Effective May 12, 2017, The Putnam Fund for Growth and Income merged into Putnam Equity Income Fund.

Equity Income Fund  (PEYAX)

Seeking to harness the power of stock dividends since 1977

Morningstar ratings as of 09/30/17
Large Value (funds in category)
Overall
(1108)
3 yrs.
(409)
5 yrs.
(962)
10 yrs.
(310)

Objective

The fund seeks capital growth and current income.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $23.81
0.13% | $0.03
$23.85
10/05/17
$19.82
11/04/16
Historical fund price

Fund facts as of 09/30/17

Total net assets
$11,928.72M
Turnover (fiscal year end)
15%
Dividend frequency (view rate)
Quarterly
Number of holdings
115
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

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 manager invests using fundamental research and quantitative tools supported by strong risk controls in portfolio construction.

Manager commentary | Q2 2017

Safety trade lifts dividend payers

Portfolio Manager Darren Jaroch talks about the role of dividend-paying stocks in his strategy.


Literature


Longevity and medical costs – education for the great unknowns
Understanding the impact of longevity and medical costs on savings requires education and a proactive approach to saving.
Why a meaningful near-term market correction is unlikely
2017 is a rare year without a stock market correction of at least 5%, but that doesn't make a correction more likely in the fourth quarter.
How the Japan election may influence global interest rates
The Japan election could have consequences for the future leadership of the Bank of Japan and the country's impact on global interest rate trends.

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)


10.43%

Average 5-year annualized return


  • Total return (%) as of 09/30/17

  • Annual performance as of 09/30/17

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 17.83% 8.72% 13.50% 7.58%
After sales charge 11.05% 6.59% 12.17% 6.95%
Russell 1000 Value Index 15.12% 8.53% 13.20% 5.92%

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, T1, 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. Class A, M, and T1 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 snapshot

  Before sales charge After sales charge
1 mt. as of 09/30/17 3.16 % -2.77 %
YTD as of 10/19/17 13.11 % 6.61 %

Yield

Distribution rate before sales charge
as of 10/19/17
1.04%
Distribution rate after sales charge
as of 10/19/17
0.98%
30-day SEC yield as of 09/29/17
(after sales charge)
1.00%

Risk-adjusted performance as of 09/30/17

Alpha (3 yrs.) 0.65
Sharpe ratio (3 yrs.) 0.86
Treynor ratio (3 yrs.) 8.96
Information ratio (3 yrs.) 0.09

Volatility as of 09/30/17

Standard deviation (3 yrs.) 9.81%
Beta 0.94
R-squared 0.96

Capture ratio as of 09/30/17

Up-market (3 yrs.) 94.67
Down-market (3 yrs.) 88.56

Lipper rankings as of 09/30/17

Equity Income Funds Percentile ranking Rank/Funds in category
1 yr. 20% 105/546
3 yrs. 36% 171/476
5 yrs. 6% 22/369
10 yrs. 11% 26/242

Morningstar ratings as of 09/30/17

Large Value Rating Funds in category
Overall (1108)
3 yrs. (409)
5 yrs. (962)
10 yrs. (310)

Distributions

Record/Ex dividend date 09/27/17
Payable date 09/29/17
Income $0.062
Extra income $0.0
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 09/30/17

JPMorgan Chase 3.59%
Citigroup 3.24%
Bank Of America Corp 2.99%
Northrop Grumman Corp 2.98%
Microsoft Corp 2.80%
Comcast Corp 2.21%
Johnson & Johnson 2.04%
Exxon Mobil Corp 1.93%
Dowdupont 1.74%
Apple 1.72%
Top 10 holdings, percent of portfolio 25.24%

