T. Rowe Price Equity Income Fund (PRFDX)

As part of 2011 Money 70 fund list and 2011 Kiplinger’s 25 best funds list, T Rowe Price Equity Income fund is popular among retail and institutional investor. This fund has total net assets of $23.3 billion. One of the negative is it was rated 4 on a scale of 1 to 5 (1= best and 5=worst) in the fund’s Value Line Overall Rank. Value Line Overall Rank is a measure of risk-adjusted performance and relative growth in fund returns. Also, this T Rowe Price fund is US domestic large value fund. More details about this fund can be found below including the fund information, performance, characteristic, etc.

T. Rowe Price Fund

T. Rowe Price Equity Income fund objective is to seek for capital growth in long term period and to provide substantial dividend income. The major net assets investment is invested in common stocks. The 65% of the companies in which the common stocks are invested are well-established companies that pay above-average dividends. It mostly invests in U.S. common stocks. This PRFDX fund may also purchase other securities such as foreign stocks, options and futures.

Fund Details

T Rowe Price Equity Income fund

• Fund Inception Date: October 1985
• Ticker Symbol: PRFDX
• CUSIP: 779547108
• Total Assets: $23.3 billion
• Beta (3yr): 1.08
• Rank in category: 71
• Category: Large Value
• Yield: 1.72%
• Capital Gains: 0.0%
• Number of Years Up: 22 years
• Number of Years Down: 3 years

updated on May 22th, 2011

Large Value Fund

Based on information in the fund prospectus, the manager looks for companies with the one or more of the following criteria to invest:

• The company has an established operating history
• It has an above average dividend yield compare to the S&P 500
• The company has low P/E (price to earnings ratio) compare to the S&P 500
• It has solid balance sheet and positive financial characteristics
• The stock price is low relative to company value measured by assets, business franchises, and cash flow

As one of the 24 Morningstar Analyst Picks, PRFDX fund has 23.32 billion net assets. It has been managed by Brain C. Rogers since October 1985. He is the chairman of the Board and chief investment officer of T. Rowe Price Group Inc. This PRFDX fund also received 4 stars rating from Morningstar. It has 5-year average return of 2.89%. The best achievement within 22 positive years was occured in 1997 with 28.82%. This top rated stock fund also has one of the worst performances in 2008 with -35.75%. The last dividend distributed in March 2011 is 0.09%. The performance of this fund is:

• 1-year: 13.21%
• 3-year: 1.71%
• 5-year: 2.89%
• 10-year: 4.99%

The minimum balance required to open a brokerage account in this fund is $2,500. For IRA account, please check with your account administrator for details. Since it is part of no load mutual fund, there is no 12b1 fee and no sales-load fee (i.e. no front end sales load and deferred sales load). The fund has a low annual expense ratio (0.68%) compared to the average in the Large Value category which is 1.26%. PRFDX fund can be purchased from a wide range of 88 brokerages such as T. Rowe Price, LPL SAM Eligible, Merrill Lynch, Raymond James, JP Morgan, Vanguard, Schwab Retail, Ameriprise Brokerage, UBS Financial Services Inc., MSSB Retail Fund, etc.

PRFDX Fund

As of May 2011, the quarter-end top 10 stock holdings of this PRFDX fund are 3M, AT&T, American Express, Chevron, Exxon Mobil, General Electric, JP Morgan Chase, Royal Dutch Shell, Time Warner and Wells Fargo. These 10 holdings represent 20.21% of total net assets from 121 holdings. The top 5 sector diversifications are Financials (19.1%), Consumer Discretionary (14.3%), Energy (13.6%), Industrials & Business Services (12.9%) and Utilities (7.3%). The fund assets are allocated as follow:

• Domestic Stock: 89.8%
• Cash: 4.9%
• Foreign Stock: 3.8%
• Domestic Bond: 0.8%
• Convertibles: 0.6%
• Other: 0.1%

Investing in mutual also involves principal risks such as

• Active management risk
• Stock investing risk
• Investment style risk
• Foreign investing risk

Pros:

• It has decent yield
• There is no sales load

Disclosure: No Position

Related bond fund:

• Fidelity Contrafund (FCNTX)
• Wells Fargo Advantage Premier Large Company Growth A (EKJAX)