Putnam Capital Manager

Putnam Equity Income Subaccount

The subaccount seeks current income. Capital growth is a secondary objective when consistent with seeking current income.

Fund description

The subaccount employs Putnam's value strategy to invest primarily in stocks of large and mid-sized companies that are undervalued and poised for positive change. The subaccount favors dividend-paying companies and is broadly diversified across market sectors. To help manage volatility and increase current income, up to 20% of the portfolio can be invested in high quality, fixed-income securities.

Sales story

A multidimensional approach that defines value on a daily basisA 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.

Management team

Lipper ranking ‡ as of 10/31/18

Category: Equity Income Funds

  Percentile ranking Rank/Funds in category
10 yrs. 8% 4/54
1 yr. 20% 16/81
3 yrs. 41% 30/73
5 yrs. 24% 15/64

Risk Characteristics as of 10/31/18

Alpha (%) 0.57
Beta 1.00
R squared 0.94
Standard deviation (3 yrs.) 9.36

Mutual funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally exempt funds may be subject to state and local taxes. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.Although value investing targets stocks believed to be priced too low, there is no guarantee they will appreciate.

‡ Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Past performance is not indicative of future results.

Quick facts as of 11/30/18

Fiscal Year End December
Asset Class Putnam Capital Manager
Subaccount Status Open to new investors
Number of issues 106
Turnover (fiscal year end) 12%
Net Assets $1,427M
Inception Date 05/01/03

Holdings

Top 10 holdings as of 10/31/18

JPMorgan Chase 4.06%
Microsoft Corp 3.59%
Bank Of America Corp 3.22%
Citigroup 2.89%
Walmart 2.41%
Apple 2.41%
Johnson Johnson 2.17%
ConocoPhillips 1.87%
Exxon Mobil Corp 1.85%
Northrop Grumman Corp 1.78%
Top 10 holdings, total: 26.25%

Represents equity portion of portfolio.

Equity Holdings as of 09/30/18

JPMORGAN CHASE & CO 4.04%
MICROSOFT CORP 3.62%
BANK OF AMERICA CORP 3.31%
CITIGROUP INC 3.04%
APPLE INC 2.39%
NORTHROP GRUMMAN CORP 2.35%
WALMART INC 2.17%
JOHNSON & JOHNSON 2.05%
CONOCOPHILLIPS 1.91%
EXXON MOBIL CORP 1.89%
BECTON DICKINSON AND CO 1.85%
MARATHON OIL CORP 1.59%
DOWDUPONT INC 1.53%
CIGNA CORP 1.52%
VALERO ENERGY CORP 1.47%
ASSURED GUARANTY LTD 1.40%
RAYTHEON COMPANY 1.38%
AT&T INC 1.36%
MERCK & CO. INC. 1.36%
AMGEN INC 1.35%
UNION PACIFIC CORP 1.35%
DANAHER CORP 1.32%
AMERICAN INTERNATIONAL GROUP 1.24%
CISCO SYSTEMS INC 1.24%
BP PLC 1.22%
KKR & CO INC -A 1.22%
KROGER CO 1.21%
GILEAD SCIENCES INC 1.19%
DXC TECHNOLOGY CO 1.17%
REGIONS FINANCIAL CORP 1.17%
COMCAST CORP-CLASS A 1.16%
QUALCOMM INC 1.16%
ASTRAZENECA PLC-SPONS ADR 1.15%
ELI LILLY & CO 1.12%
AMERICAN TOWER CORP 1.08%
WELLS FARGO & CO 1.08%
TOTAL SA 1.05%
ALCOA CORP 1.03%
PEPSICO INC 1.02%
RADIAN GROUP INC 1.02%
CHARTER COMMUNICATIONS INC-A 1.00%
GOLDMAN SACHS GROUP INC 0.98%
JOHNSON CONTROLS INTERNATION 0.97%
KIMBERLY-CLARK CORP 0.97%
PFIZER INC 0.97%
GAMING AND LEISURE PROPERTIE 0.95%
SOUTHWEST AIRLINES CO 0.94%
STATE STREET CORP 0.94%
ANADARKO PETROLEUM CORP 0.93%
EXELON CORP 0.93%
FIDELITY NATIONAL INFO SERV 0.92%
O'REILLY AUTOMOTIVE INC 0.91%
NRG ENERGY INC 0.89%
HILTON WORLDWIDE HOLDINGS IN 0.87%
HOME DEPOT INC 0.85%
MOLSON COORS BREWING CO -B 0.83%
EDISON INTERNATIONAL 0.81%
GENERAL MOTORS CO 0.80%
APTIV PLC 0.79%
HARTFORD FINANCIAL SVCS GRP 0.75%
INTEL CORP 0.75%
AIR PRODUCTS & CHEMICALS INC 0.74%
HONEYWELL INTERNATIONAL INC 0.73%
CAPITAL ONE FINANCIAL CORP 0.70%
EOG RESOURCES INC 0.70%
BALL CORP 0.68%
ENTERPRISE PRODUCTS PARTNERS 0.68%
BOSTON PROPERTIES INC 0.67%
KEYCORP 0.65%
HALLIBURTON CO 0.63%
SUNCOR ENERGY INC 0.61%
KINDER MORGAN INC 0.60%
AMERICAN ELECTRIC POWER 0.58%
TEXAS INSTRUMENTS INC 0.58%
VERIZON COMMUNICATIONS INC 0.56%
KRAFT HEINZ CO/THE 0.54%
EMERSON ELECTRIC CO 0.52%
SCHWAB (CHARLES) CORP 0.52%
NEXTERA ENERGY INC 0.48%
WALGREENS BOOTS ALLIANCE INC 0.48%
P G & E CORP 0.46%
MANDATORY EXCH TRUST P/P 144A 05.7500 CV PFD 0.44%
PULTEGROUP INC 0.42%
NXP SEMICONDUCTORS NV 0.41%
BJ'S WHOLESALE CLUB HOLDINGS 0.38%
MFA FINANCIAL INC 0.30%
ON SEMICONDUCTOR CORP 0.28%
COTY INC-CL A 0.26%
GENERAL ELECTRIC CO 0.26%
INVESCO LTD 0.25%
KEURIG DR PEPPER INC 0.21%
DELPHI TECHNOLOGIES PLC 0.09%
OPORTUN FIN CORP P/P SERIES H PFD 0.04%
GLOBAL FASHION GRP 0.01%
GLOBAL FASHION GRP P/P 0.01%
OPORTUN FIN CORP P/P 0.01%
OPORTUN FIN F-1 PFD CV P/P 0.01%
OPORTUN FIN G-1 PFD CV P/P 0.01%
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%
OPORTUN FIN F PFD CV P/P 0.00%

