Equity Income Fund (PEYAX)
Seeking to harness the power of stock dividends since 1977
Darren A. Jaroch, CFA®
(since 1996)
Designed to combine growth and income potential
Is it time to consider stocks as a source of income?
Dividends have been an important contributor to the total return of S&P 500 companies
Putnam Equity Income Fund combines the income potential of dividends with the growth potential of stocks
Dividend-paying companies: Seeks income for investors by targeting companies that pay dividends
Value stocks: Taps into undervalued companies, seeking to invest in them before the market recognizes their growth potential
Dividend growers: Rather than looking for absolute yield alone, targets companies with the potential to grow their dividends
A focus on positive performance for 35 years
Annualized returns for quarterly periods,
6/15/77–9/30/13
| Best 5-year return | 21.64% |
|---|---|
| Worst 5-year return | -2.36% |
| Average 5-year return | 9.90% |
| % of 5-year periods with positive returns | 98% |
| Number of positive 5-year periods | 123 |
| Number of negative 5-year period | 3 |
Putnam Equity Income Fund received 4, 5, and 4 stars (load waived) and 3, 4, and 4 stars (load-adjusted) for the 3-, 5-, and 10-year periods among 1,036, 922, and 605 Large Value funds, respectively, as of 10/31/13. For each fund with at least a three-year history, Morningstar calculates two sets of ratings based on a fund's monthly performance, placing more emphasis on downward variations and rewarding consistent performance. Risk-adjusted ratings reflect the effects of sales charges, loads, and redemption fees; load-waived ratings exclude those effects. Load-waived ratings should only be used by investors not subject to the sales charge. Load-waived share classes are for qualified plan participants only (e.g., plan participants of a defined contribution plan). The top 10% of funds in each 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. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. Data is historical. Past performance is no guarantee of future results. Morningstar Ratings shown are for class A shares only; other classes may have different performance characteristics.
S&P 500 Index is an unmanaged index of common stock performance.
Summary
Fund price |
Yesterday's close | 52-week high | 52-week low |
|---|---|---|---|
| Net asset value |
$20.93
0.29% ( $0.06 ) |
$21.91
(12/24/13) |
$18.75
(04/22/13) |
Management team
- Darren A. Jaroch, CFA (Investing since 1996)
- Walter D. Scully, CPA (Investing since 1996)
Strategy and process
- Dividend-paying companies: Dividends offer evidence of a company's commitment to creating shareholder value and are typically paid by more established companies.
- 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.
- A disciplined process: The fund's experienced manager combines quantitative research with rigorous fundamental investment research to find opportunities and manage risk.
Fund manager commentary
Earnings expected to expand
Portfolio Manager Darren Jaroch explains why he believes fundamentals are driving corporate earnings for U.S. companies at home and abroad.
The opportunity
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. To obtain the most recent month-end performance, visit putnam.com.
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 Absolute Return 500 Fund and 700 Fund, and 4.00% and 3.25% for income funds (1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income 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, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income Fund, which is 1% in the first year, declining to 0.5% in the second 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, R, T, 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). 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, M, and T shares of Putnam money market funds have no initial sales charge. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.
Performance
Total return (%) as of 03/31/14
| Annualized performance | 1 yr. | 3 yrs. | 5 yrs. | 10 yrs. |
|---|---|---|---|---|
| Before sales charge | 21.05% | 14.81% | 21.05% | 8.71% |
| After sales charge | 14.09% | 12.57% | 19.62% | 8.07% |
| Russell 1000 Value Index | 21.57% | 14.80% | 21.75% | 7.58% |
| Cumulative performance | 1 yr. | 3 yrs. | 5 yrs. | 10 yrs. |
|---|---|---|---|---|
| Before sales charge | 21.05% | 51.34% | 159.90% | 130.59% |
| After sales charge | 14.09% | 42.64% | 144.96% | 117.33% |
Annual performance as of 03/31/14
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Before sales charge | 12.18% | 5.68% | 19.27% | 3.44% | -31.28% | 27.20% | 12.37% | 1.77% | 19.02% | 31.63% |
| Russell 1000 Value Index | 16.49% | 7.05% | 22.25% | -0.17% | -36.85% | 19.69% | 15.51% | 0.39% | 17.51% | 32.53% |
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. To obtain the most recent month-end performance, visit putnam.com.
