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Equity Income Fund (Class Y)  (PEIYX)

A multidimensional approach that defines value on a daily basis

Equity Income Fund received an  Overall Morningstar Rating  of  

A multidimensional approach to value investing

Darren A. Jaroch, CFA, Portfolio Manager


"I've always been patient and disciplined. And I think those traits have served me well as an investor."

Darren A. Jaroch, CFA, has been a member of Putnam's U.S. and international value equity teams since 1999. He has been instrumental in developing strategic risk controls for Putnam's value investment process.

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Highlights

Objective

The fund seeks capital growth and current income.

Strategy and process

  • A large-value focus: The fund focuses on large companies whose stocks are priced below their long-term potential, and where there may be a catalyst for positive change.
  • Dividend growth: The fund places a distinct emphasis on companies that can grow their dividends and are able and willing to return cash to shareholders.
  • A disciplined process: The portfolio managers invest using fundamental research and quantitative tools supported by strong risk controls in portfolio construction.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $23.71
-0.59% | $-0.14
$26.36
09/21/18
$20.84
12/26/18
Historical fund price

Consistency of positive performance over five years

Performance represents 5-year returns in rolling quarter-end periods since inception.

Performance shown does not reflect the effects of any sales charges. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please click on the performance tab.

21.69%

Best 5-year annualized return

(for period ending 06/30/99)


-2.12%

Worst 5-year annualized return

(for period ending 03/31/09)


10.57%

Average 5-year annualized return


Fund facts as of 02/28/19

Total net assets
$12,360.71M
Turnover (fiscal year end)
16%
Dividend frequency (view rate)
Quarterly
Number of holdings
109
Fiscal year-end
November
CUSIP / Fund code
746745405 / 1810
Inception date
10/01/98
Category
Value
Open to new investors
Ticker
PEIYX

Management team

Portfolio Manager
Portfolio Manager, Analyst

Literature


October stock market volatility may signal a shift
Recent stock market volatility reflects a process of pricing in the fact that the global growth outlook has diverged.
Value opportunities gain traction in turmoil
Beneath dire headlines about plunging markets, we are seeing value opportunities assert themselves.

Performance

  • Total return (%) as of 12/31/18

  • Annual performance as of 12/31/18

Annualized Total return (%) as of 12/31/18

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge -8.06% 7.58% 6.38% 12.13%
After sales charge N/A N/A N/A N/A
Russell 1000 Value Index -8.27%6.95%5.95%11.18%

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns before sales charge do not reflect the current maximum sales charges as indicated below. Had the sales charge been reflected, returns would be lower. Returns at public offering price (after sales charge) for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50% for equity funds and Putnam Multi-Asset Absolute Return Fund, 4.00% and 3.25% for income funds and 2.25% and 0.75% for Putnam Floating Rate Income Fund, Short-Term Municipal Income, Short Duration Bond Fund, and Fixed Income Absolute Return Fund, respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter (except for Putnam Floating Rate Income Fund, which is 3% in the first year, declining to 1% in the fourth year, and is eliminated thereafter). Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, M, N, R, and Y shares prior to their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (with the exception of Putnam Tax-Free High Yield Fund and Putnam AMT-Free Municipal Fund, which are based on the historical performance of class B shares). Returns at public offering price (after sales charge) for class N shares reflect the current maximum initial sales charge of 1.50%. Class R5/R6 shares, available to qualified employee-benefit plans only, are sold without an initial sales charge and have no CDSC. Class Y shares are generally only available for corporate and institutional clients and have no initial sales charge. Performance for Class R5/R6 shares before their inception are derived from the historical performance of class Y shares, which have not been adjusted for the lower expenses; had they, returns would have been higher. Class A and M shares of Putnam money market funds have no initial sales charge. For a portion of the periods, some funds had expense limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 02/28/19 3.11% -
YTD as of 03/20/19 12.00% -

Yield

Distribution rate before sales charge
as of 03/20/19
1.59%
Distribution rate after sales charge
as of 03/20/19
1.59%
30-day SEC yield as of 02/28/19 1.73%

