notes
or debt securities in an amount up to 33 1/3% of its total assets or may issue preferred shares in an amount up to 50% of the
Fund’s total assets (including the proceeds from leverage).
The
Fund has no present intention of issuing preferred shares, although it has done so in the past and may choose to do so in the
future.
The
Fund also may borrow money as a temporary measure for extraordinary or emergency purposes.
Leverage
creates risks for common shareholders, including the likelihood of greater volatility of NAV and market price of, and dividends
paid on, the common shares. There is a risk that fluctuations in the dividend rates on any preferred shares issued by the Fund
may adversely affect the return to the common shareholders. If the income from the securities purchased with such funds is not
sufficient to cover the cost of leverage, the return on the Fund will be less than if leverage had not been used, and therefore
the amount available for distribution to common shareholders as dividends and other distributions will be reduced.
Changes
in the value of the Fund’s portfolio (including investments bought with the proceeds of the leverage program) will be borne
entirely by the common shareholders. If there is a net decrease (or increase) in the value of the Fund’s investment portfolio,
the leverage will decrease (or increase) the NAV per share to a greater extent than if the Fund were not leveraged.
www.utilityincomefund.com |
40 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
The
issuance of a class of preferred shares or incurrence of borrowings having priority over the common shares creates an opportunity
for greater return per common share, but at the same time such leveraging is a speculative technique in that it will increase
the Fund’s exposure to capital risk. Unless the income and appreciation, if any, on assets acquired with leverage proceeds
exceed the associated costs of the leverage program (and other Fund expenses), the use of leverage will diminish the investment
performance of the common shares compared with what it would have been without leverage.
The
fees received by Reaves and certain other service providers are based on the total assets of the Fund, including assets represented
by leverage. During periods in which the Fund is using leverage, the fees paid to Reaves for investment advisory services (and
separately, to Paralel for administrative services will be higher than if the Fund did not use leverage because the fees paid
will be calculated on the basis of the Fund’s total assets, including proceeds from borrowings and the issuance of any preferred
shares. Therefore, Reaves may have a financial incentive to use leverage, which creates a conflict of interest between Reaves
and common shareholders. Reaves will seek to manage this conflict of interest by utilizing leverage only when they determine such
action is in the best interests of the Fund. The Board of Trustees of the Fund (the “Board”) reviews the Fund’s
leverage on a periodic basis, and the Fund’s use of leverage may be increased or decreased subject to the Board’s
oversight and applicable law.
Under
the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (the “1940 Act”), the Fund
is not permitted to issue preferred shares unless immediately after such issuance the total asset value of the Fund’s portfolio
is at least 200% of the liquidation value of the outstanding preferred shares (i.e., such liquidation value may not exceed 50%
of the Fund’s total assets). In addition, the Fund is not permitted to declare any cash dividend or other distribution on
its common shares unless, at the time of such declaration, the NAV of the Fund’s portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of such liquidation value.
To
qualify for federal income taxation as a “regulated investment company,” the Fund must satisfy certain requirements
relating to sources of its income and diversification of its assets, and must distribute in each taxable year at least 90% of
its net investment income (including net interest income and net short-term gain). The Fund also will be required to distribute
annually substantially all of its income and capital gain, if any, to avoid imposition of a nondeductible 4% federal excise tax.
The
Fund’s willingness to issue new securities for investment purposes, and the amount the Fund will issue, depends on many
factors, the most important of which are market conditions and interest rates.
There
is no assurance that a leveraging strategy will be successful during any period in which it is employed.
The
Fund may increase the amount of leverage following the completion of an offering, subject to applicable law.
Effects
of Leverage
The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on total
return on common shares, assuming investment portfolio total returns (comprised of income, net expenses and changes in the value
of investments held in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are
hypothetical figures and are not necessarily indicative of what the Fund’s investment portfolio
Annual Report | October 31,
2023 |
41 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
returns
will be. In other words, the Fund’s actual returns may be greater or less than those appearing in the table below. The table
further reflects the use of leverage as of October 31, 2023, representing approximately 21.44% of the Fund’s Total Assets
and the Fund’s assumed annual leverage interest and fee rate of 5.99%.
Assumed
Portfolio Return (Net of Expenses) |
-10.00% |
-5.00% |
0.00% |
5.00% |
10.00% |
Corresponding
Common Share Total Return |
-11.61% |
-6.45% |
-1.28% |
3.88% |
9.04% |
Total
return is composed of two elements—the dividends on common shares paid by the Fund (the amount of which is largely determined
by the Fund’s net investment income after paying the cost of leverage) and realized and unrealized gains or losses on the
value of the securities the Fund owns. As the table shows, leverage generally increases the return to common shareholders when
portfolio return is positive or greater than the costs of leverage and decreases return when the portfolio return is negative
or less than the costs of leverage.
During
the time in which the Fund is using leverage, the amount of the fees paid to the Adviser for investment management services is
higher than if the Fund did not use leverage because the fees paid are calculated based on the Fund’s Total Assets. This
may create a conflict of interest between the Adviser, on the one hand, and common shareholders, on the other. Also, because the
leverage costs are borne by the Fund at a specified interest rate, only the Fund’s common shareholders bear the cost of
the Fund’s management fees and other expenses. There can be no assurance that a leveraging strategy will be successful during
any period in which it is employed.
Risk
Factors
Investing
in any investment company security involves risk, including the risk that you may receive little or no return on your investment
or even that you may lose part or all of your investment. Investors should consider the following risk factors and special considerations
associated with investing in the Fund’s common shares:
Risks
Associated with Offerings of Additional Common Shares. The voting power of current shareholders will be diluted to the
extent that current shareholders do not purchase shares in any future offerings of shares or do not purchase sufficient shares
to maintain their percentage interest. If the Fund is unable to invest the proceeds of such offering as intended, the Fund’s
per common share distribution may decrease and the Fund may not participate in market advances to the same extent as if such proceeds
were fully invested as planned. If the Fund sells common shares at a price below NAV pursuant to the consent of shareholders,
shareholders will experience a dilution of the aggregate NAV per common share because the sale price will be less than the Fund’s
then-current NAV per common share. Similarly, were the expenses of the offering to exceed the amount by which the sale price exceeded
the Fund’s then current NAV per common share, shareholders would experience a dilution of the aggregate NAV per common share.
This dilution will be experienced by all shareholders, irrespective of whether they purchase common shares in any such offering.
Additional
Risks of Rights. There are additional risks associated with an offering of subscription rights to purchase common shares
(“Rights”). Shareholders who do not exercise their Rights may, at the completion of such an offering, own a smaller
proportional interest in the Fund than if they exercised their Rights. As a result of such an offering, a shareholder may experience
dilution in NAV per share if the subscription price per share is below the NAV per share on the expiration date. If the subscription
price per share is below the NAV per share of the Fund’s common shares on the expiration date, a shareholder will experience
an immediate dilution of the aggregate NAV of such shareholder’s
www.utilityincomefund.com |
42 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
common
shares if the shareholder does not participate in such an offering and the shareholder will experience a reduction in the NAV
per share of such shareholder’s common shares whether or not the shareholder participates in such an offering. Such a reduction
in NAV per share may have the effect of reducing market price of the common shares. The Fund cannot state precisely the extent
of this dilution (if any) if the shareholder does not exercise such shareholder’s Rights because the Fund does not know
what the NAV per share will be when the offer expires or what proportion of the Rights will be exercised. If the subscription
price is substantially less than the then current NAV per common share at the expiration of a rights offering, such dilution could
be substantial. Any such dilution or accretion will depend upon whether (i) such shareholders participate in the rights offering
and (ii) the Fund’s NAV per common share is above or below the subscription price on the expiration date of the rights offering.
In addition to the economic dilution described above, if a Common Shareholder does not exercise all of their rights, the Common
Shareholder will incur voting dilution as a result of this rights offering. This voting dilution will occur because the Common
Shareholder will own a smaller proportionate interest in the Fund after the rights offering than prior to the rights offering.
There is a risk that changes in market conditions may result in the underlying common shares purchasable upon exercise of the
subscription rights being less attractive to investors at the conclusion of the subscription period. This may reduce or eliminate
the value of the subscription rights. If investors exercise only a portion of the rights, the number of common shares issued may
be reduced, and the common shares may trade at less favorable prices than larger offerings for similar securities. Subscription
rights issued by the Fund may be transferable or non-transferable rights. In a non-transferable rights offering, Common Shareholders
who do not wish to exercise their rights will be unable to sell their rights. In a transferrable rights offering, the Fund will
use its best efforts to ensure an adequate trading market for the rights; however, investors may find that there is no market
to sell rights they do not wish to exercise.
Investment
and Market Risk. An investment in common shares is subject to investment risk, including the possible loss of the entire
principal amount invested. An investment in common shares represents an indirect investment in the securities owned by the Fund,
which are generally traded on a securities exchange or in the over-the-counter markets. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably. The Fund anticipates using leverage, which will
magnify the Fund’s investment, market and certain other risks. The common shares at any point in time may be worth less
than the original investment, even after taking into account any reinvestment of dividends and distributions.
Issuer
Risk. The value of common and preferred stocks may decline for a number of reasons which directly relate to the issuer,
such as management performance, financial leverage and reduced demand for the issuer’s goods and services.
Income
Risk. The income that common shareholders receive from the Fund is based primarily on the dividends and interest it earns
from its investments, which can vary widely over the short and long-term. If prevailing market interest rates drop, distribution
rates of the Fund’s holdings and common shareholder’s income from the Fund could drop as well. The Fund’s income
also would likely be affected adversely if prevailing short-term interest rates increase and the Fund is utilizing leverage.
Leverage
Risk. Described in the “Use of Leverage” section above.
Tax
Risk. The Fund’s investment program and the tax treatment of Fund distributions may be affected by Internal Revenue
Service (“IRS”) interpretations of the Internal Revenue Code of 1986, as amended (the “Code”), future
changes in tax laws and regulations. There can be no assurance that any portion of the Fund’s income distributions will
not be fully taxable as ordinary income. The Fund’s ability to pursue its investment objective, the value of the Fund’s
investments and the Fund’s
Annual Report | October 31,
2023 |
43 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
NAV
may be adversely affected by changes in tax rates and policies. Because the Fund’s investment objective is to provide a
high level of after-tax yield and total return consisting primarily of dividend and interest income and capital appreciation,
the Fund’s ability to invest, and the attractiveness of investing in, equity securities that pay qualified dividend income
in relation to other investment alternatives will be affected by changes in federal income tax laws and regulations, including
changes in the qualified dividend income provisions. Any proposed or actual changes in such rates, therefore, can significantly
and adversely affect the after-tax returns of the Fund’s investments in equity securities. Any such changes also could significantly
and adversely affect the Fund’s NAV, as well as the Fund’s ability to acquire and dispose of equity securities at
desirable returns and price levels and the Fund’s ability to pursue its investment objective. The Fund cannot assure you
as to the portion, if any, of the Fund’s dividends that will be qualified dividend income. Further, in order to avoid corporate
income tax at the level of the Fund, it must qualify each year as a regulated investment company under the Code.
Sector/Industry
Risk. The “Utility Industry” generally includes companies involved in providing products, services or
equipment for (i) the generation or distribution of electricity, gas or water, (ii) telecommunications activities or
(iii) infrastructure operations, such as airports, toll roads and municipal services. The Fund invests a significant portion
of its total assets in securities of utility companies, which may include companies in the electric, gas, water,
telecommunications sectors, as well as other companies engaged in other infrastructure operations. This may make the Fund
more 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 NAV of common shares.
Risks
that are intrinsic to utility companies include difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restrictions on operations and increased cost and delays
attributable to environmental considerations and regulation, difficulty in raising capital in adequate amounts on reasonable terms
in periods of high inflation and unsettled capital markets, technological innovations that may render existing plants, equipment
or products obsolete, the potential impact of natural or man-made disasters, increased costs and reduced availability of certain
types of fuel, occasional reduced availability and high costs of natural gas and other fuels, the effects of energy conservation,
the effects of a national energy policy and lengthy delays and greatly increased costs and other problems associated with the
design, construction, licensing, regulation and operation of nuclear facilities for electric generation, including, among other
considerations, the problems associated with the use of radioactive materials, the disposal of radioactive wastes, shutdown of
facilities or release of radiation resulting from catastrophic events, disallowance of costs by regulators which may reduce profitability,
and changes in market structure that increase competition.
In
many regions, including the United States, the Utility Industry is experiencing increasing competitive pressures, primarily in
wholesale markets, as a result of consumer demand, technological advances, greater availability of natural gas with respect to
electric utility companies and other factors. For example, the Federal Energy Regulatory Commission (the “FERC”) has
implemented regulatory changes to increase access to the nationwide transmission grid by utility and non-utility purchasers and
sellers of electricity. A number of countries, including the United States, are considering or have implemented methods to introduce
and promote retail competition. Changes in regulation may result in consolidation among domestic utilities and the disaggregation
of many vertically integrated utilities into separate generation, transmission and distribution businesses. As a result, additional
significant competitors could become active in certain parts of the Utility Industry.
www.utilityincomefund.com |
44 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
Due
to the high costs of developing, constructing, operating and distributing assets and facilities many utility companies are highly
leveraged. As such, movements in the level of interest rates may affect the returns from these assets. See “Risk Factors—Sector/Industry
Risk—Interest Rate Risk.”
Concentration
Risk. The Fund’s investments will be concentrated in the Utility industry. The focus of the Fund’s portfolio
on this sector may present more risks than if the Fund’s portfolio were broadly spread over numerous sectors of the economy.
A downturn in this sector (or any sub-sectors within it) would have a larger impact on the Fund than on an investment company
that does not concentrate solely in this specific sector (or in specific sub-sectors). At times, the performance of companies
in the Utility industry (or a specific sub-sector) may lag the performance of other sectors or the broader market as a whole.
Common
Stock Risk. The Fund will have substantial exposure to common stocks. Although common stocks have historically generated
higher average returns than fixed-income securities over the long-term, common stocks also have experienced significantly more
volatility in returns. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common
stock held by the Fund. Also, the price of common stocks are sensitive to general movements in the stock market and a drop in
the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices fluctuate for many
reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of
the relevant stock market, or when political or economic events affecting the issuer occur. Common stock is subordinated to preferred
stock and debt in a company’s capital structure with respect to priority in the right to a share of corporate income, and
therefore will be subject to greater dividend risk than preferred stock or debt instruments. In addition, common stock prices
may be sensitive to rising interest rates, as the costs of capital rise and borrowing costs increase.
Foreign
Securities Risk. Investments in securities of non-U.S. issuers will be subject to risks not usually associated
with owning securities of U.S. issuers. These risks can include fluctuations in foreign currencies, foreign currency exchange
controls, social, political and economic instability, differences in securities regulation and trading, expropriation or nationalization
of assets, and foreign taxation issues. In addition, changes in government administrations or economic or monetary policies in
the United States or abroad could result in appreciation or depreciation of the Fund’s securities. It may also be more difficult
to obtain and enforce a judgment against a non-U.S. issuer. Foreign investments made by the Fund must be made in compliance with
U.S. and foreign currency restrictions and tax laws restricting the amounts and types of foreign investments. The risks of foreign
investing may be magnified for investments in issuers located in emerging market countries.
