a_equityincome.htm


	UNITED STATES SECURITIES AND EXCHANGE COMMISSION


	Washington, D.C. 20549


	FORM N-CSR


	CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES


	Investment Company Act file number:	(811–02742)


	Exact name of registrant as specified in charter:	Putnam Equity Income Fund


	Address of principal executive offices:	100 Federal Street, Boston, Massachusetts 02110


	Name and address of agent for service:	Robert T. Burns, Vice President 100 Federal Street Boston, Massachusetts 02110


	Copy to:	Bryan Chegwidden, Esq. Ropes & Gray LLP 1211 Avenue of the Americas New York, New York 10036


	Registrant's telephone number, including area code:	(617) 292–1000


	Date of fiscal year end:	November 30, 2019


	Date of reporting period:	December 1, 2018 — May 31, 2019


	Item 1. Report to Stockholders:


	The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Investment Company Act of 1940:

Putnam
Equity Income
Fund

Semiannual report
5 | 31 | 19


Message from the Trustees	1
About the fund	2
Interview with your fund’s portfolio manager	5
Your fund’s performance	9
Your fund’s expenses	12
Consider these risks before investing	14
Terms and definitions	15
Other information for shareholders	16
Financial statements	17

IMPORTANT NOTICE: Delivery of paper fund reports

In accordance with regulations adopted by the Securities and Exchange Commission, beginning on January 1, 2021, reports like this one will no longer be sent by mail unless you specifically request it. Instead, they will be on Putnam’s website, and you will be notified by mail whenever a new one is available, and provided with a website link to access the report.

If you wish to stop receiving paper reports sooner, or if you wish to continue to receive paper reports free of charge after January 1, 2021, please see the back cover or insert for instructions. If you invest through a bank or broker, your choice will apply to all funds held in your account. If you invest directly with Putnam, your choice will apply to all Putnam funds in your account.

If you already receive these reports electronically, no action is required.

Message from the Trustees

July 9, 2019

Dear Fellow Shareholder:

If there is any lesson to be learned from constantly changing financial markets, it is the importance of positioning your investment portfolio for your long-term goals. We believe that one strategy is to diversify across different asset classes and investment approaches.

We also believe your mutual fund investment offers a number of advantages, including constant monitoring by experienced investment professionals who maintain a long-term perspective. Putnam’s portfolio managers and analysts take a research-intensive approach that includes risk management strategies designed to serve you through changing conditions.

Another key strategy, in our view, is seeking the counsel of a financial advisor. For over 80 years, Putnam has recognized the importance of professional investment advice. Your financial advisor can help in many ways, including defining and planning for goals such as retirement, evaluating the level of risk appropriate for you, and reviewing your investments on a regular basis and making adjustments as necessary.

As always, your fund’s Board of Trustees remains committed to protecting the interests of Putnam shareholders like you, and we thank you for investing with Putnam.

Value-style investing is grounded in a basic concept: The stock market always offers something at a discount. Putnam Equity Income Fund Portfolio Manager Darren Jaroch scours the universe of large companies, seeking attractively priced stocks of businesses that he believes are poised for positive change.

2 Equity Income Fund

Pursuing positive returns in all types of markets

For rolling five-year periods over the past 15 years, Putnam Equity Income Fund delivered a positive return 97% of the time.

A multidimensional approach to value investing

The fund targets a wider array of opportunities than many other equity income funds, with an emphasis on businesses that could enhance capital appreciation potential.

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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 5.75%; had they, returns would have been lower. See below and pages 9–11 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.

* The fund’s benchmark, the Russell 1000 Value Index, was introduced on 12/31/78, which post-dates the inception of the fund’s class A shares.

† Returns for the six-month period are not annualized, but cumulative.

This comparison shows your fund’s performance in the context of broad market indexes for the six months ended 5/31/19. See above and pages 9–11 for additional fund performance information. Index descriptions can be found on pages 15–16.

4 Equity Income Fund

Darren, could you tell us about the investing environment for the reporting period?

The period began in December 2018, which turned out to be an extremely challenging month for U.S. stock market investors. After two months of increasing turbulence, stock markets took a sharper turn downward in December, and major stock indexes finished the year with their worst annual performance since 2008. Among the issues that contributed to the downturn were geopolitical instability, uncertainty about monetary policy, and the ongoing U.S.–China trade dispute.

After the difficult end to 2018, stocks rebounded quite dramatically in the early months of 2019. The Federal Reserve’s decision to put interest-rate hikes on hold boosted investor sentiment, as did signs of progress in the global trade conflict. Positive corporate earnings and better-than-expected economic growth helped U.S. stocks advance through April, when all three major indexes posted solid returns. However, in May, the final month of the period, stocks posted losses again, mainly due to recurring worries about the U.S.–China trade conflict.

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Allocations are shown as a percentage of the fund’s net assets as of 5/31/19. Cash and net other assets, if any, represent the market value weights of cash, derivatives, short-term securities, and other unclassified assets in the portfolio. Summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

This table shows the fund’s top 10 holdings by percentage of the fund’s net assets as of 5/31/19. Short-term investments and derivatives, if any, are excluded. Holdings may vary over time.

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How did the fund perform in this environment?

The fund’s class A shares posted a return of –0.60% for the six-month period, outperforming its benchmark, the Russell 1000 Value Index, which returned –1.96%. The fund also performed better than the average return of –1.30% for funds in its Lipper peer group.

Could you provide some examples of stocks or strategies that helped the fund’s performance?

Our investment in Microsoft was the top contributor to performance for the period. The company has generated earnings that exceeded analysts’ estimates, and we believe it continues to offer attractive earnings prospects. In our assessment, Microsoft is attractively valued for what it offers. The company excels in its three core businesses. Most of its peers focus on just one of those businesses, yet those peers trade at much higher multiples.

Microsoft’s divisions include its classic Office 365 franchise, a software-as-a-service business that is now offered as a paid subscription. Its cloud-computing business, Azure, has delivered solid revenue growth and is a key competitor in this segment of the market. And Microsoft’s video gaming business, best known for Xbox, offers an impressive lineup of gaming platforms.

Another highlight for the period was our investment in aerospace and defense company Northrop Grumman, a stock that is not part of the fund’s benchmark index. In 2018, Northrop struggled along with its industry as uncertainty arose about defense spending and possible budget cuts. However, Northrop stock recovered in 2019, due in part to strong financial performance, including better-than-expected earnings for the first quarter of 2019. Northrop stock remained in the portfolio at period-end. In our view, this is a well-managed company that focuses on cash flow, profitability, and returning cash to shareholders.

Can you discuss some stocks that detracted from fund performance?

The top detractor for the period was Cigna, a health insurance service company. The stock declined in response to the company’s acquisition of Express Scripts, a pharmacy benefit management firm. While many investors believed that Cigna overpaid for it, our view is more positive. We believe the deal enhances Cigna’s core business, improves the customer experience, and will generate significant additional free cash flow. Investors also shunned Cigna in response to proposals from presidential candidates for a single-payer or “Medicare for all” system in the United States. We believe such a system is not even a remote possibility. In fact, if Medicare expands, which is a more likely outcome in our view, we believe the managed care industry as a whole would benefit.

Also detracting from performance was our investment in Alcoa, a U.S.-based aluminum producer. The company has been pressured, along with the entire metals and mining industry, by concerns over the trade conflict as well as the slowdown in economic growth in China. Another disappointment was the stock of Kroger, a grocery retailer. The company has been facing increased competition — from other traditional grocers, as well as from online businesses and large retailers that have recently entered the grocery business.

How did derivatives affect fund performance?

During the period, forward currency contracts had a positive impact on the fund’s relative performance. We used these contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date, to hedge the fund’s foreign exchange risk. Also, our

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use of futures to equitize cash had a negative impact on fund performance, as the market value of the futures held in the fund decreased during the period.

What is your outlook for the months ahead?

Over the past three years, many stocks have been left behind by investors who were only attracted to a select group of high-multiple growth stocks. Until very recently, it was challenging to find value in those “left behind” names. While some of these businesses are permanently impaired, many others were unfairly punished in the 2018 fourth-quarter downturn, in our view. Today, for the first time in a while, we view the equity universe as fertile ground for attractive, undervalued companies.

A number of risks remain, including the ongoing U.S.–China trade conflict. We have yet to see a resolution, and any setbacks with this situation could be quite disruptive for stock markets. Another key risk is a continued global economic slowdown. Many market observers believe we have reached the end of this growth cycle and are heading toward a recession. Others believe we are entering a mid-cycle slowdown. We do not believe a recession is imminent, but it may be a higher probability than it was six months ago.

Thanks for your time and for bringing us up to date, Darren.

The views expressed in this report are exclusively those of Putnam Management and are subject to change. They are not meant as investment advice.

Please note that the holdings discussed in this report may not have been held by the fund for the entire period. Portfolio composition is subject to review in accordance with the fund’s investment strategy and may vary in the future. Current and future portfolio holdings are subject to risk.

This chart shows the fund’s largest allocation shifts, by percentage, over the past six months. Allocations are shown as a percentage of the fund’s net assets. Current period summary information may differ from the portfolio schedule included in the financial statements due to the inclusion of derivative securities, any interest accruals, the exclusion of as-of trades, if any, the use of different classifications of securities for presentation purposes, and rounding. Holdings and allocations may vary over time.

8 Equity Income Fund

Your fund’s performance

This section shows your fund’s performance, price, and distribution information for periods ended May 31, 2019, the end of the first half of its current fiscal year. In accordance with regulatory requirements for mutual funds, we also include performance information as of the most recent calendar quarter-end and expense information taken from the fund’s current prospectus. Performance should always be considered in light of a fund’s investment strategy. Data represent past performance. Past performance does not guarantee future results. More recent returns may be less or more than those shown. Investment return and principal value will fluctuate, and you may have a gain or a loss when you sell your shares. Performance information does not reflect any deduction for taxes a shareholder may owe on fund distributions or on the redemption of fund shares. For the most recent month-end performance, please visit the Individual Investors section at putnam.com or call Putnam at 1-800-225-1581. Class R, R5, R6, and Y shares are not available to all investors. See the Terms and definitions section in this report for definitions of the share classes offered by your fund.

Fund performance Total return for periods ended 5/31/19


	Annual
	average
	(life of		Annual		Annual		Annual
	fund)	10 years	average	5 years	average	3 years	average	1 year	6 months
Class A (6/15/77)
Before sales charge	10.01%	220.89%	12.37%	38.97%	6.80%	30.97%	9.41%	0.12%	–0.60%
After sales charge	9.85	202.44	11.70	30.98	5.55	23.44	7.27	–5.64	–6.32
Class B (9/13/93)
Before CDSC	9.79	202.17	11.69	33.88	6.01	28.02	8.58	–0.64	–1.02
After CDSC	9.79	202.17	11.69	31.88	5.69	25.02	7.73	–5.35	–5.72
Class C (2/1/99)
Before CDSC	9.81	197.35	11.51	33.81	6.00	27.99	8.57	–0.65	–1.04
After CDSC	9.81	197.35	11.51	33.81	6.00	27.99	8.57	–1.59	–1.98
Class M (12/2/94)
Before sales charge	9.37	205.14	11.80	35.53	6.27	29.03	8.87	–0.39	–0.87
After sales charge	9.27	194.46	11.40	30.78	5.51	24.51	7.58	–3.88	–4.34
Class R (1/21/03)
Net asset value	9.73	212.76	12.08	37.22	6.53	29.97	9.13	–0.14	–0.78
Class R5 (7/2/12)
Net asset value	10.15	230.09	12.68	40.95	7.11	31.97	9.69	0.36	–0.53
Class R6 (7/2/12)
Net asset value	10.17	232.43	12.76	41.74	7.23	32.47	9.83	0.49	–0.45
Class Y (10/1/98)
Net asset value	10.14	228.79	12.64	40.76	7.08	31.98	9.69	0.38	–0.51

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. After-sales-charge returns for class A and M shares reflect the deduction of the maximum 5.75% and 3.50% sales charge, respectively, levied at the time of purchase. Class B share returns after contingent deferred sales charge (CDSC) reflect the applicable CDSC, which is 5% in the first year, declining over time to 1% in the sixth year, and is eliminated thereafter. Class C share returns after CDSC reflect a 1% CDSC for the first year that is eliminated thereafter. Class R, R5, R6, and Y shares have no initial sales charge or CDSC. Performance for class B, C, M, R, and Y shares before their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares, except for class Y shares, for which 12b-1 fees are not

Equity Income Fund 9

applicable. Performance for class R5 and R6 shares prior to their inception is derived from the historical performance of class Y shares and has not been adjusted for the lower investor servicing fees applicable to class R5 and R6 shares; had it, returns would have been higher.

For a portion of the periods, the fund had expense limitations, without which returns would have been lower.

Class B share performance reflects conversion to class A shares after eight years.

Class C share performance reflects conversion to class A shares after 10 years.

