Equity Income Fund (Class Y)  (PEYAX)

Seeking to harness the power of stock dividends since 1977

Equity Income Fund received an  Overall Morningstar Rating  of  
Portfolio Manager Darren A. Jaroch, CFA

“I’ve always been patient and disciplined. And I think those traits have served me well as an investor.”

Watch video

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 $25.30
-0.67% | $-0.17
$26.12
01/26/18
$22.46
08/18/17
Historical fund price

Fund facts as of 07/31/18

Total net assets
$12,780.75M
Turnover (fiscal year end)
11%
Dividend frequency (view rate)
Quarterly
Number of holdings
107
Fiscal year-end
November
CUSIP / Fund code
746745108 / 0010
Inception date
06/15/77
Category
Value
Open to new investors
Ticker
PEYAX

Management team

Portfolio Manager
Portfolio Manager, Analyst


Manager commentary | Q2 2018

Is value ready to outperform growth?

Portfolio Manager Darren Jaroch discusses the likelihood that value stocks will begin to outperform growth in the near term.


Literature


Value opportunities gain traction in turmoil
Beneath dire headlines about plunging markets, we are seeing value opportunities assert themselves.

Performance

Consistency of positive performance over five years

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

Performance shown above 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 see below.

21.64%

Best 5-year annualized return

(for period ending 06/30/99)


-2.36%

Worst 5-year annualized return

(for period ending 03/31/09)


10.46%

Average 5-year annualized return


  • Total return (%) as of 06/30/18

  • Annual performance as of 06/30/18

Annualized Total return (%) as of 06/30/18

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 11.89% 8.86% 10.92% 9.99%
After sales charge N/A N/A N/A N/A
Russell 1000 Value Index 6.77% 8.26% 10.34% 8.49%

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, and 4.00% and 3.25% for income funds (2.25% and 0.75% for Putnam Short Duration Bond Fund and 1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Fixed Income Absolute Return 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 Short Duration Bond Fund, Putnam Fixed Income Absolute Return 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, 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). 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. 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 snapshot

  Before sales charge After sales charge
1 mt. as of 07/31/18 4.42 % -
YTD as of 08/13/18 3.76 % -

Yield

Distribution rate before sales charge
as of 08/13/18
0.98%
Distribution rate after sales charge
as of 08/13/18
0.98%
30-day SEC yield as of 07/31/18
(after sales charge)
1.13%

Risk-adjusted performance as of 06/30/18

Alpha (3 yrs.) 0.99
Sharpe ratio (3 yrs.) 0.84
Treynor ratio (3 yrs.) 8.70
Information ratio (3 yrs.) 0.28

Volatility as of 06/30/18

Standard deviation (3 yrs.) 9.84%
Beta 0.95
R-squared 0.95

Capture ratio as of 06/30/18

Up-market (3 yrs.) 100.00
Down-market (3 yrs.) 93.81

Lipper rankings as of 06/30/18

Time period Rank/Funds in category Percentile ranking
1 yr. 74/534 14%
3 yrs. 215/460 47%
5 yrs. 76/387 20%
10 yrs. 20/236 9%
Lipper category: Equity Income Funds

Morningstar Ratings as of 06/30/18

Time period Funds in category Morningstar Rating
Overall 1099
3 yrs. 1099
5 yrs. 951
10 yrs. 686
Morningstar category: Large Value

Distributions

Record/Ex dividend date 06/27/18
Payable date 06/29/18
Income $0.062
Extra income --
Short-term cap. gain --
Long-term cap. gain --

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.