Full Portfolio Holdings as of 09/30/18

JPMORGAN CHASE & CO 4.04%
MICROSOFT CORP 3.62%
BANK OF AMERICA CORP 3.31%
CITIGROUP INC 3.04%
APPLE INC 2.39%
NORTHROP GRUMMAN CORP 2.35%
WALMART INC 2.17%
JOHNSON & JOHNSON 2.05%
CONOCOPHILLIPS 1.91%
EXXON MOBIL CORP 1.89%
BECTON DICKINSON AND CO 1.85%
MARATHON OIL CORP 1.59%
DOWDUPONT INC 1.53%
CIGNA CORP 1.52%
VALERO ENERGY CORP 1.47%
ASSURED GUARANTY LTD 1.40%
RAYTHEON COMPANY 1.38%
AT&T INC 1.36%
MERCK & CO. INC. 1.36%
AMGEN INC 1.35%
UNION PACIFIC CORP 1.35%
DANAHER CORP 1.32%
AMERICAN INTERNATIONAL GROUP 1.24%
CISCO SYSTEMS INC 1.24%
BP PLC 1.22%
KKR & CO INC -A 1.22%
KROGER CO 1.21%
GILEAD SCIENCES INC 1.19%
DXC TECHNOLOGY CO 1.17%
REGIONS FINANCIAL CORP 1.17%
COMCAST CORP-CLASS A 1.16%
QUALCOMM INC 1.16%
ASTRAZENECA PLC-SPONS ADR 1.15%
ELI LILLY & CO 1.12%
AMERICAN TOWER CORP 1.08%
WELLS FARGO & CO 1.08%
TOTAL SA 1.05%
ALCOA CORP 1.03%
PEPSICO INC 1.02%
RADIAN GROUP INC 1.02%
CHARTER COMMUNICATIONS INC-A 1.00%
GOLDMAN SACHS GROUP INC 0.98%
JOHNSON CONTROLS INTERNATION 0.97%
KIMBERLY-CLARK CORP 0.97%
PFIZER INC 0.97%
GAMING AND LEISURE PROPERTIE 0.95%
SOUTHWEST AIRLINES CO 0.94%
STATE STREET CORP 0.94%
ANADARKO PETROLEUM CORP 0.93%
EXELON CORP 0.93%
FIDELITY NATIONAL INFO SERV 0.92%
O'REILLY AUTOMOTIVE INC 0.91%
NRG ENERGY INC 0.89%
HILTON WORLDWIDE HOLDINGS IN 0.87%
HOME DEPOT INC 0.85%
MOLSON COORS BREWING CO -B 0.83%
EDISON INTERNATIONAL 0.81%
GENERAL MOTORS CO 0.80%
APTIV PLC 0.79%
HARTFORD FINANCIAL SVCS GRP 0.75%
INTEL CORP 0.75%
AIR PRODUCTS & CHEMICALS INC 0.74%
HONEYWELL INTERNATIONAL INC 0.73%
CAPITAL ONE FINANCIAL CORP 0.70%
EOG RESOURCES INC 0.70%
BALL CORP 0.68%
ENTERPRISE PRODUCTS PARTNERS 0.68%
BOSTON PROPERTIES INC 0.67%
KEYCORP 0.65%
HALLIBURTON CO 0.63%
SUNCOR ENERGY INC 0.61%
KINDER MORGAN INC 0.60%
AMERICAN ELECTRIC POWER 0.58%
TEXAS INSTRUMENTS INC 0.58%
VERIZON COMMUNICATIONS INC 0.56%
KRAFT HEINZ CO/THE 0.54%
EMERSON ELECTRIC CO 0.52%
SCHWAB (CHARLES) CORP 0.52%
NEXTERA ENERGY INC 0.48%
WALGREENS BOOTS ALLIANCE INC 0.48%
P G & E CORP 0.46%
MANDATORY EXCH TRUST P/P 144A 05.7500 CV PFD 0.44%
PULTEGROUP INC 0.42%
NXP SEMICONDUCTORS NV 0.41%
BJ'S WHOLESALE CLUB HOLDINGS 0.38%
MFA FINANCIAL INC 0.30%
ON SEMICONDUCTOR CORP 0.28%
COTY INC-CL A 0.26%
GENERAL ELECTRIC CO 0.26%
INVESCO LTD 0.25%
KEURIG DR PEPPER INC 0.21%
DELPHI TECHNOLOGIES PLC 0.09%
OPORTUN FIN CORP P/P SERIES H PFD 0.04%
GLOBAL FASHION GRP 0.01%
GLOBAL FASHION GRP P/P 0.01%
OPORTUN FIN CORP P/P 0.01%
OPORTUN FIN F-1 PFD CV P/P 0.01%
OPORTUN FIN G-1 PFD CV P/P 0.01%
CAD/USD 10/17/2018 CITI 0.00%
CAD/USD 10/17/2018 GSFX 0.00%
EUR/USD 12/19/2018 BANKAM 0.00%
EUR/USD 12/19/2018 GSFX 0.00%
EUR/USD 12/19/2018 SSBT 0.00%
GBP/USD 12/19/2018 BCAP-FX 0.00%
GBP/USD 12/19/2018 GSFX 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%
OPORTUN FIN F PFD CV P/P 0.00%