Comparative index returns For periods ended 5/31/19


	Annual
	average
	(life of		Annual		Annual		Annual
	fund)	10 years	average	5 years	average	3 years	average	1 year	6 months
Russell 1000 Value Index	—^†	219.79%	12.33%	37.20%	6.53%	25.91%	7.98%	1.45%	–1.96%
Lipper Equity Income
Funds category average^*	10.47%	193.88	11.32	34.95	6.10	25.52	7.81	1.08	–1.30

Index and Lipper results should be compared with fund performance before sales charge, before CDSC, or at net asset value.

^*Over the 6-month, 1-year, 3-year, 5-year, 10-year, and life-of-fund periods ended 5/31/19, there were 548, 541, 472, 417, 247, and 4 funds, respectively, in this Lipper category.

^†The fund’s benchmark, the Russell 1000 Value Index, was introduced on 12/31/78, which post-dates the inception of the fund’s class A shares.

Fund price and distribution information For the 6-month period ended 5/31/19


Distributions	Class A		Class B	Class C	Class M		Class R	Class R5	Class R6	Class Y
Number	2		2	2	2		2	2	2	2
Income	$0.267		$0.176	$0.180	$0.209		$0.237	$0.302	$0.310	$0.297
Capital gains
Long-term
gains	0.820		0.820	0.820	0.820		0.820	0.820	0.820	0.820
Short-term
gains	0.097		0.097	0.097	0.097		0.097	0.097	0.097	0.097
Total	$1.184		$1.093	$1.097	$1.126		$1.154	$1.219	$1.227	$1.214
	Before	After	Net	Net	Before	After	Net	Net	Net	Net
	sales	sales	asset	asset	sales	sales	asset	asset	asset	asset
Share value	charge	charge	value	value	charge	charge	value	value	value	value
11/30/18	$24.48	$25.97	$24.17	$24.17	$24.14	$25.02	$24.29	$24.51	$24.51	$24.50
5/31/19	23.03	24.44	22.72	22.71	22.69	23.51	22.83	23.04	23.05	23.04
Current rate	Before	After	Net	Net	Before	After	Net	Net	Net	Net
(end of	sales	sales	asset	asset	sales	sales	asset	asset	asset	asset
period)	charge	charge	value	value	charge	charge	value	value	value	value
Current
dividend rate¹	1.37%	1.29%	0.60%	0.63%	0.90%	0.87%	1.12%	1.70%	1.74%	1.63%
Current
30-day
SEC yield²	N/A	1.48	0.79	0.79	N/A	1.01	1.31	1.83	1.93	1.83

The classification of distributions, if any, is an estimate. Before-sales-charge share value and current dividend rate for class A and M shares, if applicable, do not take into account any sales charge levied at the time of purchase.

After-sales-charge share value, current dividend rate, and current 30-day SEC yield, if applicable, are calculated assuming that the maximum sales charge (5.75% for class A shares and 3.50% for class M shares) was levied at the time of purchase. Final distribution information will appear on your year-end tax forms.

10 Equity Income Fund

¹Most recent distribution, including any return of capital and excluding capital gains, annualized and divided by NAV or market price at end of period.

²Based only on investment income and calculated using the maximum offering price for each share class, in accordance with SEC guidelines.

Fund performance as of most recent calendar quarter Total return for periods ended 6/30/19


	Annual
	average
	(life of		Annual		Annual		Annual
	fund)	10 years	average	5 years	average	3 years	average	1 year	6 months
Class A (6/15/77)
Before sales charge	10.15%	235.52%	12.87%	44.90%	7.70%	39.04%	11.61%	6.54%	16.46%
After sales charge	10.00	216.23	12.20	36.57	6.43	31.05	9.43	0.42	9.76
Class B (9/13/93)
Before CDSC	9.94	215.99	12.19	39.53	6.89	35.88	10.76	5.74	15.97
After CDSC	9.94	215.99	12.19	37.53	6.58	32.88	9.94	0.74	10.97
Class C (2/1/99)
Before CDSC	9.95	211.36	12.03	39.58	6.90	35.97	10.79	5.78	15.98
After CDSC	9.95	211.36	12.03	39.58	6.90	35.97	10.79	4.78	14.98
Class M (12/2/94)
Before sales charge	9.52	219.29	12.31	41.28	7.16	36.98	11.06	6.01	16.16
After sales charge	9.42	208.11	11.91	36.33	6.39	32.18	9.75	2.30	12.10
Class R (1/21/03)
Net asset value	9.88	227.14	12.58	43.06	7.43	37.98	11.33	6.28	16.25
Class R5 (7/2/12)
Net asset value	10.30	245.45	13.20	47.00	8.01	40.15	11.91	6.84	16.57
Class R6 (7/2/12)
Net asset value	10.32	247.67	13.27	47.71	8.11	40.55	12.01	6.93	16.61
Class Y (10/1/98)
Net asset value	10.29	243.94	13.15	46.71	7.97	40.06	11.89	6.82	16.55

See the discussion following the fund performance table on page 9 for information about the calculation of fund performance.

Equity Income Fund 11

Your fund’s expenses

As a mutual fund investor, you pay ongoing expenses, such as management fees, distribution fees (12b-1 fees), and other expenses. Using the following information, you can estimate how these expenses affect your investment and compare them with the expenses of other funds. You may also pay one-time transaction expenses, including sales charges (loads) and redemption fees, which are not shown in this section and would have resulted in higher total expenses. For more information, see your fund’s prospectus or talk to your financial representative.

Expense ratios


	Class A	Class B	Class C	Class M	Class R	Class R5	Class R6	Class Y
Total annual operating
expenses for the fiscal year
ended 11/30/18	0.91%	1.66%	1.66%	1.41%	1.16%	0.65%	0.55%	0.66%
Annualized expense ratio
for the six-month period
ended 5/31/19	0.91%	1.66%	1.66%	1.41%	1.16%	0.65%	0.55%	0.66%

Fiscal-year expense information in this table is taken from the most recent prospectus, is subject to change, and may differ from that shown for the annualized expense ratio and in the financial highlights of this report.

Expenses are shown as a percentage of average net assets.

Expenses per $1,000

The following table shows the expenses you would have paid on a $1,000 investment in each class of the fund from 12/1/18 to 5/31/19. It also shows how much a $1,000 investment would be worth at the close of the period, assuming actual returns and expenses.


	Class A	Class B	Class C	Class M	Class R	Class R5	Class R6	Class Y
Expenses paid per $1,000^*†	$4.52	$8.24	$8.23	$7.00	$5.76	$3.23	$2.74	$3.28
Ending value (after expenses)	$994.00	$989.80	$989.60	$991.30	$992.20	$994.70	$995.50	$994.90

^*Expenses for each share class are calculated using the fund’s annualized expense ratio for each class, which represents the ongoing expenses as a percentage of average net assets for the six months ended 5/31/19. The expense ratio may differ for each share class.

^†Expenses are calculated by multiplying the expense ratio by the average account value for the period; then multiplying the result by the number of days in the period; and then dividing that result by the number of days in the year.

12 Equity Income Fund

Estimate the expenses you paid

To estimate the ongoing expenses you paid for the six months ended 5/31/19, use the following calculation method. To find the value of your investment on 12/1/18, call Putnam at 1-800-225-1581.

Compare expenses using the SEC’s method

The Securities and Exchange Commission (SEC) has established guidelines to help investors assess fund expenses. Per these guidelines, the following table shows your fund’s expenses based on a $1,000 investment, assuming a hypothetical 5% annualized return. You can use this information to compare the ongoing expenses (but not transaction expenses or total costs) of investing in the fund with those of other funds. All mutual fund shareholder reports will provide this information to help you make this comparison. Please note that you cannot use this information to estimate your actual ending account balance and expenses paid during the period.


	Class A	Class B	Class C	Class M	Class R	Class R5	Class R6	Class Y
Expenses paid per $1,000^*†	$4.58	$8.35	$8.35	$7.09	$5.84	$3.28	$2.77	$3.33
Ending value (after expenses)	$1,020.39	$1,016.65	$1,016.65	$1,017.90	$1,019.15	$1,021.69	$1,022.19	$1,021.64

^†Expenses are calculated by multiplying the expense ratio by the average account value for the six-month period; then multiplying the result by the number of days in the six-month period; and then dividing that result by the number of days in the year.

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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. The value of investments in the fund’s portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political or financial market conditions, investor sentiment and market perceptions, government actions, geopolitical events or changes, and factors related to a specific issuer, geography, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund’s portfolio holdings. You can lose money by investing in the fund.

14 Equity Income Fund

Terms and definitions

Important terms

Total return shows how the value of the fund’s shares changed over time, assuming you held the shares through the entire period and reinvested all distributions in the fund.

Before sales charge, or net asset value, is the price, or value, of one share of a mutual fund, without a sales charge. Before-sales-charge figures fluctuate with market conditions, and are calculated by dividing the net assets of each class of shares by the number of outstanding shares in the class.

After sales charge is the price of a mutual fund share plus the maximum sales charge levied at the time of purchase. After-sales-charge performance figures shown here assume the 5.75% maximum sales charge for class A shares and 3.50% for class M shares.

Contingent deferred sales charge (CDSC) is generally a charge applied at the time of the redemption of class B or C shares and assumes redemption at the end of the period. Your fund’s class B CDSC declines over time from a 5% maximum during the first year to 1% during the sixth year. After the sixth year, the CDSC no longer applies. The CDSC for class C shares is 1% for one year after purchase.

Share classes

Class A shares are generally subject to an initial sales charge and no CDSC (except on certain redemptions of shares bought without an initial sales charge).

Class B shares are closed to new investments and are only available by exchange from another Putnam fund or through dividend and/or capital gains reinvestment. They are not subject to an initial sales charge and may be subject to a CDSC.

Class C shares are not subject to an initial sales charge and are subject to a CDSC only if the shares are redeemed during the first year.

Class M shares have a lower initial sales charge and a higher 12b-1 fee than class A shares and no CDSC.

Class R shares are not subject to an initial sales charge or CDSC and are only available to employer-sponsored retirement plans.

Class R5 shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are only available to employer-sponsored retirement plans.

Class R6 shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to employer-sponsored retirement plans, corporate and institutional clients, and clients in other approved programs.

Class Y shares are not subject to an initial sales charge or CDSC and carry no 12b-1 fee. They are generally only available to corporate and institutional clients and clients in other approved programs.

Comparative indexes

Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index of U.S. investment-grade fixed-income securities.

ICE BofAML (Intercontinental Exchange Bank of America Merrill Lynch) U.S. 3-Month Treasury Bill Index is an unmanaged index that seeks to measure the performance of U.S. Treasury bills available in the marketplace.

Russell 1000 Value Index is an unmanaged index of those companies in the large-cap Russell 1000 Index chosen for their value orientation.

S&P 500 Index is an unmanaged index of common stock performance.

Indexes assume reinvestment of all distributions and do not account for fees. Securities and performance of a fund and an index will differ. You cannot invest directly in an index.

ICE Data Indices, LLC (“ICE BofAML”), used with permission. ICE BofAML permits use of the ICE BofAML

Equity Income Fund 15

indices and related data on an “as is” basis; makes no warranties regarding same; does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofAML indices or any data included in, related to, or derived therefrom; assumes no liability in connection with the use of the foregoing; and does not sponsor, endorse, or recommend Putnam Investments, or any of its products or services.

Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

Lipper is a third-party industry-ranking entity that ranks mutual funds. Its rankings do not reflect sales charges. Lipper rankings are based on total return at net asset value relative to other funds that have similar current investment styles or objectives as determined by Lipper. Lipper may change a fund’s category assignment at its discretion. Lipper category averages reflect performance trends for funds within a category.

Other information for shareholders

Important notice regarding delivery of shareholder documents

In accordance with Securities and Exchange Commission (SEC) regulations, Putnam sends a single copy of annual and semiannual shareholder reports, prospectuses, and proxy statements to Putnam shareholders who share the same address, unless a shareholder requests otherwise. If you prefer to receive your own copy of these documents, please call Putnam at 1-800-225-1581, and Putnam will begin sending individual copies within 30 days.

Proxy voting

Putnam is committed to managing our mutual funds in the best interests of our shareholders. The Putnam funds’ proxy voting guidelines and procedures, as well as information regarding how your fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2018, are available in the Individual Investors section of putnam.com and on the SEC’s website, www.sec.gov. If you have questions about finding forms on the SEC’s website, you may call the SEC at 1-800-SEC-0330. You may also obtain the Putnam funds’ proxy voting guidelines and procedures at no charge by calling Putnam’s Shareholder Services at 1-800-225-1581.

Fund portfolio holdings

The fund will file a complete schedule of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-PORT within 60 days of the end of such fiscal quarter. Shareholders may obtain the fund’s Form N-PORT on the SEC’s website at www.sec.gov.

Prior to its use of Form N-PORT, the fund filed its complete schedule of its portfolio holdings with the SEC on Form N-Q, which is available online at www.sec.gov.