Risk-adjusted performance as of 02/28/19

Alpha (3 yrs.) 1.40
Sharpe ratio (3 yrs.) 1.16
Treynor ratio (3 yrs.) 13.20
Information ratio (3 yrs.) 0.33

Volatility as of 02/28/19

Standard deviation (3 yrs.) 10.82%
Beta 0.95
R-squared 0.95

Capture ratio as of 02/28/19

Up-market (3 yrs.) 99.59
Down-market (3 yrs.) 90.77

Lipper rankings as of 02/28/19

Time period Rank/Funds in category Percentile ranking
1 yr. 327/542 61%
3 yrs. 91/467 20%
5 yrs. 133/406 33%
10 yrs. 27/247 11%
Lipper category: Equity Income Funds

Morningstar Ratings as of 02/28/19

Time period Funds in category Morningstar Rating
Overall 1095
3 yrs. 1095
5 yrs. 935
10 yrs. 688
Morningstar category: Large Value

Distributions

Record/Ex dividend date 12/26/18
Payable date 12/28/18
Income $0.094
Extra income $0.109
Short-term cap. gain $0.097
Long-term cap. gain $0.82

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


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Holdings

Top 10 holdings as of 02/28/19

JPMorgan Chase 3.80%
Bank Of America Corp 3.32%
Microsoft Corp 3.16%
Citigroup 2.75%
Walmart 2.33%
Johnson & Johnson 2.07%
Northrop Grumman Corp 1.94%
Apple 1.86%
BD Medical 1.79%
Exxon Mobil Corp 1.79%
Top 10 holdings, percent of portfolio 24.81%