Prior top 10 holdings

Top 10 holdings as of 10/31/18
1: JPMorgan Chase 4.06%
2: Microsoft Corp 3.59%
3: Bank Of America Corp 3.22%
4: Citigroup 2.89%
5: Walmart 2.41%
6: Apple 2.41%
7: Johnson Johnson 2.17%
8: ConocoPhillips 1.87%
9: Exxon Mobil Corp 1.85%
10: Northrop Grumman Corp 1.78%
Holdings represent 26.25% of portfolio
Top 10 holdings as of 09/30/18
1: JPMorgan Chase 4.04%
2: Microsoft Corp 3.62%
3: Bank Of America Corp 3.31%
4: Citigroup 3.04%
5: Apple 2.39%
6: Northrop Grumman Corp 2.35%
7: Walmart 2.17%
8: Johnson & Johnson 2.05%
9: ConocoPhillips 1.91%
10: Exxon Mobil Corp 1.89%
Holdings represent 26.77% of portfolio
Top 10 holdings as of 08/31/18
1: JPMorgan Chase 4.08%
2: Microsoft Corp 3.53%
3: Bank Of America Corp 3.46%
4: Citigroup 3.00%
5: Apple 2.39%
6: Walmart 2.20%
7: Northrop Grumman Corp 2.20%
8: Johnson & Johnson 1.99%
9: Becton Dickinson And 1.84%
10: ConocoPhillips 1.80%
Holdings represent 26.49% of portfolio
Top 10 holdings as of 07/31/18
1: JPMorgan Chase 4.11%
2: Microsoft Corp 3.67%
3: Bank of America 3.47%
4: Citigroup 3.04%
5: Northrop Grumman Corp 2.22%
6: Walmart 2.06%
7: Apple 2.01%
8: Johnson & Johnson 1.97%
9: ConocoPhillips 1.95%
10: Exxon Mobil Corp 1.81%
Holdings represent 26.31% of portfolio

Portfolio Composition as of 10/31/18

Common stock 98.63%
Cash and net other assets 0.87%
Convertible preferred stock 0.50%

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

Mutual funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Capital gains, if any, are taxable for federal and, in most cases, state purposes. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally exempt funds may be subject to state and local taxes. Variable annuities are long-term investments designed for retirement purposes. Withdrawals prior to age 59 1/2 may be subject to a 10% IRS penalty.Although value investing targets stocks believed to be priced too low, there is no guarantee they will appreciate.

Lipper is an industry research firm whose rankings are based on total return performance, vary over time, and do not reflect the effects of sales charges. Past performance is not indicative of future results.

Top Industry Sectors as of 10/31/18

Financials 22.12%
Health care 14.12%
Information technology 12.67%
Energy 12.49%
Consumer staples 8.93%
Industrials 7.90%
Utilities 5.01%
Consumer discretionary 4.70%
Communication services 4.34%
 
Other
7.72%
Materials 3.90%
Real estate 2.95%
Cash and net other assets 0.87%