New Loomis Sayles Capital Income Fund targets dividend-paying stocks

By Toni Weeks

San Diego, March 30 - Loomis, Sayles & Co. has launched the Loomis Sayles Capital Income Fund, according to a press release by the fund's Boston-based investment adviser.

The fund's class A, class C and class Y share classes will trade under the symbols LSCAX, LSCCX and LSCYX, respectively.

The fund uses an equity income strategy that primarily invests in attractively priced dividend-paying stocks with a modest allocation to other securities, including preferred stocks, high-yield and convertible bonds.

Though dividend-paying stocks will be the base of the portfolio, portfolio managers Warren N. Koontz, Arthur Barry, Daniel J. Fuss and Kathleen C. Gaffney will also tap into top-down macro research and bottom-up fundamental analysis to access income and capital appreciation opportunities across a given company's entire capital structure.

The managers will continuously assess the relative attractiveness of preferred stocks and fixed-income securities issued by a company, government entity, agency or other party to deliver total return in excess of the fund's primary benchmark, the S&P 500 index, along with an income stream.

"We believe the Capital Income Fund can address the needs of investors who are looking for a diversified equity income alternative that can also access traditionally higher-yielding fixed-income and other income-producing opportunities," Koontz said in the release.

Koontz and Barry will use in-depth research to identify companies they believe are attractively priced based on their estimate of intrinsic value, with additional consideration given to dividend-yield potential, while Fuss and Gaffney will use their fixed-income experience to complement the fund's equities by considering financial strength of the issuer, security valuation, conditions in the credit and currency markets and the interest-rate environment.

As previously reported, the fund will invest, under normal market conditions, at least 70% of its assets in equity securities, including common stocks, preferred stocks and convertible securities, which may include, among others, warrants, convertible debt securities and convertible preferred stock. A significant majority of the equity securities is traded on a U.S. exchange and denominated in U.S. dollars.

The fund's non-U.S. equity investments, which will consist generally of American Depositary Receipts but may include direct foreign investments as well, is limited to 10% of the equity portion. The fund may also invest up to 30% of its assets in fixed-income securities, including junk bonds, corporate debt and government and agency fixed-income securities.

Shareholder fees consist of a 5.75% maximum sales charge for class A shares and a 1% maximum deferred sales charge for class C shares.

Management fees of 0.6% will apply. The fund's investment adviser has contractually agreed to limit the total annual fund operating expenses to 1.2% for class A, 1.95% for class C and 0.95% for class Y shares until March 31, 2013.

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