LMP Capital and Income Fund Inc. Announces Investment Policy Change
16 October 2014 - 11:00PM
Business Wire
LMP Capital and Income Fund Inc. (NYSE:SCD) today announced a
change to its investment policy guidelines. At a recent meeting,
the Board of Directors of the Fund approved management’s
recommendation to permit the Fund to invest without limit in both
energy and non-energy master limited partnerships (“MLPs”), so long
as no more than 25% of the Fund’s total assets are invested in MLPs
that are treated as qualified publicly traded partnerships
(“QPTPs”). The proposed 25% QPTP limitation is generally not
applicable to MLPs that are not energy- or commodity-focused, such
as, for instance, finance-related partnerships, as these types of
MLPs are generally not treated as QPTPs for tax purposes.
QPTPs are publicly-traded partnerships that earn more than 10%
of their gross income and gains from the exploration, development,
mining or production, processing, refining, transportation, or the
marketing of any mineral or natural resource, industrial source
carbon dioxide, or the transportation or storage of certain fuels
as well as income from certain other categories such as real estate
and commodities.
In recommending this change, management noted its belief that
implementing the change would be beneficial to the Fund and its
shareholders as, among other things, it would likely increase the
Fund’s investable universe and enable the Fund’s investment manager
additional investment flexibility, while continuing to permit the
Fund to qualify as a regulated investment company for tax purposes.
This change in the Fund’s investment policies is effective
immediately.
An investment in the Fund is subject to investment risk,
including the possible loss of the entire amount that you invest.
The value of the Fund’s portfolio securities may move up or down,
sometimes rapidly and unpredictably. At any point in time, your
Common Stock may be worth less than your original investment.
Much of the benefit the Fund may derive from its investment in
equity securities of MLPs is a result of MLPs generally being
treated as partnerships for U.S. federal income tax purposes.
Partnerships do not pay U.S. federal income tax at the partnership
level. Rather, each partner of a partnership, in computing its U.S.
federal income tax liability, will include its allocable share of
the partnership’s income, gains, losses, deductions and expenses. A
change in current tax law, or a change in the business of a given
MLP, could result in an MLP being treated as a corporation for U.S.
federal income tax purposes, which would result in such MLP being
required to pay U.S. federal income tax on its taxable income. The
classification of an MLP as a corporation for U.S. federal income
tax purposes would have the effect of reducing the amount of cash
available for distribution by the MLP and causing any such
distributions received by the Fund to be taxed as dividend income
to the extent of the MLP’s current or accumulated earnings and
profits. Thus, if any of the MLPs owned by the Fund were treated as
corporations for U.S. federal income tax purposes, the after-tax
return to the Fund and its shareholders with respect to the Fund’s
investment in such MLPs would be materially reduced, which could
cause a substantial decline in the value of the Fund’s Common
Stock.
The Fund is a non-diversified, closed end management investment
company. The Fund's investment objective is total return with an
emphasis on income.
The Fund will vary its allocation between equity and fixed
income securities depending on ClearBridge Investments, LLC’s
(“ClearBridge”) view of economic, market or political conditions,
fiscal and monetary policy and security valuation. Depending on
ClearBridge’s view of these factors, which may vary from time to
time, ClearBridge may allocate substantially all of the investments
in the portfolio to equity securities or fixed income
securities.
Legg Mason Partners Fund Advisor, LLC (“LMPFA”) is the Fund's
investment manager. Investment sub-advisory services are provided
by ClearBridge, Western Asset Management Company (“Western Asset”)
and Western Asset Management Company Limited (“Western Asset
Limited”). LMPFA, ClearBridge, Western Asset and Western Asset
Limited are wholly owned subsidiaries of Legg Mason, Inc. (“Legg
Mason”). LMPFA delegates to the subadvisers the day-to-day
portfolio management of the Fund. ClearBridge provides investment
advisory services to the Fund by both determining the allocation of
the Fund’s assets between equity and fixed-income investments and
performing the day-to-day management of the Fund’s investments in
equity securities. Western Asset and Western Asset Limited provide
advisory services to the Fund by performing the day-to-day
management of the Fund’s fixed-income investments.
All data and commentary provided in this press release are for
informational purposes only. Legg Mason, Inc. and its affiliates do
not engage in selling shares of the Fund.
For more information about the Fund, please call 1-888-777-0102
or consult the Fund’s website at www.lmcef.com. Hard copies of the
Fund’s complete audited financial statements are available free of
charge upon request.
Media:LMP Capital and Income Fund Inc.Maria Rosati,
212-805-6036mrosati@leggmason.com
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