Trustee and employee fund ownership

Putnam employees and members of the Board of Trustees place their faith, confidence, and, most importantly, investment dollars in Putnam mutual funds. As of May 31, 2019, Putnam employees had approximately $488,000,000 and the Trustees had approximately $69,000,000 invested in Putnam mutual funds. These amounts include investments by the Trustees’ and employees’ immediate family members as well as investments through retirement and deferred compensation plans.

16 Equity Income Fund

Financial statements

These sections of the report, as well as the accompanying Notes, constitute the fund’s financial statements.

The fund’s portfolio lists all the fund’s investments and their values as of the last day of the reporting period. Holdings are organized by asset type and industry sector, country, or state to show areas of concentration and diversification.

Statement of assets and liabilities shows how the fund’s net assets and share price are determined. All investment and non-investment assets are added together. Any unpaid expenses and other liabilities are subtracted from this total. The result is divided by the number of shares to determine the net asset value per share, which is calculated separately for each class of shares. (For funds with preferred shares, the amount subtracted from total assets includes the liquidation preference of preferred shares.)

Statement of operations shows the fund’s net investment gain or loss. This is done by first adding up all the fund’s earnings — from dividends and interest income — and subtracting its operating expenses to determine net investment income (or loss). Then, any net gain or loss the fund realized on the sales of its holdings — as well as any unrealized gains or losses over the period — is added to or subtracted from the net investment result to determine the fund’s net gain or loss for the fiscal period.

Statement of changes in net assets shows how the fund’s net assets were affected by the fund’s net investment gain or loss, by distributions to shareholders, and by changes in the number of the fund’s shares. It lists distributions and their sources (net investment income or realized capital gains) over the current reporting period and the most recent fiscal year-end. The distributions listed here may not match the sources listed in the Statement of operations because the distributions are determined on a tax basis and may be paid in a different period from the one in which they were earned. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year.

Financial highlights provide an overview of the fund’s investment results, per-share distributions, expense ratios, net investment income ratios, and portfolio turnover in one summary table, reflecting the five most recent reporting periods. In a semiannual report, the highlights table also includes the current reporting period.

Equity Income Fund 17

The fund’s portfolio 5/31/19 (Unaudited)


COMMON STOCKS (96.0%)*	Shares	Value
Aerospace and defense (3.3%)
Northrop Grumman Corp.	826,090	$250,511,793
Raytheon Co.	841,700	146,876,650
		397,388,443
Airlines (0.7%)
Southwest Airlines Co.	1,884,300	89,692,680
		89,692,680
Auto components (0.6%)
Delphi Automotive PLC	1,186,100	75,957,844
		75,957,844
Automobiles (0.8%)
General Motors Co.	2,983,519	99,470,523
		99,470,523
Banks (13.0%)
Bank of America Corp.	14,128,594	375,820,600
BB&T Corp.	1,617,400	75,613,450
Citigroup, Inc.	5,320,703	330,681,691
JPMorgan Chase & Co.	4,497,746	476,581,166
KeyCorp	4,013,900	64,101,983
PNC Financial Services Group, Inc. (The)	547,352	69,656,016
Regions Financial Corp.	4,568,098	63,176,795
Wells Fargo & Co.	2,586,740	114,773,654
		1,570,405,355
Beverages (2.2%)
Keurig Dr Pepper, Inc. ^S	1,121,500	31,615,085
Molson Coors Brewing Co. Class B	1,692,600	93,059,148
PepsiCo, Inc.	1,143,200	146,329,600
		271,003,833
Biotechnology (2.1%)
Amgen, Inc.	818,100	136,377,270
Gilead Sciences, Inc.	1,936,900	120,572,025
		256,949,295
Building products (1.8%)
Fortune Brands Home & Security, Inc.	1,821,300	87,531,678
Johnson Controls International PLC	3,492,141	134,517,271
		222,048,949
Capital markets (3.0%)
Charles Schwab Corp. (The)	1,326,800	55,208,148
Goldman Sachs Group, Inc. (The)	541,993	98,908,303
KKR & Co., Inc. Class A	5,665,096	126,218,339
State Street Corp.	1,416,780	78,277,095
		358,611,885
Chemicals (2.2%)
Air Products & Chemicals, Inc.	555,100	113,012,809
Dow, Inc. ^†	996,216	46,583,060
DuPont de Nemours, Inc.	2,988,649	91,213,567
Sherwin-Williams Co. (The)	44,700	18,749,415
		269,558,851

18 Equity Income Fund


COMMON STOCKS (96.0%)* cont.	Shares	Value
Commercial services and supplies (—%)
New Bigfoot Other Assets GmbH (acquired 8/2/13, cost $52) (Private)
(Germany) ^{† ∆∆ F}	39	$33
New Middle East Other Assets GmbH (acquired 8/2/13, cost $21) (Private)
(Germany) ^{† ∆∆ F}	16	13
		46
Communications equipment (1.4%)
Cisco Systems, Inc.	3,201,307	166,564,003
		166,564,003
Consumer finance (0.7%)
Capital One Financial Corp.	950,100	81,585,087
Oportun Financial Corp. (acquired 6/23/15, cost $2,781,056) (Private) ^{† ∆∆ F}	975,809	2,092,280
		83,677,367
Containers and packaging (1.0%)
Ball Corp.	1,874,600	115,081,694
		115,081,694
Diversified telecommunication services (1.9%)
AT&T, Inc.	5,089,900	155,649,142
Verizon Communications, Inc.	1,290,070	70,115,305
		225,764,447
Electric utilities (4.7%)
American Electric Power Co., Inc.	2,177,400	187,517,688
Edison International	1,504,100	89,298,417
Exelon Corp.	3,300,800	158,702,464
NextEra Energy, Inc.	656,500	130,124,865
		565,643,434
Electrical equipment (0.3%)
Emerson Electric Co.	594,500	35,812,680
		35,812,680
Energy equipment and services (0.3%)
Halliburton Co.	1,962,500	41,781,625
		41,781,625
Equity real estate investment trusts (REITs) (3.5%)
American Tower Corp.	937,141	195,646,927
Boston Properties, Inc.	696,200	91,083,846
Gaming and Leisure Properties, Inc.	3,379,946	133,474,068
		420,204,841
Food and staples retail (4.8%)
BJ’s Wholesale Club Holdings, Inc. ^{† S}	4,452,482	111,223,000
Kroger Co. (The)	5,223,400	119,145,754
Walgreens Boots Alliance, Inc.	1,183,900	58,413,626
Walmart, Inc.	2,904,700	294,652,768
		583,435,148
Health-care equipment and supplies (2.8%)
Becton Dickinson and Co.	890,895	207,970,529
Danaher Corp.	1,029,100	135,851,491
		343,822,020
Health-care providers and services (1.4%)
Cigna Corp.	1,117,800	165,456,756
		165,456,756

Equity Income Fund 19


COMMON STOCKS (96.0%)* cont.	Shares	Value
Hotels, restaurants, and leisure (1.0%)
Hilton Worldwide Holdings, Inc.	1,355,999	$121,280,551
		121,280,551
Household durables (0.6%)
HC Brillant Services GmbH (acquisition dates ranging from
8/2/13 to 8/31/16, cost $52) (Private) (Germany) ^{† ∆∆ F}	78	65
PulteGroup, Inc.	2,510,200	77,816,200
		77,816,265
Household products (1.4%)
Procter & Gamble Co. (The)	1,627,500	167,486,025
		167,486,025
Independent power and renewable electricity producers (0.8%)
NRG Energy, Inc.	3,004,600	102,276,584
		102,276,584
Industrial conglomerates (1.0%)
General Electric Co.	2,826,820	26,685,181
Honeywell International, Inc.	558,200	91,717,842
		118,403,023
Insurance (3.5%)
American International Group, Inc.	2,934,178	149,848,470
Assured Guaranty, Ltd.	4,176,980	170,713,173
Hartford Financial Services Group, Inc. (The)	1,904,000	100,264,640
		420,826,283
Internet and direct marketing retail (—%)
Global Fashion Group SA (acquired 8/2/13, cost $2,567,154) (Private)
(Luxembourg) ^{† ∆∆ F}	60,600	544,335
		544,335
IT Services (1.7%)
DXC Technology Co.	1,550,200	73,696,508
Fidelity National Information Services, Inc.	1,061,400	127,686,420
		201,382,928
Machinery (0.5%)
Stanley Black & Decker, Inc.	461,800	58,750,196
		58,750,196
Media (2.6%)
Charter Communications, Inc. Class A ^†	388,659	146,446,711
Comcast Corp. Class A	4,115,200	168,723,200
		315,169,911
Metals and mining (1.0%)
Alcoa Corp. ^†	3,220,000	68,231,800
Freeport-McMoRan, Inc. (Indonesia)	5,268,900	51,161,019
		119,392,819
Mortgage real estate investment trusts (REITs) (0.3%)
MFA Financial, Inc.	5,082,805	35,782,947
		35,782,947
Oil, gas, and consumable fuels (10.2%)
Anadarko Petroleum Corp.	1,741,482	122,548,088
BP PLC (United Kingdom)	20,336,082	137,921,372
ConocoPhillips	3,145,000	185,429,200
Encana Corp. (Canada)	7,150,700	37,721,583
Enterprise Products Partners LP	4,683,600	130,625,604

20 Equity Income Fund


COMMON STOCKS (96.0%)* cont.	Shares	Value
Oil, gas, and consumable fuels cont.
EOG Resources, Inc.	702,700	$57,537,076
Exxon Mobil Corp.	2,798,092	198,020,971
Kinder Morgan, Inc.	4,281,700	85,419,915
Marathon Oil Corp.	4,331,680	56,961,592
TOTAL SA (France)	2,041,421	105,597,339
Valero Energy Corp.	1,624,300	114,350,720
		1,232,133,460
Personal products (0.3%)
Coty, Inc. Class A	2,601,321	32,100,301
		32,100,301
Pharmaceuticals (7.0%)
AstraZeneca PLC ADR (United Kingdom) ^S	3,656,600	136,683,708
Eli Lilly & Co.	1,314,200	152,368,348
Johnson & Johnson	1,869,270	245,154,761
Merck & Co., Inc.	2,412,091	191,061,728
Pfizer, Inc.	2,777,820	115,335,086
		840,603,631
Road and rail (1.4%)
Union Pacific Corp.	1,039,700	173,401,166
		173,401,166
Semiconductors and semiconductor equipment (2.7%)
Intel Corp.	2,012,700	88,639,308
NXP Semiconductors NV	591,600	52,155,456
Qualcomm, Inc.	1,765,300	117,957,346
Texas Instruments, Inc. ^S	672,000	70,096,320
		328,848,430
Software (3.3%)
Microsoft Corp.	3,225,800	398,966,944
		398,966,944
Specialty retail (1.5%)
Home Depot, Inc. (The)	508,800	96,595,680
O’Reilly Automotive, Inc. ^†	220,700	81,961,359
		178,557,039
Technology hardware, storage, and peripherals (1.5%)
Apple, Inc.	1,009,600	176,750,672
		176,750,672
Thrifts and mortgage finance (1.2%)
Radian Group, Inc.	6,220,840	139,657,858
		139,657,858
Total common stocks (cost $8,723,084,928)		$11,598,463,087


CONVERTIBLE PREFERRED STOCKS (0.6%)*	Shares	Value
Danaher Corp. 4.75% cv. pfd. ^†	61,874	$64,887,264
Global Fashion Group SA zero % cv. pfd. (acquisition dates ranging from
7/11/16 to 9/14/17, cost $309,306) (Luxembourg) (Private) ^{† ∆∆ F}	47,052	431,094
Oportun Financial Corp. Ser. A-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$7,592) (Private) ^{† ∆∆ F}	2,664	5,712
Oportun Financial Corp. Ser. B-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$145,237) (Private) ^{† ∆∆ F}	46,107	109,267

Equity Income Fund 21


CONVERTIBLE PREFERRED STOCKS (0.6%)* cont.	Shares	Value
Oportun Financial Corp. Ser. C-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$341,111) (Private) ^{† ∆∆ F}	67,016	$256,629
Oportun Financial Corp. Ser. D-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$494,779) (Private) ^{† ∆∆ F}	97,206	372,238
Oportun Financial Corp. Ser. E-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$277,459) (Private) ^{† ∆∆ F}	50,539	208,742
Oportun Financial Corp. Ser. F, 8.00% cv. pfd. (acquired 6/23/15, cost
$837,565) (Private) ^{† ∆∆ F}	109,058	630,128
Oportun Financial Corp. Ser. F-1, 8.00% cv. pfd. (acquired 6/23/15, cost
$2,349,227) (Private) ^{† ∆∆ F}	824,290	1,767,401
Oportun Financial Corp. Ser. G, 8.00% cv. pfd. (acquired 6/23/15, cost
$2,970,584) (Private) ^{† ∆∆ F}	1,042,310	2,234,868
Oportun Financial Corp. Ser. H, 8.00% cv. pfd. (acquired 2/6/15, cost
$9,110,862) (Private) ^{† ∆∆ F}	3,199,825	6,854,025
Total convertible preferred stocks (cost $78,896,017)		$77,757,368


