BlackRock Variable Series Funds II N-CSR Certified annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORMN-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number:811-23346

Name of Fund:  BlackRock Variable Series Funds II, Inc.

BlackRock High Yield V.I. Fund

BlackRock Total Return V.I. Fund

BlackRock U.S. Government Bond V.I. Fund

Fund Address:   100 Bellevue Parkway, Wilmington, DE 19809

Name and address of agent for service: John M. Perlowski, Chief Executive Officer, BlackRock Variable Series Funds II, Inc., 55 East 52^nd Street, New York, NY 10055

Registrant’s telephone number, including area code: (800)441-7762

Date of fiscal year end: 12/31/2018

Date of reporting period: 12/31/2018

Item 1 – Report to Stockholders

DECEMBER 31, 2018

ANNUAL REPORT

BlackRock Variable Series Funds II, Inc.

Not FDIC Insured • May Lose Value • No Bank Guarantee

The Markets in Review

Dear Shareholder,

In the 12 months ended December 31, 2018, concerns about a variety of political risks and a modest slowdown in global growth worked against the equity market despite solid corporate earnings, while rising interest rates constrained bond returns. Though the market’s appetite for risk remained healthy for most of the reporting period, risk-taking declined sharply later in the reporting period. As a result, bonds held their value better than stocks, which posted negative returns across the globe. Shorter-term, higher-quality securities led the bond market, and U.S. equities outperformed most international stock markets.

Volatility rose in emerging market stocks, as the rising U.S. dollar and higher interest rates in the U.S. disrupted economic growth abroad. U.S.-China trade relations and debt concerns adversely affected the Chinese stock market, while Turkey and Argentina became embroiled in currency crises, largely due to hyperinflation in both countries. An economic slowdown in Europe also led to negative performance for European equities.

In fixed income markets, short-term U.S. Treasury interest rates rose the fastest, while longer-term rates slightly increased. This led to a negative return for long-term U.S. Treasuries and a substantial flattening of the yield curve. Many investors are concerned with the flattening yield curve as a harbinger of recession. However, given the extraordinary monetary measures in the last decade, we believe a more accurate barometer for the economy is the returns along the risk spectrums in stock and bond markets. Although the fundamentals in credit markets remained relatively solid, investment-grade bonds posted flat returns, and high-yield bonds declined slightly. Recent sell-offs in risk assets have flattened asset returns along the risk spectrum somewhat, which bears further scrutiny in the months ahead.

In response to rising growth and inflation, the U.S. Federal Reserve (the “Fed”) increased short-term interest rates four times during the reporting period. The Fed also continued to reduce its balance sheet, gradually reversing the unprecedented stimulus measures it enacted after the financial crisis. By our estimation, the Fed’s neutral interest rate, or the theoretical rate that is neither stimulative nor restrictive to the economy, is approximately 3.0%. With that perspective, the Fed’s current policy is still mildly stimulative to the U.S. economy, which leaves room for further Fed rate hikes to arrive at monetary policy that is a neutral factor for economic growth.

Volatility in the U.S. equity market spiked in October, as a wide range of risks were brought to bear on markets, ranging from rising interest rates and slowing global growth to heightened trade tensions and political turmoil in several countries, including the United States. This was accompanied by a broad basedrisk-off in December — which was the worst December performance on record since 1931. Although fears of recession drove equity volatility higher at the end of 2018, we continue to believe the probability of recession in 2019 remains relatively low.

Economic growth and global earnings are likely to slow somewhat in 2019 — the tax cut stimulus will be less pronounced, and the Fed’s rate hikes in 2018 will gain traction in 2019. Trade frictions look more baked into asset prices than a year ago, but markets may be overlooking European political risks. Consequently, we are cautious on European equities, as European unity remains tenuous with a history offlare-ups. We continue to prefer to take risk in U.S. and emerging market equities. Within U.S. equities, we believe that companies with high-quality earnings and strong balance sheets offer the most attractive risk/rewardtrade-off. Going into 2019, we also favor short-term bonds over long-term bonds because they offer nearly equivalent yields with far lower volatility.

In this environment, investors need to think globally, extend their scope across a broad array of asset classes, and be nimble as market conditions change. We encourage you to talk with your financial advisor and visitblackrock.com for further insight about investing in today’s markets.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

Rob Kapito

President, BlackRock Advisors, LLC

Total Returns as of December 31, 2018
	6-month	12-month
U.S. large cap equities (S&P 500® Index)	(6.85)%	(4.38)%
U.S. small cap equities (Russell 2000® Index)	(17.35)	(11.01)
International equities (MSCI Europe, Australasia, Far East Index)	(11.35)	(13.79)
Emerging market equities (MSCI Emerging Markets Index)	(8.48)	(14.57)
3-month Treasury bills (ICE BofAML3-Month U.S. Treasury Bill Index)	1.06	1.87
U.S. Treasury securities (ICE BofAML10-Year U.S. Treasury Index)	2.72	(0.03)
U.S. investment grade bonds (Bloomberg Barclays U.S. Aggregate Bond Index)	1.65	0.01
Tax-exempt municipal bonds (S&P Municipal Bond Index)	1.38	1.36
U.S. high yield bonds (Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index)	(2.24)	(2.08)
Past performance is no guarantee of future results. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.

THIS PAGEISNOT PARTOF YOUR FUND REPORT

DECEMBER 31, 2018

ANNUAL REPORT

BlackRock Variable Series Funds II, Inc.

^Ø  BlackRock High Yield V.I. Fund

Not FDIC Insured • May Lose Value • No Bank Guarantee

Fund Summary  as of December 31, 2018 BlackRock High Yield V.I. Fund

Investment Objective

BlackRock High Yield V.I. Fund’s (the “Fund”) investment objective is to seek to maximize total return, consistent with income generation and prudent investment management.

Portfolio Management Commentary

How did the Fund perform?

During the 12-month period ended December 31, 2018, the Fund underperformed its benchmark, the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index.

What factors influenced performance?

The past year was a challenging time for the high yield market. After producing a modest gain through the end of September, the index declined 5.10% in the fourth quarter due to the combination of slowing economic growth, falling oil prices and heightened investor risk aversion. The index closed the year with a loss of 2.08% as a result.

Security selection in the wireless, metals & mining, and gaming industries detracted from performance. Tactical allocations to equities and floating rate loan interests (“bank loans”) also detracted, largely due to their poor returns in the fourth quarter.

Issue selection in the oilfield services industry contributed to performance, as did underweight positions in the automotive and midstream energy industries. An underweight to BB rated issues and security selection among CCC rated securities added value, as well. An allocation to preferred securities, which outperformed the high yield market, was a further contributor.

At period end, the Fund had a slightly above average cash balance. The cash balance did not have a material impact on Fund performance.

Describe recent portfolio activity.

The Fund actively managed risk throughout the annual period and ended the year with a beta of slightly less than 1.0. (Beta measures a security’s sensitivity to the movements of the market as a whole. A beta of greater than one indicates more volatility than the market, while a beta of less than one indicates lower volatility.)

The Fund added to its weighting in bank loans on the belief that these senior, secured assets provide attractive income with minimal interest-rate risk. The Fund held a steady credit positioning over the course of the year, with underweight positions in BB rated issues and overweights in the B and CCC credit tiers. The Fund maintained an underweight in consumer cyclicals on the belief that the industry faces fundamental headwinds. The portfolio was slightly underweight in energy, with a preference for the independent energy industry.

Describe portfolio positioning at period end.

The Fund’s general investment themes and core positions reflected the investment adviser’s views regarding issuer cash flows, firm or industry catalysts, and idiosyncratic factors.

The Fund was underweight in the market’s “tails,” both the higher-yielding segment that contains a larger concentration of stressed assets as well as the portion that features higher quality and lower yields. With that said, it maintained a position in select CCC rated issues with improving credit positions and/or attractive yields.

At the industry level, the Fund’s largest overweight positions were in technology, chemicals and pharmaceuticals. Conversely, the Fund was underweight in the retail, automotive and consumer products industries. The Fund had an approximately 14% weighting in bank loans, coupled with smaller allocations to both preferred and common stocks.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

2 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Fund Summary  as of December 31, 2018 (continued) BlackRock High Yield V.I. Fund

TOTAL RETURN BASED ON A $10,000 INVESTMENT

^(a)  Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses. The returns for Class III Shares, prior to February 15, 2012, the recommencement of Class III Shares, are based upon performance of Class I Shares of the Predecessor Fund (as defined below), as adjusted to reflect the distribution and/or service(12b-1) fees applicable to Class III Shares.

^(b)  The Fund invests primarily innon-investment grade bonds with maturities of ten years or less. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of BlackRock High Yield V.I. Fund (the “Predecessor Fund”), a series of BlackRock Variable Series Funds, Inc., through a tax-free reorganization (the “Reorganization”). The Predecessor Fund is the performance and accounting survivor of the Reorganization. The Fund’s total returns prior to October 1, 2011 are the returns of the Predecessor Fund when it followed different investment objectives and investment strategies under the name “BlackRock High Income V.I. Fund”.

^(c)  An unmanaged index comprised of issues that meet the following criteria: at least $150 million par value outstanding; maximum credit rating of Ba1; at least one year to maturity; and no issuer represents more than 2% of the index.

Performance Summary for the Period Ended December 31, 2018

										Average Annual Total Returns
	Standardized 30-Day Yields (b)			Unsubsidized 30-Day Yields (b)			6-Month Total Returns (c)			1 Year (c)			5 Years (c)			10 Years (c)
Class I(a)		6.60	%		6.47	%		(2.97	)%		(2.79	)%		3.20	%		10.79	%
Class III(a)		6.34			6.23			(2.96	)		(2.89	)		2.95			10.52	(d)
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Capped Index		—			—			(2.24	)		(2.08	)		3.84			11.14

^(a)  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend/payable date. Insurance-related fees and expenses are not reflected in these returns. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of the Predecessor Fund, a series of BlackRock Variable Series Funds, Inc., through the Reorganization. The Predecessor Fund is the performance and accounting survivor of the Reorganization. The Fund’s total returns prior to October 1, 2011 are the returns of the Predecessor Fund when it followed different investment objectives and investment strategies under the name “BlackRock High Income V.I. Fund”.

^(b)  The standardized30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized30-day yield excludes the effects of any waivers and/or reimbursements.

^(c)  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

^(d)  The returns for Class III Shares prior to February 15, 2012, the recommencement of operations of Class III Shares, are based upon the performance of the Predecessor Fund’s Class I Shares, as adjusted to reflect the distribution(12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example

	Actual						Hypothetical (a)
	Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Annualized Expense Ratio
Class I	$	1,000.00	$	970.30	$	3.13	$	1,000.00	$	1,022.03	$	3.21		0.63	%
Class III		1,000.00		970.40		4.32		1,000.00		1,020.82		4.43		0.87

^(a)  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

^(b)  For each class of the Fund, expenses are equal to annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 184/365 (to reflect theone-half year period shown).

See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

FUND SUMMARY 3

Fund Summary  as of December 31, 2018 (continued) BlackRock High Yield V.I. Fund

Portfolio Information as of December 31, 2018

CREDIT QUALITY ALLOCATION

Credit Rating (a)	Percent of Total Investments (b)
BBB/Baa		6	%
BB/Ba		37
B		44
CCC/Caa		11
NR		2

^(a)  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either S&P Global Ratings or Moody’s Investors Service if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BBB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low credit quality. Credit quality ratings are subject to change.

^(b)  Total investments exclude short-term securities.