Full portfolio holdings as of 06/30/17

JPMORGAN CHASE & CO 3.55%
MICROSOFT CORP 3.15%
NORTHROP GRUMMAN CORP 3.14%
CITIGROUP INC 2.93%
BANK OF AMERICA CORP 2.66%
COMCAST CORP-CLASS A 2.32%
JOHNSON & JOHNSON 2.15%
EXXON MOBIL CORP 1.71%
AT&T INC 1.68%
APPLE INC 1.66%
BECTON DICKINSON AND CO 1.51%
SCHWAB (CHARLES) CORP 1.51%
ALPHABET INC-CL C 1.47%
ELI LILLY & CO 1.33%
MERCK & CO. INC. 1.33%
CIGNA CORP 1.32%
CONOCOPHILLIPS 1.30%
PHILIP MORRIS INTERNATIONAL 1.29%
AMERICAN INTERNATIONAL GROUP 1.26%
WELLS FARGO & CO 1.23%
RAYTHEON COMPANY 1.19%
ALTRIA GROUP INC 1.17%
PEPSICO INC 1.14%
ASSURED GUARANTY LTD 1.12%
MARATHON OIL CORP 1.11%
STATE STREET CORP 1.09%
ASTRAZENECA PLC-SPONS ADR 1.07%
DXC TECHNOLOGY CO 1.02%
REGIONS FINANCIAL CORP 1.01%
SOUTHWEST AIRLINES CO 1.01%
DOW CHEMICAL CO/THE 0.99%
AGILENT TECHNOLOGIES INC 0.97%
TEXAS INSTRUMENTS INC 0.97%
UNION PACIFIC CORP 0.97%
VALERO ENERGY CORP 0.96%
GOLDMAN SACHS GROUP INC 0.90%
JOHNSON CONTROLS INTERNATION 0.90%
DELPHI AUTOMOTIVE PLC 0.89%
KRAFT HEINZ CO/THE 0.89%
DR PEPPER SNAPPLE GROUP INC 0.88%
CISCO SYSTEMS INC 0.86%
HARTFORD FINANCIAL SVCS GRP 0.86%
EDGEWELL PERSONAL CARE CO 0.85%
CHUBB LTD 0.84%
EOG RESOURCES INC 0.83%
EXELON CORP 0.83%
CHARTER COMMUNICATIONS INC-A 0.81%
PFIZER INC 0.80%
FIDELITY NATIONAL INFO SERV 0.78%
KKR & CO LP 0.78%
RADIAN GROUP INC 0.76%
BOSTON PROPERTIES INC 0.75%
DANAHER CORP 0.74%
HALLIBURTON CO 0.73%
HILTON WORLDWIDE HOLDINGS IN 0.72%
EDISON INTERNATIONAL 0.71%
BALL CORP 0.70%
SEALED AIR CORP 0.70%
AMERICAN TOWER CORP 0.69%
ANADARKO PETROLEUM CORP 0.69%
AIR PRODUCTS & CHEMICALS INC 0.68%
NXP SEMICONDUCTORS NV 0.68%
CAPITAL ONE FINANCIAL CORP 0.67%
GENERAL ELECTRIC CO 0.67%
HOME DEPOT INC 0.67%
KEYCORP 0.66%
DU PONT (E.I.) DE NEMOURS 0.65%
HONEYWELL INTERNATIONAL INC 0.65%
TOTAL SA 0.63%
AMERICAN ELECTRIC POWER 0.62%
CALPINE CORP 0.60%
INTEL CORP 0.60%
NRG ENERGY INC 0.58%
GAMING AND LEISURE PROPERTIE 0.57%
EQUITY LIFESTYLE PROPERTIES 0.56%
WALGREENS BOOTS ALLIANCE INC 0.56%
P G & E CORP 0.54%
VODAFONE GROUP PLC-SP ADR 0.54%
APPLIED MATERIALS INC 0.53%
BERKSHIRE HATHAWAY INC-CL B 0.51%
FEDERAL REALTY INVS TRUST 0.51%
VERIZON COMMUNICATIONS INC 0.51%
SUNCOR ENERGY INC 0.50%
CHENIERE ENERGY INC 0.49%
BROADCOM LTD 0.47%
CF INDUSTRIES HOLDINGS INC 0.46%
MOLSON COORS BREWING CO -B 0.45%
PULTEGROUP INC 0.45%
GENERAL MOTORS CO 0.44%
COTY INC-CL A 0.43%
MANDATORY EXCH TRUST P/P 144A 05.7500 CV PFD 0.43%
NEXTERA ENERGY INC 0.43%
INVESCO LTD 0.42%
CBS CORP-CLASS B NON VOTING 0.39%
FORTIVE CORP 0.38%
MFA FINANCIAL INC 0.37%
AIRBUS SE 0.36%
KROGER CO 0.34%
DISH NETWORK CORP-A 0.33%
PIONEER NAT RES CO 0.31%
ARCONIC INC 05.3750 CUM CV PFD 0.25%
COLGATE-PALMOLIVE CO 0.21%
CENTURYLINK INC 0.16%
BRISTOL-MYERS SQUIBB CO 0.15%
AMERICAN TOWER CORP 05.5000 CV PFD 0.13%
OPORTUN FIN CORP P/P SERIES H PFD 0.08%
FRONTIER COMMUNICATIONS 11.1250 CUM CV PFD 0.04%
OPORTUN FIN G-1 PFD CV P/P 0.03%
ARCELORMITTAL-NY REGISTERED 0.02%
OPORTUN FIN CORP P/P 0.02%
OPORTUN FIN F-1 PFD CV P/P 0.02%
OPORTUN FIN F PFD CV P/P 0.01%
CAD/USD 07/19/2017 CITI 0.00%
CAD/USD 07/19/2017 GSFX 0.00%
EUR/USD 09/20/2017 BANKAM 0.00%
EUR/USD 09/20/2017 GSFX 0.00%
EUR/USD 09/20/2017 SSBT 0.00%
FABFURNISH GMBH P/P 0.00%
GLOBAL FASHION GRP 0.00%
GLOBAL FASHION GRP P/P 0.00%
NEW BIGFOOT OTHER AS P/P 0.00%
NEW MIDDLE EAST OTHE 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%
S&P500 EMINI FUT SEP17 ESU7 0.00%
GBP/USD 09/20/2017 BCAP-FX -0.01%
GBP/USD 09/20/2017 GSFX -0.01%

