LMP Capital and Income Fund Inc. Announces Investment Policy Change
August 12 2011 - 7:00AM
Business Wire
LMP Capital and Income Fund Inc. (NYSE: SCD)
today announced a change to its investment policy guidelines. The
Fund also announced that it will apply to the Internal Revenue
Service for permission to change its fiscal year end to November
30th of each year.
At its recent meeting, the Board of Directors
of the Fund approved management’s recommendation to permit the Fund
to invest up to 25% of its total assets in energy master limited
partnerships (“MLPs”). In recommending this change, the Fund cited
the attractive distributions currently offered by MLPs as well as
the potential for growth in distributions. The Fund also cited
their potential to provide capital appreciation over time. This
change is consistent with the recently announced repositioning of
the Fund’s equity assets to include a broader range of
higher-yielding securities, the intent of which is to increase the
level of income available from the Fund’s equity investments. 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 with respect to its
investment in such MLPs would be materially reduced, which could
cause a substantial decline in the value of the Common Stock.
LMP Capital and Income Fund Inc. is a
non-diversified, closed-end management investment company. Legg
Mason Partners Fund Advisor, LLC, a wholly owned subsidiary of Legg
Mason, Inc., serves as the Fund’s investment manager. The Fund is
sub-advised by ClearBridge Advisors and Western Asset Management
Company, affiliates of the investment manager.
Contact the Fund at 1-888-777-0102 for
additional information, or consult the Fund’s web site at
www.leggmason.com/cef.
Data and commentary provided in this press
release are for informational purposes only. Legg Mason and its
affiliates do not engage in selling shares of the Fund.
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