4 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Expenses BlackRock High Yield V.I. Fund

Shareholders of the Fund may incur the following charges: (a) transactional expenses; and (b) operating expenses, including investment advisory fees, service and distribution fees, including12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on July 1, 2018 and held through December 31, 2018) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

DISCLOSUREOF EXPENSES / DERIVATIVE FINANCIAL INSTRUMENTS 5

Schedule of Investments December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Shares			Value
Common Stocks — 1.3%
Chemicals — 0.4%
Platform Specialty Products Corp.(a)			139,053	$	1,436,417
Containers & Packaging — 0.2%
Crown Holdings, Inc.(a)			23,500		976,895
Equity Real Estate Investment Trusts (REITs) — 0.1%
Gaming and Leisure Properties, Inc.			12,660		409,044
Hotels, Restaurants & Leisure — 0.4%
Star Group, Inc. (The)(a)			103,714		1,712,360
Media — 0.1%
Altice USA, Inc., Class A			20,929		345,747
Metals & Mining — 0.1%
Constellium NV, Class A(a)			80,736		564,345
Total Common Stocks — 1.3% (Cost: $6,944,114)					5,444,808
	Par (000)
Corporate Bonds — 78.5%
Aerospace & Defense — 2.4%
Arconic, Inc., 5.13%, 10/01/24		USD	1,108		1,063,691
BBA US Holdings, Inc., 5.38%, 05/01/26(b)			481		455,743
Bombardier, Inc.(b):
7.75%, 03/15/20			128		129,920
8.75%, 12/01/21			1,357		1,397,710
5.75%, 03/15/22			289		269,492
6.00%, 10/15/22			24		22,500
6.13%, 01/15/23			1,558		1,460,625
7.50%, 12/01/24			667		628,648
7.50%, 03/15/25			1,855		1,748,337
7.45%, 05/01/34			210		187,425
BWX Technologies, Inc., 5.38%, 07/15/26(b)			244		234,777
Kratos Defense & Security Solutions, Inc., 6.50%, 11/30/25(b)			527		536,223
Pioneer Holdings LLC, 9.00%, 11/01/22(b)			183		183,915
TransDigm UK Holdings plc, 6.88%, 05/15/26(b)			1,248		1,188,720
TransDigm, Inc.:
6.00%, 07/15/22			233		229,505
6.50%, 07/15/24			648		630,180
					10,367,411
Airlines — 0.0%
American Airlines Group, Inc., 5.50%, 10/01/19(b)			30		30,075
Auto Components — 0.3%
Allison Transmission, Inc., 5.00%, 10/01/24(b)			16		15,360
Icahn Enterprises LP:
6.25%, 02/01/22			342		337,725
6.75%, 02/01/24			549		543,510
6.38%, 12/15/25			288		277,200
					1,173,795
Automobiles — 0.2%(b)
Jaguar Land Rover Automotive plc, 5.63%, 02/01/23			150		139,125
Tesla, Inc., 5.30%, 08/15/25			707		614,206
					753,331
Banks — 0.7%
Banco Espirito Santo SA(a)(c):
2.63%, 05/08/17		EUR	100		33,800
4.75%, 01/15/18			100		32,940
4.00%, 01/21/19			100		32,081

Security	Par (000)			Value
Banks (continued)
Barclays plc:
4.38%, 09/11/24		USD	850	$	802,448
5.20%, 05/12/26			200		191,716
CIT Group, Inc.:
5.00%, 08/15/22			30		29,587
5.00%, 08/01/23			892		874,160
5.25%, 03/07/25			203		198,433
6.13%, 03/09/28			138		137,310
HSBC Holdings plc(d)(e):
(USD Swap Rate 5 Year + 3.45%), 6.25%			358		335,625
(USD Swap Rate 5 Year + 3.75%), 6.00%			465		418,723
					3,086,823
Building Products — 0.4%(b)
CPG Merger Sub LLC, 8.00%, 10/01/21			371		359,870
Jeld-Wen, Inc.:
4.63%, 12/15/25			209		182,875
4.88%, 12/15/27			4		3,380
Masonite International Corp., 5.75%, 09/15/26			251		236,567
NCI Building Systems, Inc., 8.00%, 04/15/26			109		99,735
PGT Escrow Issuer, Inc., 6.75%, 08/01/26			173		170,405
Standard Industries, Inc.:
5.50%, 02/15/23			5		4,900
6.00%, 10/15/25			135		129,479
USG Corp.:
5.50%, 03/01/25			37		37,278
4.88%, 06/01/27			416		419,120
					1,643,609
Capital Markets — 0.2%(b)
Credit Suisse Group AG, (USD Swap Semi 5 Year + 4.60%), 7.50%(d)(e)			200		195,000
Eagle Holding Co. II LLC, 7.63% (7.63% Cash or 8.38% PIK), 05/15/22(f)			229		218,695
FS Energy & Power Fund, 7.50%, 08/15/23			328		311,600
Lions Gate Capital Holdings LLC, 5.88%, 11/01/24			92		90,850
MSCI, Inc., 5.25%, 11/15/24			167		166,165
					982,310
Chemicals — 3.3%
Alpha 2 BV, 8.75% (8.75% Cash or 9.50% PIK), 06/01/23(b)(f)			410		392,575
Alpha 3 BV, 6.25%, 02/01/25(b)			1,500		1,410,000
Axalta Coating Systems LLC, 4.88%, 08/15/24(b)			1,003		947,835
Blue Cube Spinco LLC:
9.75%, 10/15/23			542		596,200
10.00%, 10/15/25			838		946,940
Chemours Co. (The):
6.63%, 05/15/23			401		405,010
7.00%, 05/15/25			108		108,810
4.00%, 05/15/26		EUR	290		313,976
5.38%, 05/15/27		USD	306		275,400
Gates Global LLC, 6.00%, 07/15/22(b)			835		818,300
GCB MPM Escrow LLC, 8.88%, 10/15/20(g)			334		—
GCP Applied Technologies, Inc., 5.50%, 04/15/26(b)			44		42,900
Hexion, Inc., 10.38%, 02/01/22(b)			107		85,332
Huntsman International LLC, 5.13%, 11/15/22			165		166,238
Koppers, Inc., 6.00%, 02/15/25(b)			124		109,120
Momentive Performance Materials, Inc., 3.88%, 10/24/21			459		486,540
NOVA Chemicals Corp., 4.88%, 06/01/24(b)			338		305,045
Olin Corp., 5.00%, 02/01/30			172		150,715
Platform Specialty Products Corp.(b):
6.50%, 02/01/22			3,661		3,661,000
5.88%, 12/01/25			1,635		1,528,725

6 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Chemicals (continued)
PQ Corp.(b):
6.75%, 11/15/22		USD	640	$	659,200
5.75%, 12/15/25			925		855,625
					14,265,486
Commercial Services & Supplies — 2.2%
ACCO Brands Corp., 5.25%, 12/15/24(b)			108		96,660
ADT Corp. (The):
3.50%, 07/15/22			84		77,700
4.13%, 06/15/23			549		502,335
4.88%, 07/15/32(b)			652		482,480
Advanced Disposal Services, Inc., 5.63%, 11/15/24(b)			168		164,220
Algeco Global Finance plc:
6.50%, 02/15/23		EUR	200		223,776
8.00%, 02/15/23(b)		USD	1,066		994,045
APX Group, Inc.:
8.75%, 12/01/20			447		425,767
7.88%, 12/01/22			191		180,495
Aramark Services, Inc.:
5.13%, 01/15/24			470		465,300
4.75%, 06/01/26			470		441,800
5.00%, 02/01/28(b)			51		47,557
GFL Environmental, Inc., 5.38%, 03/01/23(b)			207		181,125
Harland Clarke Holdings Corp., 8.38%, 08/15/22(b)			182		165,848
Hulk Finance Corp., 7.00%, 06/01/26(b)			208		181,480
KAR Auction Services, Inc., 5.13%, 06/01/25(b)			307		277,068
Matthews International Corp., 5.25%, 12/01/25(b)			106		98,580
Mobile Mini, Inc., 5.88%, 07/01/24			1,390		1,362,200
Nielsen Co. Luxembourg SARL (The), 5.00%, 02/01/25(b)			139		129,965
Nielsen Finance LLC, 5.00%, 04/15/22(b)			605		577,775
Prime Security Services Borrower LLC, 9.25%, 05/15/23(b)			1,391		1,434,469
Ritchie Bros Auctioneers, Inc., 5.38%, 01/15/25(b)			399		387,030
Tervita Escrow Corp., 7.63%, 12/01/21(b)			501		477,203
Waste Pro USA, Inc., 5.50%, 02/15/26(b)			208		191,360
					9,566,238
Communications Equipment — 0.4%
CommScope Technologies LLC(b):
6.00%, 06/15/25			2		1,820
5.00%, 03/15/27			749		606,690
Nokia OYJ:
4.38%, 06/12/27			187		173,910
6.63%, 05/15/39			893		906,395
					1,688,815
Construction & Engineering — 0.3%
Brand Industrial Services, Inc., 8.50%, 07/15/25(b)			344		293,260
Engility Corp., 8.88%, 09/01/24			437		466,497
New Enterprise Stone & Lime Co., Inc.(b):
10.13%, 04/01/22			166		161,850
6.25%, 03/15/26			103		93,730
Tutor Perini Corp., 6.88%, 05/01/25(b)			194		180,420
Weekley Homes LLC, 6.63%, 08/15/25			31		28,443
					1,224,200
Consumer Finance — 1.5%
Ally Financial, Inc.:
5.13%, 09/30/24			1,032		1,024,260
8.00%, 11/01/31			2,953		3,277,830
Navient Corp.:
6.63%, 07/26/21			515		496,975
6.50%, 06/15/22			65		60,613

Security	Par (000)			Value
Consumer Finance (continued)
5.50%, 01/25/23		USD	684	$	598,500
7.25%, 09/25/23			154		141,295
5.88%, 10/25/24			63		52,605
6.75%, 06/25/25			120		102,300
6.75%, 06/15/26			230		190,900
5.63%, 08/01/33			100		66,000
Springleaf Finance Corp.:
6.13%, 05/15/22			45		43,637
5.63%, 03/15/23			14		12,915
6.88%, 03/15/25			202		180,790
7.13%, 03/15/26			205		182,962
					6,431,582
Containers & Packaging — 2.0%
Ardagh Packaging Finance plc(b):
4.63%, 05/15/23			1,562		1,491,710
7.25%, 05/15/24			1,528		1,524,180
4.75%, 07/15/27		GBP	100		115,346
BWAY Holding Co., 5.50%, 04/15/24(b)		USD	2,312		2,173,280
Crown Americas LLC:
4.75%, 02/01/26(b)			592		557,960
4.25%, 09/30/26			864		775,440
Intertape Polymer Group, Inc., 7.00%, 10/15/26(b)			160		158,000
OI European Group BV, 4.00%, 03/15/23(b)			274		256,190
Reynolds Group Issuer, Inc.:
5.75%, 10/15/20			39		38,667
7.00%, 07/15/24(b)			1,265		1,204,913
Sealed Air Corp.(b):
4.88%, 12/01/22			386		382,140
6.88%, 07/15/33			31		30,923
					8,708,749
Distributors — 0.4%(b)
American Builders & Contractors Supply Co., Inc.:
5.75%, 12/15/23			758		750,420
5.88%, 05/15/26			169		160,127
Core & Main LP, 6.13%, 08/15/25			810		712,800
					1,623,347
Diversified Consumer Services — 0.3%(b)
frontdoor, Inc., 6.75%, 08/15/26			413		392,350
Graham Holdings Co., 5.75%, 06/01/26			182		182,455
Laureate Education, Inc., 8.25%, 05/01/25			179		183,923
ServiceMaster Co. LLC (The), 5.13%, 11/15/24			482		455,490
					1,214,218
Diversified Financial Services — 1.0%(b)
Jefferies Finance LLC:
7.38%, 04/01/20			200		199,500
6.88%, 04/15/22			741		720,623
Refinitiv US Holdings, Inc.:
4.50%, 05/15/26		EUR	650		724,257
6.25%, 05/15/26		USD	252		243,180
8.25%, 11/15/26			784		716,380
Tempo Acquisition LLC, 6.75%, 06/01/25			607		561,475
Travelport Corporate Finance plc, 6.00%, 03/15/26			240		242,400
Verscend Escrow Corp., 9.75%, 08/15/26			1,033		971,020
					4,378,835
Diversified Telecommunication Services — 5.6%
Altice France SA(b):
7.38%, 05/01/26			2,713		2,489,177
8.13%, 02/01/27			1,040		980,200
CCO Holdings LLC(b):
4.00%, 03/01/23			424		395,380
5.13%, 05/01/23			218		212,005
5.13%, 05/01/27			3,024		2,816,554
5.00%, 02/01/28			1,167		1,073,640

