` PUTNAM EQUITY INCOME FUND
Prospectus Supplement dated January 8, 1996 to
Prospectus dated April 1, 1995
On January 5, 1996, the Trustees approved a proposal to increase
the fees payable to Putnam Investment Management, Inc. ("Putnam
Management") under the fund's Management Contract. The proposed
increase is subject to shareholder approval and will be submitted
to shareholders at a meeting scheduled to be held on July 11,
1996. If approved at that meeting, management fees would
thereafter be paid at the annual rate of 0.65% of the first $500
million of average net assets, 0.55% of the next $500 million,
0.50% of the next $500 million, 0.45% of the next $5 billion,
0.425% of the next $5 billion, 0.405% of the next $5 billion,
0.39% of the next $5 billion, and 0.38% of any amount thereafter.
As a result of the proposed change, the section "Expenses
summary" on pages 3 and 4 of the prospectus is replaced with the
following:
EXPENSES SUMMARY
Expenses are one of several factors to consider when investing.
The following table summarizes your maximum transaction costs
from investing in the fund and expenses incurred based on the
1994 fiscal year. The examples show the cumulative expenses
attributable to a hypothetical $1,000 investment over specified
periods.
CLASS A CLASS B CLASS M
SHARES SHARES SHARES
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge
imposed on purchases
(as a percentage of
offering price) 5.75% NONE* 3.50%*
Deferred sales charge 5.0% in the first
(as a percentage year, declining
of the lower of to 1.0% in the
original purchase sixth year, and
price or redemption eliminated
proceeds) NONE** thereafter NONE
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
net assets)
Total fund
Management 12b-1 Other operating
fees fees expenses expenses
---------- ----- -------- ---------
Class A 0.65% 0.25% 0.15% 1.05%
Class B 0.65% 1.00% 0.14% 1.79%
Class M 0.65% 0.75% 0.15% 1.55%
The table is provided to help you understand the expenses of
investing in the fund and your share of the operating expenses
that the fund incurs. The annual management fees shown in the
table have been restated to reflect the proposed increase in the
management fees payable to Putnam Management. Actual management
fees and total fund operating expenses for Class A shares were
0.64% and 1.04, respectively. Actual management fees and total
fund operating expenses for Class B shares were 0.64% and 1.78,
respectively. The 12b-1 fees for Class M shares reflect amounts
currently payable under the Class M Distribution Plan. For Class
M shares, management fees and "Other expenses" are based on the
operating expenses for the Fund's Class A shares.
EXAMPLES
Your investment of $1,000 would incur the following expenses,
assuming 5% annual return and, except as indicated, redemption at
the end of each period:
1 3 5 10
year years years years
CLASS A $68 $89 $112 $179
CLASS B $68 $86 $117 $191 ***
CLASS B (NO REDEMPTION) $18 $56 $97 $191 ***
CLASS M $50 $82 $117 $214
The examples do not represent past or future expense levels.
Actual expenses may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return,
but actual annual return varies.
* The higher 12b-1 fees borne by Class B and Class M shares
may cause long-term shareholders to pay more than the
economic equivalent of the maximum permitted front-end sales
charge on Class A shares.
** A deferred sales charge of up to 1.00% is assessed on
certain redemptions of Class A shares that were purchased
without an initial sales charge. See "How to buy shares --
Class A shares."
*** Reflects conversion of Class B shares to Class A shares
(which pay lower ongoing expenses) approximately eight
years
after purchase. See "Alternative sales arrangements."
