STATEMENT OF ADDITIONAL INFORMATION

MERCURY VARIABLE TRUST

P.O. Box 9011, Princeton, New Jersey 08536-9011 Phone No. (888) 763-2260

The Mercury Variable Trust (the Trust) is an investment company comprised of one investment fund Mercury International Value V.I. Fund (the Fund). The shares of the Fund are offered only to separate accounts of participating life insurance companies (Participating Insurance Companies) for the purpose of funding variable annuity contracts and variable life insurance contracts.

This Statement of Additional Information of the Trust is not a prospectus and should be read in conjunction with the prospectus of the Fund, dated May 1, 2003 which has been filed with the Securities and Exchange Commission (the Commission). The Prospectus of the Fund can be obtained, without charge, by calling the Trust at 1-800-236-4479 or by writing to the Trust at Financial Data Services, Inc., P.O. Box 41621, Jacksonville, Florida 32232-1621. That Prospectus is incorporated by reference into this Statement of Additional Information, and information as to the Fund in this Statement of Additional Information is incorporated by reference into the Prospectus. The Funds audited financial statements are incorporated in this Statement of Additional Information by reference to the 2002 Annual Report. You may request copies of the Annual Report at no charge by calling 1-800-236-4479 between 8:30 a.m. and 5:30 p.m. Eastern time on any business day.

Mercury Advisors Advisor

FAM Distributors, Inc. Distributor

The date of this Statement of Additional Information is May 1, 2003

TABLE OF CONTENTS

TRUST HISTORY

The Trust was organized on February 4, 1997 as a Massachusetts business trust. From October 6, 2000 to April 16, 2002, the Trust was called Mercury HW Variable Trust. Prior to October 6, 2000, the Trust was called Hotchkis and Wiley Variable Trust. The Trust is a diversified, open-end, management investment company currently consisting of one series. From October 6, 2000 to April 16, 2002, the Fund was called Mercury HW International Value VIP Portfolio. Prior to October 6, 2000, the Fund was called the Hotchkis & Wiley International VIP Portfolio.

Description of the Fund, Its Investments and Risks

The investment objective of the Fund is to provide current income and long-term growth of income, accompanied by growth of capital.

The portfolio and strategies with respect to the composition of the Fund are described in the Funds Prospectus.

Investment Restrictions

The Fund has adopted the following restrictions (in addition to its investment objectives) as fundamental policies, which may not be changed without the favorable vote of the holders of a majority of the Funds outstanding voting securities, as defined in the Investment Company Act of 1940 (the 1940 Act). Under the 1940 Act, the vote of the holders of a majority of the Funds outstanding voting securities means the vote of the holders of the lesser of (1) 67% of the shares of the Fund represented at a meeting at which the holders of more than 50% of its outstanding shares are represented or (2) more than 50% of the outstanding shares.

Except as noted, the Fund may not:

1.  Purchase any security, other than obligations of the U.S. Government, its agencies, or instrumentalities (U.S. Government securities), if as a result: (i) with respect to 75% of its total assets, more than 5% of the Funds total assets (determined at the time of investment) would then be invested in securities of a single issuer; or (ii) more than 25% of the Funds total assets (determined at the time of investment) would be invested in one or more issuers having their principal business activities in a single industry.

2.  Purchase securities on margin (but the Fund may obtain such short-term credits as may be necessary for the clearance of transactions), provided that the deposit or payment by the Fund of initial or maintenance margin in connection with futures or options is not considered the purchase of a security on margin.

3.  Make short sales of securities or maintain a short position, unless at all times when a short position is open it owns an equal amount of such securities or securities convertible into or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities sold short (short sale against-the-box), and unless not more than 25% of the Funds net assets (taken at current value) is held as collateral for such sales at any one time.

4.  Issue senior securities, borrow money or pledge its assets except that the Fund may borrow from a bank for temporary or emergency purposes in amounts not exceeding 10% (taken at the lower of cost or current value) of its total assets (not including the amount borrowed) and pledge its assets to secure such borrowings; the Fund will not purchase any additional portfolio securities while such borrowings are outstanding.

5.  Purchase any security (other than U.S. Government securities) if as a result, with respect to 75% of the Funds total assets, the Fund would then hold more than 10% of the outstanding voting securities of an issuer.

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6.  Buy or sell commodities or commodity contracts or real estate or interests in real estate, although it may purchase and sell securities which are secured by real estate and securities of companies which invest or deal in real estate. (For the purposes of this restriction, forward foreign currency exchange contracts are not deemed to be commodities or commodity contracts.)