SCHEDULE OF INVESTMENTS 7

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Diversified Telecommunication Services (continued)
CenturyLink, Inc.:
Series S, 6.45%, 06/15/21		USD	112	$	111,720
Series W, 6.75%, 12/01/23			273		263,104
Series Y, 7.50%, 04/01/24			454		438,110
Series P, 7.60%, 09/15/39			21		16,590
Series U, 7.65%, 03/15/42			475		374,062
Cincinnati Bell, Inc., 7.00%, 07/15/24(b)			734		605,550
Embarq Corp., 8.00%, 06/01/36			790		714,950
Frontier Communications Corp.:
7.13%, 03/15/19			299		290,777
10.50%, 09/15/22			224		155,680
11.00%, 09/15/25			1,444		898,818
Intelsat Jackson Holdings SA:
5.50%, 08/01/23			1,149		999,630
8.50%, 10/15/24(b)			975		945,750
9.75%, 07/15/25(b)			1,550		1,554,340
Level 3 Financing, Inc.:
5.38%, 08/15/22			395		387,290
5.13%, 05/01/23			226		218,090
5.38%, 01/15/24			227		216,218
5.38%, 05/01/25			363		340,312
5.25%, 03/15/26			1,870		1,711,050
Level 3 Parent LLC, 5.75%, 12/01/22			205		201,412
Qualitytech LP, 4.75%, 11/15/25(b)			404		377,740
Qwest Corp., 6.75%, 12/01/21			160		163,593
Sprint Capital Corp.:
6.90%, 05/01/19			375		376,875
8.75%, 03/15/32			982		1,036,010
Telecom Italia Capital SA:
6.38%, 11/15/33			230		207,605
6.00%, 09/30/34			1,063		919,495
Telesat Canada, 8.88%, 11/15/24(b)			489		508,560
Virgin Media Finance plc, 5.75%, 01/15/25(b)			1,597		1,501,228
Virgin Media Secured Finance plc, 5.25%, 01/15/26(b)			465		426,056
					23,927,571
Electric Utilities — 0.0%
DPL, Inc., 7.25%, 10/15/21			39		40,750
NextEra Energy Operating Partners LP, 4.25%, 09/15/24(b)			169		156,325
					197,075
Electrical Equipment — 0.5%(b)
Energizer Gamma Acquisition, Inc., 6.38%, 07/15/26			82		75,235
Sensata Technologies BV:
5.63%, 11/01/24			547		538,795
5.00%, 10/01/25			734		689,960
Vertiv Group Corp., 9.25%, 10/15/24			969		891,480
					2,195,470
Electronic Equipment, Instruments & Components — 0.1%
CDW LLC:
5.00%, 09/01/23			169		166,043
5.50%, 12/01/24			52		51,350
5.00%, 09/01/25			222		212,565
Itron, Inc., 5.00%, 01/15/26(b)			36		32,940
					462,898
Energy Equipment & Services — 2.6%
Apergy Corp., 6.38%, 05/01/26			148		143,560
Calfrac Holdings LP, 8.50%, 06/15/26(b)			184		130,640
CSI Compressco LP, 7.50%, 04/01/25(b)			559		519,870
Diamond Offshore Drilling, Inc.:
7.88%, 08/15/25			240		199,200

Security	Par (000)			Value
Energy Equipment & Services (continued)
5.70%, 10/15/39		USD	54	$	32,940
4.88%, 11/01/43			455		252,525
Ensco Jersey Finance Ltd., 3.00%, 01/31/24(h)			384		253,925
Ensco plc:
4.50%, 10/01/24			136		88,400
5.20%, 03/15/25			328		218,120
7.75%, 02/01/26			398		294,520
5.75%, 10/01/44			237		132,455
McDermott Technology Americas, Inc., 10.63%, 05/01/24(b)			109		91,969
Nabors Industries, Inc.:
4.63%, 09/15/21			91		81,599
5.75%, 02/01/25			230		174,126
Noble Holding International Ltd.:
7.75%, 01/15/24			316		239,370
7.88%, 02/01/26(b)			1,485		1,265,962
5.25%, 03/15/42			182		105,560
Oceaneering International, Inc., 4.65%, 11/15/24			74		58,450
Pacific Drilling First Lien Escrow Issuer Ltd., 8.38%, 10/01/23(b)			1,177		1,124,035
Pioneer Energy Services Corp., 6.13%, 03/15/22			349		212,890
Precision Drilling Corp., 7.13%, 01/15/26(b)			33		28,380
Rowan Cos., Inc., 4.88%, 06/01/22			426		351,450
SESI LLC:
7.13%, 12/15/21			110		93,500
7.75%, 09/15/24			267		212,265
Transocean Guardian Ltd., 5.88%, 01/15/24(b)			293		280,547
Transocean Pontus Ltd., 6.13%, 08/01/25(b)			344		331,960
Transocean, Inc.:
8.47%, 12/15/21			31		30,767
5.80%, 10/15/22			450		396,000
9.00%, 07/15/23(b)			1,194		1,188,030
7.25%, 11/01/25(b)			460		401,350
7.50%, 01/15/26(b)			115		100,913
Trinidad Drilling Ltd., 6.63%, 02/15/25(b)			511		515,343
USA Compression Partners LP, 6.88%, 04/01/26(b)			946		908,160
Vantage Drilling International, 9.25%, 11/15/23(b)			215		210,163
Weatherford International Ltd.:
5.13%, 09/15/20			330		257,400
6.50%, 08/01/36			116		60,320
5.95%, 04/15/42			134		68,173
					11,054,837
Entertainment — 0.4%
Ascend Learning LLC, 6.88%, 08/01/25(b)			354		338,955
Netflix, Inc.:
5.38%, 02/01/21			60		60,750
5.50%, 02/15/22			306		308,677
4.38%, 11/15/26			129		117,068
5.88%, 11/15/28(b)			643		624,803
WMG Acquisition Corp., 5.50%, 04/15/26(b)			168		160,440
					1,610,693
Equity Real Estate Investment Trusts (REITs) — 2.0%
CoreCivic, Inc., 4.75%, 10/15/27			685		566,837
CyrusOne LP, 5.38%, 03/15/27			94		91,180
Equinix, Inc.:
5.38%, 04/01/23			70		69,650
5.88%, 01/15/26			1,078		1,086,085
ESH Hospitality, Inc., 5.25%, 05/01/25(b)			1,027		955,110
GEO Group, Inc. (The):
5.88%, 10/15/24			372		328,290
6.00%, 04/15/26			34		29,835

8 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Equity Real Estate Investment Trusts (REITs) (continued)
GLP Capital LP:
5.38%, 11/01/23		USD	66	$	66,904
5.25%, 06/01/25			76		75,462
iStar, Inc.:
4.63%, 09/15/20			46		44,850
5.25%, 09/15/22			75		70,118
MGM Growth Properties Operating Partnership LP:
5.63%, 05/01/24			743		735,570
4.50%, 09/01/26			983		889,615
4.50%, 01/15/28			731		639,625
MPT Operating Partnership LP:
6.38%, 03/01/24			65		66,625
5.50%, 05/01/24			35		34,825
5.00%, 10/15/27			848		775,390
SBA Communications Corp.:
4.00%, 10/01/22			858		817,245
4.88%, 09/01/24			1,063		999,220
VICI Properties 1 LLC, 8.00%, 10/15/23			321		345,113
					8,687,549
Food & Staples Retailing — 0.1%
Albertsons Cos. LLC:
6.63%, 06/15/24			163		151,182
5.75%, 03/15/25			100		87,500
Rite Aid Corp., 6.13%, 04/01/23(b)			179		141,410
					380,092
Food Products — 0.9%
B&G Foods, Inc., 5.25%, 04/01/25			80		74,400
Chobani LLC, 7.50%, 04/15/25(b)			216		170,100
JBS USA LUX SA(b):
5.88%, 07/15/24			876		861,765
5.75%, 06/15/25			1,327		1,272,261
6.75%, 02/15/28			895		870,401
Post Holdings, Inc.(b):
5.00%, 08/15/26			543		494,130
5.75%, 03/01/27			29		27,187
5.63%, 01/15/28			35		32,200
Simmons Foods, Inc., 7.75%, 01/15/24(b)			165		165,825
					3,968,269
Gas Utilities — 0.2%
Superior Plus LP, 7.00%, 07/15/26(b)			685		661,025
Health Care Equipment & Supplies — 2.1%
Avantor, Inc.(b):
6.00%, 10/01/24			2,403		2,360,947
9.00%, 10/01/25			736		736,000
DJO Finance LLC, 8.13%, 06/15/21(b)			1,698		1,748,940
Fresenius US Finance II, Inc., 4.50%, 01/15/23(b)			127		128,330
Hologic, Inc., 4.38%, 10/15/25(b)			68		63,240
Immucor, Inc., 11.13%, 02/15/22(b)			184		184,000
Mallinckrodt International Finance SA(b):
4.88%, 04/15/20			155		149,575
5.75%, 08/01/22			1,205		1,036,300
5.63%, 10/15/23			50		38,000
Ortho-Clinical Diagnostics, Inc., 6.63%, 05/15/22(b)			2,413		2,171,700
Sotera Health Holdings LLC, 6.50%, 05/15/23(b)			459		439,493
Teleflex, Inc., 4.88%, 06/01/26			21		20,055
					9,076,580
Health Care Providers & Services — 5.0%
Acadia Healthcare Co., Inc.:
5.13%, 07/01/22			31		29,605
5.63%, 02/15/23			279		264,352
6.50%, 03/01/24			641		618,565

Security	Par (000)			Value
Health Care Providers & Services (continued)
AHP Health Partners, Inc., 9.75%, 07/15/26(b)		USD	222	$	224,775
Centene Corp.:
4.75%, 05/15/22			448		442,400
6.13%, 02/15/24			73		74,734
Centene Escrow I Corp., 5.38%, 06/01/26(b)			2,509		2,440,002
Community Health Systems, Inc., 8.63%, 01/15/24(b)			715		706,062
DaVita, Inc., 5.13%, 07/15/24			502		470,625
Encompass Health Corp., 5.75%, 11/01/24			445		440,550
HCA, Inc.:
5.00%, 03/15/24			1,633		1,616,670
5.38%, 02/01/25			86		83,850
5.25%, 04/15/25			768		764,160
5.25%, 06/15/26			1,118		1,109,615
5.38%, 09/01/26			251		244,097
5.63%, 09/01/28			604		582,860
5.50%, 06/15/47			2,697		2,555,408
inVentiv Group Holdings, Inc., 7.50%, 10/01/24(b)			306		318,240
MEDNAX, Inc.(b):
5.25%, 12/01/23			144		141,120
6.25%, 01/15/27			150		144,750
Molina Healthcare, Inc., 4.88%, 06/15/25(b)			134		122,275
MPH Acquisition Holdings LLC, 7.13%, 06/01/24(b)			548		511,010
NVA Holdings, Inc., 6.88%, 04/01/26(b)			194		173,630
Polaris Intermediate Corp., 8.50% (8.41% Cash or 9.25% PIK), 12/01/22(b)(f)			1,510		1,377,301
RegionalCare Hospital Partners Holdings, Inc., 8.25%, 05/01/23(b)			273		275,730
Surgery Center Holdings, Inc.(b):
8.88%, 04/15/21			145		144,638
6.75%, 07/01/25			771		655,350
Team Health Holdings, Inc., 6.38%, 02/01/25(b)			566		461,998
Tenet Healthcare Corp.:
6.00%, 10/01/20			118		119,475
7.50%, 01/01/22(b)			226		229,390
8.13%, 04/01/22			1,948		1,952,870
4.63%, 07/15/24			1,054		980,220
6.88%, 11/15/31			226		189,840
Vizient, Inc., 10.38%, 03/01/24(b)			419		444,140
WellCare Health Plans, Inc.:
5.25%, 04/01/25			138		132,825
5.38%, 08/15/26(b)			604		582,860
					21,625,992
Health Care Technology — 0.1%
IQVIA, Inc., 3.25%, 03/15/25		EUR	224		251,400
Hotels, Restaurants & Leisure — 3.3%
1011778 BC ULC(b):
4.25%, 05/15/24		USD	1,296		1,192,320
5.00%, 10/15/25			2,389		2,197,880
Aramark International Finance SARL, 3.13%, 04/01/25		EUR	506		581,199
Boyd Gaming Corp., 6.00%, 08/15/26		USD	186		173,910
Boyne USA, Inc., 7.25%, 05/01/25(b)			133		137,322
Caesars Resort Collection LLC, 5.25%, 10/15/25(b)			448		385,280
Churchill Downs, Inc., 4.75%, 01/15/28(b)			192		173,702
Eldorado Resorts, Inc.:
6.00%, 04/01/25			131		126,368
6.00%, 09/15/26(b)			187		176,715
Golden Nugget, Inc., 6.75%, 10/15/24(b)			924		870,870
Hilton Domestic Operating Co., Inc.:
4.25%, 09/01/24			225		212,625
5.13%, 05/01/26(b)			836		802,560
Hilton Worldwide Finance LLC, 4.63%, 04/01/25			143		135,492

