Cohen & Steers’ UTF Reveals Distribution Sources — Why the 19(a) Notice Matters for Holders

Fund announces a distribution and flags how the cash is being sourced — details missing from materials provided

Cohen & Steers Infrastructure Fund, Inc. (UTF) has issued a Section 19(a) notice tied to an upcoming regular distribution. The firm’s announcement identifies the mix of sources behind the payout — what portion comes from investment income, capital gains and any return of capital — which is the primary purpose of this filing. However, the materials supplied for this assignment did not include the concrete numbers: the distribution amount per share, the payment date, the record and ex-dividend dates, nor a current net asset value per share (NAV) tied to this notice.

Those calendar and amount details matter because they determine who receives the cash, when NAV will reflect the payment, and how investors will be taxed. This piece explains what a Section 19(a) disclosure means, how different source labels change the tax and accounting story, and what holders of UTF should look for while waiting for the full numeric notice or their broker statements.

What a Section 19(a) disclosure tells shareholders

A Section 19(a) notice is the fund’s official way of breaking down a distribution so shareholders know the source of the cash. In plain terms, the fund must say whether the payment is paid from ordinary income (interest, dividends), capital gains (from selling assets at a profit), or return of capital (ROC), which is money sent back to owners that exceeds reported earnings.

Funds disclose this because the tax and accounting treatment differs. Income and short- or long-term capital gains are generally taxable to shareholders in the year they’re received and are reported on Form 1099-DIV. Return of capital is not taxed when distributed; instead it reduces the investor’s cost basis in the shares. That reduction matters when you sell — it raises the taxable gain (or lowers the loss) later. For funds like UTF, seeing ROC in the mix is common, but investors need to know whether those ROC dollars represent a sustainable payout or simply a mechanical return of invested capital.

How this affects UTF’s NAV, yield and tax bills

If UTF pays a regular distribution, the fund’s NAV per share will typically drop by roughly the distribution amount on the ex-dividend date. That’s normal and expected — the fund has less cash after paying shareholders. What matters is whether the distribution was covered by earnings. If most or all of the payout is classified as ordinary income or capital gains, the fund has been generating cash from its holdings to support the payout.

Conversely, a material return of capital component signals the payment exceeded whatever the fund booked as income and gains. That is not necessarily fraudulent or a crisis, but it is a red flag for sustainability. Repeated ROC reduces the fund’s asset base over time and can artificially lift headline yield while masking lower true income generation.

For typical U.S. taxable investors, income and capital gains will be reported on 1099-DIV for the year and taxed according to ordinary or preferential rates. Return of capital won’t show up as taxable income in the year distributed but does lower cost basis. If a large portion of this distribution is ROC, expect future tax consequences when shares are sold — potential larger capital gains because your basis has been reduced.

UTF versus peers: what distribution composition can trigger

Cohen & Steers’ UTF sits in the infrastructure closed-end fund (CEF) space, where funds often trade at discounts or premiums to NAV and pay yields above many plain-vanilla ETFs. A distribution largely backed by realized income and gains is usually well received; the market views it as sustainable and tends to be neutral or mildly positive for the discount. If the filing shows a significant ROC slice, investors and traders may take a dimmer view. ROC can prompt re-rating pressure on the discount as yield-hungry buyers reconsider the durability of payouts.

Recent market drivers for infrastructure funds include interest-rate moves, changes in project valuations, and the performance of regulated versus unregulated asset classes. If UTF’s ROC rises alongside weak coverage ratios, expect comparably larger discount widening versus infrastructure ETFs or higher-quality infrastructure CEF peers.

What shareholders should check next

1) Watch for the full distribution notice from UTF or your broker that includes: distribution per share, payment date, record/ex-dividend dates and the NAV per share used for the calculation. Those concrete entries will let you calculate immediate NAV impact and cash flow timing.

2) On your year-end statements, look for Form 1099-DIV that breaks out ordinary income, capital gains and return of capital for tax filing. That form is the definitive tax document for distributions.

3) Check UTF’s recent coverage ratios and realized gains history. If the fund has relied on realized gains or asset sales to cover payouts, that is different from payout funded by recurring interest and dividend income.

4) If the Section 19(a) notice shows notable ROC, treat the distribution as higher risk for sustainability. In that scenario, monitor the fund’s discount/premium and manager commentary for plans to trim the payout or conserve capital.

In short: the Section 19(a) disclosure is less about whether you received cash and more about what that cash represents. Once you have the missing numbers — the per-share amount and dates — revisit the fund’s coverage and the mix of sources to judge whether the payout is a healthy yield or a temporary distribution propped up by returning capital.

Sources

• prnewswire.com