	Principal
U.S. TREASURY OBLIGATIONS (—%)*	amount	Value
U.S. Treasury Notes
2.375%, 12/31/20 ⁱ	$142,000	$144,163
2.25%, 4/30/21 ⁱ	123,000	123,909
2.125%, 2/29/24 ⁱ	188,000	190,696
2.125%, 8/15/21 ⁱ	143,000	144,446
2.125%, 6/30/21 ⁱ	59,000	59,744
2.125%, 8/31/20 ⁱ	214,000	215,164
1.75%, 9/30/19 ⁱ	381,000	381,339
1.625%, 7/31/20 ⁱ	168,000	167,837
1.625%, 12/31/19 ⁱ	201,000	201,543
1.50%, 1/31/22 ⁱ	73,000	72,590
1.125%, 2/28/21 ⁱ	115,000	113,606
Total U.S. treasury obligations (cost $1,815,037)		$1,815,037


	Principal amount/
SHORT-TERM INVESTMENTS (4.9%)*		shares	Value
Putnam Cash Collateral Pool, LLC 2.56% ^d	Shares	204,362,035	$204,362,035
Putnam Short Term Investment Fund 2.52% ^L	Shares	237,928,327	237,928,327
Interest in $382,750,000 joint tri-party repurchase agreement
dated 5/31/19 with HSBC Bank USA, National Association due
6/3/19 — maturity value of $66,263,802 for an effective yield
of 2.500% (collateralized by various mortgage backed securities
with coupon rates ranging from 3.099% to 4.500% and due dates
ranging from 3/1/33 to 10/1/48, valued at $390,486,334)		$66,250,000	66,250,000
Interest in $375,565,000 joint tri-party repurchase agreement
dated 5/31/19 with Citigroup Global Markets, Inc. due 6/3/19 —
maturity value of $63,633,254 for an effective yield of 2.500%
(collateralized by various mortgage backed securities and
a U.S. Treasury note with coupon rates ranging from 0.125%
to 6.000% and due dates ranging from 4/15/20 to 1/20/64, valued
at $383,076,300)		63,620,000	63,620,000
State Street Institutional U.S. Government Money Market Fund,
Premier Class 2.32% ^P	Shares	15,870,000	15,870,000
U.S. Treasury Bills 2.461%, 7/25/19		$1,805,000	1,799,021

22 Equity Income Fund


	Principal amount/
SHORT-TERM INVESTMENTS (4.9%)* cont.	shares	Value
U.S. Treasury Bills 2.514%, 6/6/19	$1,264,000	$1,263,774
U.S. Treasury Bills 2.548%, 6/13/19	369,000	368,768
Total short-term investments (cost $591,461,120)		$591,461,925


TOTAL INVESTMENTS
Total investments (cost $9,395,257,102)	$12,269,497,417

Key to holding’s abbreviations


ADR	American Depository Receipts: represents ownership of foreign securities on deposit with a custodian bank.

Notes to the fund’s portfolio

Unless noted otherwise, the notes to the fund’s portfolio are for the close of the fund’s reporting period, which ran from December 1, 2018 through May 31, 2019 (the reporting period). Within the following notes to the portfolio, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “ASC 820” represent Accounting Standards Codification 820 Fair Value Measurements and Disclosures.

^*Percentages indicated are based on net assets of $12,085,716,121.

^†This security is non-income-producing.

^∆∆This security is restricted with regard to public resale. The total fair value of this security and any other restricted securities (excluding 144A securities), if any, held at the close of the reporting period was $15,506,830, or 0.1% of net assets.

^dAffiliated company. See Notes 1 and 5 to the financial statements regarding securities lending. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^FThis security is valued by Putnam Management at fair value following procedures approved by the Trustees. Securities are classified as Level 3 for ASC 820 based on the securities’ valuation inputs. At the close of the reporting period, fair value pricing was also used for certain foreign securities in the portfolio (Note 1).

ⁱThis security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts (Note 1).

^LAffiliated company (Note 5). The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^PThis security was pledged, or purchased with cash that was pledged, to the fund for collateral on certain derivative contracts. The rate quoted in the security description is the annualized 7-day yield of the fund at the close of the reporting period.

^SSecurity on loan, in part or in entirety, at the close of the reporting period (Note 1).

Unless otherwise noted, the rates quoted in Short-term investments security descriptions represent the weighted average yield to maturity.

The dates shown on debt obligations are the original maturity dates.


FORWARD CURRENCY CONTRACTS at 5/31/19 (aggregate face value $439,954,603) (Unaudited)
						Unrealized
		Contract	Delivery		Aggregate	appreciation/
Counterparty	Currency	type^*	date	Value	face value	(depreciation)
Bank of America N.A.
	Euro	Sell	6/19/19	$15,085,109	$15,485,044	$399,935
Barclays Bank PLC
	British Pound	Sell	6/19/19	134,626,386	141,253,746	6,627,360
Citibank, N.A.
	Canadian Dollar	Sell	7/17/19	28,011,581	28,412,607	401,026

Equity Income Fund 23


FORWARD CURRENCY CONTRACTS at 5/31/19 (aggregate face value $439,954,603) (Unaudited) cont.
						Unrealized
		Contract	Delivery		Aggregate	appreciation/
Counterparty	Currency	type^*	date	Value	face value	(depreciation)
Goldman Sachs International
	British Pound	Sell	6/19/19	$123,129,688	$129,424,006	$6,294,318
	Canadian Dollar	Sell	7/17/19	25,471,262	25,823,502	352,240
	Euro	Sell	6/19/19	50,751,365	52,105,410	1,354,045
State Street Bank and Trust Co.
	Euro	Sell	6/19/19	46,219,747	47,450,288	1,230,541
Unrealized appreciation						16,659,465
Unrealized (depreciation)						—
Total						$16,659,465

^*The exchange currency for all contracts listed is the United States Dollar.

ASC 820 establishes a three-level hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of the fund’s investments. The three levels are defined as follows:

Level 1: Valuations based on quoted prices for identical securities in active markets.

Level 2: Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3: Valuations based on inputs that are unobservable and significant to the fair value measurement.

The following is a summary of the inputs used to value the fund’s net assets as of the close of the reporting period:


			Valuation inputs
Investments in securities:	Level 1	Level 2		Level 3
Common stocks^*:
Communication services	$540,934,358	$—		$—
Consumer discretionary	553,082,157	—		544,400
Consumer staples	1,054,025,307	—		—
Energy	1,030,396,374	243,518,711		—
Financials	2,606,869,415	—		2,092,280
Health care	1,606,831,702	—		—
Industrials	1,095,497,137	—		46
Information technology	1,272,512,977	—		—
Materials	504,033,364	—		—
Real estate	420,204,841	—		—
Utilities	667,920,018	—		—
Total common stocks	11,352,307,650	243,518,711		2,636,726

Convertible preferred stocks	—	64,887,264		12,870,104
U.S. treasury obligations	—	1,815,037		—
Short-term investments	15,870,000	575,591,925		—
Totals by level	$11,368,177,650	$885,812,937		$15,506,830

			Valuation inputs
Other financial instruments:	Level 1	Level 2		Level 3
Forward currency contracts	$—	$16,659,465		$—
Totals by level	$—	$16,659,465		$—

^*Common stock classifications are presented at the sector level, which may differ from the fund’s portfolio presentation.

At the start and close of the reporting period, Level 3 investments in securities represented less than 1% of the fund’s net assets and were not considered a significant portion of the fund’s portfolio.

The accompanying notes are an integral part of these financial statements.

24 Equity Income Fund

Statement of assets and liabilities 5/31/19 (Unaudited)


ASSETS
Investment in securities, at value, including $198,353,651 of securities on loan (Notes 1 and 8):
Unaffiliated issuers (identified cost $8,952,966,740)	$11,827,207,055
Affiliated issuers (identified cost $442,290,362) (Notes 1 and 5)	442,290,362
Cash	6,564
Dividends, interest and other receivables	32,708,081
Receivable for shares of the fund sold	26,747,847
Receivable for investments sold	21,291,222
Unrealized appreciation on forward currency contracts (Note 1)	16,659,465
Prepaid assets	149,358
Total assets	12,367,059,954

LIABILITIES
Payable for investments purchased	33,045,214
Payable for shares of the fund repurchased	10,347,733
Payable for compensation of Manager (Note 2)	5,012,292
Payable for custodian fees (Note 2)	94,021
Payable for investor servicing fees (Note 2)	2,902,026
Payable for Trustee compensation and expenses (Note 2)	3,056,030
Payable for administrative services (Note 2)	50,275
Payable for distribution fees (Note 2)	3,920,651
Collateral on securities loaned, at value (Note 1)	204,362,035
Collateral on certain derivative contracts, at value (Notes 1 and 8)	17,685,037
Distributions payable to shareholders	6,267
Other accrued expenses	862,252
Total liabilities	281,343,833

Net assets	$12,085,716,121

REPRESENTED BY
Paid-in capital (Unlimited shares authorized) (Notes 1 and 4)	$9,120,622,391
Total distributable earnings (Note 1)	2,965,093,730
Total — Representing net assets applicable to capital shares outstanding	$12,085,716,121

(Continued on next page)

Equity Income Fund 25

Statement of assets and liabilities cont.


COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
Net asset value and redemption price per class A share
($7,707,302,100 divided by 334,718,473 shares)	$23.03
Offering price per class A share (100/94.25 of $23.03)^*	$24.44
Net asset value and offering price per class B share ($106,145,266 divided by 4,671,923 shares)^**	$22.72
Net asset value and offering price per class C share ($358,027,798 divided by 15,761,990 shares)^**	$22.71
Net asset value and redemption price per class M share
($75,800,631 divided by 3,340,671 shares)	$22.69
Offering price per class M share (100/96.50 of $22.69)^*	$23.51
Net asset value, offering price and redemption price per class R share
($83,721,405 divided by 3,666,733 shares)	$22.83
Net asset value, offering price and redemption price per class R5 share
($33,089,113 divided by 1,435,860 shares)	$23.04
Net asset value, offering price and redemption price per class R6 share
($1,199,862,084 divided by 52,065,293 shares)	$23.05
Net asset value, offering price and redemption price per class Y share
($2,521,767,724 divided by 109,462,391 shares)	$23.04

^*On single retail sales of less than $50,000. On sales of $50,000 or more the offering price is reduced.

^**Redemption price per share is equal to net asset value less any applicable contingent deferred sales charge.

The accompanying notes are an integral part of these financial statements.

26 Equity Income Fund

Statement of operations Six months ended 5/31/19 (Unaudited)


INVESTMENT INCOME
Dividends (net of foreign tax of $525,568)	$150,982,014
Interest (including interest income of $2,900,220 from investments in affiliated issuers) (Note 5)	5,058,594
Securities lending (net of expenses) (Notes 1 and 5)	1,277,172
Total investment income	157,317,780

EXPENSES
Compensation of Manager (Note 2)	28,543,744
Investor servicing fees (Note 2)	9,097,659
Custodian fees (Note 2)	55,670
Trustee compensation and expenses (Note 2)	291,830
Distribution fees (Note 2)	12,722,609
Administrative services (Note 2)	226,401
Other	1,174,054
Total expenses	52,111,967
Expense reduction (Note 2)	(213,977)
Net expenses	51,897,990

Net investment income	105,419,790

REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Securities from unaffiliated issuers (Notes 1 and 3)	91,386,068
Foreign currency transactions (Note 1)	(40,057)
Forward currency contracts (Note 1)	4,393,068
Futures contracts (Note 1)	(3,914,797)
Total net realized gain	91,824,282
Change in net unrealized appreciation (depreciation) on:
Securities from unaffiliated issuers	(285,725,962)
Forward currency contracts	6,130,650
Futures contracts	(153,189)
Total change in net unrealized depreciation	(279,748,501)

Net loss on investments	(187,924,219)

Net decrease in net assets resulting from operations	$(82,504,429)

The accompanying notes are an integral part of these financial statements.

Equity Income Fund 27

Statement of changes in net assets


DECREASE IN NET ASSETS	Six months ended 5/31/19*	Year ended 11/30/18
Operations
Net investment income	$105,419,790	$194,139,770
Net realized gain on investments
and foreign currency transactions	91,824,282	439,784,878
Change in net unrealized depreciation of investments
and assets and liabilities in foreign currencies	(279,748,501)	(307,630,888)
Net increase (decrease) in net assets resulting
from operations	(82,504,429)	326,293,760
Distributions to shareholders (Note 1):
From ordinary income
Net investment income
Class A	(88,096,671)	(89,308,090)
Class B	(887,742)	(439,845)
Class C	(2,815,415)	(1,361,252)
Class M	(705,385)	(509,311)
Class R	(939,439)	(873,996)
Class R5	(398,850)	(667,177)
Class R6	(14,803,070)	(15,086,865)
Class Y	(29,814,180)	(29,697,897)
Net realized short-term gain on investments
Class A	(31,688,375)	—
Class B	(492,356)	—
Class C	(1,508,197)	—
Class M	(326,462)	—
Class R	(385,764)	—
Class R5	(127,897)	—
Class R6	(4,514,127)	—
Class Y	(9,428,742)	—
From net realized long-term gain on investments
Class A	(267,881,115)	(141,613,737)
Class B	(4,162,185)	(2,636,857)
Class C	(12,749,708)	(7,475,315)
Class M	(2,759,778)	(1,470,770)
Class R	(3,261,102)	(1,878,316)
Class R5	(1,081,188)	(920,216)
Class R6	(38,160,663)	(16,581,986)
Class Y	(79,706,892)	(34,240,029)
Increase (decrease) from capital share transactions (Note 4)	468,405,374	(17,598,365)
Total decrease in net assets	(210,794,358)	(36,066,264)

NET ASSETS
Beginning of period	12,296,510,479	12,332,576,743
End of period	$12,085,716,121	$12,296,510,479

^*Unaudited.