SCHEDULE OF INVESTMENTS 9

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Hotels, Restaurants & Leisure (continued)
IRB Holding Corp., 6.75%, 02/15/26(b)		USD	107	$	93,625
KFC Holding Co.(b):
5.00%, 06/01/24			35		33,775
5.25%, 06/01/26			371		358,942
4.75%, 06/01/27			346		321,780
Melco Resorts Finance Ltd., 4.88%, 06/06/25(b)			265		242,001
MGM Resorts International:
6.63%, 12/15/21			1,497		1,534,425
7.75%, 03/15/22			412		438,265
Sabre GLBL, Inc.(b):
5.38%, 04/15/23			165		164,175
5.25%, 11/15/23			333		328,838
Scientific Games International, Inc.:
10.00%, 12/01/22			14		14,210
5.00%, 10/15/25(b)			481		429,293
3.38%, 02/15/26		EUR	500		530,568
Six Flags Entertainment Corp., 4.88%, 07/31/24(b)		USD	138		130,065
Station Casinos LLC, 5.00%, 10/01/25(b)			82		74,210
Viking Cruises Ltd.(b):
6.25%, 05/15/25			308		303,380
5.88%, 09/15/27			1,422		1,326,015
Wyndham Destinations, Inc.:
5.40%, 04/01/24			12		11,430
5.75%, 04/01/27			128		117,440
Wyndham Hotels & Resorts, Inc., 5.38%, 04/15/26(b)			115		110,400
Wynn Macau Ltd., 5.50%, 10/01/27(b)			600		526,914
Yum! Brands, Inc.:
3.88%, 11/01/23			97		91,665
5.35%, 11/01/43			10		8,300
					14,355,959
Household Durables — 1.0%
K. Hovnanian Enterprises, Inc., 10.00%, 07/15/22(b)			276		241,500
Lennar Corp.:
6.63%, 05/01/20			255		262,331
8.38%, 01/15/21			268		284,750
4.88%, 12/15/23			450		432,000
5.25%, 06/01/26			355		334,588
4.75%, 11/29/27			465		419,662
Mattamy Group Corp.(b):
6.88%, 12/15/23			188		175,545
6.50%, 10/01/25			230		205,850
MDC Holdings, Inc., 6.00%, 01/15/43			196		152,880
Meritage Homes Corp.:
7.15%, 04/15/20			70		71,400
5.13%, 06/06/27			291		247,350
PulteGroup, Inc.:
6.38%, 05/15/33			443		404,238
6.00%, 02/15/35			244		211,060
Tempur Sealy International, Inc., 5.50%, 06/15/26			121		110,413
TRI Pointe Group, Inc.:
4.88%, 07/01/21			115		109,825
5.88%, 06/15/24			123		109,777
5.25%, 06/01/27			147		114,616
Williams Scotsman International, Inc.(b):
7.88%, 12/15/22			100		97,750
6.88%, 08/15/23			247		237,120
					4,222,655
Household Products — 0.1%
Spectrum Brands, Inc., 5.75%, 07/15/25			316		300,105
Independent Power and Renewable Electricity Producers — 1.5%
AES Corp.:
4.88%, 05/15/23			223		217,982

Security	Par (000)			Value
Independent Power and Renewable Electricity Producers (continued)
5.50%, 04/15/25		USD	326	$	323,555
6.00%, 05/15/26			273		277,095
Calpine Corp.:
5.38%, 01/15/23			1,070		1,003,125
5.88%, 01/15/24(b)			188		184,240
5.25%, 06/01/26(b)			1,246		1,136,975
Clearway Energy Operating LLC:
5.38%, 08/15/24			259		246,050
5.75%, 10/15/25(b)			368		351,440
NRG Energy, Inc., 6.63%, 01/15/27			2,006		2,021,045
Pattern Energy Group, Inc., 5.88%, 02/01/24(b)			159		153,435
Talen Energy Supply LLC, 6.50%, 06/01/25			231		164,010
Vistra Energy Corp.:
7.38%, 11/01/22			150		154,875
7.63%, 11/01/24			313		330,215
					6,564,042
Insurance — 0.8%(b)
Alliant Holdings Intermediate LLC, 8.25%, 08/01/23			2,273		2,238,905
AmWINS Group, Inc., 7.75%, 07/01/26			216		204,120
Ardonagh Midco 3 plc, 8.63%, 07/15/23			252		214,200
HUB International Ltd., 7.00%, 05/01/26			831		749,977
USIS Merger Sub, Inc., 6.88%, 05/01/25			96		88,138
					3,495,340
Interactive Media & Services — 0.0%
Rackspace Hosting, Inc., 8.63%, 11/15/24(b)			230		179,400
Internet & Direct Marketing Retail — 0.0%
Uber Technologies, Inc., 7.50%, 11/01/23(b)			182		176,085
IT Services — 2.3%
Alliance Data Systems Corp.(b):
5.88%, 11/01/21			490		489,314
5.38%, 08/01/22			712		694,200
Banff Merger Sub, Inc., 9.75%, 09/01/26(b)			2,135		1,953,525
Booz Allen Hamilton, Inc., 5.13%, 05/01/25(b)			44		41,800
First Data Corp., 5.75%, 01/15/24(b)			4,265		4,158,375
Gartner, Inc., 5.13%, 04/01/25(b)			620		601,791
WEX, Inc., 4.75%, 02/01/23(b)			330		321,750
Zayo Group LLC:
6.00%, 04/01/23			322		305,130
6.38%, 05/15/25			16		14,880
5.75%, 01/15/27(b)			1,447		1,291,448
					9,872,213
Leisure Products — 0.1%
Mattel, Inc.:
6.75%, 12/31/25(b)			525		468,400
6.20%, 10/01/40			101		74,235
5.45%, 11/01/41			59		41,890
					584,525
Life Sciences Tools & Services — 0.0%
Charles River Laboratories International, Inc., 5.50%, 04/01/26(b)			219		215,715
Machinery — 1.4%(b)
Grinding Media, Inc., 7.38%, 12/15/23			456		441,180
Mueller Water Products, Inc., 5.50%, 06/15/26			325		315,250
Navistar International Corp., 6.63%, 11/01/25			455		439,075
Novelis Corp.:
6.25%, 08/15/24			1,178		1,107,320
5.88%, 09/30/26			862		762,870
RBS Global, Inc., 4.88%, 12/15/25			780		707,850
SPX FLOW, Inc., 5.63%, 08/15/24			312		294,840
Stevens Holding Co., Inc., 6.13%, 10/01/26			369		363,465

10 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Machinery (continued)
Terex Corp., 5.63%, 02/01/25		USD	722	$	672,362
Titan Acquisition Ltd., 7.75%, 04/15/26			784		670,320
Wabash National Corp., 5.50%, 10/01/25			403		345,069
					6,119,601
Media — 7.4%
Altice Financing SA(b):
6.63%, 02/15/23			873		838,080
7.50%, 05/15/26			843		769,237
Altice Luxembourg SA, 7.75%, 05/15/22(b)			2,153		1,959,230
AMC Networks, Inc., 4.75%, 08/01/25			34		30,855
Cablevision Systems Corp., 8.00%, 04/15/20			85		86,063
CBS Radio, Inc., 7.25%, 11/01/24(b)			18		16,740
Charter Communications Operating LLC, 4.91%, 07/23/25			10		9,944
Clear Channel International BV, 8.75%, 12/15/20(b)			1,189		1,197,918
Clear Channel Worldwide Holdings, Inc.:
Series A, 7.63%, 03/15/20			1,363		1,329,975
Series A, 6.50%, 11/15/22			4,940		4,929,370
CSC Holdings LLC:
5.13%, 12/15/21(b)			1,904		1,865,920
10.13%, 01/15/23(b)			1,480		1,592,850
5.38%, 07/15/23(b)			1,248		1,217,050
5.25%, 06/01/24			942		863,108
7.75%, 07/15/25(b)			1,094		1,110,410
6.63%, 10/15/25(b)			390		394,875
10.88%, 10/15/25(b)			2,911		3,271,236
5.50%, 05/15/26(b)			966		910,455
7.50%, 04/01/28(b)			457		455,857
DISH DBS Corp.:
6.75%, 06/01/21			497		491,881
5.88%, 07/15/22			1,647		1,515,240
5.00%, 03/15/23			273		227,272
5.88%, 11/15/24			331		266,455
7.75%, 07/01/26			72		59,580
Gray Escrow, Inc., 7.00%, 05/15/27(b)			348		338,663
MDC Partners, Inc., 6.50%, 05/01/24(b)			566		515,060
Meredith Corp., 6.88%, 02/01/26(b)			232		226,780
Midcontinent Communications, 6.88%, 08/15/23(b)			293		300,325
Outfront Media Capital LLC:
5.63%, 02/15/24			54		53,190
5.88%, 03/15/25			240		235,800
Radiate Holdco LLC(b):
6.88%, 02/15/23			90		81,675
6.63%, 02/15/25			243		210,195
Sirius XM Radio, Inc., 5.00%, 08/01/27(b)			583		532,716
TEGNA, Inc., 5.50%, 09/15/24(b)			83		80,406
Telenet Finance Luxembourg Notes SARL, 5.50%, 03/01/28(b)			800		724,000
Tribune Media Co., 5.88%, 07/15/22			431		433,155
Univision Communications, Inc., 5.13%, 05/15/23(b)			446		400,285
UPCB Finance IV Ltd., 5.38%, 01/15/25(b)			202		188,894
Videotron Ltd., 5.13%, 04/15/27(b)			899		849,555
Ziggo Bond Co. BV, 5.88%, 01/15/25(b)			600		541,500
Ziggo BV, 5.50%, 01/15/27(b)			525		469,875
					31,591,675
Metals & Mining — 2.4%
Alcoa Nederland Holding BV, 6.13%, 05/15/28(b)			200		191,500
Big River Steel LLC, 7.25%, 09/01/25(b)			234		232,245
Cleveland-Cliffs, Inc., 4.88%, 01/15/24(b)			273		253,890
Constellium NV(b):
5.75%, 05/15/24			1,952		1,795,840
6.63%, 03/01/25			337		312,567
5.88%, 02/15/26			378		336,420

Security	Par (000)			Value
Metals & Mining (continued)
Freeport-McMoRan, Inc.:
4.00%, 11/14/21		USD	170	$	165,325
3.55%, 03/01/22			1,226		1,160,102
3.88%, 03/15/23			1,721		1,591,925
4.55%, 11/14/24			97		89,483
5.40%, 11/14/34			134		105,525
5.45%, 03/15/43			2,546		1,938,142
Joseph T Ryerson & Son, Inc., 11.00%, 05/15/22(b)			129		129,967
Kaiser Aluminum Corp., 5.88%, 05/15/24			81		79,178
Steel Dynamics, Inc.:
5.25%, 04/15/23			293		288,971
4.13%, 09/15/25			313		287,569
5.00%, 12/15/26			45		42,638
SunCoke Energy Partners LP, 7.50%, 06/15/25(b)			322		305,095
Teck Resources Ltd.:
4.50%, 01/15/21			26		25,935
5.20%, 03/01/42			509		427,560
5.40%, 02/01/43			67		58,290
United States Steel Corp.:
6.88%, 08/15/25			333		304,695
6.25%, 03/15/26			301		263,375
					10,386,237
Mortgage Real Estate Investment Trusts (REITs) — 0.1%
Starwood Property Trust, Inc., 5.00%, 12/15/21			267		262,328
Oil, Gas & Consumable Fuels — 10.1%
Antero Midstream Partners LP, 5.38%, 09/15/24			210		195,825
Antero Resources Corp.:
5.13%, 12/01/22			65		61,100
5.63%, 06/01/23			316		300,200
5.00%, 03/01/25			636		575,580
Ascent Resources Utica Holdings LLC(b):
10.00%, 04/01/22			150		153,420
7.00%, 11/01/26			322		291,410
Berry Petroleum Co. LLC, 7.00%, 02/15/26(b)			472		424,800
Bruin E&P Partners LLC, 8.88%, 08/01/23(b)			631		561,590
California Resources Corp., 8.00%, 12/15/22(b)			1,124		761,510
Callon Petroleum Co.:
6.13%, 10/01/24			336		312,480
6.38%, 07/01/26			219		203,670
Carrizo Oil & Gas, Inc.:
6.25%, 04/15/23			422		390,350
8.25%, 07/15/25			393		385,140
Chaparral Energy, Inc., 8.75%, 07/15/23(b)			422		301,730
Cheniere Corpus Christi Holdings LLC:
7.00%, 06/30/24			599		631,945
5.88%, 03/31/25			502		499,490
5.13%, 06/30/27			940		887,407
Cheniere Energy Partners LP:
5.25%, 10/01/25			274		255,505
5.63%, 10/01/26(b)			542		506,770
Chesapeake Energy Corp.:
6.63%, 08/15/20			389		376,357
4.88%, 04/15/22			218		190,205
7.00%, 10/01/24			909		786,285
8.00%, 01/15/25			533		470,373
8.00%, 06/15/27			1,473		1,237,320
CNX Resources Corp., 5.88%, 04/15/22			2,835		2,721,600
Comstock Escrow Corp., 9.75%, 08/15/26(b)			283		239,135
CONSOL Energy, Inc., 11.00%, 11/15/25(b)			1,077		1,179,315
Covey Park Energy LLC, 7.50%, 05/15/25(b)			591		508,260
Crestwood Midstream Partners LP, 6.25%, 04/01/23			238		229,075

