1 The firm, as defined as Reaves Asset Management, has prepared and presented this report in compliance with the AIMR Performance Presentation Standards (AIMR-PPS®), the US and Canadian version of GIPS. AIMR has not been involved with or reviewed W. H. Reaves’ claim of compliance.

2 For illustrative purposes only. The investment process may change over time. The characteristics set forth are intended as a general illustration of some of the criteria the strategy team considers in selecting stocks for client portfolios. Not all stocks in a client’s portfolio will meet such criteria.

3 Reaves performance data is the W. H. Reaves & Co., Inc. ERISA Composite and unless otherwise noted, all data is net of fees. The WHR ERISA Composite reflects the dollar-weighted return of all corporate ERISA pension accounts with assets of at least $1 million under management for all periods presented. 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.

4 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 WHR ERISA Composite.

5 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.

6 Reaves portfolio characteristics, holdings and sector weightings are subject to change at any time and are based on a representative portfolio. Holdings, sector weightings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed.

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.


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 W. H. Reaves (“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 Utilities Index is a capitalization-weighted index containing 32 Electric and Gas Utility stocks (including multi-utilities and independent power producers). Prior to July 1996, this index included telecommunications equities. This equity index does not currently have telecommunications or energy equities that are contained in the WHR ERISA Composite.

The Dow Jones Utility Average (DJUA) is a price-weighted average of the 15 utility stocks traded in the United States. This equity index does not have telecommunications or energy equities that are contained in the WHR ERISA Composite.

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.

NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 3,000 companies. This index is heavily weighted in technology and internet stocks which are not found in the WHR ERISA Composite.

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 WHR ERISA Composite is comprised of equity assets having an indefinite maturity and no fixed interest payments.

Lehman 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.

T-Bill is a negotiable debt obligation issued by the U.S. government and backed by its full faith and credit, having a maturity of one year or less.

Citigroup Treasury 10YR is a treasury index that computes returns for the current 1-year, 2-year, 3-year, 5-year, 10-year and 30-year on-the-run Treasury that has been in existence for the entire month. You cannot directly invest in the index.

Citigroup Treasury 30YR is a treasury index that computes returns for the current 1-year, 2-year, 3-year, 5-year, 10-year and 30-year on-the-run Treasury that has been in existence for the entire month. You cannot directly invest in the index.

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.

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: W. H. Reaves & Co., 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 II 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 II.