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 Absolute Return 500 Fund and 700 Fund, and 4.00% and 3.25% for income funds (1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income 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, Putnam Absolute Return 100 Fund and 300 Fund, and Putnam Short-Term Municipal Income Fund, which is 1% in the first year, declining to 0.5% in the second 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, R, T, 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). 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, M, and T shares of Putnam money market funds have no initial sales charge. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.
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.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each 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. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics. Data is historical. Past performance is no guarantee of future results.
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.
Holdings
Top 10 holdings as of 03/31/14
| Exxon Mobil Corp | 2.78% |
|
|---|---|---|
| Marathon Oil Corp | 2.70% |
|
| Metlife | 2.12% |
|
| Eli Lilly | 2.09% |
|
| Johnson Johnson | 2.09% |
|
| Northrop Grumman Corp | 2.04% |
|
| Royal Dutch Shell | 1.97% |
|
| Cigna Corp | 1.95% |
|
| Comcast Corp | 1.89% |
|
| State Street Corp | 1.80% |
|
| Top 10 holdings, percent of portfolio | 21.43% |
|
Full portfolio holdings as of 12/31/13
| EXXON MOBIL CORP | 2.99 % |
|---|---|
| MARATHON OIL CORP | 2.79 % |
| NORTHROP GRUMMAN CORP | 2.47 % |
| METLIFE INC | 2.25 % |
| CIGNA CORP | 2.12 % |
| JOHNSON & JOHNSON | 2.02 % |
| ROYAL DUTCH SHELL PLC-ADR | 2.00 % |
| STATE STREET CORP | 1.97 % |
| ELI LILLY & CO | 1.88 % |
| COMCAST CORP-SPECIAL CL A | 1.87 % |
| VODAFONE GROUP PLC-SP ADR | 1.76 % |
| BAXTER INTERNATIONAL INC | 1.68 % |
| BANK OF AMERICA CORP | 1.65 % |
| JPMORGAN CHASE & CO | 1.58 % |
| CITIGROUP INC | 1.54 % |
| CISCO SYSTEMS INC | 1.46 % |
| PFIZER INC | 1.33 % |
| TIME WARNER INC | 1.31 % |
| AMERICAN INTERNATIONAL GROUP | 1.22 % |
| CME GROUP INC | 1.20 % |
| CVS CAREMARK CORP | 1.20 % |
| PPL CORPORATION 08.7500 CV PFD | 1.09 % |
| HONEYWELL INTERNATIONAL INC | 1.08 % |
| L-3 COMMUNICATIONS HLDGS INC | 1.08 % |
| SWIFT TRANSPORTATION CO | 1.08 % |
| APPLE INC | 1.07 % |
| WELLS FARGO & CO | 1.06 % |
| COCA-COLA ENTERPRISES | 1.04 % |
| MERCK & CO. INC. | 1.03 % |
| PARTNERRE LTD | 1.02 % |
| RAYTHEON COMPANY | 1.02 % |
| VALIDUS HOLDINGS LTD | 1.00 % |
| US BANCORP | 0.96 % |
| EMC CORP/MA | 0.95 % |
| ST JUDE MEDICAL INC | 0.94 % |
| ASHLAND INC | 0.91 % |
| GENERAL MOTORS CO | 0.91 % |
| SCHWAB (CHARLES) CORP | 0.91 % |
| PHILIP MORRIS INTERNATIONAL | 0.90 % |
| DELPHI AUTOMOTIVE PLC | 0.89 % |
| UNITEDHEALTH GROUP INC | 0.87 % |
| LYONDELLBASELL INDU-CL A | 0.85 % |
| COTY INC-CL A | 0.84 % |
| CBS CORP-CLASS B NON VOTING | 0.82 % |
| FIRSTENERGY CORP | 0.81 % |
| AON PLC | 0.79 % |
| DUN & BRADSTREET CORP | 0.79 % |
| THERMO FISHER SCIENTIFIC INC | 0.79 % |
