UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Item 1.  Reports to Stockholders.

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SHAREHOLDER LETTER

October 31, 2007

Dear Shareholders,

On behalf of the Board of Trustees, I’m pleased to announce that the Reaves Utility Income Fund has delivered a one-year total return on investment of 23% of net asset value per common share, with dividends reinvested. Return on market price was more than 23.5% per common share, again assuming dividends are reinvested. While that would be considered good performance in any year, it is particularly so in a year that showed the kind of volatility the Fund managers describe in their report that follows.

Consistent with the Fund’s objective to earn and, if possible, increase dividend income, Fund trustees increased the Fund’s dividend for the third consecutive year. Following a 3.4% increase in December 2004, the Fund saw a 5% increase in December 2005, and another increase of 4.8% in December 2006. As a result, the first two dividends of fiscal 2007 were $0.105 per share while the remaining 10 were at the increased rate of $0.11 per share. In addition, the Fund paid a special dividend of $0.055 per share in December 2006, for a total of $1.365 per share paid in dividends during fiscal 2007. Those shareholders invested in the Fund since the first dividend record date in April 2004 have received dividend payments totaling approximately $4.74 per share.

Over the past 12 months, 85% of those dividends have been qualified dividend income, which are taxed at a maximum 15% federal rate, as opposed to a rate as high as 35% for non-qualifying and other types of dividend income. This presents a significant tax advantage to our shareholders.

Total assets in the fund have grown to more than $930 million, up from approximately $834 million one year ago and $400 million at the fund’s inception in February 2004.

The portfolio managers provide detailed fund commentary and analysis on the pages that follow, along with full holdings and financial statements. Feel free to contact us with any questions about the fund by calling 1-800-644-5571 or visiting www.utilityincomefund.com.

Thank you for being a shareholder.

Sincerely,

Ned Burke

President, Reaves Utility Income Fund

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MANAGEMENT DISCUSSION & ANALYSIS

October 31, 2007

In spite of periods of volatility, the fiscal year ending October 31, 2007 was a good one for your Fund. All sectors of the Fund’s underlying portfolio produced double digit returns. At fiscal year end, the Fund’s share price was $26.26, up 17.0% from the previous year, providing a total return of 23.57% with dividends taken into account.

Sub-prime credit concerns affected securities markets beginning in July. The Fund does not hold, nor has it ever held, any investments in mortgage-backed securities. Also, the Fund’s Money Market Account is invested solely in U.S. Treasury obligations.

Nevertheless, in response to investor fears, the common stock price declined to an intraday low of $21.15 on August 16, but rebounded to close at $26.26 at fiscal year end. Its high for the year was $26.85. We emphasize that 97.6% of the Fund’s assets at fiscal year end were invested in dividend paying common and preferred stocks. The lack of liquidity experienced by credit markets did briefly impact the cost of the Fund’s leverage derived from auction market preferred securities. Cost of the Fund’s leverage did increase to over 6% in August, but returned to the pre-crisis level of about 5.1% once the Federal Reserve Board reduced the Federal Funds Rate. September’s 50 basis point reduction in the Fed Funds Rate made it abundantly clear to the markets that the Federal Reserve Board will provide enough liquidity to prevent widespread disruption to the credit and money markets. The Fund’s leverage at fiscal year end was 25.9%, well below the maximum allowed level of 38%.

The Federal Reserve expects the sub-prime mortgage crisis to slow growth in the overall economy and, judging by recent steep declines in both the Dow Jones Industrial Average, which closed at 12,799.04 on November 21, 2007, and the S&P 500, which closed at 1,416.77 on the same date, market participants agree. Downward stock price pressure has not been limited to the financial and consumer discretionary sectors. Stock prices of large US multinationals with significant foreign exposure, such as Cisco Systems, have come under pressure as they reported softness in domestic markets despite opportunities for growth in world markets.

The Fund’s holdings of utility, pipeline and telecommunications companies may well be advantaged in a slow growth environment. The earnings growth of these companies is much more leveraged to capital spending on needed infrastructure rather than discretionary consumer spending or general business spending. We are cautiously optimistic that over the next several years needed infrastructure investment will persist in the areas of electric generation and transmission, oil and gas pipelines, and gas storage and processing. As a result we expect opportunities for earnings and dividend growth from selected electric and gas utilities and pipeline companies operating in markets where there is a confluence of enlightened regulation, capacity constraints, and demand growth. Consensus 2008 earnings estimates for the utilities and telecom sectors, published by Thomson Financial, are 12% and 9% respectively.

