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Important Notice to Shareholders of Allspring Utilities and High Income Fund (ERH)

On August 1, 2025, a vital notice was shared regarding the distributions sourced from the Allspring Utilities and High Income Fund (ERH), designed to keep shareholders well-informed about their investments. Given the intricacies of financial distributions, it's crucial to interpret these correctly.

Disbursement Overview

The notice outlines that the Fund has been distributing amounts exceeding its income and realized capital gains, indicating that part of this distribution might consist of a return of capital. This means that some of the initially invested funds are being returned to the shareholders rather than being revenue generated from investments. For investors, it’s imperative to differentiate such distributions from income or yield.

Understanding Distribution Sources

According to the notice, the sources for these distributions include net investment income (NII), short-term (ST), and long-term (LT) capital gains. The estimates provided are not meant for tax reporting but rather to give an overview of the fund’s performance. The actual amounts for tax purposes will depend on the overall investment experience throughout the fiscal year, subject to modification based on tax regulations. Investors will receive Form 1099-DIV after the calendar year to inform them on how to report these distributions adequately for federal income tax purposes.

Current and Past Distribution Estimates

For clarity, the data as of July 31, 2025, indicates the current month's distribution per share is $0.08062, reflecting a complete allocation from the fund's net investment income. When looking at the fiscal year to date, the total distribution adds up to $0.80966, encompassing both net investment income and capital gains, with 41.90% sourced from long-term gains. This information is crucial for shareholders aiming to understand the reliability and sustainability of their investment income streams.

Managed Distribution Plan

The Allspring Utilities and High Income Fund operates under a managed distribution plan that guarantees a minimum fixed annual distribution rate of 7% based on the average monthly net asset value per share over the preceding year. Despite this structured approach, it’s vital for stakeholders to acknowledge that the funds distributed may at times exceed the actual net returns generated, indicating that returns could lead to a decrease in the fund's net asset value (NAV).

Investment Risks and Considerations

Investors must remain cognitively aware of the risks associated with the fund's investment strategies, especially since it focuses primarily within the utility sector. Concentrated investments may face heightened price fluctuations, thus increasing potential risks for investors. Additionally, leverage is introduced through various financial mechanisms, augmenting both the volatility of the net asset value and the associated risks. The notice concludes with a reminder to investors that the information presented here is of a general nature and should not be misconstrued as tailored investment advice.

As with any investment decision, it's advised that shareholders consider the various factors influencing the fund's performance and distributions to make well-informed financial choices concerning their portfolio.