40204 1/98
Prospectus Supplement
dated January 16, 1998 to:
_________________________________________________________________
PUTNAM FEDERAL INCOME TRUST (the "fund")
Prospectuses dated February 28, 1997
1. Effective immediately the first sentence under the heading
"Basic Investment strategy" is replaced with the following:
The fund will seek its objectives by investing in debt
securities, including government and corporate obligations.
Under normal market conditions, the fund will invest at least 65%
of its total assets in U.S. government securities.
2. The sixth paragraph under the heading "Basic Investment
strategy" is deleted.