Electric utilities with significant unregulated merchant power generation have performed well as a result of demand growth and higher prices for power committed to forward capacity markets. The supply of electricity needed in many local markets across the country must be met from investment in added generation and transmission capacity. Portfolio

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holdings Public Service Enterprise Group and Exelon Corporation have benefited from these trends and contributed significantly to Fund performance. Exelon is the largest operator of nuclear power plants in the country. As a low-cost producer Exelon benefits from higher power prices and the growing recognition that carbon free, nuclear power is likely play an expanded role in future electric generation. Public Service is a major supplier of nuclear and coal fired electric power in the PJM region (Pennsylvania, New Jersey, Maryland), one of the tightest markets in the country.

Spectra Energy Corporation and Oneok Inc. provide exposure to natural gas gathering, storage, processing, and transmission. Both Oneok and Spectra have formed Master Limited Partnerships to efficiently finance ongoing infrastructure investment. Sempra Energy, a diversified gas company based in San Diego, has interests in residential distribution and storage, long-haul transmission, commodities trading, and liquefied natural gas storage and processing. Sempra’s recent joint venture with the Royal Bank of Scotland (RBS) was formed by Sempra’s sale to RBS of a 50% stake in its commodity trading business for US $1 billion. Sempra will continue to run the trading operation and RBS will assume significant capital risk. For Sempra the joint venture creates trading opportunities beyond its own capital base while simultaneously reducing exposure of Sempra’s equity. We think it is a win-win proposition for both companies.

Within the telecom sector, the Fund benefited from strong performance at AT&T Inc. and BCE Inc. AT&T, the largest holding of the Fund, represented just over 10% of the Fund’s assets at October 31. It is benefiting from industry consolidation, stabilized pricing for fixed-line services, and strong growth in wireless services, particularly data services – all of which contribute to substantial free cash flow. It has a shareholder- friendly management committed to returning much of that cash to shareholders in the form of dividend increases and share repurchases. BCE’s strong share performance is the result of a pending acquisition by a private equity group led by the Ontario Teachers Pension Plan. The transaction has been approved by BCE’s shareholders. A successful review by the Canadian Radio and Television Commission is expected to be completed by the end of the first quarter 2008.

We believe the recent trends contributing to the Fund’s performance will remain in place for the immediate future. We expect interest rates to continue their downward drift as the Federal Reserve cuts rates in the face of a slowing economy brought about by the sub-prime lending crisis. A climate of gently declining interest rates historically has been supportive of utility stock valuations. Over the longer term we continue to expect power prices to remain firm and increased demand for natural gas, particularly for power generation. A reliable and rising stream of dividend income from selected utility and telecom equities should be attractive to retiring “baby boomers” in need of current, recurring income.

As always we appreciate the support of our shareholders and remain focused on opportunities to grow the Fund’s net asset value and monthly dividend.

Sincerely,

Ronald J. Sorenson

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REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

October 31, 2007

To the Shareholders and Board of Trustees of Reaves Utility Income Fund:

We have audited the accompanying statement of assets and liabilities of Reaves Utility Income Fund, (the “Fund”), including the statement of investments, as of October 31, 2007, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. The financial highlights of Reaves Utility Income Fund for the period ended October 31, 2004 were audited by other auditors whose report, dated December 17, 2004 expresses an unqualified opinion on that statement. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2007, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Reaves Utility Income Fund as of October 31, 2007, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

December 20, 2007

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STATEMENT of INVESTMENTS

October 31, 2007

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SCHEDULE OF OPTIONS WRITTEN

Ratings:

Moody’s and S&P’s ratings are believed to be the most recent as of October 31,2007

See Notes to Financial Statements

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STATEMENT of ASSETS & LIABILITIES

October 31, 2007

See Notes to Financial Statements

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STATEMENT of OPERATIONS

For the Year Ended October 31, 2007

See Notes to Financial Statements

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STATEMENTS OF CHANGES in NET ASSETS

See Notes to Financial Statements

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FINANCIAL HIGHLIGHTS

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See Notes to Financial Statements

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NOTES to FINANCIAL STATEMENTS

October 31, 2007

1. SIGNIFICANT ACCOUNTING AND OPERATING POLICIES

Reaves Utility Income Fund is a closed-end management investment company (the “Fund”) that was organized under the laws of the state of Delaware by an Agreement and Declaration of Trust dated September 15, 2003. The Fund is a non-diversified series with an investment objective to provide a high level of after-tax income and total return consisting primarily of tax-advantaged dividend income and capital appreciation. The Declaration of Trust provides that the Trustees may authorize separate classes of shares of beneficial interest. The Fund commenced operations on February 24, 2004. The Fund’s common shares are listed on the American Stock Exchange and trade under the ticker symbol “UTG.”