SCHEDULE OF INVESTMENTS 11

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Oil, Gas & Consumable Fuels (continued)
CrownRock LP, 5.63%, 10/15/25(b)		USD	1,350	$	1,215,000
DCP Midstream Operating LP:
4.75%, 09/30/21(b)			310		306,125
5.38%, 07/15/25			272		265,880
6.45%, 11/03/36(b)			232		225,040
6.75%, 09/15/37(b)			706		695,410
Denbury Resources, Inc., 9.25%, 03/31/22(b)			676		623,610
Diamondback Energy, Inc.:
4.75%, 11/01/24(b)			700		675,500
4.75%, 11/01/24			150		144,750
5.38%, 05/31/25			150		146,250
Endeavor Energy Resources LP(b):
5.50%, 01/30/26			668		684,700
5.75%, 01/30/28			450		459,090
EnLink Midstream Partners LP:
4.40%, 04/01/24			379		357,163
4.15%, 06/01/25			38		34,258
4.85%, 07/15/26			250		225,442
5.05%, 04/01/45			122		95,315
5.45%, 06/01/47			331		267,688
EP Energy LLC:
9.38%, 05/01/20			12		9,330
9.38%, 05/01/24(b)			302		134,390
7.75%, 05/15/26(b)			557		492,945
Extraction Oil & Gas, Inc.(b):
7.38%, 05/15/24			825		680,625
5.63%, 02/01/26			548		400,040
Genesis Energy LP:
6.50%, 10/01/25			127		111,760
6.25%, 05/15/26			232		198,940
Great Western Petroleum LLC, 9.00%, 09/30/21(b)			726		660,660
Gulfport Energy Corp.:
6.63%, 05/01/23			200		189,000
6.38%, 01/15/26			75		64,875
Halcon Resources Corp., 6.75%, 02/15/25			659		481,070
Hess Infrastructure Partners LP, 5.63%, 02/15/26(b)			429		415,057
Jagged Peak Energy LLC, 5.88%, 05/01/26(b)			22		20,460
Magnolia Oil & Gas Operating LLC, 6.00%, 08/01/26(b)			179		172,735
Matador Resources Co., 5.88%, 09/15/26			580		533,600
MEG Energy Corp., 6.50%, 01/15/25(b)			788		799,820
NGL Energy Partners LP, 5.13%, 07/15/19			193		191,552
NGPL PipeCo LLC(b):
4.88%, 08/15/27			622		586,235
7.77%, 12/15/37			634		722,760
Northern Oil and Gas, Inc., 8.50% (8.50% Cash or 1.00% PIK), 05/15/23(f)			327		314,311
Oasis Petroleum, Inc., 6.88%, 03/15/22			40		37,700
Parsley Energy LLC(b):
6.25%, 06/01/24			74		71,780
5.38%, 01/15/25			1,345		1,237,400
5.25%, 08/15/25			459		415,395
5.63%, 10/15/27			258		234,458
PBF Holding Co. LLC, 7.25%, 06/15/25			315		296,100
PDC Energy, Inc.:
1.13%, 09/15/21(h)			32		28,360
5.75%, 05/15/26			171		152,190
QEP Resources, Inc.:
5.38%, 10/01/22			934		849,940
5.25%, 05/01/23			27		23,895
5.63%, 03/01/26			957		794,310
Range Resources Corp.:
5.88%, 07/01/22			40		37,000

Security	Par (000)			Value
Oil, Gas & Consumable Fuels (continued)
5.00%, 08/15/22		USD	37	$	33,115
5.00%, 03/15/23			91		80,080
4.88%, 05/15/25			254		208,280
Resolute Energy Corp., 8.50%, 05/01/20			1,112		1,095,320
Sanchez Energy Corp.:
7.75%, 06/15/21			1,536		360,960
7.25%, 02/15/23(b)			170		138,550
Seven Generations Energy Ltd.(b):
6.88%, 06/30/23			109		107,365
5.38%, 09/30/25			67		59,965
SM Energy Co.:
6.13%, 11/15/22			278		262,710
5.00%, 01/15/24			177		153,990
5.63%, 06/01/25			141		122,670
6.75%, 09/15/26			307		274,765
6.63%, 01/15/27			21		18,585
Southern Star Central Corp., 5.13%, 07/15/22(b)			47		45,120
Southwestern Energy Co.:
6.20%, 01/23/25			260		232,375
7.50%, 04/01/26			288		272,160
7.75%, 10/01/27			484		459,800
Sunoco LP:
4.88%, 01/15/23			447		435,825
5.50%, 02/15/26			168		159,180
5.88%, 03/15/28			185		173,045
Tallgrass Energy Partners LP(b):
4.75%, 10/01/23			42		40,530
5.50%, 09/15/24			845		830,213
5.50%, 01/15/28			1,983		1,903,680
Targa Resources Partners LP:
5.25%, 05/01/23			15		14,700
5.13%, 02/01/25			104		97,500
5.88%, 04/15/26(b)			458		445,405
5.00%, 01/15/28			719		650,695
TerraForm Power Operating LLC(b):
4.25%, 01/31/23			237		221,003
6.63%, 06/15/25(i)			75		75,750
5.00%, 01/31/28			237		208,560
Tullow Oil plc, 7.00%, 03/01/25(b)			200		184,750
W&T Offshore, Inc., 9.75%, 11/01/23(b)			10		8,750
Whiting Petroleum Corp., 6.63%, 01/15/26			194		166,355
WildHorse Resource Development Corp., 6.88%, 02/01/25			310		292,950
WPX Energy, Inc.:
8.25%, 08/01/23			125		130,625
5.25%, 09/15/24			220		199,100
5.75%, 06/01/26			5		4,525
					43,586,712
Paper & Forest Products — 0.2%
Mercer International, Inc.:
7.75%, 12/01/22			54		55,620
6.50%, 02/01/24			188		183,770
5.50%, 01/15/26			172		153,940
Norbord, Inc., 6.25%, 04/15/23(b)			236		236,380
PH Glatfelter Co., 5.38%, 10/15/20			34		33,702
					663,412
Pharmaceuticals — 2.1%
Bausch Health Cos., Inc.:
5.63%, 12/01/21(b)			146		143,810
5.50%, 03/01/23(b)			910		832,650
4.50%, 05/15/23		EUR	643		694,813
5.88%, 05/15/23(b)		USD	1,054		974,950

12 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Pharmaceuticals (continued)
7.00%, 03/15/24(b)		USD	594	$	599,940
6.13%, 04/15/25(b)			1,795		1,566,137
5.50%, 11/01/25(b)			1,014		945,555
9.00%, 12/15/25(b)			314		312,430
Catalent Pharma Solutions, Inc., 4.88%, 01/15/26(b)			445		421,638
Elanco Animal Health, Inc.(b):
4.27%, 08/28/23			206		205,826
4.90%, 08/28/28			257		261,517
Endo Dac, 6.00%, 07/15/23(b)			448		341,600
Endo Finance LLC, 7.25%, 01/15/22(b)			211		182,515
Valeant Pharmaceuticals International, Inc.(b):
9.25%, 04/01/26			328		328,000
8.50%, 01/31/27			1,194		1,158,180
					8,969,561
Professional Services — 0.3%
Jaguar Holding Co. II, 6.38%, 08/01/23(b)			1,447		1,384,779
Real Estate Management��& Development — 0.3%(b)
Five Point Operating Co. LP, 7.88%, 11/15/25			213		205,545
Greystar Real Estate Partners LLC, 5.75%, 12/01/25			290		283,475
Howard Hughes Corp. (The), 5.38%, 03/15/25			394		370,360
Newmark Group, Inc., 6.13%, 11/15/23			158		155,579
Realogy Group LLC, 4.50%, 04/15/19			127		126,524
					1,141,483
Road & Rail — 0.6%(b)
Avolon Holdings Funding Ltd., 5.13%, 10/01/23			482		460,310
Herc Rentals, Inc.:
7.50%, 06/01/22			343		355,862
7.75%, 06/01/24			128		133,440
Hertz Corp. (The), 7.63%, 06/01/22			562		529,685
Park Aerospace Holdings Ltd.:
3.63%, 03/15/21			310		298,375
5.25%, 08/15/22			612		592,110
5.50%, 02/15/24			10		9,650
					2,379,432
Semiconductors & Semiconductor Equipment — 0.3%
Advanced Micro Devices, Inc., 7.50%, 08/15/22			83		89,017
Entegris, Inc., 4.63%, 02/10/26(b)			261		240,120
Qorvo, Inc., 5.50%, 07/15/26(b)			983		938,765
Versum Materials, Inc., 5.50%, 09/30/24(b)			234		231,660
					1,499,562
Software — 3.9%
ACI Worldwide, Inc., 5.75%, 08/15/26(b)			588		577,710
CDK Global, Inc., 4.88%, 06/01/27			1,091		1,011,902
Genesys Telecommunications Laboratories, Inc., 10.00%, 11/30/24(b)			1,468		1,537,730
Infor Software Parent LLC, 7.13% (7.13% Cash or 7.88% PIK), 05/01/21(b)(f)			858		834,405
Infor US, Inc., 6.50%, 05/15/22			3,859		3,732,232
Informatica LLC, 7.13%, 07/15/23(b)			1,789		1,742,289
Nuance Communications, Inc.:
5.38%, 08/15/20(b)			22		21,972
6.00%, 07/01/24			57		56,715
5.63%, 12/15/26			314		298,300
PTC, Inc., 6.00%, 05/15/24			314		315,570
RP Crown Parent LLC, 7.38%, 10/15/24(b)			675		680,063
Solera LLC, 10.50%, 03/01/24(b)			3,715		3,956,475
Sophia LP, 9.00%, 09/30/23(b)			203		203,000
Symantec Corp., 5.00%, 04/15/25(b)			230		214,516
TIBCO Software, Inc., 11.38%, 12/01/21(b)			1,149		1,203,578
Veritas US, Inc., 7.50%, 02/01/23(b)			200		163,000
					16,549,457

Security	Par (000)			Value
Specialty Retail — 0.6%
Asbury Automotive Group, Inc., 6.00%, 12/15/24		USD	801	$	766,957
Group 1 Automotive, Inc.:
5.00%, 06/01/22			80		75,800
5.25%, 12/15/23(b)			45		41,737
L Brands, Inc.:
6.88%, 11/01/35			598		499,450
6.75%, 07/01/36			119		96,985
Penske Automotive Group, Inc., 5.50%, 05/15/26			476		442,680
Staples, Inc., 8.50%, 09/15/25(b)			574		517,863
					2,441,472
Technology Hardware, Storage & Peripherals — 0.5%
Dell International LLC, 7.13%, 06/15/24(b)			901		916,768
Western Digital Corp., 4.75%, 02/15/26			1,668		1,446,990
					2,363,758
Thrifts & Mortgage Finance — 0.3%(b)
Ladder Capital Finance Holdings LLLP, 5.25%, 10/01/25			648		578,340
Nationstar Mortgage Holdings, Inc.:
8.13%, 07/15/23			281		273,975
9.13%, 07/15/26			271		263,548
					1,115,863
Trading Companies & Distributors — 1.3%
Flexi-Van Leasing, Inc., 10.00%, 02/15/23(b)			247		200,070
Fortress Transportation & Infrastructure Investors LLC(b):
6.75%, 03/15/22			113		113,282
6.50%, 10/01/25			124		115,940
HD Supply, Inc., 5.38%, 10/15/26(b)			3,102		3,008,940
United Rentals North America, Inc.:
5.50%, 07/15/25			801		754,942
4.63%, 10/15/25			571		509,618
5.88%, 09/15/26			132		124,410
6.50%, 12/15/26			150		147,750
5.50%, 05/15/27			527		488,793
					5,463,745
Wireless Telecommunication Services — 2.4%
Digicel Group Ltd., 8.25%, 09/30/20(b)			818		547,038
Digicel Ltd., 6.00%, 04/15/21(b)			1,505		1,356,381
Hughes Satellite Systems Corp.:
7.63%, 06/15/21			32		33,200
5.25%, 08/01/26			514		470,953
Inmarsat Finance plc, 4.88%, 05/15/22(b)			200		188,580
Sprint Corp.:
7.88%, 09/15/23			1,231		1,263,314
7.13%, 06/15/24			3,721		3,685,055
7.63%, 02/15/25			118		118,000
7.63%, 03/01/26			749		739,637
T-Mobile USA, Inc.:
4.00%, 04/15/22			239		233,025
6.38%, 03/01/25			124		125,240
5.13%, 04/15/25			160		155,400
6.50%, 01/15/26			441		449,820
4.50%, 02/01/26			514		471,595
4.75%, 02/01/28			560		506,800
					10,344,038
Total Corporate Bonds — 78.5% (Cost: $361,574,285)					337,467,429