| UNITED TECHNOLOGIES CORP | 0.79 % |
| GENWORTH FINANCIAL INC-CL A | 0.78 % |
| TRW AUTOMOTIVE HOLDINGS CORP | 0.78 % |
| COVIDIEN PLC | 0.77 % |
| VERIZON COMMUNICATIONS INC | 0.76 % |
| COMPUTER SCIENCES CORP | 0.71 % |
| HARTFORD FINANCIAL SVCS GRP | 0.71 % |
| INTERNATIONAL PAPER CO | 0.70 % |
| NATIONAL OILWELL VARCO INC | 0.70 % |
| NXP SEMICONDUCTORS NV | 0.70 % |
| SEAGATE TECHNOLOGY | 0.68 % |
| KRAFT FOODS GROUP INC | 0.67 % |
| SANDISK CORP | 0.67 % |
| LIBERTY GLOBAL PLC-SERIES C | 0.66 % |
| HASBRO INC | 0.65 % |
| MFA FINANCIAL INC | 0.65 % |
| TEXAS INSTRUMENTS INC | 0.65 % |
| VALERO ENERGY CORP | 0.65 % |
| DR PEPPER SNAPPLE GROUP INC | 0.64 % |
| FREEPORT-MCMORAN COPPER | 0.61 % |
| QEP RESOURCES INC | 0.61 % |
| AMERICAN TOWER CORP | 0.60 % |
| ASTRAZENECA PLC-SPONS ADR | 0.60 % |
| ZIMMER HOLDINGS INC | 0.60 % |
| MARATHON PETROLEUM CORP | 0.59 % |
| EDISON INTERNATIONAL | 0.57 % |
| MACY'S INC | 0.57 % |
| TYCO INTERNATIONAL LTD | 0.57 % |
| WESCO INTERNATIONAL INC | 0.56 % |
| NEXTERA ENERGY INC | 0.55 % |
| INTEL CORP | 0.54 % |
| AT&T INC | 0.52 % |
| ALTRIA GROUP INC | 0.51 % |
| INVESCO LTD | 0.51 % |
| AMERICAN ELECTRIC POWER | 0.49 % |
| FORD MOTOR CO | 0.48 % |
| MAXIM INTEGRATED PRODUCTS | 0.45 % |
| PULTEGROUP INC | 0.45 % |
| ZOETIS INC | 0.45 % |
| AMEREN CORPORATION | 0.44 % |
| CENTURYLINK INC | 0.44 % |
| AUTOLIV INC | 0.43 % |
| REGIONS FINANCIAL CORP | 0.43 % |
| CAPITAL ONE FINANCIAL CORP | 0.42 % |
| OFFICE DEPOT INC | 0.41 % |
| ANADARKO PETROLEUM CORP | 0.40 % |
| WESCO INTERNATIONAL CV 06.0000 09/15/2029 | 0.40 % |
| MCDERMOTT INTL INC | 0.39 % |
| MGIC INVESTMENT CORP CV 05.0000 05/01/2017 | 0.39 % |
| PINNACLE FOODS INC | 0.39 % |
| FAIRCHILD SEMICONDUCTOR INTE | 0.38 % |
| DISCOVER FINANCIAL SERVICES | 0.36 % |
| SYMANTEC CORP | 0.36 % |
| SEALED AIR CORP | 0.35 % |
| WILLIS GROUP HOLDINGS PLC | 0.34 % |
| CALPINE CORP | 0.29 % |
| NRG ENERGY INC | 0.29 % |
| EQUITY LIFESTYLE PROPERTIES | 0.28 % |
| RADIAN GROUP INC | 0.28 % |
| APACHE CORP | 0.27 % |
| OWENS CORNING | 0.25 % |
| JOHNSON CONTROLS INC | 0.22 % |
| POPULAR INC | 0.20 % |
| TOTAL SA | 0.19 % |
| OCCIDENTAL PETROLEUM CORP | 0.17 % |
| TAYLOR MORRISON HOME CORP-A | 0.15 % |
| HATTERAS FINANCIAL CORP | 0.14 % |
| CST BRANDS INC | 0.13 % |
| ARCELORMITTAL 06.0000 CUM CV PFD | 0.09 % |
| MALLINCKRODT PLC | 0.09 % |
| HILTON WORLDWIDE HOLDINGS IN | 0.07 % |
| STANLEY BLACK & DECKER I 06.2500 CV PFD | 0.05 % |
| CELANESE CORP-SERIES A | 0.01 % |
Prior top 10 holdings
| Top 10 holdings as of 03/31/14 |
|---|
| Exxon Mobil Corp |
| Marathon Oil Corp |
| Metlife |
| Eli Lilly |
| Johnson Johnson |
| Northrop Grumman Corp |
| Royal Dutch Shell |
| Cigna Corp |
| Comcast Corp |
| State Street Corp |
| Holdings represent 21.43% of portfolio |
| Top 10 holdings as of 02/28/14 |
|---|
| Exxon Mobil Corp |
| Marathon Oil Corp |
| Eli Lilly |
| Metlife |
| Northrop Grumman Corp |
| Johnson Johnson |
| Royal Dutch Shell |
| Comcast Corp |
| Cigna Corp |
| State Street Corp |