Full portfolio holdings as of 12/31/18

JPMORGAN CHASE & CO 3.96%
MICROSOFT CORP 3.71%
BANK OF AMERICA CORP 3.14%
CITIGROUP INC 2.50%
WALMART INC 2.44%
JOHNSON & JOHNSON 2.18%
APPLE INC 1.89%
NORTHROP GRUMMAN CORP 1.82%
BECTON DICKINSON AND CO 1.81%
CONOCOPHILLIPS 1.77%
CIGNA CORP 1.72%
EXXON MOBIL CORP 1.72%
MERCK & CO. INC. 1.66%
AMGEN INC 1.44%
ASSURED GUARANTY LTD 1.44%
DOWDUPONT INC 1.44%
DANAHER CORP 1.42%
ELI LILLY & CO 1.37%
AMERICAN TOWER CORP 1.34%
AT&T INC 1.31%
KROGER CO 1.30%
UNION PACIFIC CORP 1.30%
COMCAST CORP-CLASS A 1.26%
ASTRAZENECA PLC-SPONS ADR 1.25%
CISCO SYSTEMS INC 1.25%
BP PLC 1.16%
RAYTHEON COMPANY 1.16%
PEPSICO INC 1.14%
VALERO ENERGY CORP 1.10%
EXELON CORP 1.09%
GILEAD SCIENCES INC 1.09%
KIMBERLY-CLARK CORP 1.09%
PFIZER INC 1.09%
WELLS FARGO & CO 1.08%
NRG ENERGY INC 1.07%
QUALCOMM INC 1.06%
AMERICAN ELECTRIC POWER 1.05%
AMERICAN INTERNATIONAL GROUP 1.04%
CHARTER COMMUNICATIONS INC-A 1.00%
KKR & CO INC -A 1.00%
GAMING AND LEISURE PROPERTIE 0.99%
FIDELITY NATIONAL INFO SERV 0.98%
REGIONS FINANCIAL CORP 0.97%
TOTAL SA 0.97%
BALL CORP 0.96%
MARATHON OIL CORP 0.96%
JOHNSON CONTROLS INTERNATION 0.93%
RADIAN GROUP INC 0.92%
GENERAL MOTORS CO 0.90%
HILTON WORLDWIDE HOLDINGS IN 0.88%
O'REILLY AUTOMOTIVE INC 0.88%
MOLSON COORS BREWING CO -B 0.86%
INTEL CORP 0.85%
GOLDMAN SACHS GROUP INC 0.82%
STATE STREET CORP 0.81%
AIR PRODUCTS & CHEMICALS INC 0.80%
HOME DEPOT INC 0.79%
SOUTHWEST AIRLINES CO 0.79%
ALCOA CORP 0.77%
EDISON INTERNATIONAL 0.77%
HARTFORD FINANCIAL SVCS GRP 0.76%
DXC TECHNOLOGY CO 0.74%
WALGREENS BOOTS ALLIANCE INC 0.73%
BOSTON PROPERTIES INC 0.71%
ANADARKO PETROLEUM CORP 0.69%
HONEYWELL INTERNATIONAL INC 0.67%
APTIV PLC 0.66%
ENTERPRISE PRODUCTS PARTNERS 0.66%
CAPITAL ONE FINANCIAL CORP 0.65%
VERIZON COMMUNICATIONS INC 0.65%
BJ'S WHOLESALE CLUB HOLDINGS 0.60%
KINDER MORGAN INC 0.59%
PULTEGROUP INC 0.59%
TEXAS INSTRUMENTS INC 0.57%
EOG RESOURCES INC 0.55%
NEXTERA ENERGY INC 0.55%
KEYCORP 0.54%
SCHWAB (CHARLES) CORP 0.50%
STANLEY BLACK & DECKER INC 0.50%
EMERSON ELECTRIC CO 0.47%
HALLIBURTON CO 0.47%
KRAFT HEINZ CO/THE 0.47%
MANDATORY EXCH TRUST P/P 144A 05.7500 CV PFD 0.42%
NXP SEMICONDUCTORS NV 0.39%
ENCANA CORP 0.37%
MFA FINANCIAL INC 0.31%
ON SEMICONDUCTOR CORP 0.28%
KEURIG DR PEPPER INC 0.26%
GENERAL ELECTRIC CO 0.19%
SHERWIN-WILLIAMS CO/THE 0.16%
COTY INC-CL A 0.15%
OPORTUN FIN CORP P/P SERIES H PFD 0.06%
OPORTUN FIN CORP P/P 0.02%
OPORTUN FIN F-1 PFD CV P/P 0.02%
OPORTUN FIN G-1 PFD CV P/P 0.02%
GLOBAL FASHION GRP P/P 0.01%
OPORTUN FIN F PFD CV P/P 0.01%
CAD/USD 01/16/2019 CITI 0.00%
CAD/USD 01/16/2019 GSFX 0.00%
EUR/USD 03/20/2019 BANKAM 0.00%
GLOBAL FASHION GRP 0.00%
HC BRILLANT SERVICES GMBH P/P 0.00%
NEW BIGFOOT OTHER ASSETS GMBH P/P 0.00%
NEW MIDDLE EAST OTHER ASSETS GMBH P/P 0.00%
OPORTUN FIN A-1 PFD CV P/P 0.00%
OPORTUN FIN B-1 PFD CV P/P 0.00%
OPORTUN FIN C-1 PFD CV P/P 0.00%
OPORTUN FIN D-1 PFD CV P/P 0.00%
OPORTUN FIN E-1 PFD CV P/P 0.00%
EUR/USD 03/20/2019 GSFX -0.01%
EUR/USD 03/20/2019 SSBT -0.01%
GBP/USD 03/20/2019 BCAP-FX -0.01%
GBP/USD 03/20/2019 GSFX -0.02%

Prior top 10 holdings

Top 10 holdings as of 02/28/19
JPMorgan Chase
Bank Of America Corp
Microsoft Corp
Citigroup
Walmart
Johnson & Johnson
Northrop Grumman Corp
Apple
BD Medical
Exxon Mobil Corp
Holdings represent 24.81% of portfolio
Top 10 holdings as of 01/31/19
JPMorgan Chase
Microsoft Corp
Bank Of America Corp
Citigroup
Walmart
Johnson Johnson
Northrop Grumman Corp
BD Medical
Apple
ConocoPhillips
Holdings represent 25.38% of portfolio
Top 10 holdings as of 12/31/18
JPMorgan Chase
Microsoft Corp
Bank Of America Corp
Citigroup
Walmart
Johnson & Johnson
Apple
Northrop Grumman Corp
Becton Dickinson And
ConocoPhillips
Holdings represent 25.22% of portfolio
Top 10 holdings as of 11/30/18
JPMorgan Chase
Microsoft Corp
Bank Of America Corp
Citigroup
Walmart
Johnson & Johnson
Apple
Becton Dickinson And
Exxon Mobil Corp
Northrop Grumman Corp
Holdings represent 25.68% of portfolio

