MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
Supplement dated January 8, 2001 to the
Statement of Additional Information dated June 29, 2000
Effective today, the American Balanced Fund, the Global Strategy Focus
Fund and the Quality Equity Fund may invest in Standard & Poor's Depositary
Receipts ("SPDRs"). SPDRs are units of beneficial interest in an investment
trust sponsored by a wholly-owned subsidiary of the American Stock Exchange,
Inc. (the "Exchange") which represent proportionate undivided interests in a
portfolio of securities consisting of substantially all of the common stocks, in
substantially the same weighting, as the component stocks of the Standard &
Poor's 500 Stock Index (the "S&P 500 Index"). SPDRs are listed on the Exchange
and traded in the secondary market on a per-SPDR basis.
SPDRs are designed to provide investment results that generally
correspond to the price and yield performance of the component common stocks of
the S&P 500 Index. The value of SPDRs is subject to change as the values of its
component common stocks fluctuate according to the volatility of the market.
Investments in SPDRs involve certain inherent risks generally associated with
investments in a broadly based portfolio of common stocks, including the risk
that the general level of stock prices may decline, thereby adversely affecting
the value of each unit of SPDRs invested in by a Fund. Moreover, a Fund's
investment in SPDRs may not exactly match the performance of a direct investment
in the component common stocks of the S&P 500 Index. Additionally, the
investment trust may not fully replicate the performance of the S&P 500 Index
due to the temporary unavailability of certain index securities in the secondary
market or due to other extraordinary circumstances, such as discrepancies
between the investment trust and the S&P 500 Index with respect to the weighting
of securities or the number of, for example, larger capitalized stocks held by
the S&P 500 Index and the investment trust.
