Putnam High Yield Fund Semiannual report 5 | 31 | 21 Income funds invest in bonds and other securities with the goal of providing a steady stream of income over time. FUND SYMBOL CLASS A PHYIX Putnam High Yield Fund Semiannual report 5 | 31 | 21 Message from the Trustees 1 About the fund 2 Interview with your fund’s portfolio manager 5 Your fund’s performance 10 Your fund’s expenses 12 Consider these risks before investing 14 Terms and definitions 15 Other information for shareholders 17 Financial statements 18 Message from the Trustees July 9, 2021 Dear Fellow Shareholder: This summer, the economy is in a much different condition than a year ago, or even six months ago. Most states have lifted the Covid-19 pandemic-related restrictions, and U.S. gross domestic product has returned nearly to pre-2020 levels. However, the global economy is a different story. Beyond our shores, many nations lag the United States in vaccination rates and business activity. While there are reasons to feel some relief, it’s important to recognize what may be a new normal. Many changes hastened by the pandemic could be lasting. Dynamic, well-managed companies have adapted to seize new, more sustainable growth opportunities. An active investment philosophy is well suited to this time. Putnam’s research teams are analyzing the fundamentals of what has stayed the same and what has changed to uncover valuable investment insights and potential risks. Thank you for investing with Putnam. Respectfully yours, Robert L. Reynolds Kenneth R. Leibler President and Chief Executive Officer Chair, Board of Trustees Putnam Investments About the fund An attractive complement to stocks and Treasuries High-yield bonds have a number of features that can make them a compelling addition to a variety of portfolios. For one, high-yield bonds can be an attractive supplement — or even alternative — to equities. Since the start of the “lost decade” in 2000, high-yield bonds have outpaced stocks by a significant margin, and they have done so with a fraction of the volatility. For investors concerned about the risk entailed in today’s equity markets, high-yield bonds may be worth considering. The fund’s managers each have more than 25 years of investment experience Paul D. Scanlon, CFA Robert L. Salvin Norman P. Boucher Co-Head of Corporate Co-Head of Corporate Portfolio Manager and Tax-exempt Credit and Tax-exempt Credit Industry since 1985 Industry since 1986 Industry since 1986 At Putnam since 1998 At Putnam since 1999 At Putnam since 2000 High-yield bonds can help diversify a Treasury-oriented portfolio High-yield bonds can also complement a portfolio geared toward Treasuries, the prices of which tend to move in the opposite direction of interest rates. High-yield bonds generally trade based on investors’ perceptions of the health of the underlying corporate issuer, rather than on rates alone. In a strengthening economy, corporate fundamentals are often improving, and that can make high-yield bonds more attractive. Diversification does not assure a profit or protect against loss. It is possible to lose money in a diversified portfolio. 2 High Yield Fund Since 2000, high-yield bonds have outpaced the average annual return of equities by more than 20%, and have done so with over 40% less volatility. 80 2000–2020 Stocks High-yield bonds Average annualized return 6.61% 7.31% Standard deviation 15.15% 8.84% 60 40 20 0 -20 -40 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sources: S&P, JPMorgan, as of 12/31/20. Stocks are represented by the S&P 500 Index. High-yield bonds are represented by the JPMorgan Developed High Yield Index. Standard deviation measures how widely a set of values varies from the mean. It is a historical measure of the variability of return earned by an investment portfolio. Past performance does not indicate future results. You cannot invest directly in an index. Unlike stocks, bonds are subject to interest-rate risk, which means the prices of the fund’s bond investments are likely to fall if interest rates rise. Bond investments also are subject to credit risk, which is the risk that the issuer of the bond may default on payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds, which may be considered speculative. High Yield Fund 3 