To
the extent the Fund invests in depositary receipts, the Fund will be subject to many of the same risks as when investing directly
in non-U.S. securities. The holder of an unsponsored depositary receipt may have limited voting rights and may not receive as
much information about the issuer of the underlying securities as would the holder of a sponsored depositary receipt.
Foreign
Currency Risk. Investments in securities that trade in and receive revenues in foreign currencies are subject to the risk
that those currencies will decline in value relative to the U.S. dollar. Currency rates in foreign countries may fluctuate significantly
over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of
securities held by the Fund and denominated in those currencies. Some foreign governments levy withholding taxes against dividend
and interest income. Although in some countries portions of these taxes are recoverable, any amounts not recovered will reduce
the income received by the Fund, and may reduce distributions to common shareholders. These risks are generally heightened for
investments in emerging market countries.
Annual Report | October 31,
2023 |
45 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
Small
and Mid-Cap Stock Risk. The Fund may invest in companies of any market capitalization. The Fund considers small companies
to be those with a market capitalization up to $2 billion and medium-sized companies to be those with a market capitalization
between $2 billion and $10 billion. Smaller and medium-sized company stocks may be more volatile than, and perform differently
from, larger company stocks. There may be less trading in the stock of a smaller or medium-sized company, which means that buy
and sell transactions in that stock could have a larger impact on the stock’s price than is the case with larger company stocks.
Smaller and medium-sized companies may have fewer business lines; changes in any one line of business, therefore, may have a greater
impact on a smaller or medium-sized company’s stock price than is the case for a larger company. As a result, the purchase or
sale of more than a limited number of shares of a small or medium-sized company may affect its market price. The Fund may need
a considerable amount of time to purchase or sell its positions in these securities. In addition, smaller or medium-sized company
stocks may not be well known to the investing public and may be held primarily by insiders or institutional investors.
Non-Investment
Grade Securities Risk. Investments in securities of below investment grade quality, if any, are predominantly speculative
because of the credit risk of their issuers. While offering a greater potential opportunity for capital appreciation and higher
yields, preferred stocks and bonds of below investment grade quality (also known as “junk bonds”) entail greater potential
price volatility and may be less liquid than higher-rated securities. Issuers of below investment grade quality preferred stocks
and bonds are more likely to default on their payments of dividends/interest and liquidation value/principal owed to the Fund,
and such defaults will reduce the Fund’s NAV and income distributions.
Interest
Rate Risk. Interest rate risk is the risk that preferred stocks paying fixed dividend rates and fixed-rate debt securities
will decline in value because of changes in market interest rates. When interest rates rise the market value of such securities
generally will fall. An investment by the Fund in preferred stocks or fixed-rate debt securities means that the NAV and price
of the common shares may decline if market interest rates rise. In typical interest rate environments, the prices of longer term
debt securities generally fluctuate more than the prices of shorter-term debt securities as interest rates change. These risks
may be greater in the current market environment because certain interest rates are near historically low levels. During periods
of declining interest rates, an issuer of preferred stock or fixed-rate debt securities may exercise its option to redeem securities
prior to maturity, forcing the Fund to reinvest in lower yielding securities. During periods of rising interest rates, the average
life of certain types of securities may be extended because of slower than expected payments. This may lock in a below market
yield, increase the security’s duration, and reduce the value of the security. The value of the Fund’s common stock
investments may also be influenced by changes in interest rates
Credit
Risk. Credit risk is the risk that an issuer of a preferred or debt security will become unable to meet its obligation
to make dividend, interest and principal payments. In general, lower rated preferred or debt securities carry a greater degree
of credit risk. If rating agencies lower their ratings of preferred or debt securities in the Fund’s portfolio, the value
of those obligations could decline. In addition, the underlying revenue source for a preferred or debt security may be insufficient
to pay dividends, interest or principal in a timely manner.
Derivatives
Risk. Although it may use other derivative instruments from time to time as described in the Fund’s Statement of
Additional Information, the Fund’s derivatives usage to date has generally been limited to equity options, including writing
covered calls, the purchase of calls and the sale of puts. A decision as to whether, when and how to use options involves the
exercise or skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because
www.utilityincomefund.com |
46 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
of
market behavior or unexpected events. The Fund may also, from time to time, choose to use interest rate swaps (or options thereon).
Derivatives transactions of the types described above subject the Fund to increased risk of principal loss due to imperfect correlation
or unexpected price or interest rate movements. The Fund’s use of derivative instruments involves investments risks and
transactions costs to which the Fund would not be subject absent the use of these instruments and, accordingly, may result in
losses greater than if they had not been used. The Fund also will be subject to credit risk with respect to the counterparties
to the over-the-counter derivatives contracts purchased by the Fund. If a counterparty becomes bankrupt or otherwise fails to
perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays
in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited recovery or may obtain no recovery in such circumstances. As a general matter, dividends received on hedged stock
positions are characterized as ordinary income and are not eligible for favorable tax treatment. In addition, use of derivatives
may give rise to short-term capital gains and other income that would not qualify for payments by the Fund of tax-advantaged dividends.
Preferred
Stock Risk. The Fund may have exposure to preferred stocks. In addition to credit risk, investments in preferred stocks
involve certain other risks. Certain preferred stocks contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “noncumulative” preferred stocks) or defer distributions (in the case of “cumulative”
preferred stocks). If the Fund owns a preferred stock that is deferring its distributions, the Fund may be required to report
income for tax purposes while it is not receiving income on this position. Preferred stocks often contain provisions that allow
for redemption in the event of certain tax or legal changes or at the issuers’ call. In the event of redemption, the Fund
may not be able to reinvest the proceeds at comparable rates of return. Preferred stocks typically do not provide any voting rights,
except in cases when dividends are in arrears beyond a certain time period, which varies by issue. Preferred stocks are subordinated
to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation
payments, and therefore will be subject to greater credit risk than those debt instruments. Preferred stocks may be significantly
less liquid than many other securities, such as U.S. government securities, corporate debt or common stock.
Debt
Securities Risk. In addition to credit risk, investments in debt securities carry certain risks including: redemption
risk (debt securities sometimes contain provisions that allow for redemption in the event of tax or security law changes in addition
to call features at the option of the issuer. In the event of a redemption, the Fund may not be able to reinvest the proceeds
at comparable rates of return); limited voting rights (debt securities typically do not provide any voting rights, except in cases
when interest payments have not been made and the issuer is in default; and liquidity (certain debt securities may be substantially
less liquid than many other securities, such as U.S. government securities or common stocks).
Inflation
Risk. Inflation risk is the risk that the purchasing power of assets or income from investment will be worth less in the
future as inflation decreases the value of money. As inflation increases, the real value of the common shares and distributions
thereon can decline.
Illiquid
Securities Risk. The Fund may invest in securities for which there is no readily available trading market or which are
otherwise illiquid. The Fund may not be able readily to dispose of such securities at prices that approximate those at which the
Fund could sell such securities if they were more widely traded and, as a result of such illiquidity, the Fund may have to sell
other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. In addition,
Annual Report | October 31,
2023 |
47 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
the
limited liquidity could affect the market price of the securities, thereby adversely affecting the Fund’s NAV.
Market
Price of Common Shares. The shares of closed-end management investment companies often trade at a discount from their
NAV, and the Fund’s common shares may likewise trade at a discount from NAV. The trading price of the Fund’s common
shares may be less than the public offering price. The returns earned by common shareholders who sell their common shares below
NAV will be reduced. As of October 31, 2023, the Fund’s common shares are trading at a premium to NAV.
Management
Risk. The Fund is subject to management risk because it has an actively managed portfolio. Reaves and the individual portfolio
managers apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee
that these will produce the desired results.
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. The increasing interconnectivity
between global economies and financial markets increases the likelihood that events or conditions in one region or financial market
may adversely impact issuers in a different country, region or financial market. 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),
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. 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
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48 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October 31, 2023
(Unaudited) |
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.
Legislation,
Policy and Regulatory Risk. At any time after the date of this report, legislation or additional regulations may be enacted
that could negatively affect the assets of the Fund or the issuers of such assets. Recent changes in the U.S. political landscape
and changing approaches to regulation may have a negative impact on the entities and/or securities in which the Fund invests.
Legislation or regulation may also change the way in which the Fund itself is regulated. New or amended regulations may be imposed
by the Commodity Futures Trading Commission (“CFTC”), the SEC, the Board of Governors of the Federal Reserve System
(the “Federal Reserve”) or other financial regulators, other governmental regulatory authorities or self-regulatory
organizations that supervise the financial markets that could adversely affect the Fund. In particular, these agencies are empowered
to promulgate a variety of new rules pursuant to financial reform legislation in the United States. There can be no assurance
that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the
ability of the Fund to achieve its investment objective. The Fund also may be adversely affected by changes in the enforcement
or interpretation of existing statutes and rules by these governmental agencies.
Portfolio
Manager Information
Since
the prior disclosure date, Jay Rhame became a portfolio manager of the Fund. Mr. Rhame’s information is set forth below:
Jay
Rhame joined Reaves Asset Management in 2005 and was named Chief Executive Officer in January 2019. Previously he served as a
telecommunications, energy, and utility analyst. Mr. Rhame has been a co-portfolio manager of the Reaves Utility Income Fund since
2023 and the Virtus Reaves Utilities ETF since that Fund’s inception in 2015. In June 2021, Mr. Rhame was appointed to serve
as President of the Reaves Utility Income Fund. He is a member of the portfolio review and risk management committees. Mr. Rhame
received a B.A. from St. Mary’s College of Maryland and is a CFA Charterholder.
Fund
Organizational Structure
Since
the prior disclosure date, there have been no changes in the Fund’s charter or by-laws that would delay or prevent a change
of control of the Fund that have not been approved by shareholders.
Other
Disclosures
Delaware
Statutory Trust Act – Control Share Acquisitions Under Delaware law applicable to the Fund as of August 1, 2022,
if a shareholder acquires direct or indirect ownership or power to direct the voting of shares of the Fund in an amount that equals
or exceeds certain percentage thresholds specified under Delaware law (beginning at 10% or more of shares of the Fund), the shareholder’s
ability to vote certain of these shares may be limited.
Market
and Net Asset Value Information
The
common shares are listed on the NYSE American under the symbol “UTG” and began trading on the NYSE American on February
24, 2004. Shares of closed-end investment companies often trade on an exchange at prices lower than NAV. The Fund’s common
shares have traded in the market at both premiums to and discounts from NAV. The following table shows, for each fiscal quarter
since the quarter ended January 31, 2021; (i) high and low NAVs per common share, (ii) the high and low sale prices per common
share, as reported in the consolidated transaction reporting system, and (iii) the percentage by which the common shares traded
at a premium over, or discount from, the high and low NAVs per common share. The Fund’s NAV per common share is determined
on a daily basis.
Annual Report | October 31,
2023 |
49 |
|
Summary
of Updated Information |
Reaves
Utility Income Fund |
Regarding
the Fund |
|
October
31, 2023 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
Market
Price |
Net
Asset Value at |
Market
Premium
(Discount) to Net Asset
Value at |
|
|
|
|
|
|
|
Quarter Ended |
|
Low |
High |
Market
Low |
Market
High |
Market
Low Market High |
2023 |
October
31 |
$23.24 |
$28.1789 |
$23.38 |
$27.57 |
(1.11)% |
2.21% |
|
July 31 |
$26.57 |
$29.07 |
$26.42 |
$28.91 |
0.53% |
0.55% |
|
April 30 |
$26.32 |
$30.32 |
$26.41 |
$29.96 |
(3.02)% |
1.20% |
|
January 31 |
$27.02 |
$30.71 |
$27.45 |
$30.44 |
(0.02)% |
0.01% |
2022 |
October 31 |
$24.55 |
$34.02 |
$25.10 |
$33.85 |
(5.58)% |
0.51% |
|
July 31 |
$28.85 |
$34.50 |
$28.56 |
$34.02 |
1.02% |
2.59% |
|
April 30 |
$30.76 |
$35.43 |
$30.71 |
$36.13 |
(0.65)% |
(1.94)% |
|
January 31 |
$32.20 |
$35.44 |
$31.95 |
$34.79 |
(1.08)% |
1.90% |
2021 |
October 31 |
$32.34 |
$36.50 |
$31.76 |
$36.07 |
0.84% |
3.40% |
|
July 31 |
$33.85 |
$35.61 |
$33.43 |
$34.83 |
(0.21)% |
4.12% |
|
April 30 |
$30.50 |
$35.10 |
$29.95 |
$34.64 |
(0.39)% |
1.50% |
|
January 31 |
$31.24 |
$34.60 |
$31.29 |
$33.62 |
(0.16)% |
2.91% |
As
of October 31, 2023, the last reported closing sale price for the Fund’s Common Shares was $24.56 per share and the reported
NAV on that date for the Fund’s Common Shares was $24.53, representing a premium to NAV of 0.12%. Market prices on that
same date ranged from $24.58 to a low of $24.06, representing a premium to NAV of 0.20% and a discount to NAV of (1.92)%, respectively.
www.utilityincomefund.com |
50 |
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.
| (a) | As
of the end of the period covered by this report, the registrant has adopted a code of
ethics that applies to the registrant’s principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or a third party. |
| (b) | For
purposes of this item, “code of ethics” means written standards that are reasonably
designed to deter wrongdoing and to promote: |
| (1) | Honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships; |
| (2) | Full,
fair, accurate, timely, and understandable disclosure in reports and documents that a
registrant files with, or submits to, the Commission and in other public communications
made by the registrant; |
| (3) | Compliance
with applicable governmental laws, rules, and regulations; |
| (4) | The
prompt internal reporting of violations of the code to an appropriate person or persons
identified in the code; and |
| (5) | Accountability
for adherence to the code. |
| (c) | During
the period covered by this report, there were no amendments to the provisions of the
code of ethics adopted in Item 2(a) of this report. |
| (d) | During
the period covered by this report, the registrant had not granted any express or implicit
waivers from the provisions of the code of ethics adopted in Item 2(a) of this report. |
| (f) | The
registrant’s code of ethics referred to in Item 2(a) above is attached as Exhibit 13(a)(l),
hereto. |
Item
3. Audit Committee Financial Expert.
The
Board of Trustees of the registrant has determined that the registrant has at least one audit committee financial expert serving
on its audit committee. The Board of Trustees has designated Jeremy W. Deems and Michael F. Holland as the registrant’s “audit
committee financial expert(s).” Mr. Deems and Mr. Holland are each “independent” as defined in paragraph (a)(2)
of Item 3 to Form N-CSR.