SCHEDULE OF INVESTMENTS 13

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Floating Rate Loan Interests — 13.9%(j)
Aerospace & Defense — 0.1%
Atlantic Aviation FBO, Inc., Term Loan B, (LIBOR 6 Month + 3.75%), 6.13%, 11/30/25(g)		USD	201	$	198,990
Sequa Mezzanine Holdings LLC, 1st Lien Term Loan, (LIBOR 3 Month + 5.00%), 7.41%, 11/28/21			210		199,577
Sequa Mezzanine Holdings LLC, 2nd Lien Term Loan, (LIBOR 3 Month + 9.00%), 11.52%, 04/28/22(g)			45		42,525
					441,092
Auto Components — 0.0%(g)
Mavis Tire Express Services Corp., 1st Lien Term Loan, (LIBOR 1 Month + 3.25%), 5.75%, 03/15/25			102		97,883
Mavis Tire Express Services Corp., Delayed Draw 1st Lien Term Loan, (LIBOR 1 Month + 3.25%), 6.05%, 03/15/25			2		2,348
					100,231
Chemicals — 1.0%
Alpha 3 BV, Term Loan, 01/31/24(k)			724		686,822
Ascend Performance Materials Operations LLC, 1st Lien Term Loan B, (LIBOR 3 Month + 5.25%), 8.05%, 08/12/22(g)			518		509,821
Greenrock Finance, Inc., Term Loan, (LIBOR 3 Month + 3.50%), 6.30%, 06/28/24			63		62,093
Invictus Co., Term Loan B, (LIBOR 3 Month + 3.00%), 5.50%, 03/28/25			153		148,515
Invictus Co., Term Loan B26, (LIBOR 3 Month + 6.75%), 9.25%, 03/30/26			84		83,790
Messer Industries LLC, Term Loan, 10/01/25(k)			1,375		1,301,671
Starfruit Finco BV, Term Loan, 10/01/25(g)(k)			1,376		1,314,100
					4,106,812
Commercial Services & Supplies — 0.7%
Access CIG LLC, 2nd Lien Term Loan:
(LIBOR 3 Month + 7.75%), 10.46% , 02/27/26			37		36,752
Brand Energy & Infrastructure Services, Inc., Term Loan, (LIBOR 3 Month + 4.25%),6.73% - 6.76%, 06/21/24			1,891		1,791,753
GFL Environmental, Inc., Term Loan B, (LIBOR 1 Month + 3.00%), 5.52%, 05/30/25			993		923,527
Tempo Acquisition LLC, Term Loan, (LIBOR 1 Month + 3.00%), 5.52%, 05/01/24			191		181,982
West Corp., Term Loan, (LIBOR 3 Month + 3.50%), 6.03%, 10/10/24			100		90,752
					3,024,766
Construction & Engineering — 0.3%
Ply Gem, Inc., Term Loan B, (LIBOR 3 Month + 3.75%), 6.18%, 04/01/25(g)			591		538,026
SRS Distribution, Inc., Term Loan B, (LIBOR 1 Month + 3.25%), 5.77%, 05/23/25			594		552,340
					1,090,366
Containers & Packaging — 0.3%
Verallia Packaging SAS, Term Loan B4, (EURIBOR 1 Month + 2.75%), 2.75%, 10/31/22		EUR	1,000		1,114,528
Diversified Consumer Services — 0.1%
Laureate Education, Inc., Term Loan, (LIBOR 3 Month + 3.50%), 6.03%, 04/26/24		USD	206		201,573
TierPoint LLC, Term Loan, (LIBOR 1 Month + 3.75%), 6.27%, 05/06/24			197		183,043
					384,616

Security	Par (000)			Value
Diversified Financial Services — 0.1%
LTI Holdings, Inc., Term Loan, (LIBOR 1 Month + 3.50%), 6.02%, 09/06/25		USD	214	$	201,417
WP CPP Holdings, Term Loan B, (LIBOR 3 Month + 3.75%), 6.28%, 03/16/25			84		80,752
					282,169
Diversified Telecommunication Services — 0.4%
Altice France SA, Term Loan, (LIBOR 1 Month + 4.00%), 6.46%, 08/14/26			560		527,800
CenturyLink, Inc., Term Loan, (LIBOR 1 Month + 2.75%), 5.27%, 01/31/25			938		872,840
Frontier Communications Corp., Term Loan, 03/31/21(k)			335		317,730
					1,718,370
Electric Utilities — 0.0%
Vistra Operations Co. LLC, Term Loan B3, 12/31/25(k)			172		164,676
Energy Equipment & Services — 0.8%
McDermott International, Inc., Term Loan, 05/12/25(k)			2,431		2,263,298
Pioneer Energy Services Corp., Term Loan, (LIBOR 1 Month + 7.75%), 10.21%, 11/08/22(g)			1,007		991,895
Weatherford International Ltd., Term Loan, (LIBOR 1 Month + 1.43%), 3.96%, 07/13/20(g)			229		213,705
					3,468,898
Food Products — 0.1%
CHG PPC Parent LLC, Term Loan, (LIBOR 1 Month + 2.75%), 5.27%, 03/31/25			147		141,002
Chobani LLC, Term Loan, (LIBOR 1 Month + 3.50%), 6.02%, 10/10/23			69		63,918
JBS USA Lux SA, Term Loan, (LIBOR 3 Month + 2.50%), 5.02% - 5.30%, 10/30/22			146		140,383
					345,303
Gas Utilities — 0.1%
Midcoast Operating LP, Term Loan, (LIBOR 3 Month + 5.50%), 8.30%, 06/30/25			429		415,388
Health Care Equipment & Supplies — 0.6%
DJO Finance LLC, 1st Lien Term Loan B, 06/08/20(k)			1,326		1,306,993
Immucor, Inc., 1st Lien Term Loan, (LIBOR 3 Month + 5.00%), 7.80%, 06/15/21			1,247		1,223,684
Universal Hospital Services, Inc., Delayed Draw Term Loan B, 10/18/25(g)(k)			123		118,695
					2,649,372
Health Care Providers & Services — 1.0%
AHP Health Partners, Inc., Term Loan, (LIBOR 1 Month + 4.50%), 7.02%, 06/30/25			233		228,755
Auris LuxCo, Term Loan, 07/24/25(k)			244		236,834
Concentra, Inc., 2nd Lien Term Loan, (LIBOR 1 Month + 6.50%), 8.88%, 07/25/23			328		324,720
Dentalcorp Perfect Smile ULC, 1st Lien Term Loan, (LIBOR 1 Month + 3.75%), 6.27%, 05/31/25			152		146,996
Dentalcorp Perfect Smile ULC, Delayed Draw Term Loan, (LIBOR 1 Month + 3.75%),0.00% - 6.27%, 05/31/25			21		20,755
Envision Healthcare Corp., Term Loan, (LIBOR 1 Month + 3.75%), 6.27%, 10/10/25			1,637		1,521,821
Gentiva Health Services, Inc., Term Loan, (LIBOR 1 Month + 7.00%), 9.56%, 07/02/26			91		90,644
Gentiva Health Services, Inc., Term Loan U, (LIBOR 1 Month + 3.75%), 6.31%, 07/02/25(g)			649		627,766

14 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Health Care Providers & Services (continued)
Ortho-Clinical Diagnostics, Inc., Term Loan B, (LIBOR 1 Month + 3.25%), 5.76%, 06/30/25		USD	278	$	257,379
Quorum Health Corp., 1st Lien Term Loan, (LIBOR 1 Month + 6.75%), 9.27%, 04/29/22			330		325,594
Team Health Holdings, Inc., Term Loan, (LIBOR 1 Month + 2.75%), 5.27%, 02/06/24			333		296,744
					4,078,008
Health Care Technology — 0.1%
Change Healthcare Holdings LLC, Term Loan B, 03/01/24(k)			402		380,511
Goodrx, Inc., Term Loan, (LIBOR 1 Month + 3.00%), 5.43%, 10/10/25			139		133,614
					514,125
Hotels, Restaurants & Leisure — 1.1%
GVC Holdings plc, Term Loan, (EURIBOR 6 Month + 2.75%), 2.75%, 03/29/24		EUR	1,000		1,132,287
IRB Holding Corp., Term Loan B, (LIBOR 1 Month + 3.25%), 5.68%, 02/05/25		USD	357		339,781
Las Vegas Sands LLC, Term Loan, (LIBOR 1 Month + 1.75%), 4.27%, 03/27/25			922		878,365
Penn National Gaming, Inc., 1st Lien Term Loan, (LIBOR 1 Month + 2.25%), 4.71%, 10/15/25			112		107,871
Stars Group Holdings BV, Term Loan, (LIBOR 3 Month + 3.50%), 6.30%, 07/10/25			2,418		2,331,219
					4,789,523
Household Products — 0.0%
Energizer Holdings, Inc., 1st Lien Term Loan B, 06/20/25(k)			97		93,484
Industrial Conglomerates — 0.4%
Accudyne Industries LLC, Term Loan, (LIBOR 1 Month + 3.00%), 5.52%, 08/18/24			667		631,545
Filtration Group Corp., Term Loan B, (LIBOR 1 Month + 3.00%), 5.52%, 03/29/25			77		74,448
PSAV Holdings LLC, 1st Lien Term Loan, (LIBOR 3 Month + 3.25%), 5.77% - 6.05%, 02/21/25			176		166,011
PSAV Holdings LLC, 2nd Lien Term Loan, 09/01/25(g)(k)			102		98,057
Uber Technologies, Inc., Term Loan, (LIBOR 1 Month + 4.00%), 6.39%, 03/14/25(g)			604		587,356
Vertiv Co., Term Loan B, (LIBOR 3 Month + 4.00%), 6.71%, 11/30/23			297		269,100
					1,826,517
Insurance — 0.5%
Alliant Holdings Intermediate LLC, Term Loan, (LIBOR 1 Month + 2.75%), 5.21%, 05/09/25			82		76,944
Asurion LLC, 2nd Lien Term Loan B2, (LIBOR 1 Month + 6.50%), 9.02%, 08/04/25			681		672,065
Sedgwick, 1st Lien Term Loan, 11/06/25(k)			1,093		1,041,542
USI, Inc., 1st Lien Term Loan B, (LIBOR 3 Month + 3.00%), 5.80%, 05/16/24			233		219,036
					2,009,587
IT Services — 1.1%
Boxer Parent Co., Inc., Term Loan B, (LIBOR 3 Month + 4.25%), 7.05%, 10/02/25			773		743,773
CCC Information Services, Inc., 2nd Lien Term Loan, (LIBOR 1 Month + 6.75%), 9.27%, 04/28/25			40		39,300
CCC Information Services, Inc., Term Loan, (LIBOR 1 Month + 3.00%), 5.53%, 04/29/24			130		123,617
Deck Chassis Acquisition, Inc., Term Loan, (LIBOR 3 Month + 6.00%), 8.53%, 06/15/23(g)			37		35,022