Holdings

Top 10 holdings as of 06/30/18

JPMorgan Chase 3.86%
Microsoft Corp 3.53%
Bank Of America Corp 3.28%
Citigroup 2.93%
Northrop Grumman Corp 2.36%
Walmart 2.05%
Apple 2.03%
ConocoPhillips 1.95%
Exxon Mobil Corp 1.91%
Johnson & Johnson 1.87%
Top 10 holdings, percent of portfolio 25.77%

Full portfolio holdings as of 06/30/18

JPMORGAN CHASE & CO 3.86%
MICROSOFT CORP 3.53%
BANK OF AMERICA CORP 3.28%
CITIGROUP INC 2.93%
NORTHROP GRUMMAN CORP 2.36%
WALMART INC 2.05%
APPLE INC 2.03%
CONOCOPHILLIPS 1.95%
EXXON MOBIL CORP 1.91%
JOHNSON & JOHNSON 1.87%
MARATHON OIL CORP 1.86%
BECTON DICKINSON AND CO 1.76%
DOWDUPONT INC 1.62%
VALERO ENERGY CORP 1.48%
AT&T INC 1.35%
RAYTHEON COMPANY 1.34%
AMERICAN INTERNATIONAL GROUP 1.28%
CIGNA CORP 1.28%
ALCOA CORP 1.24%
AMGEN INC 1.24%
DANAHER CORP 1.24%
ASSURED GUARANTY LTD 1.23%
KROGER CO 1.22%
MERCK & CO. INC. 1.21%
UNION PACIFIC CORP 1.21%
REGIONS FINANCIAL CORP 1.18%
WELLS FARGO & CO 1.18%
KKR & CO LP 1.16%
CISCO SYSTEMS INC 1.13%
DR PEPPER SNAPPLE GROUP INC 1.13%
GILEAD SCIENCES INC 1.13%
AMERICAN TOWER CORP 1.11%
COMCAST CORP-CLASS A 1.11%
EOG RESOURCES INC 1.09%
STATE STREET CORP 1.09%
O'REILLY AUTOMOTIVE INC 1.07%
ASTRAZENECA PLC-SPONS ADR 1.06%
ANADARKO PETROLEUM CORP 1.05%
DXC TECHNOLOGY CO 1.03%
PEPSICO INC 1.02%
TOTAL SA 1.02%
GAMING AND LEISURE PROPERTIE 1.00%
GOLDMAN SACHS GROUP INC 0.98%
GENERAL MOTORS CO 0.97%
JOHNSON CONTROLS INTERNATION 0.96%
MOLSON COORS BREWING CO -B 0.95%
CHARTER COMMUNICATIONS INC-A 0.94%
EXELON CORP 0.94%
FIDELITY NATIONAL INFO SERV 0.93%
ELI LILLY & CO 0.92%
KIMBERLY-CLARK CORP 0.92%
APTIV PLC 0.89%
HILTON WORLDWIDE HOLDINGS IN 0.88%
PFIZER INC 0.83%
RADIAN GROUP INC 0.83%
HOME DEPOT INC 0.82%
INTEL CORP 0.82%
HARTFORD FINANCIAL SVCS GRP 0.80%
SOUTHWEST AIRLINES CO 0.79%
EDISON INTERNATIONAL 0.78%
NRG ENERGY INC 0.76%
HALLIBURTON CO 0.73%
BOSTON PROPERTIES INC 0.72%
CAPITAL ONE FINANCIAL CORP 0.72%
AIR PRODUCTS & CHEMICALS INC 0.71%
QUALCOMM INC 0.69%
ENTERPRISE PRODUCTS PARTNERS 0.67%
HONEYWELL INTERNATIONAL INC 0.66%
KEYCORP 0.65%
SUNCOR ENERGY INC 0.65%
KRAFT HEINZ CO/THE 0.63%
KINDER MORGAN INC 0.62%
TEXAS INSTRUMENTS INC 0.61%
AMERICAN ELECTRIC POWER 0.58%
BALL CORP 0.56%
SCHWAB (CHARLES) CORP 0.56%
NXP SEMICONDUCTORS NV 0.53%
VERIZON COMMUNICATIONS INC 0.53%
MANDATORY EXCH TRUST P/P 144A 05.7500 CV PFD 0.52%
EMERSON ELECTRIC CO 0.49%
NEXTERA ENERGY INC 0.49%
PULTEGROUP INC 0.49%
P G & E CORP 0.44%
WALGREENS BOOTS ALLIANCE INC 0.40%
BJ'S WHOLESALE CLUB HOLDINGS 0.35%
ON SEMICONDUCTOR CORP 0.35%
PIONEER NAT RES CO 0.35%
GENERAL ELECTRIC CO 0.32%
MFA FINANCIAL INC 0.32%
CF INDUSTRIES HOLDINGS INC 0.31%
COTY INC-CL A 0.30%
INVESCO LTD 0.30%
SEALED AIR CORP 0.27%
DELPHI TECHNOLOGIES PLC 0.15%
OPORTUN FIN CORP P/P SERIES H PFD 0.06%
OPORTUN FIN CORP P/P 0.02%
OPORTUN FIN G-1 PFD CV P/P 0.02%
OPORTUN FIN F PFD CV P/P 0.01%
OPORTUN FIN F-1 PFD CV P/P 0.01%
CAD/USD 07/18/2018 CITI 0.00%
CAD/USD 07/18/2018 GSFX 0.00%
EUR/USD 09/19/2018 BANKAM 0.00%
EUR/USD 09/19/2018 GSFX 0.00%
EUR/USD 09/19/2018 SSBT 0.00%
GBP/USD 09/19/2018 BCAP-FX 0.00%
GBP/USD 09/19/2018 GSFX 0.00%
GLOBAL FASHION GRP 0.00%
GLOBAL FASHION GRP P/P 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%