Item
4. Principal Accountant Fees and Services.
| (a) | Audit
Fees: For the registrant’s last two fiscal years ended October 31, 2022 and October
31, 2023, the aggregate fees billed for professional services rendered by the principal
accountant for the audit of the registrant’s annual financial statements or services
that are normally provided by the accountant in connection with statutory and regulatory
filings or engagements were $46,500 and $50,220, respectively. |
| (b) | Audit-Related
Fees: For the registrant’s last two fiscal years ended October 31, 2022 and October
31, 2023, the aggregate fees billed for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit of the registrant’s
financial statements and not otherwise reported under paragraph (a) of Item 4 of this
report were $0 and $0, respectively. Such fees related to consents filed with respect
to the registrant’s registration statements. |
| (c) | Tax
Fees: For the registrant’s last two fiscal years ended October 31, 2022 and October
31, 2023, the aggregate fees billed for professional services rendered by the principal
accountant for tax compliance, tax advice and tax planning, which were comprised of the
preparation of excise filings and income tax returns for the registrant, were $6,650
and
$6,850,
respectively. |
| (d) | All
Other Fees: For the registrant’s last two fiscal years ended October 31, 2022 and
October 31, 2023, the aggregate fees billed for products and services, provided by the
principal accountant, other than the services reported in paragraphs (a) through (c)
of Item 4 of this report, were $0
and
$0, respectively. |
| (e) | (1)
The audit committee’s pre-approval policies and procedures require that all services
to be performed by the registrant’s principal accountant must be pre-approved by the
registrant’s audit committee. |
(2)
No
services described in paragraphs (b) through (d) of Item 4 of this report were approved by the registrant’s audit committee pursuant
to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
| (f) | Not
applicable to the registrant. |
| (g) | The
aggregate non-audit fees billed by the Registrant’s accountant for services rendered
to the Registrant, and rendered to the Registrant’s investment adviser, and any
entity controlling, controlled by, or under common control with the investment adviser
that provides ongoing services to the Registrant for each of the last two fiscal years
of the Registrant were $6,650 in 2022 and $6,850 in 2023. These amounts consist of the
tax fees disclosed in Item 4(c) above. |
| (h) | Not
applicable to the registrant. |
| (i) | Not
applicable to the registrant. |
| (j) | Not
applicable to the registrant. |
Item
5. Audit Committee of Listed Registrants.
| (a) | The
registrant has a separately designated standing audit committee established in accordance
with Section 3(a) (58)(A) of the Exchange Act and is comprised of the following members: |
Mary
K. Anstine
Jeremy
W. Deems (designated audit committee financial expert)
Michael F. Holland (designated audit committee financial expert)
JoEllen
Legg
E.
Wayne Nordberg
Item
6. Investments.
| (a) | The
schedule of investments is included as part of the Reports to Stockholders filed under
Item 1 of this report. |
| (b) | Not
applicable to the registrant. |
Item
7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
A
closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively
in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio
securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders,
on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined
in section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its
investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment
adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to
vote proxies relating to portfolio securities.
These
policies are included as Appendix A.
Item
8. Portfolio Managers of Closed-End Management
Investment Companies.
(a)(l)
The registrant’s Portfolio Managers as of December 31, 2023 are:
Name |
Title |
Length
of Service |
Business Experience 5
Years |
John
P. Bartlett |
Co-Portfolio
Manager |
Since
April 2017 |
PM,
Reaves Asset
Management 1995-present |
Timothy
O. Porter |
Co-Portfolio
Manager |
Since
December 2018 |
PM,
Reaves Asset
Management 2004-present |
Joseph
Rhame, III |
Co-Portfolio
Manager |
Since
June 2023 |
PM,
Reaves Asset
Management 2005-present |
(a)(2)
Other accounts managed by the registrant’s Portfolio Managers as of October 31, 2023:
PM
Name |
Registered Investment
Companies, Total Assets |
Other Pooled Investments
Vehicles, Total Assets |
Other Accounts, Total
Assets |
John
P. Bartlett |
$42,163,797
1
account |
0 |
0 |
Timothy
O. Porter |
$26,790,942
1
account |
0 |
$331,649,330
494
accounts |
Joseph
Rhame, III |
$442,163,797
1
account |
0 |
$331,649,330
494
accounts |
Other
Accounts Managed by Portfolio Managers. 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 pursuant to Item 8(a)(2) of Form N-CSR have an advisory fee based on the performance of an account.
(a)(3)
Portfolio Manager compensation as of October 31, 2023:
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.
(a)(4)
Dollar range of securities owned by the registrant’s Portfolio Managers as of October 31, 2023:
Portfolio
Manager |
Dollar Range of Equity Securities Held in
Registrant1 |
John
P. Bartlett |
$100,001
- $500,000 |
Timothy
O. Porter |
$10,001
- $50,000 |
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) The Code of Ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions is attached hereto as Exhibit 13(a)(1).
(a)(2) The certifications required by Rule 30a-2(a) of the Investment Company Act of 1940, as amended, and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex-99.Cert.
(b) A certification for the registrant’s Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(b) of the Investment Company Act of 1940, as amended, and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as Ex-99.906Cert.
(c) Pursuant to the Securities and Exchange Commission’s Order granting relief from Section 19(b) of the Investment Company Act of 1940 dated August 10, 2009, the form of 19(a) Notices to Beneficial Owners are attached hereto as Exhibit 13(c).
(d) Consent of the Independent Registered Public Accounting Firm is attached hereto as Exhibit 13(d).
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: | January
5, 2024 |
|
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: | January
5, 2024 |
|
By: | /s/
Jill Kerschen |
|
| Jill
Kerschen |
|
| Treasurer
(Principal Financial Officer) |
|
| |
|
Date: | January
5, 2024 |
|
APPENDIX
A
PROXY VOTING POLICIES AND PROCEDURES
The act of managing
assets of clients may include the voting of proxies related to such managed assets. Where the power to vote in person or by proxy has
been delegated, directly or indirectly, to the investment adviser, the investment adviser has the fiduciary responsibility for (a) voting
in a manner that is in the best interests of the client, and (b) properly dealing with potential conflicts of interest arising from proxy
proposals being voted upon.
The policies and
procedures of W. H. Reaves & Company, Inc. ("WHR") ("the Adviser") for voting proxies received for accounts managed
by the Adviser are set forth below and are applicable if:
| • | The underlying advisory agreement entered into with the client expressly provides
that the Adviser shall be responsible to vote proxies received in connection with the client's account; or |
| • | The underlying advisory agreement entered into with the client is silent as to
whether or not the Adviser shall be responsible to vote proxies received in connection with the client's account and the Adviser
has discretionary authority over investment decisions for the client's account; or |
| • | In case of an employee benefit plan, the client (or any plan trustee or other fiduciary)
has not reserved the power to vote proxies in either the underlying advisory agreement entered into with the client or in the client's
plan documents. |
These Proxy
Voting Policies and Procedures are designed to ensure that proxies are voted in an appropriate manner and should complement the Adviser's
investment policies and procedures regarding its general responsibility to monitor the performance and/or corporate events of companies
which are issuers of securities held in managed accounts. Any questions about these policies and procedures should be directed to WHR's
Compliance Department.
PROXY VOTING POLICIES
In the absence
of specific voting guidelines from a client, WHR will vote proxies in a manner that is in the best interest of the client, which may result
in different voting results for proxies for the same issuer. The Adviser shall consider only those factors that relate to the client's
investment or dictated by the client's written instructions, including how its vote will economically impact and affect the value of the
client's investment (keeping in mind that, after conducting an appropriate cost-benefit analysis, not voting at all on a presented proposal
may be in the best interest of the client). WHR believes that voting proxies in accordance with the following policies is in the best
interests of its clients.
| A. | Specific Voting Policies |
| • | The Adviser will generally vote for the election of directors (where no corporate
governance issues are implicated). |
| • | The Adviser will generally vote for the selection of independent auditors. |
| • | The Adviser will generally vote for increases in or reclassification of common stock. |
| • | The Adviser will generally vote for management recommendations adding or amending
indemnification provisions in charter or by-laws. |
| • | The Adviser will generally vote for changes in the board of directors. |
| • | The Adviser will generally vote for outside director compensation. |
| • | The Adviser will generally vote for proposals that maintain or strengthen the shared
interests of shareholders and management |
| • | The Adviser will generally vote for proposals that increase shareholder value |
| • | The Adviser will generally vote for proposals that will maintain or increase shareholder
influence over the issuer's board of directors and management |
| • | The Adviser will generally vote for proposals that maintain or increase the rights
of shareholders |
| 2. | Non-Routine and Conflict of Interest Items: |
| • | The Adviser will generally vote for management proposals for merger or reorganization
if the transaction appears to offer fair value. |
| • | The Adviser will generally vote against shareholder resolutions that consider only
non-financial impacts of mergers |
| • | The Adviser will generally vote against anti-greenmail provisions. |
If the proxy includes
a Routine Item that implicates corporate governance changes, a Non-Routine Item where no specific policy applies or a Conflict of Interest
Item where no specific policy applies, then the Adviser may engage an independent third party to determine how the proxies should be voted.
In voting
on each and every issue, the Adviser and its employees shall vote in a prudent and timely fashion and only after a careful evaluation
of the issue(s) presented on the ballot.
In exercising its
voting discretion, the Adviser and its employees shall avoid any direct or indirect conflict of interest raised by such voting decision.
The Adviser will provide adequate disclosure to the client if any substantive aspect or foreseeable result of the subject matter to be
voted upon raises an actual or potential conflict of interest to the Adviser or:
| • | any affiliate of the Adviser. For purposes of these Proxy Voting Policies and Procedures,
an affiliate means: |
| (i) | any person directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with the Adviser; |
| (ii) | any officer, director, principal, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of the Adviser; or |
| (iii) | any other person for which a person described in clause (ii) acts in any such capacity; |
| • | any issuer of a security for which the Adviser (or any affiliate of the Adviser)
acts as a sponsor, advisor, manager, custodian, distributor, underwriter, broker, or other similar capacity; or |
| • | any person with whom the Adviser (or any affiliate of the Adviser) has an existing,
material contract or business relationship that was not entered into in the ordinary course of the Adviser's (or its affiliate's) business. |
After informing
the client of any potential conflict of interest, the Adviser will take other appropriate action as required under these Proxy Voting
Policies and Procedures, as provided below.
The Adviser shall
keep certain records required by applicable law in connection with its proxy voting activities for clients and shall provide proxy-voting
information to clients upon their written or oral request.
| 3. | PROXY VOTING PROCEDURES |
| A. | The Account Representative or the Portfolio Manager the "Responsible Party")
shall be designated by the Adviser to make discretionary investment decisions for the client's account will be responsible for voting
the proxies related to that account. The Responsible Party should assume that he or she has the power to vote all proxies related to the
client's account if any one of the three circumstances set forth in Section 1 above regarding proxy voting powers is applicable. |
| B. | All proxies and ballots received by WHR will be forwarded to the Responsible Party
and then logged in upon receipt in the "Receipt of Proxy Voting Material" log. |
| C. | Prior to voting, the Responsible Party will verify whether his or her voting power
is subject to any limitations or guidelines issued by the client (or in the case of an employee benefit plan, the plan's trustee or other
fiduciaries). |
| D. | Prior to voting, the Responsible Party will verify whether an actual or potential
conflict of interest with the Adviser or any Interested Person exists in connection with the subject proposal(s) to be voted upon. The
determination regarding the presence or absence of any actual or potential conflict of interest shall be adequately documented by the
Responsible Party (i.e., comparing the apparent parties affected by the proxy proposal being voted upon against the Adviser's internal
list of Interested Persons and, for any matches found, describing the process taken to determine the anticipated magnitude and possible
probability of any conflict of interest being present), which shall be reviewed and signed off on by the Responsible Party's direct supervisor
(and if none, by the board of directors or a committee of the board of directors of the Adviser). |
| E. | If an actual or potential conflict is found to exist, written notification of the
conflict (the "Conflict Notice") shall be given to the client or the client's designee (or in the case of an employee benefit
plan, the plan's trustee or other fiduciary) in sufficient detail and with sufficient time to reasonably inform the client (or in the
case of an employee benefit plan, the plan's trustee or other fiduciary) of the actual or potential conflict involved. |
Specifically, the Conflict Notice should describe:
| • | the proposal to be voted upon; |
| • | the actual or potential conflict of interest involved; |
| • | the Adviser's vote recommendation (with a summary of material factors supporting the
recommended vote); and |
| • | if applicable, the relationship between the Adviser and any Interested Person. |
The Conflict
Notice will either request the client's consent to the Adviser's vote recommendation or may request the client to vote the proxy directly
or through another designee of the client. The Conflict Notice and consent thereto may be sent or received, as the case may be, by mail,
fax, electronic transmission or any other reliable form of communication that may be recalled, retrieved, produced, or printed in accordance
with the recordkeeping policies and procedures of the Adviser. If the client (or in the case of an employee benefit plan, the plan's trustee
or other fiduciary) is unreachable or has not affirmatively responded before the response deadline for the matter being voted upon, the
Adviser may:
| • | engage a non-Interested Party to independently review the Adviser's vote recommendation
if the vote recommendation would fall in favor of the Adviser's interest (or the interest of an Interested Person) to confirm that the
Adviser's vote recommendation is in the best interest of the client under the circumstances; |
| • | cast its vote as recommended if the vote recommendation would fall against the
Adviser's interest (or the interest of an Interested Person) and such vote recommendation is in the best interest of the client under
the circumstances; or |
| • | abstain from voting if such action is determined by the Adviser to be in the best
interest of the client under the circumstances. |
| F. | The Responsible Party will promptly vote proxies received in a manner consistent
with the Proxy Voting Policies and Procedures stated above and guidelines (if any) issued by client (or in the case of an employee benefit
plan, the plan's trustee or other fiduciaries if such guidelines are consistent with ERISA). |
| G. | In accordance with SEC Rule 204-2(c)(2), as amended, the Responsible Party shall
retain in the respective client's file, the following: |
| • | A copy of the proxy statement received (unless retained by a third party for the
benefit of the Adviser or the proxy statement is available from the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
system); |
| • | A record of the vote cast (unless this record is retained by a third party for
the benefit of the Adviser and the third party is able to promptly provide the Adviser with a copy of the voting record upon its
request); |
| • | A record memorializing the basis for the vote cast; |
| • | A copy of any document created by the Adviser or its employees that was material
in making the decision on how to vote the subject proxy; and, |
| • | A copy of any Conflict Notice, conflict consent or any other written communication
(including emails or other electronic communications) to or from the client (or in the case of an employee benefit plan, the plan's trustee
or other fiduciaries) regarding the subject proxy vote cast by, or the vote recommendation of, the Adviser. |
The above copies
and records shall be retained in the client's file for a period not less than five (5) years (or in the case of an employee benefit plan,
no less than six (6) years), which shall be maintained at the appropriate office of the Adviser.
| H. | Periodically, but no less than annually, the Adviser will: |
| 1. | Verify that all annual proxies for the securities held in the client's account
have been received; |
| 2. | Verify that each proxy received has been voted in a manner consistent with the
Proxy Voting Policies and Procedures and the guidelines (if any) issued by the client (or in the case of an employee benefit plan, the
plan's trustee or other fiduciaries); |
| 3. | Review the files to verify that records of the voting of the proxies have been
properly maintained; |
| 4. | Prepare a written report for each client regarding compliance with the Proxy Voting
Policies and Procedures; and |
| 5. | Maintain an internal list of Interested Persons. |
Proxies and Class Action Lawsuits
WHR will be required to take action
and render advice with respect to voting of proxies solicited by or with respect to the issuers of securities in which assets of the Account
may be invested from time to time. However, WHR will not take any action or render any advice with respect to any securities held
in the Account, which are named in or subject to class action lawsuits. WHR may, only at the client's request, offer clients advice regarding
corporate actions
Reaves Utility Income Fund N-CSR
Exhibit
99.13(a)(1)
Reaves
Utility Income Fund
Code
of Ethics for Principal Executive and Financial Officers
The
Reaves Utility Income Fund (the “Fund”) code of ethics (this “Code”) is intended to serve as the code of ethics
described in Section 406 of the Sarbanes-Oxley Act of 2002 and Item 2 of Form N-CSR. This Code shall be the sole code of ethics adopted
by the Fund for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies
thereunder. Insofar as other policies or procedures of the Fund, the Fund’s adviser, principal underwriter, or other service providers
govern or purport to govern the behavior or activities of the Covered Officers, as defined herein, who are subject to this Code, they
are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Fund’s and its investment
adviser’s, and principal underwriter’s codes of ethics pursuant to Rule 17j-1 under the Investment Company Act of 1940 (the
“1940 Act”) are separate requirements applying to the Covered Officers and others, and are not part of this Code.
