MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
PRIME BOND FUND
Supplement dated November 20, 2000
to Prospectus dated April 4, 2000
The following information supersedes and replaces any contrary
information contained in the Prospectus under the captions "Key Facts--Merrill
Lynch Prime Bond Fund at a Glance", "Details About the Fund--How the Fund
Invests" and "Details About the Fund--Investment Strategies":
Effective immediately, under normal circumstances, the Prime Bond Fund
will invest at least 65% of its assets in fixed-income securities of any kind
rated investment grade by a Nationally Recognized Statistical Rating
Organization ("NRSRO"). The Prime Bond Fund may invest up to 35% of its assets
in fixed-income securities rated below investment grade by a NRSRO or unrated
securities of equivalent credit quality ("junk bonds"); however, as a matter of
operating policy, the Prime Bond Fund will not invest more than 10% of its
assets in such securities.
Although junk bonds generally have higher yields than fixed-income
securities with higher credit ratings, they are high risk investments that may
not pay interest or return principal as scheduled. Junk bonds generally are less
liquid and experience more price volatility than higher rated fixed-income
securities.
Effective immediately, the Prime Bond Fund may engage in transactions
in certain derivatives, such as financial futures contracts, options and swaps
for hedging purposes or to enhance income. Derivatives allow the Prime Bond Fund
to increase or decrease its risk exposure more quickly and efficiently than
other types of instruments. Derivatives may be volatile and involve significant
risks, including credit, leverage and liquidity risks.