The accompanying notes are an integral part of these financial statements.

28 Equity Income Fund

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Equity Income Fund 29

Financial highlights (For a common share outstanding throughout the period)


	INVESTMENT OPERATIONS				LESS DISTRIBUTIONS						RATIOS AND SUPPLEMENTAL DATA
												Ratio of	Ratio of net
	Net asset		Net realized			From						expenses	investment
	value,		and unrealized	Total from	From	net realized		Non-recurring	Net asset	Total return	Net assets,	to average	income (loss)	Portfolio
	beginning	Net investment	gain (loss) on	investment	net investment	gain on	Total	reimburse-	value, end	at net asset	end of period	net assets	to average	turnover
Period ended	of period	income (loss)^a	investments	operations	income	investments	distributions	ments	of period	value (%)^b	(in thousands)	(%)^c	net assets (%)	(%)
Class A
May 31, 2019 ^**	$24.48	.20	(.46)	(.26)	(.27)	(.92)	(1.19)	—	$23.03	(.60)^*	$7,707,302	.45^*	.84^*	6^*
November 30, 2018	24.51	.37	.28	.65	(.27)	(.41)	(.68)	—	24.48	2.65	8,050,928	.91	1.51	16
November 30, 2017	21.09	.30	3.69	3.99	(.36)	(.21)	(.57)	—^d,e	24.51	19.28	8,466,321	.92^f	1.30	11
November 30, 2016	20.69	.33	1.22	1.55	(.30)	(.85)	(1.15)	—	21.09	8.01	3,316,513	.97^g	1.66^g	15
November 30, 2015	22.76	.32	(.43)	(.11)	(.29)	(1.67)	(1.96)	—	20.69	(.63)	3,454,264	.96	1.51	22
November 30, 2014	21.60	.29	2.72	3.01	(.32)	(1.53)	(1.85)	—	22.76	14.99	3,590,810	.98	1.37	29
Class B
May 31, 2019 ^**	$24.17	.11	(.46)	(.35)	(.18)	(.92)	(1.10)	—	$22.72	(1.02)^*	$106,145	.83^*	.47^*	6^*
November 30, 2018	24.19	.18	.29	.47	(.08)	(.41)	(.49)	—	24.17	1.93	124,574	1.66	.75	16
November 30, 2017	20.84	.13	3.63	3.76	(.20)	(.21)	(.41)	—^d,e	24.19	18.33	158,052	1.67^f	.57	11
November 30, 2016	20.44	.18	1.22	1.40	(.15)	(.85)	(1.00)	—	20.84	7.29	105,267	1.72^g	.92^g	15
November 30, 2015	22.51	.16	(.43)	(.27)	(.13)	(1.67)	(1.80)	—	20.44	(1.41)	102,903	1.71	.76	22
November 30, 2014	21.39	.13	2.68	2.81	(.16)	(1.53)	(1.69)	—	22.51	14.09	113,515	1.73	.62	29
Class C
May 31, 2019 ^**	$24.17	.11	(.47)	(.36)	(.18)	(.92)	(1.10)	—	$22.71	(1.04)^*	$358,028	.83^*	.47^*	6^*
November 30, 2018	24.20	.18	.28	.46	(.08)	(.41)	(.49)	—	24.17	1.91	379,587	1.66	.74	16
November 30, 2017	20.83	.13	3.65	3.78	(.20)	(.21)	(.41)	—^d,e	24.20	18.40	440,477	1.67^f	.58	11
November 30, 2016	20.45	.18	1.21	1.39	(.16)	(.85)	(1.01)	—	20.83	7.20	370,527	1.72^g	.91^g	15
November 30, 2015	22.52	.16	(.42)	(.26)	(.14)	(1.67)	(1.81)	—	20.45	(1.37)	355,619	1.71	.77	22
November 30, 2014	21.40	.13	2.69	2.82	(.17)	(1.53)	(1.70)	—	22.52	14.12	306,308	1.73	.63	29
Class M
May 31, 2019 ^**	$24.14	.14	(.46)	(.32)	(.21)	(.92)	(1.13)	—	$22.69	(.87)^*	$75,801	.70^*	.59^*	6^*
November 30, 2018	24.18	.25	.27	.52	(.15)	(.41)	(.56)	—	24.14	2.14	81,700	1.41	1.01	16
November 30, 2017	20.82	.18	3.65	3.83	(.26)	(.21)	(.47)	—^d,e	24.18	18.68	85,635	1.42^f	.81	11
November 30, 2016	20.43	.23	1.21	1.44	(.20)	(.85)	(1.05)	—	20.82	7.52	50,339	1.47^g	1.17^g	15
November 30, 2015	22.50	.21	(.42)	(.21)	(.19)	(1.67)	(1.86)	—	20.43	(1.13)	51,230	1.46	1.01	22
November 30, 2014	21.38	.18	2.69	2.87	(.22)	(1.53)	(1.75)	—	22.50	14.39	49,775	1.48	.87	29
Class R
May 31, 2019 ^**	$24.29	.17	(.47)	(.30)	(.24)	(.92)	(1.16)	—	$22.83	(.78)^*	$83,721	.58^*	.72^*	6^*
November 30, 2018	24.31	.31	.28	.59	(.20)	(.41)	(.61)	—	24.29	2.45	96,822	1.16	1.25	16
November 30, 2017	20.93	.24	3.65	3.89	(.30)	(.21)	(.51)	—^d,e	24.31	18.90	113,504	1.17^f	1.09	11
November 30, 2016	20.53	.28	1.22	1.50	(.25)	(.85)	(1.10)	—	20.93	7.80	118,848	1.22^g	1.41^g	15
November 30, 2015	22.60	.26	(.42)	(.16)	(.24)	(1.67)	(1.91)	—	20.53	(.89)	116,895	1.21	1.26	22
November 30, 2014	21.47	.24	2.69	2.93	(.27)	(1.53)	(1.80)	—	22.60	14.66	118,917	1.23	1.12	29

See notes to financial highlights at the end of this section.

The accompanying notes are an integral part of these financial statements.


30 Equity Income Fund	Equity Income Fund 31

Financial highlights cont.

INVESTMENT OPERATIONS

LESS DISTRIBUTIONS

RATIOS AND SUPPLEMENTAL DATA

Ratio of

Ratio of net

Net asset

Net realized

From

expenses

investment

value,

and unrealized

Total from

From

net realized

Non-recurring

Net asset

Total return

Net assets,

to average

income (loss)

Portfolio

beginning

Net investment

gain (loss) on

investment

net investment

gain on

Total

reimburse-

value, end

at net asset

end of period

net assets

to average

turnover

Period ended

of period

income (loss)^a

investments

operations

income

investments

distributions

ments

of period

value (%)^b

(in thousands)

(%)^c

net assets (%)

(%)

Class R5

May 31, 2019 ^**

$24.51

.22

(.47)

(.25)

(.30)

(.92)

(1.22)

—

$23.04

(.53)^*

$33,089

.32^*

.95^*

6^*

November 30, 2018

24.53

.42

.30

.72

(.33)

(.41)

(.74)

—

24.51

2.95

32,219

.65

1.67

November 30, 2017

21.10

.37

3.68

4.05

(.41)

(.21)

(.62)

—^d,e

24.53

19.57

67,389

.66^f

1.67

November 30, 2016

20.70

.39

1.22

1.61

(.36)

(.85)

(1.21)

—

21.10

8.35

120,507

.66^g

1.97^g

November 30, 2015

22.77

.38

(.42)

(.04)

(.36)

(1.67)

(2.03)

—

20.70

(.30)

106,460

.65

1.81

November 30, 2014

21.63

.39

2.68

3.07

(.40)

(1.53)

(1.93)

—

22.77

15.30

42,934

.66

1.80

Class R6

May 31, 2019 ^**

$24.51

.24

(.47)

(.23)

(.31)

(.92)

(1.23)

—

$23.05

(.45)^*

$1,199,862

.27^*

1.02^*

6^*

November 30, 2018

24.53

.47

.27

.74

(.35)

(.41)

(.76)

—

24.51

3.06

1,117,896

.55

1.87

November 30, 2017

21.11

.38

3.69

4.07

(.44)

(.21)

(.65)

—^d,e

24.53

19.68

965,235

.56^f

1.68

November 30, 2016

20.70

.41

1.23

1.64

(.38)

(.85)

(1.23)

—

21.11

8.52

616,651

.56^g

2.07^g

November 30, 2015

22.77

.40

(.42)

(.02)

(.38)

(1.67)

(2.05)

—

20.70

(.21)

386,755

.55

1.92

November 30, 2014

21.62

.39

2.70

3.09

(.41)

(1.53)

(1.94)

—

22.77

15.42

311,320

.56

1.80

Class Y

May 31, 2019 ^**

$24.50

.23

(.47)

(.24)

(.30)

(.92)

(1.22)

—

$23.04

(.51)^*

$2,521,768

.33^*

.97^*

6^*

November 30, 2018

24.52

.44

.28

.72

(.33)

(.41)

(.74)

—

24.50

2.95

2,412,784

.66

1.77

November 30, 2017

21.10

.36

3.68

4.04

(.41)

(.21)

(.62)

—^d,e

24.52

19.54

2,035,965

.67^f

1.58

November 30, 2016

20.69

.38

1.23

1.61

(.35)

(.85)

(1.20)

—

21.10

8.33

1,544,573

.72^g

1.92^g

November 30, 2015

22.76

.37

(.42)

(.05)

(.35)

(1.67)

(2.02)

—

20.69

(.38)

1,580,470

.71

1.78

November 30, 2014

21.61

.35

2.71

3.06

(.38)

(1.53)

(1.91)

—

22.76

15.22

1,531,387

.73

1.63

^*Not annualized.

^**Unaudited.

^aPer share net investment income (loss) has been determined on the basis of the weighted average number of shares outstanding during the period.

^bTotal return assumes dividend reinvestment and does not reflect the effect of sales charges.

^cIncludes amounts paid through expense offset and/or brokerage/service arrangements, if any (Note 2). Also excludes acquired fund fees and expenses, if any.

^dReflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (the SEC) and JPMorgan Chase which amounted to less than $0.01 per share outstanding on September 29, 2017.

^eReflects a non-recurring reimbursement pursuant to a settlement between the Securities and Exchange Commission (the SEC) and Countrywide Financial which amounted to less than $0.01 per share outstanding on November 29, 2017.

^fIncludes one time merger costs of 0.01%.

^gReflects a voluntary waiver of certain fund expenses in effect during the period. As a result of such waivers, the expenses of each class reflect a reduction of less than 0.01% as a percentage of net assets.

The accompanying notes are an integral part of these financial statements.


32 Equity Income Fund	Equity Income Fund 33

Notes to financial statements 5/31/19 (Unaudited)

Within the following Notes to financial statements, references to “State Street” represent State Street Bank and Trust Company, references to “the SEC” represent the Securities and Exchange Commission, references to “Putnam Management” represent Putnam Investment Management, LLC, the fund’s manager, an indirect wholly-owned subsidiary of Putnam Investments, LLC and references to “OTC”, if any, represent over-the-counter. Unless otherwise noted, the “reporting period” represents the period from December 1, 2018 through May 31, 2019.

Putnam Equity Income Fund (the fund) is a Massachusetts business trust, which is registered under the Investment Company Act of 1940, as amended, as a diversified open-end management investment company. The goal of the fund is to seek capital growth and current income. The fund invests mainly in common stocks of midsize and large U.S. companies, with a focus on value stocks that offer the potential for capital growth, current income, or both. Under normal circumstances, Putnam Management invests at least 80% of the fund’s net assets in common stocks and other equity investments that offer the potential for current income. This policy may be changed only after 60 days’ notice to shareholders. Value stocks are issued by companies that Putnam Management believes are currently undervalued by the market. If Putnam Management is correct and other investors ultimately recognize the value of the company, the price of its stock may rise. Putnam Management may consider, among other factors, a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows and dividends when deciding whether to buy or sell investments.

