LMP Capital and Income Fund (NYSE: SCD) updates to diversified structure

Rhea-AI Filing Summary

LMP Capital and Income Fund Inc. updated its prospectus and Statement of Additional Information to reflect that it is now classified as a diversified closed-end management investment company under the Investment Company Act of 1940. The fund was previously classified as non-diversified.

As a diversified fund, at least 75% of total assets must be invested so that no more than 5% is in any one issuer and the fund may not own more than 10% of an issuer’s voting securities, excluding cash, U.S. government securities and other investment companies. The fund also removed the "Non-Diversification Risk" disclosure and states it cannot resume operating in a non-diversified manner without shareholder approval.

Insights

Closed-end fund and regulatory structure analyst

LMP Capital and Income Fund formally shifts to diversified status under the 1940 Act, tightening issuer concentration limits.

The filing confirms that LMP Capital and Income Fund Inc. has reclassified from a non-diversified to a diversified management investment company under the 1940 Act. Diversified status limits exposure to any single issuer for at least 75% of assets, potentially reducing concentration risk.

The documents now state that no more than 5% of total assets may be invested in any one issuer and the fund may not own more than 10% of an issuer’s voting securities, with specified exclusions. The prior "Non-Diversification Risk" language is removed, while broader market and investment risks are reiterated, emphasizing that diversification does not assure against loss.

The fund also commits not to resume non-diversified operations without shareholder approval, making this a durable structural feature unless investors vote otherwise. Subsequent reports and portfolio holdings disclosures will show how these constraints are reflected in actual issuer concentration within the portfolio.

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Filed pursuant to Rule 424(b)(3)

Registration No. 333-284227

LMP CAPITAL AND INCOME FUND INC.

SUPPLEMENT DATED FEBRUARY 13, 2026 TO THE PROSPECTUS AND

STATEMENT OF ADDITIONAL INFORMATION DATED MARCH 14, 2025

Effective as of the date of this supplement, the following supplements and, to the extent inconsistent with, supersedes such information in the Fund’s Prospectus and Statement of Additional Information (“SAI”):

Prospectus

The first paragraph on the cover page of the Prospectus is removed entirely and replaced as follows:

The Fund. LMP Capital and Income Fund Inc., a Maryland corporation (the “Fund”), is a diversified, closed-end management investment company. The Fund was previously classified as a non-diversified management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). As a result of ongoing operations, the Fund is now classified as a diversified management investment company. This means that with respect to 75% of the Fund’s total assets, no more than 5% of the Fund’s total assets may be invested in any one issuer or own more than 10% of the outstanding voting securities of such issuer (except, in each case, excepting cash and cash items, U.S. government securities, and securities of other investment companies). The Fund may not resume operating in a non-diversified manner without first obtaining shareholder approval in accordance with the 1940 Act.

The second paragraph titled “The Fund” on page 1 of the Prospectus under “Prospectus Summary” is removed entirely and replaced as follows:

The Fund LMP Capital and Income Fund Inc., a Maryland corporation (the “Fund”), is a diversified, closed-end management investment company. The Fund was previously classified as a non-diversified management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). As a result of ongoing operations, the Fund is now classified as a diversified management investment company. This means that with respect to 75% of the Fund’s total assets, no more than 5% of the Fund’s total assets may be invested in any one issuer or own more than 10% of the outstanding voting securities of such issuer (except, in each case, excepting cash and cash items, U.S. government securities, and securities of other investment companies). The Fund may not resume operating in a non-diversified manner without first obtaining shareholder approval in accordance with the 1940 Act.

The paragraph titled “Non-Diversification Risk”. on page 21 of the Prospectus under “Prospectus Summary” is deleted in its entirety.

The section titled “The Fund” on page 29 of the Prospectus is removed entirely and replaced as follows:

THE FUND

The Fund is a diversified, closed-end management investment company registered under the 1940 Act. The Fund was previously classified as a non-diversified management investment company under 1940 Act. As a result of ongoing operations, the Fund is now classified as a diversified management investment company. This means that with respect to 75% of the Fund’s total assets, no more than 5% of the Fund’s total assets may be invested in any one issuer or own more than 10% of the outstanding voting securities of such issuer (except, in each case, excepting cash and cash items, U.S. government securities, and securities of other investment companies). The Fund was incorporated as a Maryland corporation on November 12, 2003. The Fund’s principal executive office is located at One Madison Avenue, 17th Floor, New York, New York 10010, and its telephone number is (888) 777-0102.

The first paragraph under “Risks” on page 41 of the Prospectus is removed entirely and replaced as follows:

RISKS

The Fund is a diversified, closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. In accordance with the requirements of the 1940 Act, the Fund reclassified its diversification status from non-diversified to diversified. Diversification does not assure against market loss. The Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investments, there can be no assurance that the Fund will achieve its investment objectives. The Fund’s performance and the value of its investments will vary in response to changes in interest rates, inflation, the financial condition of a security’s issuer, ratings on a security and other market factors. Your securities at any point in time may be worth less than you invested, even after taking into account the reinvestment of Fund dividends and distributions. Below are the principal risks associated with an investment in the Fund.

The paragraph titled “Non-Diversification Risk”. on page 54 of the Prospectus under the section titled “Risks” is deleted in its entirety.

SAI

The first paragraph on the cover page of the SAI is removed and replaced as follows:

LMP Capital and Income Fund Inc., a Maryland corporation (the “Fund”), is a diversified, closed-end management investment company. The Fund was previously classified as a non-diversified management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). As a result of ongoing operations, the Fund is now classified as a diversified management investment company. This means that with respect to 75% of the Fund’s total assets, no more than 5% of the Fund’s total assets may be invested in any one issuer or own more than 10% of the outstanding voting securities of such issuer (except, in each case, excepting cash and cash items, U.S. government securities, and securities of other investment companies). The Fund may not resume operating in a non-diversified manner without first obtaining shareholder approval in accordance with the 1940 Act.

FAQ

How did LMP Capital and Income Fund (SCD) change its diversification status?

The fund reclassified from a non-diversified to a diversified management investment company under the Investment Company Act of 1940. This formal change is reflected in its prospectus and Statement of Additional Information, replacing prior language that described the fund as non-diversified.

What does it mean that LMP Capital and Income Fund (SCD) is now diversified?

Being diversified means that, for at least 75% of total assets, the fund may not invest more than 5% in any one issuer or hold over 10% of an issuer’s voting securities, excluding cash, U.S. government securities, and other investment companies. This limits single-issuer exposure.

Can LMP Capital and Income Fund (SCD) return to a non-diversified strategy?

The fund states it may not resume operating in a non-diversified manner without first obtaining shareholder approval in accordance with the Investment Company Act of 1940. This adds an investor voting requirement before any future shift back to non-diversified status.

How did the risk disclosures change for LMP Capital and Income Fund (SCD)?

The supplement removes the "Non-Diversification Risk" sections from the prospectus and emphasizes that the fund is diversified. It restates that diversification does not assure against market loss and that the fund’s performance will still vary with interest rates, issuer conditions, and other market factors.

Is LMP Capital and Income Fund (SCD) still a closed-end management investment company?

Yes, the fund remains a diversified, closed-end management investment company registered under the Investment Company Act of 1940. The supplement updates its classification from non-diversified to diversified but does not change its closed-end structure or registration status.

What portfolio limits apply to LMP Capital and Income Fund (SCD) after this update?

For at least 75% of total assets, no more than 5% may be invested in any one issuer and the fund may not hold more than 10% of that issuer’s voting securities. Cash, U.S. government securities, and other investment companies are excluded from these limits.