Risk Factors to Consider When Investing in Master Limited Partnerships (MLPs)

• Cash distributions are not guaranteed and may fluctuate with the MLP’s operating or business performance.
• MLPs have a General Partner. Unit holders will have limited voting rights and do not own an interest in, vote with, or control the General Partner. The General Partner often cannot be removed without its own consent, and the General Partner has conflicts of interest and limited fiduciary responsibilities, which may permit it to favor its own interests to the detriment of unit holders.
• The MLP may issue additional common units, diluting existing unit holders’ interests.
• Unit holders may be required to pay taxes on income from the MLP even if they do not receive cash distributions.
• The IRS could reclassify the MLP as a taxable entity, which could reduce the cash available for distribution to unit holders.
• If at any time the GP owns 85% or more of the issued and outstanding limited partner interests, the GP will have the right to purchase all of the limited partnership interests not held by the GP at a price that may be undesirable.

Tax Considerations of MLPs

The tax treatment for investors in MLPs is different from that of an investment in stock, including: (a) the investor’s share of the MLP’s income, deductions, and expenses are reported on Schedule K-1, not Form 1099; (b) because of the possibility of unrelated business taxable income, charitable remainder trusts should not invest in this portfolio, and other nontaxable investors (such as ERISA and IRA accounts) should carefully consider whether to invest in this portfolio; (c) investors may have to file income tax returns in states in which the MLP’s do business; and (d) MLP tax information is sent directly from the partnership, which generally has until April 15th to provide this information. You should discuss these and any other tax implications with your tax advisor.