Wells Fargo Utilities and High Income Fund Announces Change to Managed Distribution Plan
August 12 2020 - 4:27PM
Business Wire
The Wells Fargo Utilities and High Income Fund (NYSE American:
ERH), a closed-end fund, announced today that the fund’s Board of
Trustees has approved a change to the fund’s managed distribution
plan.
Effective with the monthly distribution to be declared in August
2020, the plan will provide for the declaration of monthly
distributions to common shareholders of the fund at an annual
minimum fixed rate of 7% based on the fund’s average monthly net
asset value (NAV) per share over the prior 12 months. Under the
managed distribution plan, monthly distributions may be sourced
from income, paid-in capital, and/or capital gains, if any.
Shareholders may elect to reinvest distributions received pursuant
to the managed distribution plan in the fund under the existing
dividend reinvestment plan, which is described in the fund’s
shareholder reports.
The Wells Fargo Utilities and High Income Fund is a closed-end
equity and high-yield bond fund. The fund’s investment objective is
to seek a high level of current income and moderate capital growth
with an emphasis on providing tax-advantaged dividend income.
Under the managed distribution plan, the fund will distribute
available investment income to its shareholders monthly. If
sufficient investment income is not available on a monthly basis,
the fund will distribute long-term capital gains and/or return
capital to its shareholders in order to maintain its managed
distribution level. The fund expects that distributions under the
managed distribution plan may exceed investment income.
Distributions in excess of net investment income will be treated as
distributions of capital gains to the extent of realized gains
during the fiscal year. Any distributions in excess of both net
investment income and realized gains will be treated as returns of
capital. No conclusions should be drawn about the fund’s investment
performance from the amount of the fund’s distributions or from the
terms of the fund’s managed distribution plan.
The amount distributed per share is subject to change at the
discretion of the fund’s Board of Trustees. The managed
distribution plan will be subject to periodic review by the fund’s
Board of Trustees to determine whether the managed distribution
plan should be continued, modified, or terminated. The fund’s Board
of Trustees may amend the terms of the managed distribution plan or
suspend or terminate the managed distribution plan at any time
without prior notice to the fund’s shareholders. The amendment or
termination of the managed distribution plan could have an adverse
effect on the market price of the fund's shares.
With each distribution that does not consist solely of net
investment income, the fund will issue a notice to shareholders
that will provide detailed information regarding the amount and
composition of the distribution and other related information. The
amounts and sources of distributions reported in the notice are
only estimates and are not being provided 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 its full fiscal year and may be subject to
changes. The fund will send shareholders a Form 1099-DIV for the
calendar year that will tell shareholders how to report these
distributions for federal income tax purposes.
For more information on Wells Fargo’s closed-end funds, please
visit our website.
The fund is a closed-end fund that is no longer engaged in
initial public offerings, and shares are available only through
broker-dealers on the secondary market. Unlike an open-end
mutual fund, a closed-end fund offers a fixed number of shares for
sale. After the initial public offering, shares are bought and sold
through broker-dealers in the secondary marketplace, and the market
price of the shares is determined by supply and demand, not by NAV,
and is often lower than the NAV. A closed-end fund is not required
to buy its shares back from investors upon request.
The fund is leveraged through a revolving credit facility and
also may incur leverage by issuing preferred shares in the future.
The use of leverage results in certain risks, including, among
others, the likelihood of greater volatility of net asset value and
the market price of common shares. High-yield, lower-rated bonds
may contain more risk due to the increased possibility of default.
Foreign investments may contain more risk due to the inherent risks
associated with changing political climates, foreign market
instability, and foreign currency fluctuations. Risks of
international investing are magnified in emerging or developing
markets. Funds that concentrate their investments in a single
industry or sector may face increased risk of price fluctuation due
to adverse developments within that industry or sector. Small- and
mid-cap securities may be subject to special risks associated with
narrower product lines and limited financial resources compared
with their large-cap counterparts. Derivatives involve additional
risks, including interest rate risk, credit risk, the risk of
improper valuation, and the risk of noncorrelation to the relevant
instruments they are designed to hedge or closely track. There are
numerous risks associated with transactions in options on
securities. Illiquid securities may be subject to wide fluctuations
in market value and may be difficult to sell. This closed-end fund
is no longer available as an initial public offering and is only
offered through broker-dealers on the secondary market. A
closed-end fund is not required to buy its shares back from
investors upon request.
Wells Fargo Asset Management (WFAM) is the trade name for
certain investment advisory/management firms owned by Wells Fargo
& Company. These firms include but are not limited to Wells
Capital Management Incorporated and Wells Fargo Funds Management,
LLC. Certain products managed by WFAM entities are distributed by
Wells Fargo Funds Distributor, LLC (a broker-dealer and Member
FINRA).
This material is for general informational and educational
purposes only and is NOT intended to provide investment advice or a
recommendation of any kind—including a recommendation for any
specific investment, strategy, or plan.
Some of the information contained herein may include
forward-looking statements about the expected investment activities
of the funds. These statements provide no assurance as to the
funds’ actual investment activities or results. Readers must make
their own assessment of the information contained herein and
consider such other factors as they may deem relevant to their
individual circumstances.
PAR-0820-00341
INVESTMENT PRODUCTS: NOT FDIC INSURED ● NO
BANK GUARANTEE ● MAY LOSE VALUE
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version on businesswire.com: https://www.businesswire.com/news/home/20200812005700/en/
Media Jeanette Foster, 415-264-1323
jeanette.d.foster@wellsfargo.com
Shareholder inquiries 1-800-730-6001
Financial advisor inquiries 1-888-877-9275
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