July 23, 2014
/PRNewswire/ -- The Board of Directors of
Duff & Phelps Select Energy MLP Fund Inc.
(NYSE: DSE), a closed-end fund that began trading on the New York Stock Exchange on
June 26, 2014
, has declared the fund's first distribution of
per share, payable on
August 29, 2014
, to shareholders of record as of
August 18, 2014
(ex-dividend date of
August 14, 2014
This first quarterly distribution represents an annualized cash distribution rate of 6.3 percent, based on the initial public offering price of
per share. The fund currently intends to pay its quarterly distributions out of distributable cash flow, which generally consists of cash from publicly traded master limited partnerships (MLPs). It is currently anticipated that substantially all of this distribution will be treated as a return of capital for tax purposes.
"We believe DSE offers a significant way for investors to participate in the secular growth story around the renaissance of the U.S. energy industry," said
David Grumhaus Jr
, the fund's lead portfolio manager and a senior vice-president at
Duff & Phelps Investment Management Co.
, the investment subadviser of the fund. "We are very pleased with the initial investments we made in the portfolio and we look forward to providing a more detailed investment update on the fund in the weeks to come."
The Duff & Phelps Select Energy MLP Fund, which raised
in its initial public offering, seeks to provide shareholders with a high level of total return resulting from a combination of current tax-deferred distributions and capital appreciation by investing primarily in MLPs in the energy sector. Targeted investments include midstream MLPs across all market caps that specialize in the gathering, processing and transportation of natural gas, oil, refined products, or other energy sources.
The fund intends to invest in MLPs that historically have made cash distributions to limited partners or members that exceed the amount of taxable income allocable to limited partners or members, due to a variety of factors, including significant non-cash deductions such as depreciation and depletion. If the cash distributions exceed the taxable income reported in a particular tax year, the excess cash distributions would be treated as a return of capital for U.S. federal income tax purposes, to the extent of the fund's basis in its MLP units, rather than as income to the fund. Distributions to common stockholders in excess of earnings and profits may be treated as a return of capital to the extent of the common stockholders' cost basis in the fund's common stock. As a result, the fund's common stockholders should expect to receive distributions that are generally tax-deferred, although no assurance can be given in this regard. For tax purposes, a return of capital generally represents a return of a common stockholder's initial investment in the fund rather than a distribution of the fund's earnings. Any distribution that is treated as a return of capital generally will result in a reduction in basis in common stockholder's shares, which may increase the capital gain, or reduce the capital loss, realized upon the sale of such shares.