Prior top 10 holdings

Top 10 holdings as of 06/30/18
JPMorgan Chase
Microsoft Corp
Bank Of America Corp
Citigroup
Northrop Grumman Corp
Walmart
Apple
ConocoPhillips
Exxon Mobil Corp
Johnson & Johnson
Holdings represent 25.77% of portfolio
Top 10 holdings as of 05/31/18
JPMorgan Chase
Microsoft Corp
Bank Of America Corp
Citigroup
Northrop Grumman Corp
Apple
Marathon Oil Corp
ConocoPhillips
Exxon Mobil Corp
Johnson Johnson
Holdings represent 26.00% of portfolio
Top 10 holdings as of 04/30/18
JPMorgan Chase
Bank Of America Corp
Microsoft Corp
Citigroup
Northrop Grumman Corp
Johnson & Johnson
ConocoPhillips
Apple
Exxon Mobil Corp
BD Medical
Holdings represent 25.76% of portfolio
Top 10 holdings as of 03/31/18
JPMorgan Chase
Bank Of America Corp
Microsoft Corp
Citigroup
Northrop Grumman Corp
Johnson & Johnson
Apple
Exxon Mobil Corp
ConocoPhillips
BD Medical
Holdings represent 25.74% of portfolio

Portfolio composition as of 06/30/18

Common stock 97.82%
Cash and net other assets 1.56%
Convertible preferred stock 0.62%

Equity statistics as of 06/30/18

Median market cap $37.73B
Weighted average market cap $149.88B
Price to book 2.19
Price to earnings 13.82

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 prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific company or industry. You can lose money by investing in the fund.

Top industry sectors as of 06/30/18

Financials 22.45%
Energy 13.37%
Health care 12.54%
Information technology 12.17%
Consumer staples 8.63%
Industrials 8.13%
Consumer discretionary 7.68%
Materials 4.77%
Utilities 3.99%
 
Other
6.27%
Real estate 2.83%
Telecommunication services 1.88%
Cash and net other assets 1.56%

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

Investment Breakpoint Class A Class B Class C Class M Class R Class R5 Class R6 Class Y
$0-$49,999 5.75% 0.00% 0.00% 3.50% -- -- -- --
$50,000-$99,999 4.50% 0.00% 0.00% 2.50% -- -- -- --
$100,000-$249,999 3.50% -- 0.00% 1.50% -- -- -- --
$250,000-$499,999 2.50% -- 0.00% 1.00% -- -- -- --
$500,000-$999,999 2.00% -- 0.00% 1.00% -- -- -- --
$1M-$4M 0.00% -- -- -- -- -- -- --
$4M-$50M 0.00% -- -- -- -- -- -- --
$50M+ 0.00% -- -- -- -- -- -- --

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% -- -- -- -- --

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 prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific company or industry. You can lose money by investing in the fund.