All
Covered Officers must become familiar and fully comply with this Code. Because this Code cannot and does not cover every applicable law
or provide answers to all questions that might arise, all Covered Officers are expected to use common sense about what is right and wrong,
including a sense of when it is proper to seek guidance from others on the appropriate course of conduct.
The
purpose of this Code is to set standards for the Covered Officers that are reasonably designed to deter wrongdoing and to promote:
| ● | honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships; |
| ● | full,
fair, accurate, timely, and understandable disclosure in reports and documents that the Fund
files with, or submits to, the Securities and Exchange Commission (the “SEC”)
and in any other public communications by the Fund; |
| ● | compliance
with applicable governmental laws, rules and regulations; |
| ● | the
prompt internal reporting of violations of the Code to the appropriate persons as set forth
in the Code; and |
| ● | accountability
for adherence to the Code. |
This
Code applies to the Fund’s Principal Executive Officers and Principal Financial Officers, or any persons performing similar functions
on behalf of the Fund (the “Covered Officers”). Each Covered Person should adhere to a high standard of business ethics and
should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Covered Officers are expected
to act in accordance with the standards set forth in this Code.
| III. | Honest
and Ethical Conduct |
| A. | Honesty,
Diligence and Professional Responsibility |
Covered
Officers are expected to observe both the form and the spirit of the ethical principles contained in this Code. Covered Officers must
perform their duties and responsibilities for the Fund:
| ● | with
honesty, diligence, and a commitment to professional and ethical responsibility; |
| ● | carefully,
thoroughly and in a timely manner; and |
| ● | in
conformity with applicable professional and technical standards. |
Covered
Officers who are certified public accountants are expected to carry out their duties and responsibilities in a manner consistent with
the principles governing the accounting profession, including any guidelines or principles issued by the Public Company Accounting Oversight
Board or the American Institute of Certified Public Accountants from time to time.
| B. | Objectivity/Avoidance
of Undisclosed Conflicts of Interest |
Covered
Officers are expected to maintain objectivity and avoid undisclosed conflicts of interest. In the performance of their duties and responsibilities
for the Fund, Covered Officers must not subordinate their judgment to personal gain and advantage, or be unduly influenced by their own
interests or by the interests of others. Covered Officers must avoid participation in any activity or relationship that constitutes a
conflict of interest unless that conflict has been completely disclosed to affected parties and waived by the Trustees on behalf of the
Fund. Further, Covered Officers should avoid participation in any activity or relationship that could create the appearance of a conflict
of interest.
A
conflict of interest would generally arise if, for instance, a Covered Officer directly or indirectly participates in any investment,
interest, association, activity or relationship that may impair or appear to impair the Covered Officer’s objectivity or interfere
with the interests of, or the Covered Officer's service to, the Fund.
Any
Covered Officer who may be involved in a situation or activity that might be a conflict of interest or give the appearance of a conflict
of interest must report such situation or activity using the reporting procedures set forth in Section VI of this Code.
Each
Covered Officer must not:
| ● | use
his or her personal influence or personal relationships improperly to influence investment
decisions or financial reporting by the Fund whereby the Covered Officer would benefit personally
to the detriment of the Fund; |
| ● | cause
the Fund to take action, or fail to take actions, for the individual personal benefit of
the Covered Officer rather than the benefit of the Fund; or |
| ● | use
material non-public knowledge of portfolio transactions made or contemplated for the Fund
to trade personally or cause others to trade personally in contemplation of the market effect
of such transactions. |
Each
Covered Officer is responsible for his or her compliance with this conflict of interest policy.
| C. | Preparation
of Financial Statements |
Covered
Officers must not knowingly make any misrepresentations regarding the Fund’s financial statements or any facts in the preparation
of the Fund’s financial statements, and must comply with all applicable laws, standards, principles, guidelines, rules and regulations
in the preparation of the Fund’s financial statements. This section is intended to prohibit:
| ● | making,
or permitting or directing another to make, materially false or misleading entries in the
Fund’s financial statements or records; |
| ● | failing
to correct the Fund’s financial statements or records that are materially false or
misleading when he or she has the authority to record an entry; and |
| ● | signing,
or permitting or directing another to sign, a document containing materially false or misleading
financial information. |
Covered
Officers must be scrupulous in their application of generally accepted accounting principles. No Covered Officer may (i) express an opinion
or state affirmatively that the financial statements or other financial data of the Fund are presented in conformity with generally accepted
accounting principles, or (ii) state that he or she is not aware of any material modifications that should be made to such statements
or data in order for them to be in conformity with generally accepted accounting principles, if such statements or data contain any departure
from generally accepted accounting principles then in effect in the United States.
Covered
Officers must follow the laws, standards, principles, guidelines, rules and regulations established by all applicable governmental bodies,
commissions or other regulatory agencies in the preparation of financial statements, records and related information. If a Covered Officer
prepares financial statements, records or related information for purposes of reporting to such bodies, commissions or regulatory agencies,
the Covered Officer must follow the requirements of such organizations in addition to generally accepted accounting principles.
If
a Covered Officer and his or her supervisor have a disagreement or dispute relating to the preparation of financial statements or the
recording of transactions, the Covered Officer should take the following steps to ensure that the situation does not constitute an impermissible
subordination of judgment:
| ● | The
Covered Officer should consider whether (i) the entry or the failure to record a transaction
in the records, or (ii) the financial statement presentation or the nature or omission of
disclosure in the financial statements, as proposed by the supervisor, represents the use
of an acceptable alternative and does not materially misrepresent the facts or result in
an omission of a material fact. If, after appropriate research or consultation, the Covered
Officer concludes that the matter has authoritative support and/or does not result in a material
misrepresentation, the Covered Officer need do nothing further. |
| ● | If
the Covered Officer concludes that the financial statements or records could be materially
misstated as a result of the supervisor’s determination, the Covered Officer should
follow the reporting procedures set forth in Section VI of this Code. |
| D. | Obligations
to the Independent Auditor of the Fund |
In
dealing with the Fund’s independent auditor, Covered Officers must be candid and not knowingly misrepresent facts or knowingly
fail to disclose material facts, and must respond to specific inquiries and requests by the Fund’s independent auditor.
Covered
Officers must not take any action, or direct any person to take any action, to fraudulently influence, coerce, manipulate or mislead
the Fund’s independent auditor in the performance of an audit of the Fund’s financial statements for the purpose of rendering
such financial statements materially misleading.
| IV. | Full,
Fair, Accurate, Timely and Understandable Disclosure |
It
is the Fund’s policy to provide full, fair, accurate, timely, and understandable disclosure in reports and documents that the Fund
files with, or submits to, the SEC and in any other public communications by the Fund. The Fund has designed and implemented Disclosure
Controls and Procedures to carry out this policy.
Covered
Officers are expected to familiarize themselves with the disclosure requirements generally applicable to the Fund, and to use their best
efforts to promote, facilitate, and prepare full, fair, accurate, timely, and understandable disclosure in all reports and documents
that the Fund files with, or submits to, the SEC and in any other public communications by the Fund.
Covered
Officers must review the Fund’s Disclosure Controls and Procedures to ensure they are aware of and carry out their duties and responsibilities
in accordance with the Disclosure Controls and Procedures and the disclosure obligations of the Fund. Covered Officers are responsible
for monitoring the integrity and effectiveness of the Fund’s Disclosure Controls and Procedures.
| V. | Compliance
with Applicable Laws, Rules and Regulations |
Covered
Officers are expected to know, respect and comply with all laws, rules and regulations applicable to the conduct of the Fund’s
business. If a Covered Officer is in doubt about the legality or propriety of an action, business practice or policy, the Covered Officer
should seek advice from the Covered Officer’s supervisor or the Fund’s legal counsel.
In
the performance of their work, Covered Officers must not knowingly be a party to any illegal activity or engage in acts that are discreditable
to the Fund.
Covered
Officers are expected to promote the Fund’s compliance with applicable laws, rules and regulations. To promote such compliance,
Covered Officers may establish and maintain mechanisms to educate employees carrying out the finance and compliance functions of the
Fund about any applicable laws, rules or regulations that affect the operation of the finance and compliance functions and the Fund generally.
| VI. | Reporting
and Accountability |
All
Covered Officers will be held accountable for adherence to this Code. Each Covered Officer must, upon the Fund’s adoption of this
Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and
understands this Code by signing the Acknowledgement Form attached hereto as Appendix A. Thereafter, each Covered Officer, on an annual
basis, must affirm to the Board that he/she has complied with the requirements of this Code.
Covered
Officers may not retaliate against any other Covered Officer of the Fund or their affiliated persons for reports of potential violations
that are made in good faith.
The
Fund will follow these procedures in investigating and enforcing this Code:
| A. | Any
Covered Officer who knows of any violation of this Code or who questions whether a situation,
activity or practice is acceptable must immediately report such practice to the Fund’s
Audit Committee. The Audit Committee shall take appropriate action to investigate any reported
potential violations. If, after such investigation, the Audit Committee believes that no
violation has occurred, the Audit Committee is not required to take any further action. Any
matter that the Audit Committee believes is a violation will be reported to the Chairman
of the Board of Trustees. The Audit Committee shall respond to the Covered Officer within
a reasonable period of time. |
| B. | If
the Covered Officer is not satisfied with the response of the Audit Committee, the Covered
Officer shall report the matter to the Chairman of the Board of Trustees. If the Chairman
is unavailable, the Covered Officer may report the matter to any other member of the Board
of Trustees. The person receiving the report shall consider the matter, refer it to the full
Board of Trustees if he or she deems appropriate, and respond to the Covered Officer within
a reasonable amount of time. If the Board of Trustees concurs that a violation has occurred,
it will consider appropriate action, which may include review of and appropriate modifications
to applicable policies and procedures or notification to appropriate personnel of the investment
adviser or its board. |
| C. | If
the Board of Trustees determines that a Covered Officer violated this Code, failed to report
a known or suspected violation of this Code, or provided intentionally false or malicious
information in connection with an alleged violation of this Code, the Board of Trustees may
take disciplinary action against any such Covered Officer to the extent the Board of Trustees
deems appropriate. No Covered Officer will be disciplined for reporting a concern in good
faith. |
To
the extent possible and as allowed by law, reports will be treated as confidential. The Fund may report violations of the law to the
appropriate authorities.
| VII. | Disclosure
of this Code |
This
Code shall be disclosed to the public by at least one of the following methods in the manner prescribed by the SEC, unless otherwise
required by law:
| ● | Filing
a copy of this Code as an exhibit to the Fund’s annual report on Form N-CSR; |
| ● | Posting
the text of this Code on the Fund’s Internet website and disclosing, in its most recent
report on Form N-CSR, its Internet address and the fact that it has posted this Code on its
Internet website; or |
| ● | Providing
an undertaking in the Fund’s most recent report on Form N-CSR to provide a copy of
this Code to any person without charge upon request, and explaining the manner in which such
a request may be made. |
Any
waiver of this Code, including an implicit waiver, granted to a Covered Officer may be made only by the Board of Trustees or a committee
of the Board to which such responsibility has been delegated, and must be disclosed by the Fund in the manner prescribed by law and as
set forth above in Section VII (Disclosure of this Code).
This
Code may be amended by the affirmative vote of a majority of the Board of Trustees, including a majority of the independent Trustees.
Any amendment of this Code must be disclosed by the Fund in the manner prescribed by law and as set forth above in Section VII (Disclosure
of this Code), unless such amendment is deemed to be technical, administrative, or otherwise non-substantive. Any amendments to this
Code will be provided to the Covered Officers.
All
reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected
accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board of
Trustees of the Fund, the Audit Committee, the legal counsel to the Fund, legal counsel to the independent trustees and such other persons
as a majority of the Board of Trustees, including a majority of the independent Trustees, shall determine to be appropriate.
Appendix
A
REAVES
UTILITY INCOME FUND
PRINCIPAL
EXECUTIVE AND PRINCIPAL FINANCIAL OFFICER ANNUAL CERTIFICATE
Pursuant
to the requirements of the Code of Ethics of the Reaves Utility Income Fund, the undersigned hereby certifies as follows:
| 1. | I
have read the Fund's Code of Ethics for Principal Executive and Principal Financial Officers. |
| 2. | I
understand the Code of Ethics for Principal Executive and Principal Financial Officers and
acknowledge that I am subject to it. |
| 4. | I
affirm that I have complied with the requirements of this Code. |
|
| |
Date |
| Print
Name |
|
| |
|
| |
|
| Signature |
Reaves Utility Income Fund N-CSR
Exhibit
99.CERT
I,
Joseph Rhame III, President (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: |
January 5, 2024 |
By: |
/s/ Joseph Rhame, III |
|
|
|
Joseph Rhame, III |
|
|
|
President (Principal Executive Officer) |
I,
Jill Kerschen, Treasuer (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: |
January 5, 2024 |
By: |
/s/ Jill Kerschen |
|
|
|
Jill Kerschen |
|
|
|
Treasurer (Principal Financial Officer) |
Reaves Utility Income Fund N-CSR
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 October 31, 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: | January
5, 2024 |
|
| |
|
By: | /s/ Jill Kerschen |
|
| Jill
Kerschen |
|
| Treasurer
(Principal Financial Officer) |
|
| |
|
Date: | January
5, 2024 |
|
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 N-CSR
Exhibit 99.(13)(c)
REAVES
UTILITY INCOME FUND SECTION 19(a) NOTICE
Statement
Pursuant to Section 19(a) of the Investment Company Act of 1940
On
May 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 $0.19 per share to shareholders of record at the close of business on May 18, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
Per
Share ($) |
% |
Net
Investment Income |
0.05983 |
31.49% |
Net
Realized Short-Term Capital Gain |
0.00089 |
0.47% |
Net
Realized Long-Term Capital Gain |
0.12928 |
68.04% |
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 |
0.39200 |
29.47% |
Net
Realized Short-Term Capital Gain |
0.03231 |
2.43% |
Net
Realized Long-Term Capital Gain |
0.90569 |
68.10% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
1.33000 |
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 4/30/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
7.89% |
Cumulative
Distribution Rate on NAV^ |
4.61% |
Cumulative
Total Return on NAV* |
8.40% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 4/30/2023** |
5.66% |
^
Based on the Fund’s NAV as of April 30, 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 April 30, 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
June 30, 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 $0.19 per share to shareholders of record at the close of business on June 16, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
Per
Share ($) |
% |
Net
Investment Income |
0.07944 |
41.81% |
Net
Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net
Realized Long-Term Capital Gain |
0.11056 |
58.19% |
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 |
0.47144 |
31.01% |
Net
Realized Short-Term Capital Gain |
0.03231 |
2.13% |
Net
Realized Long-Term Capital Gain |
1.01625 |
66.86% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
1.52000 |
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 5/31/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
8.57% |
Cumulative
Distribution Rate on NAV^ |
5.72% |
Cumulative
Total Return on NAV* |
0.52% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 5/31/2023** |
4.14% |
^
Based on the Fund’s NAV as of May 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 May 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
Denver,
CO/ACCESSWIRE/July 31, 2023/ On July 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 $0.19 per share to shareholders of record at the close
of business on July 21, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
Per
Share ($) |
% |
Net
Investment Income |
0.00000 |
0.00% |
Net
Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net
Realized Long-Term Capital Gain |
0.19000 |
100.00% |
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 |
0.47144 |
27.57% |
Net
Realized Short-Term Capital Gain |
0.03231 |
1.89% |
Net
Realized Long-Term Capital Gain |
1.20625 |
70.54% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
1.71000 |
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 6/30/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
8.32% |
Cumulative
Distribution Rate on NAV^ |
6.24% |
Cumulative
Total Return on NAV* |
4.26% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 6/30/2023** |
4.16% |
^
Based on the Fund’s NAV as of June 30, 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 June 30, 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
Denver,
CO/ACCESSWIRE/August 31, 2023/ On August 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 $0.19 per share to shareholders of record at the
close of business on August 18, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
|
|
Per
Share ($) |
% |
Net
Investment Income |
0.03207 |
16.88% |
Net
Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net
Realized Long-Term Capital Gain |
0.15793 |
83.12% |
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 |
0.50351 |
26.50% |
Net
Realized Short-Term Capital Gain |
0.03231 |
1.70% |
Net
Realized Long-Term Capital Gain |
1.36418 |
71.80% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
1.90000 |
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 7/31/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
8.19% |
Cumulative
Distribution Rate on NAV^ |
6.82% |
Cumulative
Total Return on NAV* |
6.70% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 7/31/2023** |
3.95% |
^
Based on the Fund’s NAV as of July 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 July 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
Denver,
CO/ACCESSWIRE/September 29, 2023/ On September 29, 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 $0.19 per share to shareholders of record at the
close of business on September 19, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
Per
Share ($) |
% |
Net
Investment Income |
0.07047 |
37.09% |
Net
Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net
Realized Long-Term Capital Gain |
0.11953 |
62.91% |
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 |
0.57398 |
27.46% |
Net
Realized Short-Term Capital Gain |
0.03231 |
1.55% |
Net
Realized Long-Term Capital Gain |
1.48371 |
70.99% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
2.09000 |
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 8/31/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
8.71% |
Cumulative
Distribution Rate on NAV^ |
7.98% |
Cumulative
Total Return on NAV* |
1.10% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 8/31/2023** |
2.61% |
^
Based on the Fund’s NAV as of August 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 August 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
Denver,
CO/ACCESSWIRE/October 31, 2023/ On October 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 $0.19 per share to shareholders of record at the
close of business on October 20, 2023.
