A SPECIAL LETTER TO SHAREHOLDERS OF PUTNAM FEDERAL INCOME TRUST
May 9, 1994
Dear Shareholder:

You recently received a proxy statement requesting your vote on
matters relating to Putnam Federal Income Trust.  Our records
show you have not yet voted.  Your vote is very important.  In
the next several days, representatives of the Fund will try to
contact you by telephone to receive your voting instructions.  

The proxy statement sent to you included a proposal to allow the
Fund to issue additional classes of shares.  Offering multiple
classes of shares give investors different ways to pay sales
charges.  NEW CLASSES OF SHARES WOULD NOT AFFECT THE FUND'S
CURRENT SHAREHOLDERS.

Currently, the Fund offers only one class of shares, which you
own and which are normally subject to a sales charge at the time
of purchase.  Additional classes of shares could include a class
of shares sold without an initial sales charge but that would
have a contingent deferred sales charge and higher distribution
fees.

Shareholders sometimes ask why a fund offers multiple classes of
shares.  Multiple classes of shares with different sales charge
arrangements offer investors a greater range of choices.  This
also has the potential to increase the size of the fund, which
could help reduce per share operating expenses by spreading
expenses over a larger number of shares.  The important thing to
remember is that the proposal would not affect any of the shares
that you now own.

At your Fund's shareholder meeting last week, action on this
proposal was adjourned until June 2 to permit solicitation of
additional proxies.  As part of this effort, the Fund is offering
shareholders like yourself who have not yet voted the opportunity
to use our vote-by-phone program.  (See the back of this letter.) 
In closing, we ask you to consider this proposal carefully.  Your
vote is important to us.  Thank you.


Sincerely, 



INFORMATION ON PUTNAM INVESTMENTS' VOTE-BY-PHONE PROGRAM:

The telephone voting procedure is designed to authenticate your
identity, to allow you to authorize the voting of your shares in
accordance with your instructions and to confirm that your
instruction  have been properly recorded.  If these procedures
were subject to successful legal challenge, such votes would not
be counted at the Fund's shareholder meeting to be held on June
2, 1994.  The Fund has not sought to obtain an opinion of counsel
on this matter and we are unaware of any such challenge at this
time.  
We will call you on a recorded line at the phone number Putnam
Investments has in its records for your account, and ask you for
your Social Security number or other identifying information. 
You will then be given an opportunity to authorize proxies to
vote your shares at the meeting in accordance with your instruc
tions.  To ensure your instructions have been recorded correctly,
you will also receive a confirmation of your instructions in the
mail.  

A special toll-free number will be available in case the informa-

tion contained in the confirmation is incorrect.  If you decide
after you have voted that you want to attend the Fund's share
holder meeting in person, you can revoke your proxy at that time
and vote your shares at the meeting.  If you no longer have a
copy of your proxy statement, you can call us at xxx-xxx-xxxx and
a copy will be promptly forwarded to you.



                              William N. Shiebler
                              Senior Managing Director

                              Putnam Mutual Funds
                              President
                              One Post Office Square
                              Boston, Massachusetts 02109

PUTNAMINVESTMENTS

May 9, 1994

Dear Investment Colleague:

In March, we mailed proxy materials to shareholders of Putnam
Convertible Income-Growth Trust, Putnam Tax-Free High Yield Fund
and Putnam Federal Income Trust, asking for their votes on
various issues.  As of today, we have not received a sufficient
number of returned proxies to pass some of the issues in
question.

As a result, we are mailing letters (attached) to the sharehold
ers of these funds who did not return their proxies to explain
these items and to inform them of an upcoming opportunity to
vote-by-phone.  We will not be contacting shareholders who voted
no or who abstained.  A few days after the shareholder letters
arrive, we will be calling them regarding the opportunity to
vote-by-phone.  Telephone solicitation and voting is common
practice when time is of the essence.

     The issues at hand are: 

     * PUTNAM CONVERTIBLE INCOME-GROWTH TRUST - Approval of a
     management fee increase

     * PUTNAM TAX-FREE HIGH YIELD FUND - Approval of a management
     fee increase

     * PUTNAM FEDERAL INCOME TRUST - Approval of additional
     classes of shares

Should you have any questions on these issues, please call a
Putnam Broker Operations representative at 1-800-354-2228.

Sincerely,


William N. Shiebler