The Fund may have elements of risk, including the risk of loss of equity. There is no assurance that the investment process will consistently lead to successful results. An investment concentrated in sectors and industries may involve greater risk and volatility than a more diversified investment.

The following summarizes the significant accounting policies of the Fund.

Security Valuation: The net asset value per common share of the Fund is determined no less frequently than daily, on each day that the American Stock Exchange (the “Exchange”) is open for trading, as of the close of regular trading on the Exchange (normally 4:00 p.m. New York time). Securities held by the fund for which exchange quotations are readily available are valued at the last sale price, or if no sale price or if traded on the over-the-counter market, at the mean of the bid and asked prices on such day. Over-the-counter securities traded on NASDAQ are valued based upon the NASDAQ Official Closing Price. Debt securities for which the over-the-counter market is the primary market are normally valued on the basis of prices furnished by one or more pricing services at the mean between the latest available bid and asked prices. As authorized by the Trustees, debt securities (other than short-term obligations) may be valued on the basis of valuations furnished by a pricing service which determines valuations based upon market transactions for normal, institutional-size trading units of securities. Short-term obligations maturing within 60 days are valued at amortized cost which approximates market value. Over-the-counter options are valued at the mean between bid and asked prices provided by dealers. Financial futures contracts listed on commodity exchanges and exchange-traded options are valued at closing settlement prices. Securities for which there is no such quotation or valuation and all other assets are valued at fair value in good faith by or at the direction of the Trustees. Various factors may be reviewed in order to make a good faith determination of a security’s fair value. These factors may include, but are not limited to, the type and cost of the security; the fundamental analytical data relating to the investment; an evaluation of the forces which influence the market in which the security is sold, including the liquidity and depth of the market; information as to any transactions or offers with respect to the security; price, yield and the extent of public or private trading in similar securities of the issuer or comparable companies. The valuation assigned to fair-valued securities for purposes of calculating the Fund’s NAV may differ from the security’s most recent closing market price and from the prices used by other funds to calculate their NAVs.

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Foreign Securities: The Fund may invest a portion of its assets in foreign securities. In the event that the Fund executes a foreign security transaction, the Fund will generally enter into a forward foreign currency contract to settle the foreign security transaction. Foreign securities may carry more risk than U.S. securities, such as political, market and currency risks.

The accounting records of the Fund are maintained in U.S. dollars. Prices of securities denominated in foreign currencies are translated into U.S. dollars at the closing rates of exchange at period end. Amounts related to the purchase and sale of foreign securities and investment income are translated at the rates of exchange prevailing on the respective dates of such transactions.

The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and reported with all other foreign currency gains and losses in the Fund’s Statement of Operations.

Options: In order to hedge against adverse market shifts, the Fund may utilize up to 5% of its total assets to purchase put and call options on securities. When a Fund purchases a call or put option, an amount equal to the premium paid is included in the Fund’s Statement of Assets and Liabilities, as an investment, and is subsequently marked to-market to reflect the current market value of the option. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If the Fund exercises a call, the cost of the security acquired is increased by the premium paid for the call. If the Fund exercises a put option, a gain or loss is realized from the sale of the underlying security, and the proceeds from such a sale are decreased by the premium originally paid.

In addition, the Fund may seek to increase its income or may hedge a portion of its portfolio investments through writing (i.e., selling) covered put and call options. When a Fund writes a put or call option, an amount equal to the premium received is included in the Statement of Assets and Liabilities, as a liability. The amount of the liability is sub-sequently marked-to-market to reflect the current market value of the option. If an option expires on its stipulated expiration date or if the Fund enters into a closing purchase transaction, a gain or loss is realized. If a written call option is exercised, a gain or loss is realized for the sale of the underlying security and the proceeds from the sale are increased by the premium originally received. If a written put option is exercised, the cost of the security acquired is decreased by the premium originally received. As a writer of an option, a Fund has no control over whether the underlying securities are subsequently sold (call) or purchased (put) and, as a result, bears the market risk of an unfavorable change in the price of the security underlying the written option. Written and purchased options are non-income producing securities.

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The Fund may utilize up to 5% of its total assets to purchase put and call options on domestic stock indices to hedge against risks of market-wide price movements affecting its assets. In addition, the Fund may write covered put and call options on stock indices. Because no underlying security can be delivered, however, the option represents the holder’s right to obtain from the writer, in cash, a fixed multiple of the amount by which the exercise price exceeds (in the case of a put) or is less than (in the case of a call) the closing value of the underlying index on the exercise date.

Written option activity as of October 31, 2007 was as follows:

COVERED CALL OPTIONS WRITTEN