The
following table sets forth the estimated amount of the sources of distribution for purposes of Section 19 of the Investment Company
Act of 1940, as amended, and the related rules adopted thereunder. In accordance with generally accepted accounting principles
(“GAAP”), the Fund estimates the following percentages, of the total distribution amount per share, attributable to
(i) current and prior fiscal year net investment income, (ii) net realized short-term capital gain, (iii) net realized long-term
capital gain and (iv) return of capital or other capital source as a percentage of the total distribution amount. These percentages
are disclosed for the current distribution as well as the fiscal year-to-date cumulative distribution amount per share for the
Fund.
Current
Distribution from: |
Per
Share ($) |
% |
Net
Investment Income |
0.00777 |
4.09% |
Net
Realized Short-Term Capital Gain |
0.00000 |
0.00% |
Net
Realized Long-Term Capital Gain |
0.18223 |
95.91% |
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 |
0.58175 |
25.52% |
Net
Realized Short-Term Capital Gain |
0.03231 |
1.42% |
Net
Realized Long-Term Capital Gain |
1.66594 |
73.06% |
Return
of Capital or other Capital Source |
0.00000 |
0.00% |
Total
(per common share) |
2.28000 |
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 9/30/2023) |
Annualized
Distribution Rate as a Percentage of NAV^ |
9.34% |
Cumulative
Distribution Rate on NAV^ |
9.34% |
Cumulative
Total Return on NAV* |
-5.03% |
|
|
Average
Annual Total Return on NAV for the 5 Year Period Ended 9/30/2023** |
1.21% |
^
Based on the Fund’s NAV as of September 30, 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 September 30, 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 N-CSR
Exhibit 99.(13)(d)
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in Registration Statement No. 333-261328 on Form N-2 of our report dated December 22,
2023, relating to the financial statements and financial highlights of Reaves Utility Income Fund (the “Fund”) appearing
in this Annual Report on Form N-CSR for the year ended October 31, 2023.
/s/
DELOITTE & TOUCHE LLP
Denver,
Colorado
January
5, 2024
v3.23.4
N-2 - USD ($)
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3 Months Ended |
12 Months Ended |
Oct. 31, 2023 |
Oct. 31, 2023 |
Jul. 31, 2023 |
Apr. 30, 2023 |
Jan. 31, 2023 |
Oct. 31, 2022 |
Jul. 31, 2022 |
Apr. 30, 2022 |
Jan. 31, 2022 |
Oct. 31, 2021 |
Jul. 31, 2021 |
Apr. 30, 2021 |
Jan. 31, 2021 |
Oct. 31, 2023 |
Cover [Abstract] |
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Entity Registrant Name |
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Reaves
Utility Income Fund
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Fee Table [Abstract] |
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Shareholder Transaction Expenses [Table Text Block] |
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Shareholder
Transaction Expenses (as a percentage of offering price)
Sales Load(a) |
—% |
Offering Expenses Borne by Common Shareholders(a) |
—% |
Dividend Reinvestment Plan Fees(b) |
None |
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Sales Load [Percent] |
[1] |
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0.00%
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Dividend Reinvestment and Cash Purchase Fees |
[2] |
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$ 0
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Other Transaction Expenses [Abstract] |
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Other Transaction Expenses [Percent] |
[1] |
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0.00%
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Annual Expenses [Table Text Block] |
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Annual Expenses |
Percentage of Net
Assets
Attributable to Common Shares |
Investment Advisory Fees(c) |
0.72% |
Interest Payments on Borrowed Funds(d) |
1.38% |
Other Expenses(e) |
0.22% |
Acquired Fund Fees & Expenses |
0.01% |
Total Annual Fund Operating Expenses |
2.33% |
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Management Fees [Percent] |
[3] |
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0.72%
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Interest Expenses on Borrowings [Percent] |
[4] |
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1.38%
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Acquired Fund Fees and Expenses [Percent] |
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0.01%
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Other Annual Expenses [Abstract] |
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Other Annual Expenses [Percent] |
[5] |
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0.22%
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Total Annual Expenses [Percent] |
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2.33%
|
Expense Example [Table Text Block] |
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Example
The
purpose of the following table is to help a holder of common shares understand the fees and expenses that such holder would bear
directly or indirectly. The following example illustrates the expenses that you would pay on a $1,000 investment in common shares
of the Fund assuming (1) that the Fund incurs total annual expenses of 2.33% of its net assets in years 1 through 10 (assuming
borrowing equal to 21.44% of the Fund’s total assets) and (2) a 5% annual return.
1 Year |
3 Years |
5
Years |
10
Years |
$24 |
$73 |
$124 |
$266 |
The
example should not be considered a representation of future expenses or rate of return. The example assumes that all dividends
and distributions are reinvested at NAV. The Fund’s actual rate of return may be greater or less than the hypothetical 5%
annual return shown in the example.
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Expense Example, Year 01 |
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$ 24
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Expense Example, Years 1 to 3 |
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73
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Expense Example, Years 1 to 5 |
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124
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Expense Example, Years 1 to 10 |
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$ 266
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Purpose of Fee Table , Note [Text Block] |
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The
following information is intended to assist investors in understanding the fees and expenses (annualized) that an investor in
common shares of the Fund would bear, directly or indirectly. The table is based on the capital structure of the Fund as of October
31, 2023.
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Other Expenses, Note [Text Block] |
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Other
Expenses are estimated based on estimated amounts for the current fiscal year.
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General Description of Registrant [Abstract] |
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Investment Objectives and Practices [Text Block] |
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Investment
Objective
There
have been no material changes in the Fund’s investment objective since the prior disclosure date that have not been approved
by shareholders. 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.
Principal
Investment Strategies.
There
have been no material changes in the Fund’s Principal Investment Strategies and Policies since the prior disclosure date.
The
Fund pursues its investment objective by investing at least 80% of its total assets in the securities of domestic and foreign
companies involved to a significant extent in providing products, services or equipment for (i) the generation or distribution
of electricity, gas or water, (ii) telecommunications activities or (iii) infrastructure operations, such as airports, toll roads
and municipal services (“Utilities” or the “Utility Industry”).
A
company will be deemed to be involved in the Utility Industry to a significant extent if at least 50% of its assets, gross income
or profits are committed to or derived from activities in the areas described above. The remaining 20% of the Fund’s total
assets may be invested in other securities including stocks, debt obligations and money market instruments, as well as certain
derivative instruments (described below) and other investments.
As
used in the Annual Report, as well as the Fund’s Prospectus Supplement and the accompanying Prospectus and Statement of
Additional Information, the terms “debt securities” and “debt obligations” refer to bonds, debentures
and similar long and intermediate term debt investments and do not include short-term fixed income securities such as money market
instruments in which the Fund may invest temporarily pending investment of the proceeds of an offering and during periods of abnormal
market conditions. The Fund may invest in preferred stocks and bonds of below investment grade quality (i.e., “junk bonds”).
Under
normal market conditions, the Fund invests at least 80% of its total assets in dividend-paying common and preferred stocks of
companies in the Utility Industry. In pursuing its objective, the Fund invests primarily in common and preferred stocks that pay
dividends that qualify for federal income taxation at rates applicable to long-term capital gains (“tax-advantaged dividends”).
The
Fund may invest in the securities of both domestic and foreign issuers, including those located in emerging market countries (i.e.,
a country not included in the MSCI World Index, a free float-adjusted market capitalization weighted index that is designed to
measure the equity market performance of developed markets).
As
an alternative to holding foreign-traded securities, the Fund may invest in dollar-denominated securities of foreign companies
that trade on U.S. exchanges or in the U.S. over-the-counter market (including depositary receipts, which evidence ownership in
underlying foreign securities).
To
date, the Fund’s derivatives usage has been limited to equity options, including writing covered calls, the purchase of
calls and the sale of puts. Options may be used as both hedges against the value of existing holdings or as speculative trades
as part of the Fund’s overall investment strategy.
In
addition, the Fund may choose to use interest rate swaps (or options thereon) from time to time for hedging purposes.
Although the Fund does not currently use interest rate swaps (or options thereon), the Fund may do so in the future,
depending on the interest rate outlook of W.H. Reaves & Co., Inc. (dba Reaves Asset Management, the
“Adviser”) and other factors. Such usage would be limited to no more than 20% of the Fund’s total assets.
The Fund may choose to use other derivatives from time to time, as described in the Statement of Additional
Information.
There
is no assurance that the Fund will achieve its investment objective. Further, the Fund’s ability to pursue its investment
objective, the value of the Fund’s investments and the Fund’s NAV may be adversely affected by changes in tax rates
and policies. Because the Fund’s investment objective is to provide a high level of after-tax yield and total return consisting
primarily of dividend and interest income and capital appreciation, the Fund’s ability to invest, and the attractiveness
of investing in, equity securities that pay qualified dividend income in relation to other investment alternatives will be affected
by changes in federal income tax laws and regulations, including changes in the qualified dividend income provisions. Any proposed
or actual changes in such rates, therefore, can significantly and adversely affect the after-tax returns of the Fund’s investments
in equity securities. Any such changes also could significantly and adversely affect the Fund’s NAV, as well as the Fund’s
ability to acquire and dispose of equity securities at desirable returns and price levels and the Fund’s ability to pursue
its investment objective. The Fund cannot assure you as to the portion, if any, of the Fund’s dividends that will be qualified
dividend income
Leverage
The
Fund currently uses leverage through borrowing. More specifically, the Fund has entered into a credit agreement (the “Credit
Agreement”) with State Street Bank and Trust Company (the “Bank”). As of October 31, 2023, the Fund had outstanding
$520,000,000 in principal amount of borrowings from the Credit Agreement representing approximately 21.44% of the Fund’s
total assets (including assets attributable to the Fund’s use of leverage). The Bank has the ability to terminate the Credit
Agreement upon 360-days’ notice. The provisions of the 1940 Act further provide that the Fund may borrow or issue notes
or debt securities in an amount up to 33 1/3% of its total assets or may issue preferred shares in an amount up to 50% of the
Fund’s total assets (including the proceeds from leverage).
The
Fund has no present intention of issuing preferred shares, although it has done so in the past and may choose to do so in the
future.
The
Fund also may borrow money as a temporary measure for extraordinary or emergency purposes.
Leverage
creates risks for common shareholders, including the likelihood of greater volatility of NAV and market price of, and dividends
paid on, the common shares. There is a risk that fluctuations in the dividend rates on any preferred shares issued by the Fund
may adversely affect the return to the common shareholders. If the income from the securities purchased with such funds is not
sufficient to cover the cost of leverage, the return on the Fund will be less than if leverage had not been used, and therefore
the amount available for distribution to common shareholders as dividends and other distributions will be reduced.
Changes
in the value of the Fund’s portfolio (including investments bought with the proceeds of the leverage program) will be borne
entirely by the common shareholders. If there is a net decrease (or increase) in the value of the Fund’s investment portfolio,
the leverage will decrease (or increase) the NAV per share to a greater extent than if the Fund were not leveraged.
The
issuance of a class of preferred shares or incurrence of borrowings having priority over the common shares creates an opportunity
for greater return per common share, but at the same time such leveraging is a speculative technique in that it will increase
the Fund’s exposure to capital risk. Unless the income and appreciation, if any, on assets acquired with leverage proceeds
exceed the associated costs of the leverage program (and other Fund expenses), the use of leverage will diminish the investment
performance of the common shares compared with what it would have been without leverage.
The
fees received by Reaves and certain other service providers are based on the total assets of the Fund, including assets represented
by leverage. During periods in which the Fund is using leverage, the fees paid to Reaves for investment advisory services (and
separately, to Paralel for administrative services will be higher than if the Fund did not use leverage because the fees paid
will be calculated on the basis of the Fund’s total assets, including proceeds from borrowings and the issuance of any preferred
shares. Therefore, Reaves may have a financial incentive to use leverage, which creates a conflict of interest between Reaves
and common shareholders. Reaves will seek to manage this conflict of interest by utilizing leverage only when they determine such
action is in the best interests of the Fund. The Board of Trustees of the Fund (the “Board”) reviews the Fund’s
leverage on a periodic basis, and the Fund’s use of leverage may be increased or decreased subject to the Board’s
oversight and applicable law.
Under
the Investment Company Act of 1940, as amended, and the rules and regulations thereunder (the “1940 Act”), the Fund
is not permitted to issue preferred shares unless immediately after such issuance the total asset value of the Fund’s portfolio
is at least 200% of the liquidation value of the outstanding preferred shares (i.e., such liquidation value may not exceed 50%
of the Fund’s total assets). In addition, the Fund is not permitted to declare any cash dividend or other distribution on
its common shares unless, at the time of such declaration, the NAV of the Fund’s portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of such liquidation value.