Performance history as of 5/31/21 Annualized total return (%) comparison The fund — class A shares Fund’s benchmark Fund’s Lipper before sales charge JPMorgan Developed peer group average Putnam High Yield Fund (PHYIX) High Yield Index High Yield Funds 16.30 14.85 13.66 7.46 7.16 7.18 6.76 6.61 6.30 6.39 6.11 6.16 5.41 5.34 4.94 3.90 4.39 LIFE OF FUND* 10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS (since 3/25/86) Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 10–12 for additional performance information. For a portion of the periods, the fund had expense limitations, without which returns would have been lower. To obtain the most recent month-end performance, visit putnam.com. Returns for periods of less than one year are not annualized. Lipper peer group average provided by Lipper, a Refinitiv company. * The fund’s benchmark, the JPMorgan Developed High Yield Index, was introduced on 12/31/94, which post-dates the inception of the fund’s class A shares. Recent broad market index and fund performance U.S. stocks (S&P 500 Index) 16.95% Fund’s benchmark (JPMorgan Developed High Yield Index) 4.94% Putnam High Yield Fund (class A shares before sales charge) 3.90% Cash (ICE BofA U.S. 3-Month Treasury Bill Index) 0.04% U.S. bonds (Bloomberg Barclays U.S. Aggregate Bond Index) –2.16% This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 5/31/21. See above and pages 10–12 for additional fund performance information. Index descriptions can be found on pages 15–16. All Bloomberg Barclays indices provided by Bloomberg Index Services Limited. 4 High Yield Fund Interview with your fund’s portfolio manager Interview with your fund’s portfolio manager Performance history as of 5/31/21 Paul Scanlon discusses the investing Annualized total return (%) comparison The fund — class A shares Fund’s benchmark Fund’s Lipper environment and fund results for the six months before sales charge JPMorgan Developed peer group average Putnam High Yield Fund (PHYIX) High Yield Index High Yield Funds ended May 31, 2021, and offers his outlook for 16.30 14.85 13.66 the fund. 7.46 7.16 7.18 6.76 6.61 6.30 6.39 6.11 6.16 5.41 5.34 4.94 3.90 4.39 LIFE OF FUND* 10 YEARS 5 YEARS 3 YEARS 1 YEAR 6 MONTHS (since 3/25/86) Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Paul, how would you describe the high-yield Share price, principal value, and return will fluctuate, and you may have a gain or a loss when you sell your shares. bond market during the period? Performance of class A shares assumes reinvestment of distributions and does not account for taxes. Fund returns in the High-yield bonds gained 4.94% for the six bar chart do not reflect a sales charge of 4.00%; had they, returns would have been lower. See below and pages 10–12 for additional performance information. For a portion of the periods, the fund had expense limitations, without which months ended May 31, 2021, as measured by returns would have been lower. To obtain the most recent month-end performance, visit putnam.com. the JPMorgan Developed High Yield Index. Driven by investor demand for higher-yielding Returns for periods of less than one year are not annualized. Paul D. Scanlon, CFA Lipper peer group average provided by Lipper, a Refinitiv company. Portfolio Manager securities, the asset class outpaced investment- grade [IG] corporate bonds and the broad IG * The fund’s benchmark, the JPMorgan Developed High Yield Index, was introduced on 12/31/94, which post-dates the Paul is Co-Head of Corporate and inception of the fund’s class A shares. fixed-income market. Tax-exempt Credit. He has an M.B.A. from the University of Chicago Booth The market began the period strongly, as news Recent broad market index and fund performance School of Business and a B.A. from of multiple Covid-19 vaccines fueled hopes of Colgate University. Paul joined Putnam returning to more normalcy in the economy, in 1999 and has been in the investment U.S. stocks markets, and society in 2021. Early in the (S&P 500 Index) 16.95% industry since 1986. new year, widespread vaccine distribution Norman P. Boucher and Robert L. Salvin Fund’s benchmark are also Portfolio Managers of the fund. bolstered investor optimism about the strength (JPMorgan Developed High Yield Index) 4.94% of the economic recovery.