Separately Managed Accounts Endnotes/Disclosures

1 Reaves Asset Management is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Reaves is a privately held, employee-owned "S" corporation organized under the laws of the State of Delaware. Reaves is a dual registrant (Investment Adviser/Broker-Dealer). 

Reaves' Long Term Value Strategy seeks a high risk-adjusted total return. The strategy tends to be invested in relatively larger companies with strong balance sheets, good cash flow and a history of dividend growth. Core positions are accumulated in financially strong,  high quality, companies and generally have the following characteristics: strong managementabove industry-average growth rates, large/mid-market capitalization and low price/earnings multiples.

Reaves Asset Management claims compliance with the Global Investment Performance Standards (GIPS®). GIPS has not been involved with or reviewed Reaves' claim of compliance. To receive a list of composite descriptions of Reaves Asset Management and/or a presentation that complies with the GIPS standards, please contact our Marketing Department (800-732-8374), or write Reaves Asset Management, Attn: Marketing Department, 10 Exchange Place, 18th Floor, Jersey City, NJ 07302.

2 Reaves maintains an employee Profit Sharing Trust (PST). Most current and some past employees are participants in the Trust. The PST may purchase or sell the same securities as Reaves transacts for its investment advisory clients.

Reaves' performance data is the Reaves Asset Management ERISA Composite and unless otherwise noted, all data is net of fees. The Reaves ERISA Composite reflects the dollar-weighted return of all corporate ERISA pension accounts with assets of at least $1,000,000 under management for all periods presented (the minimum was $900,000 during the period 08/31/10-6/22/12). Returns are time-weighted and include the reinvestment of all dividends and other earnings, net of commissions. The ERISA Composite does not reflect all of the Firm’s assets under management.

Reaves’ investment process, portfolio characteristics, holdings and sector weightings are subject to change at any time and are based on our ERISA composite portfolio. Holdings, sector weightings and portfolio characteristics of individual client portfolios may differ, sometimes significantly from those shown. The information does not constitute, and should not be construed, as investment advice or recommendations with respect to the securities and sectors listed. Cash is cash and cash equivalents.

5 Standard deviation is a measure of the variability of returns – the higher the standard deviation, the greater the range of performance (i.e. volatility). The data shown reflects the deduction of investment management fees and/or transactions costs. Standard deviation is based on quarterly data. The risk/return data shown are based on historical annualized rates of return and standard deviations of the Reaves ERISA Composite.

6 The Up Capture Ratio measures the manager’s overall performance to the benchmark’s overall performance, considering only quarters that are positive in the benchmark. The Down Capture Ratio is the ratio of the manager’s overall performance to the benchmark’s overall performance, considering only quarters that are negative in the benchmark.

Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account.

All data is presented in U.S. dollars.


Index/Term Definitions:

The S&P 500 Index is a capitalization-weighted, composite index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The typical Reaves portfolio includes a significant percentage of assets that are also found in the S&P 500. However, Reaves' portfolios are far less diversified, resulting in higher sector concentrations than found in the broad-based S&P 500 index.

The S&P 500 Energy Index is comprised of those companies, included in the S&P 500, that are classified as members of the Global Industry Classification Standards (GICS) energy sector. 

The S&P Utilities Index is a capitalization-weighted index containing 34 Electric and Gas Utility stocks (including multi-utilities and independent power producers). Prior to July 1996, this index included telecommunications equities. 

The Dow Jones U.S. Select Telecommunications Index measures the performance of the telecommunications sector of the U.S. equity market, including fixed-line communications and wireless communications. 

Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. These stocks are selected from the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index. Reaves portfolios are far less diversified, resulting in higher sector concentrations than found in the broad-based Russell 1000 Value Index.

The debt obligation indexes below are unmanaged and reflect the value of corporate and government bonds whose rates are fixed at issuance. The market value will fluctuate but is designed to equal par at maturity. The Reaves ERISA Composite is comprised of equity assets having an indefinite maturity and no fixed interest payments.

Barclays Capital Aggregate Bond Index is an index comprised of approximately 6,000 publicly traded bonds including US Government, mortgage-backed, corporate, and yankee bonds with an approximate average maturity of 10 years.

Barclays Capital Long U.S. Treasury Index includes all publicly issued U. S. Treasury securities that have a remaining maturity of 10 of more years, are rated investment grade and have $250 million or more of outstanding face value. In addition, the securities must be denominated in U. S. dollars and must be fixed rate and non-convertible.

The Citigroup 3-Month T-Bill Index is a designed to measure the return of 3-month Treasury bills (debt obligations issued by the U.S. government and backed by its full faith and credit).

Dividend Yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. In the absence of any capital gains, the dividend yield is the return on investment.

Alpha is a synonym of "value added". Linearly similar to the way beta is computed, alpha is the incremental return on a manager when the market is stationary. In other words, it is the extra expected return due to non-market factors. This risk-adjusted measurement takes into account both the performance of the market as a whole and the volatility of a manager. A positive alpha indicates that a selected portfolio has produced returns above the expected level at that level of risk, and vice versa for a negative alpha.

Beta measures a manager’s volatility relative to the market portfolio. A manager with a beta higher than 1.0 has historically been more volatile than the benchmark, while a manager with a beta lower than 1.0 has been less volatile.

Price-to-Earnings Ratio (P/E) is a stock’s price divided by its earnings per share.

Earnings-per-share (EPS) is the portion of a company’s profit allocated to each outstanding share of a common stock.

Weighted average market capitalization is a stock market index weighted by the value of all shares outstanding for each stock.

Price-to-book ratio is a ratio used to compare a stock’s market value to its book value.

Sharpe ratio is used to measure risk-adjusted performance. It is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns.

Sortino ratio is a ratio developed to differentiate between good and bad volatility in the Sharpe ratio. This differentiation of upwards and downwards volatility allows the calculation to provide a risk-adjusted measure of a security or fund’s performance without penalizing it for upward price changes.

Information ratio is a ratio of portfolio returns above the returns of a benchmark (usually an index) to the volatility of those returns. The information ratio (IR) measures a portfolio manager's ability to generate excess returns relative to a benchmark, but also attempts to identify the consistency of the investor. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is and consistency is an ideal trait.

An investor cannot invest directly in an index. Past performance is no guarantee of future results. 

All investments involve risk, including loss of principal.

Important Tax Information: Reaves Asset Management and its employees are not in the business of providing tax or legal advice to taxpayers. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Fees: Net performance reflects the deduction of advisory fees which are described in detail in Part 2A of our Form ADV. Gross performance does not reflect the deduction of investment management fees and transaction costs which would reduce the performance shown. For fee schedules, please contact your financial professional for a copy of our Form ADV Part 2A.




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