To
qualify for federal income taxation as a “regulated investment company,” the Fund must satisfy certain requirements
relating to sources of its income and diversification of its assets, and must distribute in each taxable year at least 90% of
its net investment income (including net interest income and net short-term gain). The Fund also will be required to distribute
annually substantially all of its income and capital gain, if any, to avoid imposition of a nondeductible 4% federal excise tax.
The
Fund’s willingness to issue new securities for investment purposes, and the amount the Fund will issue, depends on many
factors, the most important of which are market conditions and interest rates.
There
is no assurance that a leveraging strategy will be successful during any period in which it is employed.
The
Fund may increase the amount of leverage following the completion of an offering, subject to applicable law.
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Risk Factors [Table Text Block] |
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Risk
Factors
Investing
in any investment company security involves risk, including the risk that you may receive little or no return on your investment
or even that you may lose part or all of your investment. Investors should consider the following risk factors and special considerations
associated with investing in the Fund’s common shares:
Risks
Associated with Offerings of Additional Common Shares. The voting power of current shareholders will be diluted to the
extent that current shareholders do not purchase shares in any future offerings of shares or do not purchase sufficient shares
to maintain their percentage interest. If the Fund is unable to invest the proceeds of such offering as intended, the Fund’s
per common share distribution may decrease and the Fund may not participate in market advances to the same extent as if such proceeds
were fully invested as planned. If the Fund sells common shares at a price below NAV pursuant to the consent of shareholders,
shareholders will experience a dilution of the aggregate NAV per common share because the sale price will be less than the Fund’s
then-current NAV per common share. Similarly, were the expenses of the offering to exceed the amount by which the sale price exceeded
the Fund’s then current NAV per common share, shareholders would experience a dilution of the aggregate NAV per common share.
This dilution will be experienced by all shareholders, irrespective of whether they purchase common shares in any such offering.
Additional
Risks of Rights. There are additional risks associated with an offering of subscription rights to purchase common shares
(“Rights”). Shareholders who do not exercise their Rights may, at the completion of such an offering, own a smaller
proportional interest in the Fund than if they exercised their Rights. As a result of such an offering, a shareholder may experience
dilution in NAV per share if the subscription price per share is below the NAV per share on the expiration date. If the subscription
price per share is below the NAV per share of the Fund’s common shares on the expiration date, a shareholder will experience
an immediate dilution of the aggregate NAV of such shareholder’s
common
shares if the shareholder does not participate in such an offering and the shareholder will experience a reduction in the NAV
per share of such shareholder’s common shares whether or not the shareholder participates in such an offering. Such a reduction
in NAV per share may have the effect of reducing market price of the common shares. The Fund cannot state precisely the extent
of this dilution (if any) if the shareholder does not exercise such shareholder’s Rights because the Fund does not know
what the NAV per share will be when the offer expires or what proportion of the Rights will be exercised. If the subscription
price is substantially less than the then current NAV per common share at the expiration of a rights offering, such dilution could
be substantial. Any such dilution or accretion will depend upon whether (i) such shareholders participate in the rights offering
and (ii) the Fund’s NAV per common share is above or below the subscription price on the expiration date of the rights offering.
In addition to the economic dilution described above, if a Common Shareholder does not exercise all of their rights, the Common
Shareholder will incur voting dilution as a result of this rights offering. This voting dilution will occur because the Common
Shareholder will own a smaller proportionate interest in the Fund after the rights offering than prior to the rights offering.
There is a risk that changes in market conditions may result in the underlying common shares purchasable upon exercise of the
subscription rights being less attractive to investors at the conclusion of the subscription period. This may reduce or eliminate
the value of the subscription rights. If investors exercise only a portion of the rights, the number of common shares issued may
be reduced, and the common shares may trade at less favorable prices than larger offerings for similar securities. Subscription
rights issued by the Fund may be transferable or non-transferable rights. In a non-transferable rights offering, Common Shareholders
who do not wish to exercise their rights will be unable to sell their rights. In a transferrable rights offering, the Fund will
use its best efforts to ensure an adequate trading market for the rights; however, investors may find that there is no market
to sell rights they do not wish to exercise.
Investment
and Market Risk. An investment in common shares is subject to investment risk, including the possible loss of the entire
principal amount invested. An investment in common shares represents an indirect investment in the securities owned by the Fund,
which are generally traded on a securities exchange or in the over-the-counter markets. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably. The Fund anticipates using leverage, which will
magnify the Fund’s investment, market and certain other risks. The common shares at any point in time may be worth less
than the original investment, even after taking into account any reinvestment of dividends and distributions.
Issuer
Risk. The value of common and preferred stocks may decline for a number of reasons which directly relate to the issuer,
such as management performance, financial leverage and reduced demand for the issuer’s goods and services.
Income
Risk. The income that common shareholders receive from the Fund is based primarily on the dividends and interest it earns
from its investments, which can vary widely over the short and long-term. If prevailing market interest rates drop, distribution
rates of the Fund’s holdings and common shareholder’s income from the Fund could drop as well. The Fund’s income
also would likely be affected adversely if prevailing short-term interest rates increase and the Fund is utilizing leverage.
Leverage
Risk. Described in the “Use of Leverage” section above.
Tax
Risk. The Fund’s investment program and the tax treatment of Fund distributions may be affected by Internal Revenue
Service (“IRS”) interpretations of the Internal Revenue Code of 1986, as amended (the “Code”), future
changes in tax laws and regulations. There can be no assurance that any portion of the Fund’s income distributions will
not be fully taxable as ordinary income. The Fund’s ability to pursue its investment objective, the value of the Fund’s
investments and the Fund’s
NAV
may be adversely affected by changes in tax rates and policies. Because the Fund’s investment objective is to provide a
high level of after-tax yield and total return consisting primarily of dividend and interest income and capital appreciation,
the Fund’s ability to invest, and the attractiveness of investing in, equity securities that pay qualified dividend income
in relation to other investment alternatives will be affected by changes in federal income tax laws and regulations, including
changes in the qualified dividend income provisions. Any proposed or actual changes in such rates, therefore, can significantly
and adversely affect the after-tax returns of the Fund’s investments in equity securities. Any such changes also could significantly
and adversely affect the Fund’s NAV, as well as the Fund’s ability to acquire and dispose of equity securities at
desirable returns and price levels and the Fund’s ability to pursue its investment objective. The Fund cannot assure you
as to the portion, if any, of the Fund’s dividends that will be qualified dividend income. Further, in order to avoid corporate
income tax at the level of the Fund, it must qualify each year as a regulated investment company under the Code.
Sector/Industry
Risk. The “Utility Industry” generally includes companies involved in providing products, services or
equipment for (i) the generation or distribution of electricity, gas or water, (ii) telecommunications activities or
(iii) infrastructure operations, such as airports, toll roads and municipal services. The Fund invests a significant portion
of its total assets in securities of utility companies, which may include companies in the electric, gas, water,
telecommunications sectors, as well as other companies engaged in other infrastructure operations. This may make the Fund
more 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 NAV of common shares.
Risks
that are intrinsic to utility companies include difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restrictions on operations and increased cost and delays
attributable to environmental considerations and regulation, difficulty in raising capital in adequate amounts on reasonable terms
in periods of high inflation and unsettled capital markets, technological innovations that may render existing plants, equipment
or products obsolete, the potential impact of natural or man-made disasters, increased costs and reduced availability of certain
types of fuel, occasional reduced availability and high costs of natural gas and other fuels, the effects of energy conservation,
the effects of a national energy policy and lengthy delays and greatly increased costs and other problems associated with the
design, construction, licensing, regulation and operation of nuclear facilities for electric generation, including, among other
considerations, the problems associated with the use of radioactive materials, the disposal of radioactive wastes, shutdown of
facilities or release of radiation resulting from catastrophic events, disallowance of costs by regulators which may reduce profitability,
and changes in market structure that increase competition.
In
many regions, including the United States, the Utility Industry is experiencing increasing competitive pressures, primarily in
wholesale markets, as a result of consumer demand, technological advances, greater availability of natural gas with respect to
electric utility companies and other factors. For example, the Federal Energy Regulatory Commission (the “FERC”) has
implemented regulatory changes to increase access to the nationwide transmission grid by utility and non-utility purchasers and
sellers of electricity. A number of countries, including the United States, are considering or have implemented methods to introduce
and promote retail competition. Changes in regulation may result in consolidation among domestic utilities and the disaggregation
of many vertically integrated utilities into separate generation, transmission and distribution businesses. As a result, additional
significant competitors could become active in certain parts of the Utility Industry.
Due
to the high costs of developing, constructing, operating and distributing assets and facilities many utility companies are highly
leveraged. As such, movements in the level of interest rates may affect the returns from these assets. See “Risk Factors—Sector/Industry
Risk—Interest Rate Risk.”
Concentration
Risk. The Fund’s investments will be concentrated in the Utility industry. The focus of the Fund’s portfolio
on this sector may present more risks than if the Fund’s portfolio were broadly spread over numerous sectors of the economy.
A downturn in this sector (or any sub-sectors within it) would have a larger impact on the Fund than on an investment company
that does not concentrate solely in this specific sector (or in specific sub-sectors). At times, the performance of companies
in the Utility industry (or a specific sub-sector) may lag the performance of other sectors or the broader market as a whole.
Common
Stock Risk. The Fund will have substantial exposure to common stocks. Although common stocks have historically generated
higher average returns than fixed-income securities over the long-term, common stocks also have experienced significantly more
volatility in returns. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common
stock held by the Fund. Also, the price of common stocks are sensitive to general movements in the stock market and a drop in
the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices fluctuate for many
reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of
the relevant stock market, or when political or economic events affecting the issuer occur. Common stock is subordinated to preferred
stock and debt in a company’s capital structure with respect to priority in the right to a share of corporate income, and
therefore will be subject to greater dividend risk than preferred stock or debt instruments. In addition, common stock prices
may be sensitive to rising interest rates, as the costs of capital rise and borrowing costs increase.
Foreign
Securities Risk. Investments in securities of non-U.S. issuers will be subject to risks not usually associated
with owning securities of U.S. issuers. These risks can include fluctuations in foreign currencies, foreign currency exchange
controls, social, political and economic instability, differences in securities regulation and trading, expropriation or nationalization
of assets, and foreign taxation issues. In addition, changes in government administrations or economic or monetary policies in
the United States or abroad could result in appreciation or depreciation of the Fund’s securities. It may also be more difficult
to obtain and enforce a judgment against a non-U.S. issuer. Foreign investments made by the Fund must be made in compliance with
U.S. and foreign currency restrictions and tax laws restricting the amounts and types of foreign investments. The risks of foreign
investing may be magnified for investments in issuers located in emerging market countries.
To
the extent the Fund invests in depositary receipts, the Fund will be subject to many of the same risks as when investing directly
in non-U.S. securities. The holder of an unsponsored depositary receipt may have limited voting rights and may not receive as
much information about the issuer of the underlying securities as would the holder of a sponsored depositary receipt.
Foreign
Currency Risk. Investments in securities that trade in and receive revenues in foreign currencies are subject to the risk
that those currencies will decline in value relative to the U.S. dollar. Currency rates in foreign countries may fluctuate significantly
over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of
securities held by the Fund and denominated in those currencies. Some foreign governments levy withholding taxes against dividend
and interest income. Although in some countries portions of these taxes are recoverable, any amounts not recovered will reduce
the income received by the Fund, and may reduce distributions to common shareholders. These risks are generally heightened for
investments in emerging market countries.
Small
and Mid-Cap Stock Risk. The Fund may invest in companies of any market capitalization. The Fund considers small companies
to be those with a market capitalization up to $2 billion and medium-sized companies to be those with a market capitalization
between $2 billion and $10 billion. Smaller and medium-sized company stocks may be more volatile than, and perform differently
from, larger company stocks. There may be less trading in the stock of a smaller or medium-sized company, which means that buy
and sell transactions in that stock could have a larger impact on the stock’s price than is the case with larger company stocks.
Smaller and medium-sized companies may have fewer business lines; changes in any one line of business, therefore, may have a greater
impact on a smaller or medium-sized company’s stock price than is the case for a larger company. As a result, the purchase or
sale of more than a limited number of shares of a small or medium-sized company may affect its market price. The Fund may need
a considerable amount of time to purchase or sell its positions in these securities. In addition, smaller or medium-sized company
stocks may not be well known to the investing public and may be held primarily by insiders or institutional investors.
Non-Investment
Grade Securities Risk. Investments in securities of below investment grade quality, if any, are predominantly speculative
because of the credit risk of their issuers. While offering a greater potential opportunity for capital appreciation and higher
yields, preferred stocks and bonds of below investment grade quality (also known as “junk bonds”) entail greater potential
price volatility and may be less liquid than higher-rated securities. Issuers of below investment grade quality preferred stocks
and bonds are more likely to default on their payments of dividends/interest and liquidation value/principal owed to the Fund,
and such defaults will reduce the Fund’s NAV and income distributions.
Interest
Rate Risk. Interest rate risk is the risk that preferred stocks paying fixed dividend rates and fixed-rate debt securities
will decline in value because of changes in market interest rates. When interest rates rise the market value of such securities
generally will fall. An investment by the Fund in preferred stocks or fixed-rate debt securities means that the NAV and price
of the common shares may decline if market interest rates rise. In typical interest rate environments, the prices of longer term
debt securities generally fluctuate more than the prices of shorter-term debt securities as interest rates change. These risks
may be greater in the current market environment because certain interest rates are near historically low levels. During periods
of declining interest rates, an issuer of preferred stock or fixed-rate debt securities may exercise its option to redeem securities
prior to maturity, forcing the Fund to reinvest in lower yielding securities. During periods of rising interest rates, the average
life of certain types of securities may be extended because of slower than expected payments. This may lock in a below market
yield, increase the security’s duration, and reduce the value of the security. The value of the Fund’s common stock
investments may also be influenced by changes in interest rates
Credit
Risk. Credit risk is the risk that an issuer of a preferred or debt security will become unable to meet its obligation
to make dividend, interest and principal payments. In general, lower rated preferred or debt securities carry a greater degree
of credit risk. If rating agencies lower their ratings of preferred or debt securities in the Fund’s portfolio, the value
of those obligations could decline. In addition, the underlying revenue source for a preferred or debt security may be insufficient
to pay dividends, interest or principal in a timely manner.
Derivatives
Risk. Although it may use other derivative instruments from time to time as described in the Fund’s Statement of
Additional Information, the Fund’s derivatives usage to date has generally been limited to equity options, including writing
covered calls, the purchase of calls and the sale of puts. A decision as to whether, when and how to use options involves the
exercise or skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because
of
market behavior or unexpected events. The Fund may also, from time to time, choose to use interest rate swaps (or options thereon).
Derivatives transactions of the types described above subject the Fund to increased risk of principal loss due to imperfect correlation
or unexpected price or interest rate movements. The Fund’s use of derivative instruments involves investments risks and
transactions costs to which the Fund would not be subject absent the use of these instruments and, accordingly, may result in
losses greater than if they had not been used. The Fund also will be subject to credit risk with respect to the counterparties
to the over-the-counter derivatives contracts purchased by the Fund. If a counterparty becomes bankrupt or otherwise fails to
perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays
in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited recovery or may obtain no recovery in such circumstances. As a general matter, dividends received on hedged stock
positions are characterized as ordinary income and are not eligible for favorable tax treatment. In addition, use of derivatives
may give rise to short-term capital gains and other income that would not qualify for payments by the Fund of tax-advantaged dividends.
