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Subject: Making Money In The Mutual
Date: Fri, 13 Nov 92 13:07:19 EST
Message-ID: <1.1992Nov13.130720@AmeriCast.com>


11/13/92


TITLE Making Money In The Mutual Shearson Launches Growth & In-
come Fund

Fund Is Looking For Firms With Steady Dividend Growth

Doug Rogers Shearson Lehman Brothers Inc. has introduced a Growth
& Income Fund.  The new open-end fund will invest primarily in
dividend-paying common stocks and securities convertible into
common stocks. It may also invest in fixed-income securities.

The fund was open to investors last Friday.  Growth & Income's
portfolio managers are Frank Caruso, Jay Gerken and George Novel-
lo. Novello, who is co-head of the equity mutual fund group at
Shearson, also manages Shearson's Special Equities Fund. Caruso
and Gerken oversee Shearson's Directions management, a retail in-
vestment advisory service. They also manage Shearson's Directions
Value Fund. Combined, these three manage more than $40 billion.
"With many investors today needing income but also looking for
something to help outpace inflation, we think this will be a very
popular fund," said Robert Leo, Shearson's director of mutual
funds.  The huge amounts of money pouring into growth and income
funds his year certainly wasn't lost on Shearson.  The fund's
prospectus stipulates that it must invest at least 65% of assets
in conservative, high-quality stocks. Up to 35% can be invested
in investment-grade or equivalent fixed-income securities.  The
managers use a series of screens to determine which stocks will
be considered for the fund.  The first screen flags companies
whose market capitalizations are greater than $250 million, pay a
cash dividend that yields more than half -but less than three
times - the market level.  The second screen is designed to test
the stability of a company's dividend. It looks for companies
whose debt is investment grade, or if unrated, the company's
gross cash flow must be twice its dividend. In addition, balance
sheet fundamentals and income statements are analyzed.  The final
screen looks for companies likely to raise dividends. A company's
long-term dividend growth must be greater than inflation and it
must show a consistent pattern of increasing dividends.  Com-
panies that meet the criteria are put on an eligible list. The
managers then apply additional fundamental analysis to select
about 50 of the most attractive stocks for the fund.  Common
stock dividend payments accounted for almost 50% of the total re-
turn of the Standard & Poor's 500-stock index between 1926 and
1991, Gerken noted.

Investors can buy the fund three ways. One, which involves buying
Class A shares, charges a front-end load of 5%. The A sharehold-
ers also pay an annual 0.25% service fee.  The other method, in-
volving B shares, carries a contingent deferred sales charge,
commonly called a back-end load. The back-end load starts at 5%
and declines 1% a year to zero in the sixth year. The back-end
load version also carries a 0.25% service fee, plus a 0.5% 12b-1
distribution fee.  Class B shares automatically will convert to A
shares eight years after the orignial purchase.

There are also Class D shares available for purchase, but they
don't convert to A shares. Therefore, they will be subject to the
added 0.5% distribution fee indefinitely. (It's hard to think of
a reason why someone would want to buy these shares when they can
own the same portfolio at a cheaper price by using the other
classes of shares.) All classes of shares charge an annual 0.65%
in management fees.  Total operating expenses are 1.4% of assets
for A shares, 1.9% for B and D shares.

The minimum investment is $1,000, $250 for retirement accounts.
***

Fidelity Investments has produced a booklet designed to make
choices easier for first-time fund investors.  In a recent survey
of new customers calling Fidelity, more than half described them-
selves as "beginners." This is double the historical average of
Fidelity's customers who identify themselves as beginners.  To
introduce these new investors to mutual funds, Fidelity has pub-
lished a new 23-page educational booklet, The Fidelity Guide to
Getting Started in Mutual Funds. Designed expressly for the per-
son who is new to mutual fund investing, the free booklet con-
tains definitions of terms and easy-to-follow examples.  The
guide is one of seven free educational guides Fidelity makes
available to investors. Available free by calling 800-544-8888 or
by visiting a Fidelity Investor Center, the newest guide covers
the types of mutual funds, how to receive income from mutual
funds, share pricing, fees and charges.

This article is copyright 1992 Investors Business Daily. Redis-
tribution to other sites is not permitted except by arrangement
with American Cybercasting Corporation.  For more information,
send-email to usa@AmeriCast.COM