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Mutual Fund Commentary

Investors looking for regular income flows and with the willingness to forgo capital growth often select equity funds promising income for their investment needs. The presence of both debt and equity income funds in a portfolio also increases diversification. Further, equity income funds provide a steady and regular income stream from dividends which can go a long way in healing losses made by falling stock prices. Equity income funds provide investors with a convenient method of holding a well diversified portfolio which generates a regular income stream

Below we will share with you 5 top rated equity income mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future. To view theZacks Rank and past performance of all equity income funds, then click here.

American Funds Income Fund of America A (AMECX) invests heavily in dividend paying securities. It uses at least 60% of its assets to purchase equity securities but may also invest in debt. Not more than 25% of its assets may be invested in foreign securities excluded from the S&P 500 Composite Index. The equity income mutual fund has a ten year annualized return of 5.51%.

The equity income mutual fund has a minimum initial investment of $250 and an expense ratio of 0.61% compared to a category average of 1.00%.

Fidelity Equity-Income (FEQIX - MF report) seeks income with a secondary objective of capital growth. The majority of the fund’s assets are invested in equity securities which generate significant income. It seeks to acquire large cap value stocks and purchases both domestic and foreign securities. The equity income mutual fund returned 7.05% in the last one year period.

As of September 2010, this equity income mutual fund held 201 issues, with 3.01% of its total assets invested in J.P. Morgan Chase & Co.

Parnassus Equity Income( PRBLX) invests at least 75% of its assets in equity securities which generate income from regular dividends. The fund holds a wide range of equity securities such as common and preferred stocks and related convertible securities. The equity income mutual fund has a five year annualized return of 5.86%.

Todd C. Ahlsten is the fund manager and she has managed this equity income mutual fund since 2001.

Alpine Dynamic Dividend (ADVDX - MF report) seeks high current income from dividends as well as capital appreciation over the long term. The majority of the fund’s assets are invested in domestic and foreign companies that pay out regular dividend income. The equity income mutual fund returned 5.69% in the last one year period.

The equity income mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.18% compared to a category average of 1.13%.

Neuberger Berman Equity Income A (NBHAX - MF report) invests a large share of its assets in equity securities which generate income. This includes convertible securities, common stocks and master limited partnerships. The equity income mutual fund returned 19.68% in the last one year period.

Alexandra S. Pomeroy is the fund manager and she has managed this equity income mutual fund since 2006.

To view the Zacks Rank and past performance of all equity income mutual funds, then click here.

About Zacks Mutual Fund Rank

By applying the Zacks Rank to mutual funds, investors can find funds that not only outpaced the market in the past but are also expected to outperform going forward. Learn more about the Zacks Mutual Fund Rank at http://www.zacks.com/funds/mutualfund/

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