| Holdings represent 21.25% of portfolio |
| Top 10 holdings as of 01/31/14 |
|---|
| Exxon Mobil Corp |
| Marathon Oil Corp |
| Cigna Corp |
| Metlife |
| Eli Lilly |
| Northrop Grumman Corp |
| Comcast Corp |
| Johnson Johnson |
| Royal Dutch Shell |
| State Street Corp |
| Holdings represent 21.58% of portfolio |
| Top 10 holdings as of 12/31/13 |
|---|
| Exxon Mobil Corp |
| Marathon Oil Corp |
| Northrop Grumman Corp |
| Metlife |
| Cigna Corp |
| Johnson Johnson |
| Royal Dutch Shell |
| State Street Corp |
| Eli Lilly |
| Comcast Corp |
| Holdings represent 22.36% of portfolio |
Portfolio composition as of 03/31/14
| Common stock | 96.47% |
|
|---|---|---|
| Cash and net other assets | 1.59% |
|
| Convertible preferred stock | 1.21% |
|
| Convertible bonds | 0.73% |
|
Equity statistics as of 03/31/14
| Median market cap | $24.85B |
|---|---|
| Weighted average market cap | $83.76B |
| Price to book | 1.91 |
| Price to earnings | 18.66 |
Fund characteristics will vary over time.
Due to rounding, percentages may not equal 100%.
Expenses
Expense ratio |
Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y |
|---|---|---|---|---|---|---|---|---|
| Total expense ratio | 1.02% | 1.77% | 1.77% | 1.52% | 1.27% | 0.66% | 0.56% | 0.77% |
| What you pay | 1.02% | 1.77% | 1.77% | 1.52% | 1.27% | 0.66% | 0.56% | 0.77% |
Sales charge
| Investment Breakpoint | Class A | Class B | Class C | Class M | Class R | Class R5 | Class R6 | Class Y |
|---|---|---|---|---|---|---|---|---|
| $0-$49,999 | 5.75% | -- | -- | 3.50% | -- | -- | -- | -- |
| $50,000-$99,999 | 4.50% | -- | -- | 2.50% | -- | -- | -- | -- |
| $100,000-$249,999 | 3.50% | -- | -- | 1.50% | -- | -- | -- | -- |
| $250,000-$499,999 | 2.50% | -- | -- | 1.00% | -- | -- | -- | -- |
| $500,000-$999,999 | 2.00% | -- | -- | 1.00% | -- | -- | -- | -- |
| $1M-$4M | -- | -- | -- | -- | -- | -- | -- | -- |
| $4M-$50M | -- | -- | -- | -- | -- | -- | -- | -- |
| $50M+ | -- | -- | -- | -- | -- | -- | -- | -- |
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. | -- | 5.00% | 1.00% | -- | -- | -- | -- | -- |
| 2 yrs. | -- | 4.00% | -- | -- | -- | -- | -- | -- |
| 3 yrs. | -- | 3.00% | -- | -- | -- | -- | -- | -- |
| 4 yrs. | -- | 3.00% | -- | -- | -- | -- | -- | -- |
| 5 yrs. | -- | 2.00% | -- | -- | -- | -- | -- | -- |
| 6 yrs. | -- | 1.00% | -- | -- | -- | -- | -- | -- |
| 7+ yrs. | -- | -- | -- | -- | -- | -- | -- | -- |
The Russell 1000 Value Index is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation. Securities in the fund do not match those in the indexes and performance of the fund will differ. It is not possible to 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 prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.
You can lose money by investing in a fund. Any given fund may not achieve its goal, and is not intended as a complete investment program. All funds have risk. The value and/or returns of a portfolio will fluctuate with market conditions. You may have more or less than the original amount invested when you redeem your shares.