7.  Act as underwriter except to the extent that, in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under certain federal securities laws.

8.  Make investments for the purpose of exercising control or management.

9.  Participate on a joint or joint and several basis in any trading account in securities.

10.  Make loans, except through repurchase agreements.

If a percentage restriction on the investment or use of assets set forth above is adhered to at the time a transaction is effected, later changes in percentages resulting from changing values will not be considered a violation.

Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) with the Advisor, the Fund is prohibited from engaging in certain transactions involving Merrill Lynch or its affiliates except for brokerage transactions permitted under the 1940 Act involving only usual and customary commissions or transactions pursuant to an exemptive order under the 1940 Act. See Management Transactions in Portfolio Securities. Without such an exemptive order the Fund would be prohibited from engaging in portfolio transactions with Merrill Lynch or any of its affiliates acting as principal.

Repurchase Agreements

The Fund may invest in repurchase agreements collateralized by U.S. Government securities. A repurchase agreement is an agreement where the seller agrees to repurchase a security from a Fund at a mutually agreed-upon time and price. The period of maturity is usually quite short, possibly overnight or a few days, although it may extend over a number of months. The resale price is more than the purchase price, reflecting an agreed-upon rate of return effective for the period of time the Funds money is invested in the repurchase agreement. The Funds repurchase agreements will at all times be fully collateralized in an amount at least equal to the resale price. The instruments held as collateral are valued daily, and if the value of those instruments declines, the Fund will require additional collateral. In the event of a default, insolvency or bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral. In such circumstances, the Fund could experience a delay or be prevented from disposing of the collateral. To the extent that the proceeds from any sale of such collateral upon a default in the obligation to repurchase are less than the repurchase price, the Fund will suffer a loss.

Bonds

The term bond or bonds as used in the Prospectuses and this Statement of Additional Information is intended to include all manner of fixed-income securities, debt securities and other debt obligations unless specifically defined or the context requires otherwise.

U.S. Government Securities

U.S. Government agencies or instrumentalities which issue or guarantee securities include, but are not limited to, the Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land Banks, Tennessee Valley Authority, Inter-American Development Bank, Asian Development Bank, Student Loan Marketing Association and the International Bank for Reconstruction and Development.

Except for U.S. Treasury securities, obligations of U.S. Government agencies and instrumentalities may or may not be supported by the full faith and credit of the United States. Some are backed by the right of the issuer

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to borrow from the Treasury; others by discretionary authority of the U.S. Government to purchase the agencies obligations; while still others, such as the Student Loan Marketing Association, are supported only by the credit of the instrumentality. In the case of securities not backed by the full faith and credit of the United States, the investor must look principally to the agency or instrumentality issuing or guaranteeing the obligation for ultimate repayment, and may not be able to assert a claim against the United States itself in the event the agency or instrumentality does not meet its commitment. The Fund will invest in securities of such instrumentality only when the Advisor is satisfied that the credit risk with respect to any instrumentality is acceptable.

The Fund may invest in component parts of U.S. Treasury notes or bonds, namely, either the corpus (principal) of such Treasury obligations or one of the interest payments scheduled to be paid on such obligations. These obligations may take the form of: (1) Treasury obligations from which the interest coupons have been stripped; (2) the interest coupons that are stripped; (3) book-entries at a Federal Reserve member bank representing ownership of Treasury obligation components; or (4) receipts evidencing the component parts (corpus or coupons) of Treasury obligations that have not actually been stripped. Such receipts evidence ownership of component parts of Treasury obligations (corpus or coupons) purchased by a third party (typically an investment banking firm) and held on behalf of the third party in physical or book-entry form by a major commercial bank or trust company pursuant to a custody agreement with the third party. These custodial receipts are known by various names, including Treasury Receipts, Treasury Investment Growth Receipts (TIGRs) and Certificates of Accrual on Treasury Securities (CATS), and are not issued by the U.S. Treasury; therefore they are not U.S. Government securities, although the underlying bonds represented by these receipts are debt obligations of the U.S. Treasury.

Corporate Debt Securities

The Funds investments in U.S. dollar or foreign currency-denominated corporate debt securities of domestic or foreign issuers are limited to corporate debt securities (corporate bonds, debentures, notes and other similar corporate debt instruments) which meet the minimum ratings criteria set forth for the Fund, or, if unrated, are in the Advisors opinion comparable in quality to corporate debt securities in which the Fund may invest. The rate of return or return of principal on some debt obligations may be linked or indexed to the level of exchange rates between the U.S. dollar and a foreign currency or currencies.

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