Preferred
Stock Risk. The Fund may have exposure to preferred stocks. In addition to credit risk, investments in preferred stocks
involve certain other risks. Certain preferred stocks contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “noncumulative” preferred stocks) or defer distributions (in the case of “cumulative”
preferred stocks). If the Fund owns a preferred stock that is deferring its distributions, the Fund may be required to report
income for tax purposes while it is not receiving income on this position. Preferred stocks often contain provisions that allow
for redemption in the event of certain tax or legal changes or at the issuers’ call. In the event of redemption, the Fund
may not be able to reinvest the proceeds at comparable rates of return. Preferred stocks typically do not provide any voting rights,
except in cases when dividends are in arrears beyond a certain time period, which varies by issue. Preferred stocks are subordinated
to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation
payments, and therefore will be subject to greater credit risk than those debt instruments. Preferred stocks may be significantly
less liquid than many other securities, such as U.S. government securities, corporate debt or common stock.
Debt
Securities Risk. In addition to credit risk, investments in debt securities carry certain risks including: redemption
risk (debt securities sometimes contain provisions that allow for redemption in the event of tax or security law changes in addition
to call features at the option of the issuer. In the event of a redemption, the Fund may not be able to reinvest the proceeds
at comparable rates of return); limited voting rights (debt securities typically do not provide any voting rights, except in cases
when interest payments have not been made and the issuer is in default; and liquidity (certain debt securities may be substantially
less liquid than many other securities, such as U.S. government securities or common stocks).
Inflation
Risk. Inflation risk is the risk that the purchasing power of assets or income from investment will be worth less in the
future as inflation decreases the value of money. As inflation increases, the real value of the common shares and distributions
thereon can decline.
Illiquid
Securities Risk. The Fund may invest in securities for which there is no readily available trading market or which are
otherwise illiquid. The Fund may not be able readily to dispose of such securities at prices that approximate those at which the
Fund could sell such securities if they were more widely traded and, as a result of such illiquidity, the Fund may have to sell
other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. In addition,
the
limited liquidity could affect the market price of the securities, thereby adversely affecting the Fund’s NAV.
Market
Price of Common Shares. The shares of closed-end management investment companies often trade at a discount from their
NAV, and the Fund’s common shares may likewise trade at a discount from NAV. The trading price of the Fund’s common
shares may be less than the public offering price. The returns earned by common shareholders who sell their common shares below
NAV will be reduced. As of October 31, 2023, the Fund’s common shares are trading at a premium to NAV.
Management
Risk. The Fund is subject to management risk because it has an actively managed portfolio. Reaves and the individual portfolio
managers apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee
that these will produce the desired results.
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. The increasing interconnectivity
between global economies and financial markets increases the likelihood that events or conditions in one region or financial market
may adversely impact issuers in a different country, region or financial market. 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),
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. 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.
Legislation,
Policy and Regulatory Risk. At any time after the date of this report, legislation or additional regulations may be enacted
that could negatively affect the assets of the Fund or the issuers of such assets. Recent changes in the U.S. political landscape
and changing approaches to regulation may have a negative impact on the entities and/or securities in which the Fund invests.
Legislation or regulation may also change the way in which the Fund itself is regulated. New or amended regulations may be imposed
by the Commodity Futures Trading Commission (“CFTC”), the SEC, the Board of Governors of the Federal Reserve System
(the “Federal Reserve”) or other financial regulators, other governmental regulatory authorities or self-regulatory
organizations that supervise the financial markets that could adversely affect the Fund. In particular, these agencies are empowered
to promulgate a variety of new rules pursuant to financial reform legislation in the United States. There can be no assurance
that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the
ability of the Fund to achieve its investment objective. The Fund also may be adversely affected by changes in the enforcement
or interpretation of existing statutes and rules by these governmental agencies.
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Effects of Leverage [Text Block] |
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Effects
of Leverage
The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on total
return on common shares, assuming investment portfolio total returns (comprised of income, net expenses and changes in the value
of investments held in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are
hypothetical figures and are not necessarily indicative of what the Fund’s investment portfolio
returns
will be. In other words, the Fund’s actual returns may be greater or less than those appearing in the table below. The table
further reflects the use of leverage as of October 31, 2023, representing approximately 21.44% of the Fund’s Total Assets
and the Fund’s assumed annual leverage interest and fee rate of 5.99%.
Assumed
Portfolio Return (Net of Expenses) |
-10.00% |
-5.00% |
0.00% |
5.00% |
10.00% |
Corresponding
Common Share Total Return |
-11.61% |
-6.45% |
-1.28% |
3.88% |
9.04% |
Total
return is composed of two elements—the dividends on common shares paid by the Fund (the amount of which is largely determined
by the Fund’s net investment income after paying the cost of leverage) and realized and unrealized gains or losses on the
value of the securities the Fund owns. As the table shows, leverage generally increases the return to common shareholders when
portfolio return is positive or greater than the costs of leverage and decreases return when the portfolio return is negative
or less than the costs of leverage.
During
the time in which the Fund is using leverage, the amount of the fees paid to the Adviser for investment management services is
higher than if the Fund did not use leverage because the fees paid are calculated based on the Fund’s Total Assets. This
may create a conflict of interest between the Adviser, on the one hand, and common shareholders, on the other. Also, because the
leverage costs are borne by the Fund at a specified interest rate, only the Fund’s common shareholders bear the cost of
the Fund’s management fees and other expenses. There can be no assurance that a leveraging strategy will be successful during
any period in which it is employed.
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Effects of Leverage [Table Text Block] |
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Assumed
Portfolio Return (Net of Expenses) |
-10.00% |
-5.00% |
0.00% |
5.00% |
10.00% |
Corresponding
Common Share Total Return |
-11.61% |
-6.45% |
-1.28% |
3.88% |
9.04% |
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Return at Minus Ten [Percent] |
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(11.61%)
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Return at Minus Five [Percent] |
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(6.45%)
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Return at Zero [Percent] |
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(1.28%)
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Return at Plus Five [Percent] |
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3.88%
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Return at Plus Ten [Percent] |
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9.04%
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Effects of Leverage, Purpose [Text Block] |
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The
following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on total
return on common shares, assuming investment portfolio total returns (comprised of income, net expenses and changes in the value
of investments held in the Fund’s portfolio) of -10%, -5%, 0%, 5% and 10%. These assumed investment portfolio returns are
hypothetical figures and are not necessarily indicative of what the Fund’s investment portfolio
returns
will be. In other words, the Fund’s actual returns may be greater or less than those appearing in the table below. The table
further reflects the use of leverage as of October 31, 2023, representing approximately 21.44% of the Fund’s Total Assets
and the Fund’s assumed annual leverage interest and fee rate of 5.99%.
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Share Price [Table Text Block] |
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Market
and Net Asset Value Information
The
common shares are listed on the NYSE American under the symbol “UTG” and began trading on the NYSE American on February
24, 2004. Shares of closed-end investment companies often trade on an exchange at prices lower than NAV. The Fund’s common
shares have traded in the market at both premiums to and discounts from NAV. The following table shows, for each fiscal quarter
since the quarter ended January 31, 2021; (i) high and low NAVs per common share, (ii) the high and low sale prices per common
share, as reported in the consolidated transaction reporting system, and (iii) the percentage by which the common shares traded
at a premium over, or discount from, the high and low NAVs per common share. The Fund’s NAV per common share is determined
on a daily basis.
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Market
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Low |
High |
Market
Low |
Market
High |
Market
Low Market High |
2023 |
October
31 |
$23.24 |
$28.1789 |
$23.38 |
$27.57 |
(1.11)% |
2.21% |
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July 31 |
$26.57 |
$29.07 |
$26.42 |
$28.91 |
0.53% |
0.55% |
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April 30 |
$26.32 |
$30.32 |
$26.41 |
$29.96 |
(3.02)% |
1.20% |
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January 31 |
$27.02 |
$30.71 |
$27.45 |
$30.44 |
(0.02)% |
0.01% |
2022 |
October 31 |
$24.55 |
$34.02 |
$25.10 |
$33.85 |
(5.58)% |
0.51% |
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July 31 |
$28.85 |
$34.50 |
$28.56 |
$34.02 |
1.02% |
2.59% |
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April 30 |
$30.76 |
$35.43 |
$30.71 |
$36.13 |
(0.65)% |
(1.94)% |
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January 31 |
$32.20 |
$35.44 |
$31.95 |
$34.79 |
(1.08)% |
1.90% |
2021 |
October 31 |
$32.34 |
$36.50 |
$31.76 |
$36.07 |
0.84% |
3.40% |
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July 31 |
$33.85 |
$35.61 |
$33.43 |
$34.83 |
(0.21)% |
4.12% |
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April 30 |
$30.50 |
$35.10 |
$29.95 |
$34.64 |
(0.39)% |
1.50% |
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January 31 |
$31.24 |
$34.60 |
$31.29 |
$33.62 |
(0.16)% |
2.91% |
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Capital Stock, Long-Term Debt, and Other Securities [Abstract] |
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Document Period End Date |
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Oct. 31, 2023
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Risks Associated with Offerings of Additional Common Shares [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Risks
Associated with Offerings of Additional Common Shares. The voting power of current shareholders will be diluted to the
extent that current shareholders do not purchase shares in any future offerings of shares or do not purchase sufficient shares
to maintain their percentage interest. If the Fund is unable to invest the proceeds of such offering as intended, the Fund’s
per common share distribution may decrease and the Fund may not participate in market advances to the same extent as if such proceeds
were fully invested as planned. If the Fund sells common shares at a price below NAV pursuant to the consent of shareholders,
shareholders will experience a dilution of the aggregate NAV per common share because the sale price will be less than the Fund’s
then-current NAV per common share. Similarly, were the expenses of the offering to exceed the amount by which the sale price exceeded
the Fund’s then current NAV per common share, shareholders would experience a dilution of the aggregate NAV per common share.
This dilution will be experienced by all shareholders, irrespective of whether they purchase common shares in any such offering.
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Additional Risks of Rights [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Additional
Risks of Rights. There are additional risks associated with an offering of subscription rights to purchase common shares
(“Rights”). Shareholders who do not exercise their Rights may, at the completion of such an offering, own a smaller
proportional interest in the Fund than if they exercised their Rights. As a result of such an offering, a shareholder may experience
dilution in NAV per share if the subscription price per share is below the NAV per share on the expiration date. If the subscription
price per share is below the NAV per share of the Fund’s common shares on the expiration date, a shareholder will experience
an immediate dilution of the aggregate NAV of such shareholder’s
common
shares if the shareholder does not participate in such an offering and the shareholder will experience a reduction in the NAV
per share of such shareholder’s common shares whether or not the shareholder participates in such an offering. Such a reduction
in NAV per share may have the effect of reducing market price of the common shares. The Fund cannot state precisely the extent
of this dilution (if any) if the shareholder does not exercise such shareholder’s Rights because the Fund does not know
what the NAV per share will be when the offer expires or what proportion of the Rights will be exercised. If the subscription
price is substantially less than the then current NAV per common share at the expiration of a rights offering, such dilution could
be substantial. Any such dilution or accretion will depend upon whether (i) such shareholders participate in the rights offering
and (ii) the Fund’s NAV per common share is above or below the subscription price on the expiration date of the rights offering.
In addition to the economic dilution described above, if a Common Shareholder does not exercise all of their rights, the Common
Shareholder will incur voting dilution as a result of this rights offering. This voting dilution will occur because the Common
Shareholder will own a smaller proportionate interest in the Fund after the rights offering than prior to the rights offering.
There is a risk that changes in market conditions may result in the underlying common shares purchasable upon exercise of the
subscription rights being less attractive to investors at the conclusion of the subscription period. This may reduce or eliminate
the value of the subscription rights. If investors exercise only a portion of the rights, the number of common shares issued may
be reduced, and the common shares may trade at less favorable prices than larger offerings for similar securities. Subscription
rights issued by the Fund may be transferable or non-transferable rights. In a non-transferable rights offering, Common Shareholders
who do not wish to exercise their rights will be unable to sell their rights. In a transferrable rights offering, the Fund will
use its best efforts to ensure an adequate trading market for the rights; however, investors may find that there is no market
to sell rights they do not wish to exercise.
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Investment and Market Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Investment
and Market Risk. An investment in common shares is subject to investment risk, including the possible loss of the entire
principal amount invested. An investment in common shares represents an indirect investment in the securities owned by the Fund,
which are generally traded on a securities exchange or in the over-the-counter markets. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably. The Fund anticipates using leverage, which will
magnify the Fund’s investment, market and certain other risks. The common shares at any point in time may be worth less
than the original investment, even after taking into account any reinvestment of dividends and distributions.
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Issuer Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Issuer
Risk. The value of common and preferred stocks may decline for a number of reasons which directly relate to the issuer,
such as management performance, financial leverage and reduced demand for the issuer’s goods and services.
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Income Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Income
Risk. The income that common shareholders receive from the Fund is based primarily on the dividends and interest it earns
from its investments, which can vary widely over the short and long-term. If prevailing market interest rates drop, distribution
rates of the Fund’s holdings and common shareholder’s income from the Fund could drop as well. The Fund’s income
also would likely be affected adversely if prevailing short-term interest rates increase and the Fund is utilizing leverage.
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Leverage Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Leverage
Risk. Described in the “Use of Leverage” section above.
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Tax Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Tax
Risk. The Fund’s investment program and the tax treatment of Fund distributions may be affected by Internal Revenue
Service (“IRS”) interpretations of the Internal Revenue Code of 1986, as amended (the “Code”), future
changes in tax laws and regulations. There can be no assurance that any portion of the Fund’s income distributions will
not be fully taxable as ordinary income. The Fund’s ability to pursue its investment objective, the value of the Fund’s
investments and the Fund’s
NAV
may be adversely affected by changes in tax rates and policies. Because the Fund’s investment objective is to provide a
high level of after-tax yield and total return consisting primarily of dividend and interest income and capital appreciation,
the Fund’s ability to invest, and the attractiveness of investing in, equity securities that pay qualified dividend income
in relation to other investment alternatives will be affected by changes in federal income tax laws and regulations, including
changes in the qualified dividend income provisions. Any proposed or actual changes in such rates, therefore, can significantly
and adversely affect the after-tax returns of the Fund’s investments in equity securities. Any such changes also could significantly
and adversely affect the Fund’s NAV, as well as the Fund’s ability to acquire and dispose of equity securities at
desirable returns and price levels and the Fund’s ability to pursue its investment objective. The Fund cannot assure you
as to the portion, if any, of the Fund’s dividends that will be qualified dividend income. Further, in order to avoid corporate
income tax at the level of the Fund, it must qualify each year as a regulated investment company under the Code.
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Sector/Industry Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Sector/Industry
Risk. The “Utility Industry” generally includes companies involved in providing products, services or
equipment for (i) the generation or distribution of electricity, gas or water, (ii) telecommunications activities or
(iii) infrastructure operations, such as airports, toll roads and municipal services. The Fund invests a significant portion
of its total assets in securities of utility companies, which may include companies in the electric, gas, water,
telecommunications sectors, as well as other companies engaged in other infrastructure operations. This may make the Fund
more 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 NAV of common shares.