Security	Par (000)			Value
IT Services (continued)
Mitchell International, Inc., 1st Lien Term Loan, (LIBOR 1 Month + 3.25%), 5.77%, 11/29/24		USD	334	$	321,639
Mitchell International, Inc., 2nd Lien Term Loan, (LIBOR 1 Month + 7.25%), 9.77%, 12/01/25			123		118,910
Peak 10 Holding Corp., 2nd Lien Term Loan, (LIBOR 3 Month + 7.25%), 9.79%, 08/01/25			83		73,974
Peak 10 Holding Corp., Term Loan, (LIBOR 3 Month + 3.50%), 6.31%, 08/01/24			193		174,591
Renaissance Learning, Inc., Term Loan, (LIBOR 1 Month + 3.25%), 5.77%, 05/24/25			172		159,333
SS&C Technologies Holdings, Inc., Term Loan B, (LIBOR 1 Month + 2.25%), 4.77%, 04/16/25			517		487,021
SS&C Technologies, Inc., 1st Lien Term Loan B5, (LIBOR 1 Month + 2.25%), 4.77%, 04/16/25			330		311,189
Verscend Holding Corp., Term Loan B, (LIBOR 1 Month + 4.50%), 7.02%, 08/27/25			2,103		2,029,536
					4,617,905
Life Sciences Tools & Services — 0.0%
Albany Molecular Research, Inc., Term Loan, (LIBOR 1 Month + 3.25%), 5.77%, 08/30/24			123		116,245
Machinery — 0.3%
Altra Industrial Motion Corp., Term Loan, (LIBOR 1 Month + 2.00%), 4.52%, 09/26/25			286		270,674
Brookfield WEC Holdings, Inc., 2nd Lien Term Loan, (LIBOR 1 Month + 6.75%), 9.27%, 08/03/26			139		135,525
Titan Acquisition Ltd., Term Loan, 03/28/25(k)			1,047		955,346
					1,361,545
Media — 1.2%
Ascend Learning LLC, Term Loan B, (LIBOR 1 Month + 3.00%), 5.52%, 07/12/24			76		71,665
Charter Communications Operating LLC, Term Loan, (LIBOR 1 Month + 1.50%), 4.03%, 03/31/23			1,926		1,829,368
Gray Television, Inc., Term Loan, 11/02/25(k)			127		122,465
Intelsat Jackson Holdings SA, Term Loan:
(LIBOR 1 Month + 3.75%), 6.26% , 11/27/23			117		112,934
(LIBOR 6 Month + 6.63%), 6.63% , 01/02/24			2,255		2,215,341
(LIBOR 1 Month + 4.50%), 7.01% , 01/02/24			388		384,805
Xplornet Communications, Inc., Term Loan, (LIBOR 3 Month + 4.00%), 6.80%, 09/09/21(g)			397		392,037
					5,128,615
Multiline Retail — 0.1%
Neiman Marcus Group Ltd. LLC, Term Loan, (LIBOR 1 Month + 3.25%), 5.63%, 10/25/20			332		279,977
Multi-Utilities — 0.0%
Exgen Renewables IV LLC, Term Loan, (LIBOR 3 Month + 3.00%), 5.71%, 11/28/24			104		98,237
Oil, Gas & Consumable Fuels — 0.6%
BCP Raptor II LLC, Term Loan, (LIBOR 3 Month + 4.75%), 7.14%, 10/22/25			132		121,935
Bronco Midstream Funding LLC, Term Loan B, (LIBOR 1 Month + 3.50%), 6.01%, 08/14/23			45		43,602
California Resources Corp., Term Loan:
, 12/31/21(k)			927		906,295
(LIBOR 1 Month + 4.75%), 7.26% , 12/31/22			1,052		1,017,083
CNX Resources Corp., Term Loan, (LIBOR 1 Month + 6.00%), 8.53%, 11/28/22			419		422,477
Gavilan Resources LLC, 2nd Lien Term Loan, (LIBOR 1 Month + 6.00%), 8.50%, 03/01/24			220		166,621
					2,678,013

SCHEDULE OF INVESTMENTS 15

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund (Percentages shown are based on Net Assets)

Security	Par (000)			Value
Pharmaceuticals — 0.5%
Amneal Pharmaceuticals LLC, Term Loan B18, (LIBOR 1 Month + 3.50%), 6.06%, 03/21/25		USD	513	$	485,657
Bausch Health Co., Inc., Term Loan, (LIBOR 1 Month + 3.00%), 5.38%, 06/02/25			480		457,249
Endo Pharmaceuticals, Inc., Term Loan B, (LIBOR 1 Month + 4.25%), 6.81%, 04/29/24			752		711,050
Valeant Pharmaceuticals International, Inc., Term Loan, (LIBOR 1 Month + 2.75%), 5.13%, 11/14/25			342		323,525
					1,977,481
Real Estate Management & Development — 0.0%
Forest City, Term Loan B, (LIBOR 6 Month + 4.00%), 6.38%, 12/31/25			128		124,586
Software — 1.4%
Financial & Risk US Holdings, Inc., Term Loan, (LIBOR 1 Month + 3.75%), 6.27%, 10/01/25			5,069		4,815,550
Infor US, Inc., Term Loan, (LIBOR 1 Month + 2.75%), 5.27%, 02/01/22			164		156,429
Kronos, Inc., 2nd Lien Term Loan B, (LIBOR 3 Month + 8.25%), 9.25%, 11/01/24			569		560,823
McAfee LLC, Term Loan, (LIBOR 1 Month + 3.75%), 6.27%, 09/30/24			206		199,571
PowerSchool Group LLC, 1st Lien Term Loan, (LIBOR 1 Month + 3.25%), 5.63%, 07/31/25(g)			147		138,915
SS&C Technologies Holdings, Inc., Term Loan, (LIBOR 1 Month + 2.25%), 4.77%, 04/16/25			183		171,901
					6,043,189
Specialty Retail — 0.3%
Belron Finance US LLC, Term Loan B, (LIBOR 3 Month + 2.25%), 4.84%, 11/07/24(g)			164		156,534
EG Group Ltd., Term Loan, (EURIBOR 3 Month + 4.00%), 4.00%, 02/07/25		EUR	336		372,204
EG Group Ltd., Term Loan B1, (EURIBOR 3 Month + 4.00%), 4.00%, 02/07/25			660		733,832
					1,262,570
Trading Companies & Distributors — 0.0%
Beacon Roofing Supply, Inc., Term Loan B, (LIBOR 1 Month + 2.25%), 4.68%, 01/02/25		USD	177		168,077
Wireless Telecommunication Services — 0.7%
Digicel International Finance Ltd., Term Loan, (LIBOR 3 Month + 3.25%), 5.96%, 05/27/24			286		258,797
Ligado Networks LLC, Term Loan, (LIBOR 3 Month + 12.50%), 15.27%, 12/07/20			612		114,672
New Lightsquared LLC, 1st Lien Term Loan, (LIBOR 3 Month + 0.00%), 11.52%, 12/07/20			2,412		1,639,092
Sprint Communications, Inc., Term Loan, (LIBOR 1 Month + 3.00%), 5.56%, 02/02/24			1,088		1,049,920
					3,062,481
Total Floating Rate Loan Interests — 13.9% (Cost: $63,116,236)					59,536,752
Preferred Securities — 1.6%
Capital Trusts — 1.4%(d)(j)
Banks — 1.3%
Bank of America Corp.:
Series X, 6.25%			558		551,304
Series Z, 6.50%			341		345,263
Series AA, 6.10%			1,465		1,443,025
CIT Group, Inc., Series A, 5.80%			295		266,975
JPMorgan Chase & Co.:
Series V, 5.00%			640		617,600

Security	Par (000)				Value
Banks (continued)
Series Q, 5.15%		USD		190	$	180,994
Series U, 6.13%				99		98,258
Series X, 6.10%				1,356		1,347,525
Wells Fargo & Co.:
Series S, 5.90%				150		142,912
Series U, 5.87%				435		429,976
						5,423,832
Capital Markets — 0.1%
Goldman Sachs Group, Inc. (The), Series P, 5.00%				317		265,456
Morgan Stanley, Series H, 5.45%				162		157,564
						423,020
Total Capital Trusts — 1.4% (Cost: $6,259,538)						5,846,852
			Shares
Trust Preferreds — 0.2%
Banks — 0.2%
GMAC Capital Trust I, Series 2, 8.40%, 02/15/40(j)				32,966		835,688
Total Trust Preferreds — 0.2% (Cost: $862,505)						835,688
Total Preferred Securities — 1.6% (Cost: $7,122,043)						6,682,540
Total Long-Term Investments — 95.3% (Cost: $438,756,678)						409,131,529
Short-Term Securities — 5.2%(l)
BlackRock Liquidity Funds,T-Fund, Institutional Class, 2.32%(m)				21,772,561		21,772,561
JPMorgan US Treasury Plus Money Market Fund, Agency Class, 2.24%				719,274		719,274
Total Short-Term Securities — 5.2% (Cost: $22,491,835)						22,491,835
Total Investments — 100.5% (Cost: $461,248,513)						431,623,364
Liabilities in Excess of Other Assets — (0.5)%						(2,016,668	)
Net Assets — 100.0%					$	429,606,696

^(a)  Non-income producing security.

^(b)  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

^(c)  Issuer filed for bankruptcy and/or is in default.

^(d)  Perpetual security with no stated maturity date.

^(e)  Variable rate security. Security may be issued at a fixed coupon rate, which converts to a variable rate at a specified date. Rate shown is the rate in effect as of period end.

^(f)  Payment-in-kind security which may pay interest/dividends in additional par/shares and/or in cash. Rates shown are the current rate and possible payment rates.

^(g)  Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

^(h)  Convertible security.

⁽ⁱ⁾  Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

^(j)  Variable rate security. Rate shown is the rate in effect as of period end.

^(k)  Represents an unsettled loan commitment at period end. Certain details associated with this purchase are not known prior to the settlement date, including coupon rate.

^(l)  Annualized7-day yield as of period end.

16 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund

^(m)  During the year ended December 31, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at 12/31/17		Net Activity		Shares Held at 12/31/18		Value at 12/31/18		Income		Net Realized Gain (Loss) (a)		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds,T-Fund, Institutional Class		15,856,054		5,916,507		21,772,561	$	21,772,561	$	263,428	$	—	$	—

^(a)  Includes net capital gain distributions, if applicable.

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industrysub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment adviser. These definitions may not apply for purposes of this report, which may combine such industrysub-classifications for reporting ease.

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

Description	Number of Contracts		Expiration Date		Notional Amount (000)		Value/ Unrealized Appreciation (Depreciation)
Long Contracts
U.S. Treasury 2 Year Note		108		03/29/19	$	22,930	$	65,841
U.S. Treasury 5 Year Note		101		03/29/19		11,583		72,010
							$	137,851

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	121,499	GBP	95,000	JPMorgan Chase Bank NA		02/05/19	$	204
USD	7,921,067	EUR	6,948,000	UBS AG		02/05/19		(62,698	)
	Net unrealized depreciation						$	(62,494	)

Centrally Cleared Credit Default Swaps — Sell Protection

Reference Obligation/Index	Financing Rate Received by the Fund			Payment Frequency		Termination Date		Credit Rating (a)		Notional Amount (000) (b)			Value		Upfront Premium Paid (Received)		Unrealized Appreciation (Depreciation)
CDX.NA.HY.31.V1		5.00	%		Quarterly		12/20/23		B+		USD	4,495	$	97,091	$	175,400	$	(78,309	)

^(a)  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

^(b)  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

OTC Credit Default Swaps — Sell Protection

Reference Obligation/Index	Financing Rate Received by the Fund			Payment Frequency		Counterparty		Termination Date		Credit Rating (a)	Notional Amount (000) (b)			Value			Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
Chesapeake Energy Corp.		5.00	%		Quarterly		Barclays Bank plc		12/20/23	B-		USD	116	$	(15,792	)	$	221		$	(16,013	)
Chesapeake Energy Corp.		5.00	%		Quarterly		Barclays Bank plc		12/20/23	B-		USD	208		(28,317	)		1,939			(30,256	)
CenturyLink, Inc.		1.00	%		Quarterly		Barclays Bank plc		12/20/23	B+		USD	312		(49,580	)		(23,800	)		(25,780	)
CenturyLink, Inc.		1.00	%		Quarterly		Barclays Bank plc		06/20/25	B+		USD	567		(123,321	)		(97,383	)		(25,938	)
														$	(217,010	)	$	(119,023	)	$	(97,987	)

^(a)  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

^(b)  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

SCHEDULE OF INVESTMENTS 17

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund

Balances reported in the Statement of Assets and Liabilities for Centrally Cleared Swaps and OTC Swaps

	Swap Premiums Paid		Swap Premiums Received			Unrealized Appreciation		Unrealized Depreciation
Centrally Cleared Swaps(a)	$	175,400	$	—		$	—	$	(78,309	)
OTC Swaps		2,160		(121,183	)		—		(97,987	)

^(a)  Includes cumulative appreciation (depreciation) on centrally cleared swaps, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities and is net of any previously paid (received) swap premium amounts.

