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| Questions & Answers Regarding the Meeting and Proposals |
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| Although we recommend that you read the complete Proxy Statement, we have provided for your convenience a brief overview of the issues to be voted on at the Meeting. |
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| Q. Why is a special meeting of shareholders being held? |
| A. The special meeting of shareholders is being held to approve a new investment advisory and management agreement and revise a fundamental investment restriction concerning the Fund’s ability to utilize certain types of leverage. |
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| Q. Why are shareholders being asked to approve a new investment advisory and management agreement? |
| A. The current investment adviser for the Reaves Utility Income Fund (the “Fund”) is W.H. Reaves & Co., Inc. (the “Adviser”). As a result of the retirement William H. Reaves, the founder of the Adviser, on May 31, 2009, he sold all of his remaining interest in the Adviser to the Adviser, after which the Adviser sold a portion of such interests to certain of the Adviser’s current employees and existing business owners on May 6, 2010 (the “Transaction”). As a result of this Transaction an “assignment” of the advisory agreement occurred and, therefore, pursuant to the Investment Company Act of 1940 (the “1940 Act”), resulted in the automatic termination of the Fund’s investment advisory agreement. Prior to the termination of the Fund’s investment advisory agreement, as allowed under the 1940 Act and the rules thereunder, the Board of Trustees of the Fund (the “Board”) approved an interim investment advisory agreement between the Fund and the Adviser, which went into effect upon the termination of the original investment advisory agreement. The 1940 Act requires that shareholders of the Fund (the “Shareholders”) approve a new investment advisory agreement between the Fund and the Adviser.
The Fund’s Board and management are recommending Shareholders approve the new investment advisory and management agreement between the Fund and the Adviser.
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| Q. How will the Transaction affect the Fund? |
| A. Your investment in the Fund will not change as a result of the Transaction. You will own the same amount of shares in the Fund and the net asset value of your investment will not change as a result of the Transaction. Further, the Transaction is not expected to result in any change to the Fund’s portfolio management team, investment objective or principal investment strategies. |
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| Q. How does the new advisory agreement compare with the former advisory agreement? |
| A. The new advisory agreement and the former advisory agreement are substantially similar. The interim advisory agreement is substantially similar to both, except with respect to certain provisions required to be included pursuant to the 1940 Act. The advisory fee charged to the Fund will not change. |
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| Q. Why are shareholders being asked to approve the revised fundamental investment restriction relating to borrowing? |
| A. The Board reviewed the Fund’s fundamental investment restriction relating to borrowing and determined, using its business judgment, that the current language is more restrictive than the law requires and that this limitation could hinder the Fund’s ability to respond to changing market conditions and the Fund’s potential use of leverage.
The Fund’s Board and management are recommending Shareholders approve the revised fundamental investment restriction relating to borrowing.
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| Q. Will my vote make a difference? |
| A. Yes, your vote is important and will make a difference no matter how many shares you own. We encourage all Shareholders to participate in the governance of their Fund. |
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| Q. How do I vote my proxy? |
| A. You may cast your vote by mail, phone or internet. To vote by mail, please mark your vote on the enclosed proxy card and sign, date and return the card in the postage-paid envelope provided. If you choose to vote via phone or internet, please refer to the instructions found on the proxy card accompanying the Proxy Statement. To vote by phone or internet, you will need the “control number” that appears on the proxy card. |
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| Q. Where do I call for more information? |
| A. Please call Reaves Utility Income Fund at 1-800-644-5571 or visit our website at www.utilityincomefund.com, where you can send us an e-mail message by selecting “Contact Us.” |
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