The fund offers class A, class B, class C, class M, class R, class R5, class R6 and class Y shares. Purchases of class B shares are closed to new and existing investors except by exchange from class B shares of another Putnam fund or through dividend and/or capital gains reinvestment. Class A and class M shares are sold with a maximum front-end sales charge of 5.75% and 3.50%, respectively. Class A shares generally are not subject to a contingent deferred sales charge, and class M, class R, class R5, class R6 and class Y shares are not subject to a contingent deferred sales charge. Class B shares, which convert to class A shares after approximately eight years, are not subject to a front-end sales charge and are subject to a contingent deferred sales charge if those shares are redeemed within six years of purchase. Class C shares are subject to a one-year 1.00% contingent deferred sales charge and generally convert to class A shares after approximately ten years. Class R shares, which are not available to all investors, are sold at net asset value. The expenses for class A, class B, class C, class M and class R shares may differ based on the distribution fee of each class, which is identified in Note 2. Class R5, class R6 and class Y shares, which are sold at net asset value, are generally subject to the same expenses as class A, class B, class C, class M and class R shares, but do not bear a distribution fee, and in the case of class R5 and class R6 shares, bear a lower investor servicing fee, which is identified in Note 2. Class R5, class R6 and class Y shares are not available to all investors.

In the normal course of business, the fund enters into contracts that may include agreements to indemnify another party under given circumstances. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be, but have not yet been, made against the fund. However, the fund’s management team expects the risk of material loss to be remote.

The fund has entered into contractual arrangements with an investment adviser, administrator, distributor, shareholder servicing agent and custodian, who each provide services to the fund. Unless expressly stated otherwise, shareholders are not parties to, or intended beneficiaries of these contractual arrangements, and these contractual arrangements are not intended to create any shareholder right to enforce them against the service providers or to seek any remedy under them against the service providers, either directly or on behalf of the fund.

Under the fund’s Amended and Restated Agreement and Declaration of Trust, any claims asserted against or on behalf of the Putnam Funds, including claims against Trustees and Officers, must be brought in state and federal courts located within the Commonwealth of Massachusetts.

Note 1: Significant accounting policies

The following is a summary of significant accounting policies consistently followed by the fund in the preparation of its financial statements. The preparation of financial statements is in conformity with accounting principles generally accepted in the United States of America and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from operations. Actual results could differ from those estimates. Subsequent events after the Statement of assets and liabilities date through the date that the financial statements were issued have been evaluated in the preparation of the financial statements.

34 Equity Income Fund

Investment income, realized and unrealized gains and losses and expenses of the fund are borne pro-rata based on the relative net assets of each class to the total net assets of the fund, except that each class bears expenses unique to that class (including the distribution fees applicable to such classes). Each class votes as a class only with respect to its own distribution plan or other matters on which a class vote is required by law or determined by the Trustees. If the fund were liquidated, shares of each class would receive their pro-rata share of the net assets of the fund. In addition, the Trustees declare separate dividends on each class of shares.

Security valuation Portfolio securities and other investments are valued using policies and procedures adopted by the Board of Trustees. The Trustees have formed a Pricing Committee to oversee the implementation of these procedures and have delegated responsibility for valuing the fund’s assets in accordance with these procedures to Putnam Management. Putnam Management has established an internal Valuation Committee that is responsible for making fair value determinations, evaluating the effectiveness of the pricing policies of the fund and reporting to the Pricing Committee.

Investments for which market quotations are readily available are valued at the last reported sales price on their principal exchange, or official closing price for certain markets, and are classified as Level 1 securities under Accounting Standards Codification 820 Fair Value Measurements and Disclosures (ASC 820). If no sales are reported, as in the case of some securities that are traded OTC, a security is valued at its last reported bid price and is generally categorized as a Level 2 security.

Investments in open-end investment companies (excluding exchange-traded funds), if any, which can be classified as Level 1 or Level 2 securities, are valued based on their net asset value. The net asset value of such investment companies equals the total value of their assets less their liabilities and divided by the number of their outstanding shares.

Market quotations are not considered to be readily available for certain debt obligations (including short-term investments with remaining maturities of 60 days or less) and other investments; such investments are valued on the basis of valuations furnished by an independent pricing service approved by the Trustees or dealers selected by Putnam Management. Such services or dealers determine valuations for normal institutional-size trading units of such securities using methods based on market transactions for comparable securities and various relationships, generally recognized by institutional traders, between securities (which consider such factors as security prices, yields, maturities and ratings). These securities will generally be categorized as Level 2.

Many securities markets and exchanges outside the U.S. close prior to the scheduled close of the New York Stock Exchange and therefore the closing prices for securities in such markets or on such exchanges may not fully reflect events that occur after such close but before the scheduled close of the New York Stock Exchange. Accordingly, on certain days, the fund will fair value certain foreign equity securities taking into account multiple factors including movements in the U.S. securities markets, currency valuations and comparisons to the valuation of American Depository Receipts, exchange-traded funds and futures contracts. The foreign equity securities, which would generally be classified as Level 1 securities, will be transferred to Level 2 of the fair value hierarchy when they are valued at fair value. The number of days on which fair value prices will be used will depend on market activity and it is possible that fair value prices will be used by the fund to a significant extent. At the close of the reporting period, fair value pricing was used for certain foreign securities in the portfolio. Securities quoted in foreign currencies, if any, are translated into U.S. dollars at the current exchange rate.

To the extent a pricing service or dealer is unable to value a security or provides a valuation that Putnam Management does not believe accurately reflects the security’s fair value, the security will be valued at fair value by Putnam Management in accordance with policies and procedures approved by the Trustees. Certain investments, including certain restricted and illiquid securities and derivatives, are also valued at fair value following procedures approved by the Trustees. These valuations consider such factors as significant market or specific security events such as interest rate or credit quality changes, various relationships with other securities, discount rates, U.S. Treasury, U.S. swap and credit yields, index levels, convexity exposures, recovery rates, sales and other multiples and resale restrictions. These securities are classified as Level 2 or as Level 3 depending on the priority of the significant inputs.

To assess the continuing appropriateness of fair valuations, the Valuation Committee reviews and affirms the reasonableness of such valuations on a regular basis after considering all relevant information that is reasonably available. Such valuations and procedures are reviewed periodically by the Trustees. The fair value of securities is generally determined as the amount that the fund could reasonably expect to realize from an orderly disposition of such securities over a reasonable period of time. By its nature, a fair value price is a good faith estimate of the value of a security in a current sale and does not reflect an actual market price, which may be different by a material amount.

Equity Income Fund 35

Joint trading account Pursuant to an exemptive order from the SEC, the fund may transfer uninvested cash balances into a joint trading account along with the cash of other registered investment companies and certain other accounts managed by Putnam Management. These balances may be invested in issues of short-term investments having maturities of up to 90 days.

Repurchase agreements The fund, or any joint trading account, through its custodian, receives delivery of the underlying securities, the fair value of which at the time of purchase is required to be in an amount at least equal to the resale price, including accrued interest. Collateral for certain tri-party repurchase agreements, which totaled $132,481,478 at the end of the reporting period, is held at the counterparty’s custodian in a segregated account for the benefit of the fund and the counterparty. Putnam Management is responsible for determining that the value of these underlying securities is at all times at least equal to the resale price, including accrued interest. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

Security transactions and related investment income Security transactions are recorded on the trade date (the date the order to buy or sell is executed). Gains or losses on securities sold are determined on the identified cost basis.

Interest income, net of any applicable withholding taxes, is recorded on the accrual basis. Dividend income, net of any applicable withholding taxes, is recognized on the ex-dividend date except that certain dividends from foreign securities, if any, are recognized as soon as the fund is informed of the ex-dividend date. Non-cash dividends, if any, are recorded at the fair value of the securities received. Dividends representing a return of capital or capital gains, if any, are reflected as a reduction of cost and/or as a realized gain.

All premiums/discounts are amortized/accreted on a yield-to-maturity basis.

Foreign currency translation The accounting records of the fund are maintained in U.S. dollars. The fair value of foreign securities, currency holdings, and other assets and liabilities is recorded in the books and records of the fund after translation to U.S. dollars based on the exchange rates on that day. The cost of each security is determined using historical exchange rates. Income and withholding taxes are translated at prevailing exchange rates when earned or incurred. The fund does not isolate that portion of realized or unrealized gains or losses resulting from changes in the foreign exchange rate on investments from fluctuations arising from changes in the market prices of the securities. Such gains and losses are included with the net realized and unrealized gain or loss on investments. Net realized gains and losses on foreign currency transactions represent net realized exchange gains or losses on disposition of foreign currencies, currency gains and losses realized between the trade and settlement dates on securities transactions and the difference between the amount of investment income and foreign withholding taxes recorded on the fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized appreciation and depreciation of assets and liabilities in foreign currencies arise from changes in the value of assets and liabilities other than investments at the period end, resulting from changes in the exchange rate.

Futures contracts The fund uses futures contracts to equitize cash.

The potential risk to the fund is that the change in value of futures contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, if there is an illiquid secondary market for the contracts, if interest or exchange rates move unexpectedly or if the counterparty to the contract is unable to perform. With futures, there is minimal counterparty credit risk to the fund since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized on the Statement of assets and liabilities. When the contract is closed, the fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

Futures contracts are valued at the quoted daily settlement prices established by the exchange on which they trade. The fund and the broker agree to exchange an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments are known as “variation margin.”

Futures contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Forward currency contracts The fund buys and sells forward currency contracts, which are agreements between two parties to buy and sell currencies at a set price on a future date. These contracts are used to hedge foreign exchange risk.

The U.S. dollar value of forward currency contracts is determined using current forward currency exchange rates supplied by a quotation service. The fair value of the contract will fluctuate with changes in currency exchange

36 Equity Income Fund

rates. The contract is marked to market daily and the change in fair value is recorded as an unrealized gain or loss. The fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed when the contract matures or by delivery of the currency. The fund could be exposed to risk if the value of the currency changes unfavorably, if the counterparties to the contracts are unable to meet the terms of their contracts or if the fund is unable to enter into a closing position. Risks may exceed amounts recognized on the Statement of assets and liabilities.

Forward currency contracts outstanding at period end, if any, are listed after the fund’s portfolio.

Master agreements The fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the fund is held in a segregated account by the fund’s custodian and, with respect to those amounts which can be sold or repledged, is presented in the fund’s portfolio.

Collateral pledged by the fund is segregated by the fund’s custodian and identified in the fund’s portfolio. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the fund and the applicable counterparty. Collateral requirements are determined based on the fund’s net position with each counterparty.

Termination events applicable to the fund may occur upon a decline in the fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the fund’s counterparties to elect early termination could impact the fund’s future derivative activity.

At the close of the reporting period, the fund did not have a net liability position on open derivative contracts subject to the Master Agreements.

Securities lending The fund may lend securities, through its agent, to qualified borrowers in order to earn additional income. The loans are collateralized by cash in an amount at least equal to the fair value of the securities loaned. The fair value of securities loaned is determined daily and any additional required collateral is allocated to the fund on the next business day. The remaining maturities of the securities lending transactions are considered overnight and continuous. The risk of borrower default will be borne by the fund’s agent; the fund will bear the risk of loss with respect to the investment of the cash collateral. Income from securities lending, net of expenses, is included in investment income on the Statement of operations. Cash collateral is invested in Putnam Cash Collateral Pool, LLC, a limited liability company managed by an affiliate of Putnam Management. Investments in Putnam Cash Collateral Pool, LLC are valued at its closing net asset value each business day. There are no management fees charged to Putnam Cash Collateral Pool, LLC. At the close of the reporting period, the fund received cash collateral of $204,362,035 and the value of securities loaned amounted to $198,353,651.

Interfund lending The fund, along with other Putnam funds, may participate in an interfund lending program pursuant to an exemptive order issued by the SEC. This program allows the fund to borrow from or lend to other Putnam funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. Interest earned or paid on the interfund lending transaction will be based on the average of certain current market rates. During the reporting period, the fund did not utilize the program.

Lines of credit The fund participates, along with other Putnam funds, in a $317.5 million unsecured committed line of credit and a $235.5 million unsecured uncommitted line of credit, both provided by State Street. Borrowings may be made for temporary or emergency purposes, including the funding of shareholder redemption requests and trade settlements. Interest is charged to the fund based on the fund’s borrowing at a rate equal to 1.25% plus the higher of (1) the Federal Funds rate and (2) the overnight LIBOR for the committed line of credit and the Federal Funds rate plus 1.30% for the uncommitted line of credit. A closing fee equal to 0.04% of the committed line of credit and 0.04% of the uncommitted line of credit has been paid by the participating funds. In addition, a commitment fee of 0.21% per annum on any unutilized portion of the committed line of credit is allocated to the participating funds based on their relative net assets and paid quarterly. During the reporting period, the fund had no borrowings against these arrangements.

Equity Income Fund 37

Federal taxes It is the policy of the fund to distribute all of its taxable income within the prescribed time period and otherwise comply with the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable to regulated investment companies. It is also the intention of the fund to distribute an amount sufficient to avoid imposition of any excise tax under Section 4982 of the Code.