Prior top 10 holdings

Top 10 holdings as of 09/30/17
JPMorgan Chase
Citigroup
Bank Of America Corp
Northrop Grumman Corp
Microsoft Corp
Comcast Corp
Johnson & Johnson
Exxon Mobil Corp
Dowdupont
Apple
Holdings represent 25.24% of portfolio
Top 10 holdings as of 08/31/17
JPMorgan Chase
Microsoft Corp
Northrop Grumman Corp
Citigroup
Bank Of America Corp
Comcast Corp
Johnson & Johnson
Apple
AT&T
Exxon Mobil Corp
Holdings represent 25.85% of portfolio
Top 10 holdings as of 07/31/17
JPMorgan Chase
Microsoft Corp
Northrop Grumman
Citigroup
Bank of America
Comcast
Johnson & Johnson
AT&T
Apple
Exxon Mobil
Holdings represent 25.14% of portfolio
Top 10 holdings as of 06/30/17
JPMorgan Chase
Microsoft Corp
Northrop Grumman Corp
Citigroup
Bank Of America Corp
Comcast Corp
Johnson & Johnson
Exxon Mobil Corp
AT&T
Apple
Holdings represent 24.95% of portfolio

Portfolio composition as of 09/30/17

Common stock 97.12%
Cash and net other assets 1.87%
Convertible preferred stock 1.01%

Equity statistics as of 09/30/17

Median market cap $36.17B
Weighted average market cap $137.55B
Price to book 2.23
Price to earnings 16.84

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 09/30/17

Financials 23.28%
Health care 13.70%
Information technology 12.37%
Energy 10.18%
Industrials 9.67%
Consumer discretionary 7.60%
Materials 5.90%
Consumer staples 5.57%
Utilities 4.56%
 
Other
7.17%
Telecommunication services 2.73%
Real estate 2.57%
Cash and net other assets 1.87%

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

Sectors will vary over time. Represents the equity portion of the portfolio.


Expenses

Expense ratio

Class A Class B Class C Class M Class R Class R5 Class R6 Class Y
Total expense ratio 0.94% 1.69% 1.69% 1.44% 1.19% 0.66% 0.56% 0.69%
What you pay 0.94% 1.69% 1.69% 1.44% 1.19% 0.66% 0.56% 0.69%

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. 0.00% 5.00% 1.00% -- -- -- -- --
2 yrs. -- 4.00% 0.00% -- -- -- -- --
3 yrs. -- 3.00% 0.00% -- -- -- -- --
4 yrs. -- 3.00% 0.00% -- -- -- -- --
5 yrs. -- 2.00% 0.00% -- -- -- -- --
6 yrs. -- 1.00% 0.00% -- -- -- -- --
7+ yrs. -- 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.