Portfolio composition as of 02/28/19

Common stock 96.15%
Cash and net other assets 2.73%
Convertible preferred stock 1.12%

Equity statistics as of 02/28/19

Median market cap $39.10B
Weighted average market cap $155.77B
Price to book 2.16
Price to earnings 13.62

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Value stocks may fail to rebound, and the market may not favor value-style investing. Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests. Stock values may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions, changes in government intervention in the financial markets, and factors related to a specific issuer, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. You can lose money by investing in the fund.

Top industry sectors as of 02/28/19

Financials 21.71%
Health care 14.30%
Information technology 11.71%
Energy 11.04%
Consumer staples 8.68%
Industrials 8.23%
Utilities 5.22%
Consumer discretionary 4.64%
Materials 4.41%
 
Other
10.06%
Communication services 4.25%
Real estate 3.08%
Cash and net other assets 2.73%

The unclassified sector (where applicable) includes exchange traded funds and other securities not able to be classified by sector.

Sectors will vary over time.


Expenses

Expense ratio

Class A Class B Class C Class M Class R Class R5 Class R6 Class Y
Total expense ratio 0.91% 1.66% 1.66% 1.41% 1.16% 0.65% 0.55% 0.66%
What you pay 0.91% 1.66% 1.66% 1.41% 1.16% 0.65% 0.55% 0.66%

Sales charge

 Breakpoint Class A Class B Class C Class M Class R Class R5 Class R6 Class Y
$0-$49,999 5.75% / 5.00% 0.00% / 4.00% 0.00% / 1.00% 3.50% / 3.00% -- -- -- --
$50,000-$99,999 4.50% / 3.75% 0.00% / 4.00% 0.00% / 1.00% 2.50% / 2.00% -- -- -- --
$100,000-$249,999 3.50% / 2.75% -- 0.00% / 1.00% 1.50% / 1.00% -- -- -- --
$250,000-$499,999 2.50% / 2.00% -- 0.00% / 1.00% 1.00% / 1.00% -- -- -- --
$500,000-$999,999 2.00% / 1.75% -- 0.00% / 1.00% 1.00% / 1.00% -- -- -- --
$1M-$4M 0.00% / 1.00% -- -- -- -- -- -- --
$4M-$50M 0.00% / 0.50% -- -- -- -- -- -- --
$50M+ 0.00% / 0.25% -- -- -- -- -- -- --

CDSC

  Class A (sales for $1,000,000+) Class B Class C Class M Class R Class R5 Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% -- -- -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% -- -- -- -- --
2 yrs. 0.00% 4.00% 0.00% -- -- -- -- --
3 yrs. 0.00% 3.00% 0.00% -- -- -- -- --
4 yrs. 0.00% 3.00% 0.00% -- -- -- -- --
5 yrs. 0.00% 2.00% 0.00% -- -- -- -- --
6 yrs. 0.00% 1.00% 0.00% -- -- -- -- --
7+ yrs. 0.00% 0.00% 0.00% -- -- -- -- --

Trail commissions

  Class A Class B Class C Class M Class R Class R5 Class R6 Class Y
  0.25% 0.25% 1.00% 0.65% 0.50% 0.00% 0.00% 0.00%
  NA NA NA NA NA NA NA NA
  NA NA NA NA NA NA NA NA

For sales and trail commission information on purchases over $1 million and participant-directed qualified retirement plans, see a Putnam fund prospectus and the statement of additional information.

The Russell 1000 Value Index is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation. You cannot invest directly in an index.

Consider these risks before investing: Value stocks may fail to rebound, and the market may not favor value-style investing. Income provided by the fund may be reduced by changes in the dividend policies of, and the capital resources available at, the companies in which the fund invests. Stock values may fall or fail to rise over time for several reasons, including general financial market conditions, changing market perceptions, changes in government intervention in the financial markets, and factors related to a specific issuer, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. You can lose money by investing in the fund.