The fund is subject to the provisions of Accounting Standards Codification 740 Income Taxes (ASC 740). ASC 740 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The fund did not have a liability to record for any unrecognized tax benefits in the accompanying financial statements. No provision has been made for federal taxes on income, capital gains or unrealized appreciation on securities held nor for excise tax on income and capital gains. Each of the fund’s federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

The fund may also be subject to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income or gains earned or repatriated. The fund accrues and applies such taxes to net investment income, net realized gains and net unrealized gains as income and/or capital gains are earned. In some cases, the fund may be entitled to reclaim all or a portion of such taxes, and such reclaim amounts, if any, are reflected as an asset on the fund’s books. In many cases, however, the fund may not receive such amounts for an extended period of time, depending on the country of investment.

Tax cost of investments includes adjustments to net unrealized appreciation (depreciation) which may not necessarily be final tax cost basis adjustments, but closely approximate the tax basis unrealized gains and losses that may be realized and distributed to shareholders. The aggregate identified cost on a tax basis is $9,440,189,224, resulting in gross unrealized appreciation and depreciation of $3,353,312,996 and $507,345,338, respectively, or net unrealized appreciation of $2,845,967,658.

Distributions to shareholders Distributions to shareholders from net investment income are recorded by the fund on the ex-dividend date. Distributions from capital gains, if any, are recorded on the ex-dividend date and paid at least annually. The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Dividend sources are estimated at the time of declaration. Actual results may vary. Any non-taxable return of capital cannot be determined until final tax calculations are completed after the end of the fund’s fiscal year. Reclassifications are made to the fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryovers) under income tax regulations.

Note 2: Management fee, administrative services and other transactions

The fund pays Putnam Management a management fee (based on the fund’s average net assets and computed and paid monthly) at annual rates that may vary based on the average of the aggregate net assets of all open-end mutual funds sponsored by Putnam Management (excluding net assets of funds that are invested in, or that are invested in by, other Putnam funds to the extent necessary to avoid “double counting” of those assets). Such annual rates may vary as follows:


0.630%	of the first $5 billion,	0.430%	of the next $50 billion,
0.580%	of the next $5 billion,	0.410%	of the next $50 billion,
0.530%	of the next $10 billion,	0.400%	of the next $100 billion and
0.480%	of the next $10 billion,	0.395%	of any excess thereafter.

For the reporting period, the management fee represented an effective rate (excluding the impact from any expense waivers in effect) of 0.235% of the fund’s average net assets.

Putnam Management has contractually agreed, through March 30, 2021, to waive fees and/or reimburse the fund’s expenses to the extent necessary to limit the cumulative expenses of the fund, exclusive of brokerage, interest, taxes, investment-related expenses, extraordinary expenses, acquired fund fees and expenses and payments under the fund’s investor servicing contract, investment management contract and distribution plans, on a fiscal year-to-date basis to an annual rate of 0.20% of the fund’s average net assets over such fiscal year-to-date period. During the reporting period, the fund’s expenses were not reduced as a result of this limit.

Putnam Investments Limited (PIL), an affiliate of Putnam Management, is authorized by the Trustees to manage a separate portion of the assets of the fund as determined by Putnam Management from time to time. PIL did not manage any portion of the assets of the fund during the reporting period. If Putnam Management were to engage

38 Equity Income Fund

the services of PIL, Putnam Management would pay a quarterly sub-management fee to PIL for its services at an annual rate of 0.35% of the average net assets of the portion of the fund managed by PIL.

The fund reimburses Putnam Management an allocated amount for the compensation and related expenses of certain officers of the fund and their staff who provide administrative services to the fund. The aggregate amount of all such reimbursements is determined annually by the Trustees.

Custodial functions for the fund’s assets are provided by State Street. Custody fees are based on the fund’s asset level, the number of its security holdings and transaction volumes.

Putnam Investor Services, Inc., an affiliate of Putnam Management, provides investor servicing agent functions to the fund. Putnam Investor Services, Inc. received fees for investor servicing for class A, class B, class C, class M, class R and class Y shares that included (1) a per account fee for each direct and underlying non-defined contribution account (retail account) of the fund; (2) a specified rate of the fund’s assets attributable to defined contribution plan accounts; and (3) a specified rate based on the average net assets in retail accounts. Putnam Investor Services, Inc. has agreed that the aggregate investor servicing fees for each fund’s retail and defined contribution accounts for these share classes will not exceed an annual rate of 0.25% of the fund’s average assets attributable to such accounts.

Class R5 shares paid a monthly fee based on the average net assets of class R5 shares at an annual rate of 0.15%.

Class R6 shares paid a monthly fee based on the average net assets of class R6 shares at an annual rate of 0.05%.

During the reporting period, the expenses for each class of shares related to investor servicing fees were as follows:


Class A	$6,294,661	Class R5	18,831
Class B	91,946	Class R6	288,292
Class C	295,592	Class Y	1,973,156
Class M	62,763	Total	$9,097,659
Class R	72,418

The fund has entered into expense offset arrangements with Putnam Investor Services, Inc. and State Street whereby Putnam Investor Services, Inc.’s and State Street’s fees are reduced by credits allowed on cash balances. The fund also reduced expenses through brokerage/service arrangements. For the reporting period, the fund’s expenses were reduced by $58,419 under the expense offset arrangements and by $155,558 under the brokerage/service arrangements.

Each Independent Trustee of the fund receives an annual Trustee fee, of which $8,860, as a quarterly retainer, has been allocated to the fund, and an additional fee for each Trustees meeting attended. Trustees also are reimbursed for expenses they incur relating to their services as Trustees.

The fund has adopted a Trustee Fee Deferral Plan (the Deferral Plan) which allows the Trustees to defer the receipt of all or a portion of Trustees fees payable on or after July 1, 1995. The deferred fees remain invested in certain Putnam funds until distribution in accordance with the Deferral Plan.

The fund has adopted an unfunded noncontributory defined benefit pension plan (the Pension Plan) covering all Trustees of the fund who have served as a Trustee for at least five years and were first elected prior to 2004. Benefits under the Pension Plan are equal to 50% of the Trustee’s average annual attendance and retainer fees for the three years ended December 31, 2005. The retirement benefit is payable during a Trustee’s lifetime, beginning the year following retirement, for the number of years of service through December 31, 2006. Pension expense for the fund is included in Trustee compensation and expenses in the Statement of operations. Accrued pension liability is included in Payable for Trustee compensation and expenses in the Statement of assets and liabilities. The Trustees have terminated the Pension Plan with respect to any Trustee first elected after 2003.

The fund has adopted distribution plans (the Plans) with respect to the following share classes pursuant to Rule 12b–1 under the Investment Company Act of 1940. The purpose of the Plans is to compensate Putnam Retail Management Limited Partnership, an indirect wholly-owned subsidiary of Putnam Investments, LLC, for services provided and expenses incurred in distributing shares of the fund. The Plans provide payments by the fund to Putnam Retail Management Limited Partnership at an annual rate of up to the following amounts (Maximum %) of the average net assets attributable to each class. The Trustees have approved payment by the fund at the

Equity Income Fund 39

following annual rate (Approved %) of the average net assets attributable to each class. During the reporting period, the class-specific expenses related to distribution fees were as follows:


	Maximum %	Approved %	Amount
Class A	0.35%	0.25%	$9,796,375
Class B	1.00%	1.00%	571,208
Class C	1.00%	1.00%	1,837,111
Class M	1.00%	0.75%	292,575
Class R	1.00%	0.50%	225,340
Total			$12,722,609

For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received net commissions of $256,004 and $2,313 from the sale of class A and class M shares, respectively, and received $13,634 and $2,196 in contingent deferred sales charges from redemptions of class B and class C shares, respectively.

A deferred sales charge of up to 1.00% is assessed on certain redemptions of class A shares. For the reporting period, Putnam Retail Management Limited Partnership, acting as underwriter, received $146 on class A redemptions.

Note 3: Purchases and sales of securities

During the reporting period, the cost of purchases and the proceeds from sales, excluding short-term investments, were as follows:


	Cost of purchases	Proceeds from sales
Investments in securities (Long-term)	$799,490,397	$690,508,780
U.S. government securities (Long-term)	—	—
Total	$799,490,397	$690,508,780

The fund may purchase or sell investments from or to other Putnam funds in the ordinary course of business, which can reduce the fund’s transaction costs, at prices determined in accordance with SEC requirements and policies approved by the Trustees. During the reporting period, purchases or sales of long-term securities from or to other Putnam funds, if any, did not represent more than 5% of the fund’s total cost of purchases and/or total proceeds from sales.

Note 4: Capital shares

At the close of the reporting period, there were an unlimited number of shares of beneficial interest authorized. In certain circumstances shares may be purchased or redeemed through the delivery to the fund or receipt by the shareholders, respectively, of securities, the fair value of which is used to determine the number of shares issued or redeemed Transactions, including, if applicable, direct exchanges pursuant to share conversions, in capital shares were as follows:


	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class A	Shares	Amount	Shares	Amount
Shares sold	11,311,875	$259,318,475	20,832,333	$517,422,563
Shares issued in connection with
reinvestment of distributions	17,274,037	362,700,065	8,738,188	214,961,652
	28,585,912	622,018,540	29,570,521	732,384,215
Shares repurchased	(22,680,717)	(522,929,095)	(46,200,768)	(1,148,666,194)
Net increase (decrease)	5,905,195	$99,089,445	(16,630,247)	$(416,281,979)

40 Equity Income Fund


	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class B	Shares	Amount	Shares	Amount
Shares sold	73,102	$1,648,402	196,767	$4,815,331
Shares issued in connection with
reinvestment of distributions	250,568	5,176,218	117,674	2,859,863
	323,670	6,824,620	314,441	7,675,194
Shares repurchased	(806,387)	(18,454,097)	(1,692,722)	(41,573,493)
Net decrease	(482,717)	$(11,629,477)	(1,378,281)	$(33,898,299)

	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class C	Shares	Amount	Shares	Amount
Shares sold	1,252,811	$28,198,506	3,167,082	$78,014,890
Shares issued in connection with
reinvestment of distributions	754,320	15,588,504	332,730	8,090,382
	2,007,131	43,787,010	3,499,812	86,105,272
Shares repurchased	(1,952,408)	(44,470,040)	(5,995,466)	(145,098,899)
Net increase (decrease)	54,723	$(683,030)	(2,495,654)	$(58,993,627)

	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class M	Shares	Amount	Shares	Amount
Shares sold	94,071	$2,124,899	200,091	$4,908,453
Shares issued in connection with
reinvestment of distributions	181,398	3,748,235	80,723	1,960,050
	275,469	5,873,134	280,814	6,868,503
Shares repurchased	(318,896)	(7,173,645)	(438,728)	(10,765,113)
Net decrease	(43,427)	$(1,300,511)	(157,914)	$(3,896,610)

	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class R	Shares	Amount	Shares	Amount
Shares sold	279,727	$6,338,559	608,525	$14,970,756
Shares issued in connection with
reinvestment of distributions	202,295	4,208,705	102,454	2,501,244
	482,022	10,547,264	710,979	17,472,000
Shares repurchased	(801,859)	(18,418,194)	(1,392,476)	(34,298,301)
Net decrease	(319,837)	$(7,870,930)	(681,497)	$(16,826,301)

	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class R5	Shares	Amount	Shares	Amount
Shares sold	1,093,889	$25,906,576	511,484	$12,717,744
Shares issued in connection with
reinvestment of distributions	76,440	1,607,935	64,654	1,587,393
	1,170,329	27,514,511	576,138	14,305,137
Shares repurchased	(1,048,812)	(22,954,690)	(2,008,789)	(49,448,989)
Net increase (decrease)	121,517	$4,559,821	(1,432,651)	$(35,143,852)

Equity Income Fund 41


	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class R6	Shares	Amount	Shares	Amount
Shares sold	12,252,840	$282,795,552	18,819,471	$472,355,180
Shares issued in connection with
reinvestment of distributions	2,728,610	57,438,054	1,286,060	31,668,800
	14,981,450	340,233,606	20,105,531	504,023,980
Shares repurchased	(8,533,720)	(193,644,767)	(9,018,353)	(223,460,681)
Redemption in kind	—	—	(4,817,751)	(118,942,517)
Net increase	6,447,730	$146,588,839	6,269,427	$161,620,782

	SIX MONTHS ENDED 5/31/19		YEAR ENDED 11/30/18
Class Y	Shares	Amount	Shares	Amount
Shares sold	22,196,314	$507,160,234	37,883,790	$946,005,052
Shares issued in connection with
reinvestment of distributions	5,209,389	109,579,634	2,351,131	57,905,572
	27,405,703	616,739,868	40,234,921	1,003,910,624
Shares repurchased	(16,432,160)	(377,088,651)	(24,767,964)	(618,089,103)
Net increase	10,973,543	$239,651,217	15,466,957	$385,821,521

Note 5: Affiliated transactions

Transactions during the reporting period with any company which is under common ownership or control were as follows:


					Shares
					outstanding
					and fair
	Fair value as	Purchase	Sale	Investment	value as
Name of affiliate	of 11/30/18	cost	proceeds	income	of 5/31/19
Short-term investments
Putnam Cash Collateral
Pool, LLC^*	$135,744,665	$899,454,189	$830,836,819	$1,926,297	$204,362,035
Putnam Short Term
Investment Fund^**	297,757,049	92,670,431	152,499,153	2,900,220	237,928,327
Total Short-term
investments	$433,501,714	$992,124,620	$983,335,972	$4,826,517	$442,290,362

^*No management fees are charged to Putnam Cash Collateral Pool, LLC (Note 1). Investment income shown is included in securities lending income on the Statement of operations. There were no realized or unrealized gains or losses during the period.

