<PAGE>
MERRILL LYNCH FEDERAL SECURITIES TRUST
------------------------
SUPPLEMENT DATED MAY 4, 1994 TO
STATEMENT OF ADDITIONAL INFORMATION DATED DECEMBER 23, 1993
------------------------
'Purchase of Shares--Reduced Initial Sales Charges--Class A
Shares--Retirement Plans' is replaced as follows:
Employer Sponsored Retirement and Savings Plans. Class A shares are offered
at net asset value to employer sponsored retirement or savings plans, such as
tax qualified retirement plans within the meaning of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the 'Code'), deferred compensation
plans within the meaning of Sections 403(b) and 457 of the Code, other deferred
compensation arrangements, VEBA plans, and non-qualified After Tax Savings and
Investment programs, maintained on the Merrill Lynch Group Employee Services
system, herein referred to as 'Employer Sponsored Retirement or Savings Plans',
provided the plan has $5 million or more in existing plan assets initially
invested in portfolios, mutual funds or trusts advised by the Fund's investment
adviser either directly or through an affiliate. Class A shares are being
offered at net asset value to Employer Sponsored Retirement or Savings Plans,
provided the plan has accumulated $5 million or more in existing plan assets
invested in mutual funds advised by the Fund's investment adviser charging a
front-end sales charge or contingent deferred sales charge. Assets of Employer
Sponsored Retirement or Savings Plans sponsored by the same sponsor or an
affiliated sponsor may be aggregated. The Class A share reduced load breakpoints
also apply to these aggregated assets. Class A shares are being offered at net
asset value to multiple plans sponsored by the same sponsor or an affiliated
sponsor provided that the addition of one or more of the multiple plans results
in aggregate assets of $5 million or more invested in portfolios, mutual funds
or trusts advised by the Fund's investment adviser either directly or through an
affiliate. Employer Sponsored Retirement or Savings Plans are also offered Class
A shares at net asset value, provided such plan initially has 1,000 or more
employees eligible to participate in the plan. Employees eligible to participate
in Employer Sponsored Retirement or Savings Plans of the same sponsoring
employer or its affiliates may be aggregated. Tax qualified retirement plans
within the meaning of Section 401(a) of the Code meeting any of the foregoing
requirements and which are provided specialized services (e.g., plans whose
participants may direct on a daily basis their plan allocations among a wide
range of investments including individual corporate equities and other
securities in addition to mutual fund shares) by the Merrill Lynch Blueprint
(Service Mark) Program, are offered Class A shares at a price equal to net
asset value per share plus a reduced sales charge of 0.50%. Any
Employer Sponsored Retirement or Savings Plan which does not meet the
above-described qualifications to purchase Class A shares at net asset
value has the option of purchasing Class A shares at the sales charge
schedule disclosed in the Prospectus, or if the Employer Sponsored
Retirement or Savings Plan is a qualified retirement plan and meets the
specified requirements, then it may purchase Class B shares with a
waiver of the contingent deferred sales charge upon redemption. The
minimum initial and subsequent purchase requirements are waived in
connection with all the above referenced Employer Sponsored Retirement
or Savings Plans.
Code #10260ALL