Risks
that are intrinsic to utility companies include difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restrictions on operations and increased cost and delays
attributable to environmental considerations and regulation, difficulty in raising capital in adequate amounts on reasonable terms
in periods of high inflation and unsettled capital markets, technological innovations that may render existing plants, equipment
or products obsolete, the potential impact of natural or man-made disasters, increased costs and reduced availability of certain
types of fuel, occasional reduced availability and high costs of natural gas and other fuels, the effects of energy conservation,
the effects of a national energy policy and lengthy delays and greatly increased costs and other problems associated with the
design, construction, licensing, regulation and operation of nuclear facilities for electric generation, including, among other
considerations, the problems associated with the use of radioactive materials, the disposal of radioactive wastes, shutdown of
facilities or release of radiation resulting from catastrophic events, disallowance of costs by regulators which may reduce profitability,
and changes in market structure that increase competition.
In
many regions, including the United States, the Utility Industry is experiencing increasing competitive pressures, primarily in
wholesale markets, as a result of consumer demand, technological advances, greater availability of natural gas with respect to
electric utility companies and other factors. For example, the Federal Energy Regulatory Commission (the “FERC”) has
implemented regulatory changes to increase access to the nationwide transmission grid by utility and non-utility purchasers and
sellers of electricity. A number of countries, including the United States, are considering or have implemented methods to introduce
and promote retail competition. Changes in regulation may result in consolidation among domestic utilities and the disaggregation
of many vertically integrated utilities into separate generation, transmission and distribution businesses. As a result, additional
significant competitors could become active in certain parts of the Utility Industry.
Due
to the high costs of developing, constructing, operating and distributing assets and facilities many utility companies are highly
leveraged. As such, movements in the level of interest rates may affect the returns from these assets. See “Risk Factors—Sector/Industry
Risk—Interest Rate Risk.”
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Concentration Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Concentration
Risk. The Fund’s investments will be concentrated in the Utility industry. The focus of the Fund’s portfolio
on this sector may present more risks than if the Fund’s portfolio were broadly spread over numerous sectors of the economy.
A downturn in this sector (or any sub-sectors within it) would have a larger impact on the Fund than on an investment company
that does not concentrate solely in this specific sector (or in specific sub-sectors). At times, the performance of companies
in the Utility industry (or a specific sub-sector) may lag the performance of other sectors or the broader market as a whole.
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Common Stock Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Common
Stock Risk. The Fund will have substantial exposure to common stocks. Although common stocks have historically generated
higher average returns than fixed-income securities over the long-term, common stocks also have experienced significantly more
volatility in returns. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common
stock held by the Fund. Also, the price of common stocks are sensitive to general movements in the stock market and a drop in
the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices fluctuate for many
reasons, including changes in investors’ perceptions of the financial condition of an issuer or the general condition of
the relevant stock market, or when political or economic events affecting the issuer occur. Common stock is subordinated to preferred
stock and debt in a company’s capital structure with respect to priority in the right to a share of corporate income, and
therefore will be subject to greater dividend risk than preferred stock or debt instruments. In addition, common stock prices
may be sensitive to rising interest rates, as the costs of capital rise and borrowing costs increase.
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Foreign Securities Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Foreign
Securities Risk. Investments in securities of non-U.S. issuers will be subject to risks not usually associated
with owning securities of U.S. issuers. These risks can include fluctuations in foreign currencies, foreign currency exchange
controls, social, political and economic instability, differences in securities regulation and trading, expropriation or nationalization
of assets, and foreign taxation issues. In addition, changes in government administrations or economic or monetary policies in
the United States or abroad could result in appreciation or depreciation of the Fund’s securities. It may also be more difficult
to obtain and enforce a judgment against a non-U.S. issuer. Foreign investments made by the Fund must be made in compliance with
U.S. and foreign currency restrictions and tax laws restricting the amounts and types of foreign investments. The risks of foreign
investing may be magnified for investments in issuers located in emerging market countries.
To
the extent the Fund invests in depositary receipts, the Fund will be subject to many of the same risks as when investing directly
in non-U.S. securities. The holder of an unsponsored depositary receipt may have limited voting rights and may not receive as
much information about the issuer of the underlying securities as would the holder of a sponsored depositary receipt.
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Foreign Currency Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Foreign
Currency Risk. Investments in securities that trade in and receive revenues in foreign currencies are subject to the risk
that those currencies will decline in value relative to the U.S. dollar. Currency rates in foreign countries may fluctuate significantly
over short periods of time. A decline in the value of foreign currencies relative to the U.S. dollar will reduce the value of
securities held by the Fund and denominated in those currencies. Some foreign governments levy withholding taxes against dividend
and interest income. Although in some countries portions of these taxes are recoverable, any amounts not recovered will reduce
the income received by the Fund, and may reduce distributions to common shareholders. These risks are generally heightened for
investments in emerging market countries.
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Small and Mid-Cap Stock Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Small
and Mid-Cap Stock Risk. The Fund may invest in companies of any market capitalization. The Fund considers small companies
to be those with a market capitalization up to $2 billion and medium-sized companies to be those with a market capitalization
between $2 billion and $10 billion. Smaller and medium-sized company stocks may be more volatile than, and perform differently
from, larger company stocks. There may be less trading in the stock of a smaller or medium-sized company, which means that buy
and sell transactions in that stock could have a larger impact on the stock’s price than is the case with larger company stocks.
Smaller and medium-sized companies may have fewer business lines; changes in any one line of business, therefore, may have a greater
impact on a smaller or medium-sized company’s stock price than is the case for a larger company. As a result, the purchase or
sale of more than a limited number of shares of a small or medium-sized company may affect its market price. The Fund may need
a considerable amount of time to purchase or sell its positions in these securities. In addition, smaller or medium-sized company
stocks may not be well known to the investing public and may be held primarily by insiders or institutional investors.
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Non-Investment Grade Securities Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Non-Investment
Grade Securities Risk. Investments in securities of below investment grade quality, if any, are predominantly speculative
because of the credit risk of their issuers. While offering a greater potential opportunity for capital appreciation and higher
yields, preferred stocks and bonds of below investment grade quality (also known as “junk bonds”) entail greater potential
price volatility and may be less liquid than higher-rated securities. Issuers of below investment grade quality preferred stocks
and bonds are more likely to default on their payments of dividends/interest and liquidation value/principal owed to the Fund,
and such defaults will reduce the Fund’s NAV and income distributions.
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Credit Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Credit
Risk. Credit risk is the risk that an issuer of a preferred or debt security will become unable to meet its obligation
to make dividend, interest and principal payments. In general, lower rated preferred or debt securities carry a greater degree
of credit risk. If rating agencies lower their ratings of preferred or debt securities in the Fund’s portfolio, the value
of those obligations could decline. In addition, the underlying revenue source for a preferred or debt security may be insufficient
to pay dividends, interest or principal in a timely manner.
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Derivatives Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Derivatives
Risk. Although it may use other derivative instruments from time to time as described in the Fund’s Statement of
Additional Information, the Fund’s derivatives usage to date has generally been limited to equity options, including writing
covered calls, the purchase of calls and the sale of puts. A decision as to whether, when and how to use options involves the
exercise or skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because
of
market behavior or unexpected events. The Fund may also, from time to time, choose to use interest rate swaps (or options thereon).
Derivatives transactions of the types described above subject the Fund to increased risk of principal loss due to imperfect correlation
or unexpected price or interest rate movements. The Fund’s use of derivative instruments involves investments risks and
transactions costs to which the Fund would not be subject absent the use of these instruments and, accordingly, may result in
losses greater than if they had not been used. The Fund also will be subject to credit risk with respect to the counterparties
to the over-the-counter derivatives contracts purchased by the Fund. If a counterparty becomes bankrupt or otherwise fails to
perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays
in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. The Fund may obtain
only a limited recovery or may obtain no recovery in such circumstances. As a general matter, dividends received on hedged stock
positions are characterized as ordinary income and are not eligible for favorable tax treatment. In addition, use of derivatives
may give rise to short-term capital gains and other income that would not qualify for payments by the Fund of tax-advantaged dividends.
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Preferred Stock Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Preferred
Stock Risk. The Fund may have exposure to preferred stocks. In addition to credit risk, investments in preferred stocks
involve certain other risks. Certain preferred stocks contain provisions that allow an issuer under certain conditions to skip
distributions (in the case of “noncumulative” preferred stocks) or defer distributions (in the case of “cumulative”
preferred stocks). If the Fund owns a preferred stock that is deferring its distributions, the Fund may be required to report
income for tax purposes while it is not receiving income on this position. Preferred stocks often contain provisions that allow
for redemption in the event of certain tax or legal changes or at the issuers’ call. In the event of redemption, the Fund
may not be able to reinvest the proceeds at comparable rates of return. Preferred stocks typically do not provide any voting rights,
except in cases when dividends are in arrears beyond a certain time period, which varies by issue. Preferred stocks are subordinated
to bonds and other debt instruments in a company’s capital structure in terms of priority to corporate income and liquidation
payments, and therefore will be subject to greater credit risk than those debt instruments. Preferred stocks may be significantly
less liquid than many other securities, such as U.S. government securities, corporate debt or common stock.
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Debt Securities Risk [Member] |
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Debt
Securities Risk. In addition to credit risk, investments in debt securities carry certain risks including: redemption
risk (debt securities sometimes contain provisions that allow for redemption in the event of tax or security law changes in addition
to call features at the option of the issuer. In the event of a redemption, the Fund may not be able to reinvest the proceeds
at comparable rates of return); limited voting rights (debt securities typically do not provide any voting rights, except in cases
when interest payments have not been made and the issuer is in default; and liquidity (certain debt securities may be substantially
less liquid than many other securities, such as U.S. government securities or common stocks).
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Inflation Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Inflation
Risk. Inflation risk is the risk that the purchasing power of assets or income from investment will be worth less in the
future as inflation decreases the value of money. As inflation increases, the real value of the common shares and distributions
thereon can decline.
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Illiquid Securities Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Illiquid
Securities Risk. The Fund may invest in securities for which there is no readily available trading market or which are
otherwise illiquid. The Fund may not be able readily to dispose of such securities at prices that approximate those at which the
Fund could sell such securities if they were more widely traded and, as a result of such illiquidity, the Fund may have to sell
other investments or engage in borrowing transactions if necessary to raise cash to meet its obligations. In addition,
the
limited liquidity could affect the market price of the securities, thereby adversely affecting the Fund’s NAV.
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Market Price of Common Shares [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Market
Price of Common Shares. The shares of closed-end management investment companies often trade at a discount from their
NAV, and the Fund’s common shares may likewise trade at a discount from NAV. The trading price of the Fund’s common
shares may be less than the public offering price. The returns earned by common shareholders who sell their common shares below
NAV will be reduced. As of October 31, 2023, the Fund’s common shares are trading at a premium to NAV.
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Management Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Management
Risk. The Fund is subject to management risk because it has an actively managed portfolio. Reaves and the individual portfolio
managers apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee
that these will produce the desired results.
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Market Disruption and Geopolitical Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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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. The increasing interconnectivity
between global economies and financial markets increases the likelihood that events or conditions in one region or financial market
may adversely impact issuers in a different country, region or financial market. 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),
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. 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.
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Legislation, Policy and Regulatory Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Legislation,
Policy and Regulatory Risk. At any time after the date of this report, legislation or additional regulations may be enacted
that could negatively affect the assets of the Fund or the issuers of such assets. Recent changes in the U.S. political landscape
and changing approaches to regulation may have a negative impact on the entities and/or securities in which the Fund invests.
Legislation or regulation may also change the way in which the Fund itself is regulated. New or amended regulations may be imposed
by the Commodity Futures Trading Commission (“CFTC”), the SEC, the Board of Governors of the Federal Reserve System
(the “Federal Reserve”) or other financial regulators, other governmental regulatory authorities or self-regulatory
organizations that supervise the financial markets that could adversely affect the Fund. In particular, these agencies are empowered
to promulgate a variety of new rules pursuant to financial reform legislation in the United States. There can be no assurance
that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the
ability of the Fund to achieve its investment objective. The Fund also may be adversely affected by changes in the enforcement
or interpretation of existing statutes and rules by these governmental agencies.
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Interest Rate Risk [Member] |
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General Description of Registrant [Abstract] |
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Risk [Text Block] |
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Interest
Rate Risk. Interest rate risk is the risk that preferred stocks paying fixed dividend rates and fixed-rate debt securities
will decline in value because of changes in market interest rates. When interest rates rise the market value of such securities
generally will fall. An investment by the Fund in preferred stocks or fixed-rate debt securities means that the NAV and price
of the common shares may decline if market interest rates rise. In typical interest rate environments, the prices of longer term
debt securities generally fluctuate more than the prices of shorter-term debt securities as interest rates change. These risks
may be greater in the current market environment because certain interest rates are near historically low levels. During periods
of declining interest rates, an issuer of preferred stock or fixed-rate debt securities may exercise its option to redeem securities
prior to maturity, forcing the Fund to reinvest in lower yielding securities. During periods of rising interest rates, the average
life of certain types of securities may be extended because of slower than expected payments. This may lock in a below market
yield, increase the security’s duration, and reduce the value of the security. The value of the Fund’s common stock
investments may also be influenced by changes in interest rates
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Common Shares [Member] |
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General Description of Registrant [Abstract] |
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Lowest Price or Bid |
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$ 24.06
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$ 23.24
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$ 26.57
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$ 26.32
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$ 27.02
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$ 24.55
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$ 28.85
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$ 30.76
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$ 32.20
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$ 32.34
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$ 33.85
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$ 30.50
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$ 31.24
|
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Highest Price or Bid |
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$ 24.58
|
28.1789
|
29.07
|
30.32
|
30.71
|
34.02
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34.50
|
35.43
|
35.44
|
36.50
|
35.61
|
35.10
|
34.60
|
|
Lowest Price or Bid, NAV |
|
|
23.38
|
26.42
|
26.41
|
27.45
|
25.10
|
28.56
|
30.71
|
31.95
|
31.76
|
33.43
|
29.95
|
31.29
|
|
Highest Price or Bid, NAV |
|
|
$ 27.57
|
$ 28.91
|
$ 29.96
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$ 30.44
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$ 33.85
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$ 34.02
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$ 36.13
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$ 34.79
|
$ 36.07
|
$ 34.83
|
$ 34.64
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$ 33.62
|
|
Highest Price or Bid, Premium (Discount) to NAV [Percent] |
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0.20%
|
2.21%
|
0.55%
|
1.20%
|
0.01%
|
0.51%
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2.59%
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(1.94%)
|
1.90%
|
3.40%
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4.12%
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1.50%
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2.91%
|
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Lowest Price or Bid, Premium (Discount) to NAV [Percent] |
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(1.92%)
|
(1.11%)
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0.53%
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(3.02%)
|
(0.02%)
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(5.58%)
|
1.02%
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(0.65%)
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(1.08%)
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0.84%
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(0.21%)
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(0.39%)
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(0.16%)
|
|
Share Price |
|
$ 24.56
|
$ 24.56
|
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$ 24.56
|
NAV Per Share |
|
$ 24.53
|
$ 24.53
|
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$ 24.53
|
Latest Premium (Discount) to NAV [Percent] |
|
0.12%
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