^**Management fees charged to Putnam Short Term Investment Fund have been waived by Putnam Management. There were no realized or unrealized gains or losses during the period.

Note 6: Market, credit and other risks

In the normal course of business, the fund trades financial instruments and enters into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the contracting party to the transaction to perform (credit risk). The fund may be exposed to additional credit risk that an institution or other entity with which the fund has unsettled or open transactions will default. Investments in foreign securities involve certain risks, including those related to economic instability, unfavorable political developments, and currency fluctuations.

42 Equity Income Fund

Note 7: Summary of derivative activity

The volume of activity for the reporting period for any derivative type that was held during the period is listed below and was based on an average of the holdings at the end of each fiscal quarter:


Futures contracts (number of contracts)	10
Forward currency contracts (contract amount)	$422,200,000

The following is a summary of the fair value of derivative instruments as of the close of the reporting period:


Fair value of derivative instruments as of the close of the reporting period
	ASSET DERIVATIVES		LIABILITY DERIVATIVES
Derivatives not
accounted for as	Statement of		Statement of
hedging instruments	assets and		assets and
under ASC 815	liabilities location	Fair value	liabilities location	Fair value
Foreign exchange
contracts	Receivables	$16,659,465	Payables	$—
Total		$16,659,465		$—

The following is a summary of realized and change in unrealized gains or losses of derivative instruments in the Statement of operations for the reporting period (Note 1):


Amount of realized gain or (loss) on derivatives recognized in net gain or (loss) on investments
Derivatives not accounted for as hedging		Forward currency
instruments under ASC 815	Futures	contracts	Total
Foreign exchange contracts	$—	$4,393,068	$4,393,068
Equity contracts	(3,914,797)	—	$(3,914,797)
Total	$(3,914,797)	$4,393,068	$478,271


Change in unrealized appreciation or (depreciation) on derivatives recognized in net gain or (loss)
on investments
Derivatives not accounted for as hedging		Forward currency
instruments under ASC 815	Futures	contracts	Total
Foreign exchange contracts	$—	$6,130,650	$6,130,650
Equity contracts	(153,189)	—	$(153,189)
Total	$(153,189)	$6,130,650	$5,977,461

Equity Income Fund 43

Note 8: Offsetting of financial and derivative assets and liabilities

The following table summarizes any derivatives, repurchase agreements and reverse repurchase agreements, at the end of the reporting period, that are subject to an enforceable master netting agreement or similar agreement. For securities lending transactions or borrowing transactions associated with securities sold short, if any, see Note 1. For financial reporting purposes, the fund does not offset financial assets and financial liabilities that are subject to the master netting agreements in the Statement of assets and liabilities.


	Bank of America N.A.	Barclays Bank PLC	Citibank, N.A.	Citigroup Global Markets, Inc.	Goldman Sachs International	HSBC Bank USA, National Association	State Street Bank and Trust Co.	Total
Assets:
Forward currency	$399,935	$6,627,360	$401,026	$—	$8,000,603	$—	$1,230,541	$16,659,465
contracts^#
Repurchase	—	—	—	63,620,000	—	66,250,000	—	129,870,000
agreements^**
Total Assets	$399,935	$6,627,360	$401,026	$63,620,000	$8,000,603	$66,250,000	$1,230,541	$146,529,465
Liabilities:
Forward currency	—	—	—	—	—	—	—	—
contracts^#
Total Liabilities	$—	$—	$—	$—	$—	$—	$—	$—
Total Financial
and Derivative	$399,935	$6,627,360	$401,026	$63,620,000	$8,000,603	$66,250,000	$1,230,541	$146,529,465
Net Assets
Total collateral
received	$399,935	$6,627,360	$401,026	$63,620,000	$8,000,603	$66,250,000	$1,230,541
(pledged)^†##
Net amount	$—	$—	$—	$—	$—	$—	$—
Controlled
collateral received
(including TBA	$448,465	$6,970,000	$430,000	$—	$8,470,000	$—	$1,366,572	$17,685,037
commitments)^**
Uncontrolled
collateral received	$—	$—	$—	$64,892,400	$—	$67,589,078	$—	$132,481,478
Collateral
(pledged)
(including TBA	$—	$—	$—	$—	$—	$—	$—	$—
commitments)^**

^**Included with Investments in securities on the Statement of assets and liabilities.

^†Additional collateral may be required from certain brokers based on individual agreements.

^#Covered by master netting agreement (Note 1).

^##Any over-collateralization of total financial and derivative net assets is not shown. Collateral may include amounts related to unsettled agreements.

44 Equity Income Fund

Fund information

Founded over 80 years ago, Putnam Investments was built around the concept that a balance between risk and reward is the hallmark of a well-rounded financial program. We manage funds across income, value, blend, growth, sustainable, asset allocation, absolute return, and global sector categories.


Investment Manager	Trustees	Michael J. Higgins
Putnam Investment	Kenneth R. Leibler, Chair	Vice President, Treasurer,
Management, LLC	Liaquat Ahamed	and Clerk
100 Federal Street	Ravi Akhoury
Boston, MA 02110	Barbara M. Baumann	Janet C. Smith
	Katinka Domotorffy	Vice President,
Investment Sub-Advisor	Catharine Bond Hill	Principal Financial Officer,
Putnam Investments Limited	Paul L. Joskow	Principal Accounting Officer,
16 St James’s Street	Robert E. Patterson	and Assistant Treasurer
London, England SW1A 1ER	George Putnam, III
	Robert L. Reynolds	Susan G. Malloy
Marketing Services	Manoj P. Singh	Vice President and
Putnam Retail Management		Assistant Treasurer
100 Federal Street	Officers
Boston, MA 02110	Robert L. Reynolds	Mark C. Trenchard
	President	Vice President and
Custodian		BSA Compliance Officer
State Street Bank	Jonathan S. Horwitz
and Trust Company	Executive Vice President,	Nancy E. Florek
	Principal Executive Officer,	Vice President, Director of
Legal Counsel	and Compliance Liaison	Proxy Voting and Corporate
Ropes & Gray LLP		Governance, Assistant Clerk,
	Robert T. Burns	and Assistant Treasurer
	Vice President and
	Chief Legal Officer	Denere P. Poulack
		Assistant Vice President, Assistant
	James F. Clark	Clerk, and Assistant Treasurer
	Vice President and
	Chief Compliance Officer

This report is for the information of shareholders of Putnam Equity Income Fund. It may also be used as sales literature when preceded or accompanied by the current prospectus, the most recent copy of Putnam’s Quarterly Performance Summary, and Putnam’s Quarterly Ranking Summary. For more recent performance, please visit putnam.com. Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund, which are described in its prospectus. For this and other information or to request a prospectus or summary prospectus, call 1-800-225-1581 toll free. Please read the prospectus carefully before investing. The fund’s Statement of Additional Information contains additional information about the fund’s Trustees and is available without charge upon request by calling 1-800-225-1581.


	Item 2. Code of Ethics:


	Not applicable


	Item 3. Audit Committee Financial Expert:


	Not applicable


	Item 4. Principal Accountant Fees and Services:


	Not applicable


	Item 5. Audit Committee of Listed Registrants


	Not applicable


	Item 6. Schedule of Investments:


	The registrant's schedule of investments in unaffiliated issuers is included in the report to shareholders in Item 1 above.


	Item 7. Disclosure of Proxy Voting Policies and Procedures For Closed-End Management Investment Companies:


	Not applicable


	Item 8. Portfolio Managers of Closed-End Investment Companies


	Not Applicable


	Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers:


	Not applicable


	Item 10. Submission of Matters to a Vote of Security Holders:


	Not applicable


	Item 11. Controls and Procedures:

(a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, that the design and operation of such procedures are generally effective to provide reasonable assurance that information required to be disclosed by the registrant in this report is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.


	(b) Changes in internal control over financial reporting: Not applicable


	Item 12. Disclosures of Securities Lending Activities for Closed-End Investment Companies:


	Not Applicable


	Item 13. Exhibits:


	(a)(1) Not applicable


	(a)(2) Separate certifications for the principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are filed herewith.


	(b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940, as amended, are filed herewith.


	SIGNATURES


	Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Putnam Equity Income Fund


	By (Signature and Title):


	/s/ Janet C. Smith Janet C. Smith Principal Accounting Officer


	Date: July 26, 2019


	Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


	By (Signature and Title):


	/s/ Jonathan S. Horwitz Jonathan S. Horwitz Principal Executive Officer


	Date: July 26, 2019


	By (Signature and Title):


	/s/ Janet C. Smith Janet C. Smith Principal Financial Officer


	Date: July 26, 2019


	Certifications
	I, Jonathan S. Horwitz, the Principal Executive Officer of the funds listed on Attachment A, certify that:
	1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:
	2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;
	3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;
	4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
	a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;
	b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and
	d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
	5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions):
	a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant's internal control over financial reporting.
	Date: July 26, 2019
	/s/ Jonathan S. Horwitz
	_______________________
	Jonathan S. Horwitz
	Principal Executive Officer
	Certifications
	I, Janet C. Smith, the Principal Financial Officer of the funds listed on Attachment A, certify that:
	1. I have reviewed each report on Form N-CSR of the funds listed on Attachment A:
	2. Based on my knowledge, each report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by each report;
	3. Based on my knowledge, the financial statements, and other financial information included in each report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in each report;
	4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:
	a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which each report is being prepared;
	b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of each report based on such evaluation; and
	d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
	5. The registrant's other certifying officer and I have disclosed to each registrant's auditors and the audit committee of each registrant's board of directors (or persons performing the equivalent functions):
	a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect each registrant's ability to record, process, summarize, and report financial information; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in each registrant's internal control over financial reporting.
	Date: July 26, 2019
	/s/ Janet C. Smith
	_______________________
	Janet C. Smith
	Principal Financial Officer
	Attachment A
	Period (s) ended May 31, 2019
	Putnam Dynamic Asset Allocation Equity Fund
	Putnam Dynamic Risk Allocation Fund
	Putnam Equity Income Fund
	Putnam High Yield Fund
	Putnam Intermediate-Term Municipal Income Fund
	Putnam Massachusetts Tax Exempt Income Fund
	Putnam Minnesota Tax Exempt Income Fund
	Putnam Mortgage Opportunities Fund
	Putnam New Jersey Tax Exempt Income Fund
	Putnam New York Tax Exempt Income Fund
	Putnam Ohio Tax Exempt Income Fund
	Putnam Pennsylvania Tax Exempt Income Fund
	Putnam Short-Term Municipal Income Fund


	Section 906 Certifications
	I, Jonathan S. Horwitz, the Principal Executive Officer of the Funds listed on Attachment A, certify that, to my knowledge:
	1. The form N-CSR of the Funds listed on Attachment A for the period ended May 31, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended May 31, 2019 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
	Date: July 26, 2019
	/s/ Jonathan S. Horwitz
	______________________
	Jonathan S. Horwitz
	Principal Executive Officer
	Section 906 Certifications
	I, Janet C. Smith, the Principal Financial Officer of the Funds listed on Attachment A, certify that, to my knowledge:
	1. The form N-CSR of the Funds listed on Attachment A for the period ended May 31, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
	2. The information contained in the Form N-CSR of the Funds listed on Attachment A for the period ended May 31, 2019 fairly presents, in all material respects, the financial condition and results of operations of the Funds listed on Attachment A.
	Date: July 26, 2019
	/s/ Janet C. Smith
	______________________
	Janet C. Smith
	Principal Financial Officer
	Attachment A
	Period (s) ended May 31, 2019
	Putnam Dynamic Asset Allocation Equity Fund
	Putnam Dynamic Risk Allocation Fund
	Putnam Equity Income Fund
	Putnam High Yield Fund
	Putnam Intermediate-Term Municipal Income Fund
	Putnam Massachusetts Tax Exempt Income Fund
	Putnam Minnesota Tax Exempt Income Fund
	Putnam Mortgage Opportunities Fund
	Putnam New Jersey Tax Exempt Income Fund
	Putnam New York Tax Exempt Income Fund
	Putnam Ohio Tax Exempt Income Fund
	Putnam Pennsylvania Tax Exempt Income Fund
	Putnam Short-Term Municipal Income Fund