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Assets — Derivative Financial Instruments
Futures contracts
Net unrealized appreciation(a)	$	—	$	—	$	—	$	—	$	137,851	$	—	$	137,851
Forward foreign currency exchange contracts
Unrealized appreciation on forward foreign currency exchange contracts		—		—		—		204		—		—		204
Swaps — OTC
Unrealized appreciation on OTC swaps; Swap premiums paid		—		2,160		—		—		—		—		2,160
	$	—	$	2,160	$	—	$	204	$	137,851	$	—	$	140,215
Liabilities — Derivative Financial Instruments
Forward foreign currency exchange contracts
Unrealized depreciation on forward foreign currency exchange contracts	$	—	$	—	$	—	$	62,698	$	—	$	—	$	62,698
Swaps — centrally cleared
Net unrealized depreciation(a)		—		78,309		—		—		—		—		78,309
Swaps — OTC
Unrealized depreciation on OTC swaps; Swap premiums received		—		219,170		—		—		—		—		219,170
	$	—	$	297,479	$	—	$	62,698	$	—	$	—	$	360,177

^(a)  Includes cumulative appreciation on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

For the year ended December 31, 2018, the effect of derivative financial instruments in the Statement of Operations were as follows:

	Commodity Contracts		Credit Contracts			Equity Contracts			Foreign Currency Exchange Contracts			Interest Rate Contracts		Other Contracts		Total
Net Realized Gain (Loss) from:
Futures contracts	$	—	$	—		$	(20,003	)	$	—		$	127,898	$	—	$	107,895
Forward foreign currency exchange contracts		—		—			—			432,068			—		—		432,068
Swaps		—		223,351			—			—			—		—		223,351
	$	—	$	223,351		$	(20,003	)	$	432,068		$	127,898	$	—	$	763,314
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	$	—	$	—		$	—		$	—		$	126,587	$	—	$	126,587
Forward foreign currency exchange contracts		—		—			—			(13,228	)		—		—		(13,228	)
Swaps		—		(230,188	)		—			—			—		—		(230,188	)
	$	—	$	(230,188	)	$	—		$	(13,228	)	$	126,587	$	—	$	(116,829	)

18 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund

Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$	8,628,297
Average notional value of contracts — short		2,261,680
Forward foreign currency exchange contracts:
Average amounts purchased — in USD		9,652,776
Average amounts sold — in USD		3,482,021
Credit default swaps:
Average notional value — buy protection		75,452
Average notional value — sell protection		14,444,250

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments — Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	40,437		$	—
Forward foreign currency exchange contracts		204			62,698
Swaps — Centrally cleared		5,154			—
Swaps — OTC(a)		2,160			219,170
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	47,955		$	281,868
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(45,591	)		—
Total derivative assets and liabilities subject to an MNA	$	2,364		$	281,868

^(a)  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums (paid/received) in the Statement of Assets and Liabilities.

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets  (b)
Barclays Bank plc	$	2,160	$	(2,160	)	$	—	$	—	$	—
JPMorgan Chase Bank NA		204		—			—		—		204
	$	2,364	$	(2,160	)	$	—	$	—	$	204

Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities  (c)
Barclays Bank plc	$	219,170	$	(2,160	)	$	—	$	—	$	217,010
UBS AG		62,698		—			—		—		62,698
	$	281,868	$	(2,160	)	$	—	$	—	$	279,708

^(a)  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

^(b)  Net amount represents the net amount receivable from the counterparty in the event of default.

^(c)  Net amount represents the net amount payable due to the counterparty in the event of default.

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

SCHEDULE OF INVESTMENTS 19

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1		Level 2			Level 3			Total
Assets:
Investments:
Long-Term Investments:
Common Stocks(a)	$	5,444,808	$	—		$	—		$	5,444,808
Corporate Bonds(a)		—		337,467,429			—			337,467,429
Floating Rate Loan Interests:
Aerospace & Defense		—		199,577			241,515			441,092
Auto Components		—		—			100,231			100,231
Chemicals		—		2,282,891			1,823,921			4,106,812
Commercial Services & Supplies		—		3,024,766			—			3,024,766
Construction & Engineering		—		552,340			538,026			1,090,366
Containers & Packaging		—		1,114,528			—			1,114,528
Diversified Consumer Services		—		384,616			—			384,616
Diversified Financial Services		—		282,169			—			282,169
Diversified Telecommunication Services		—		1,718,370			—			1,718,370
Electric Utilities		—		164,676			—			164,676
Energy Equipment & Services		—		2,263,298			1,205,600			3,468,898
Food Products		—		345,303			—			345,303
Gas Utilities		—		415,388			—			415,388
Health Care Equipment & Supplies		—		2,530,677			118,695			2,649,372
Health Care Providers & Services		—		3,450,242			627,766			4,078,008
Health Care Technology		—		514,125			—			514,125
Hotels, Restaurants & Leisure		—		4,789,523			—			4,789,523
Household Products		—		93,484			—			93,484
Industrial Conglomerates		—		1,141,104			685,413			1,826,517
Insurance		—		2,009,587			—			2,009,587
IT Services		—		4,582,883			35,022			4,617,905
Life Sciences Tools & Services		—		116,245			—			116,245
Machinery		—		1,361,545			—			1,361,545
Media		—		4,736,578			392,037			5,128,615
Multiline Retail		—		279,977			—			279,977
Multi-Utilities		—		98,237			—			98,237
Oil, Gas & Consumable Fuels		—		2,678,013			—			2,678,013
Pharmaceuticals		—		1,977,481			—			1,977,481
Real Estate Management & Development		—		124,586			—			124,586
Software		—		5,904,274			138,915			6,043,189
Specialty Retail		—		1,106,036			156,534			1,262,570
Trading Companies & Distributors		—		168,077			—			168,077
Wireless Telecommunication Services		—		3,062,481			—			3,062,481
Preferred Securities:
Banks		835,688		5,423,832			—			6,259,520
Capital Markets		—		423,020			—			423,020
Short-Term Securities		22,491,835		—			—			22,491,835
Liabilities:
Unfunded Floating Rate Loan Interests(b)		—		(658	)		(527	)		(1,185	)
	$	28,772,331	$	396,786,700		$	6,063,148		$	431,622,179
Derivative Financial Instruments(c)
Assets:
Foreign currency exchange contracts	$	—	$	204		$	—		$	204
Interest rate contracts		137,851		—			—			137,851
Liabilities:
Credit contracts		—		(176,296	)		—			(176,296	)
Foreign currency exchange contracts		—		(62,698	)		—			(62,698	)
	$	137,851	$	(238,790	)	$	—		$	(100,939	)

^(a)  See above Schedule of Investments for values in each industry.

^(b)  Unfunded floating rate loan interests are valued at the unrealized appreciation (depreciation) on the commitment.

^(c)  Derivative financial instruments are swaps, futures contracts and forward foreign currency exchange contracts. Swaps, futures contracts and forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument.

During the year ended December 31, 2018, there were no transfers between Level 1 and Level 2.

20 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock High Yield V.I. Fund

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Corporate Bonds			Floating Rate Loan Interests			Preferred Securities			Unfunded Floating Rate Loan Interests			Total
Investments:
Assets:
Opening Balance, as of December 31, 2017	$	470,250		$	2,263,498		$	1,972,247		$	110		$	4,706,105
Transfers into Level 3		—			500,675			—			—			500,675
Transfers out of Level 3		—			(107,060	)		—			—			(107,060	)
Accrued discounts/premiums		—			10,020			—			—			10,020
Net realized gain (loss)		11,581			7,545			657,271			—			676,397
Net change in unrealized appreciation (depreciation)(a)(b)		4,750			(228,122	)		(685,682	)		(637	)		(909,691	)
Purchases		—			6,248,181			—			—			6,248,181
Sales		(486,581	)		(2,631,062	)		(1,943,836	)		—			(5,061,479	)
Closing Balance, as of December 31, 2018	$	—		$	6,063,675		$	—		$	(527	)	$	6,063,148
Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2018(b)	$	—		$	(233,563	)	$	—		$	(527	)	$	(234,090	)

^(a)  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

^(b)  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2018 is generally due to investments no longer held or categorized as Level 3 at period end.

The Fund’s investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information could result in a significantly lower or higher value of such Level 3 investments.

See notes to financial statements.

SCHEDULE OF INVESTMENTS 21

Statement of Assets and Liabilities

December 31, 2018

	BlackRock High Yield V.I. Fund
ASSETS
Investments at value — unaffiliated (cost — $439,475,952)	$	409,850,803
Investments at value — affiliated (cost — $21,772,561)		21,772,561
Cash pledged:
Futures contracts		130,000
Centrally cleared swaps		242,000
Foreign currency at value (cost — $21,814)		21,836
Receivables:
Investments sold		2,073,636
Capital shares sold		81,997
Dividends — affiliated		32,130
Dividends — unaffiliated		89
Interest — unaffiliated		6,525,613
From the Manager		187,049
Variation margin on futures contracts		40,437
Variation margin on centrally cleared swaps		5,154
Swap premiums paid		2,160
Unrealized appreciation on:
Forward foreign currency exchange contracts		204
Prepaid expenses		481
Total assets		440,966,150
LIABILITIES
Bank overdraft		143,647
Payables:
Investments purchased		4,601,323
Capital shares redeemed		3,624,740
Income dividend distributions		1,885,190
Distribution fees		53,635
Board realignment and consolidation		187,049
Investment advisory fees		174,216
Directors’ and Officer’s fees		6,501
Other affiliates		1,292
Other accrued expenses		398,808
Swap premiums received		121,183
Unrealized depreciation on:
Forward foreign currency exchange contracts		62,698
OTC swaps		97,987
Unfunded floating rate loan interests		1,185
Total liabilities		11,359,454
NET ASSETS	$	429,606,696
NET ASSETS CONSIST OF
Paid-in capital	$	468,762,824
Accumulated loss		(39,156,128	)
NET ASSETS	$	429,606,696
NET ASSET VALUE
Class I — Based on net assets of $185,735,605 and 27,301,252 shares outstanding, 200 million shares authorized, $0.10 par value	$	6.80
Class III — Based on net assets of $243,871,091 and 35,869,751 shares outstanding, 100 million shares authorized, $0.10 par value	$	6.80

See notes to financial statements.

22 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Statement of Operations

Year Ended December 31, 2018

	BlackRock High Yield V.I. Fund
INVESTMENT INCOME
Dividends — affiliated	$	263,428
Dividends — unaffiliated		195,774
Interest — unaffiliated		27,319,058
Total investment income		27,778,260
EXPENSES
Investment advisory		2,257,345
Transfer agent — class specific		753,619
Distribution — class specific		690,432
Board realignment and consolidation		187,049
Accounting services		157,839
Professional		97,692
Printing		70,101
Custodian		32,756
Directors and Officer		23,082
Transfer agent		4,675
Miscellaneous		26,676
Total expenses		4,301,266
Less:
Fees waived and/or reimbursed by the Manager		(197,987	)
Transfer agent fees waived and/or reimbursed — class specific		(500,330	)
Total expenses after fees waived and/or reimbursed		3,602,949
Net investment income		24,175,311
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments — unaffiliated		(4,194,408	)
Forward foreign currency exchange contracts		432,068
Foreign currency transactions		202,458
Futures contracts		107,895
Swaps		223,351
		(3,228,636	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(34,418,648	)
Forward foreign currency exchange contracts		(13,228	)
Foreign currency translations		11,149
Futures contracts		126,587
Swaps		(230,188	)
Unfunded floating rate loan interests		(1,295	)
		(34,525,623	)
Net realized and unrealized loss		(37,754,259	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(13,578,948	)

See notes to financial statements.

FINANCIAL STATEMENTS 23

Statements of Changes in Net Assets

	BlackRock High Yield V.I. Fund
	Year Ended December 31,
	2018			2017
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income	$	24,175,311		$	19,309,067
Net realized gain (loss)		(3,228,636	)		7,903,036
Net change in unrealized appreciation (depreciation)		(34,525,623	)		(1,348,280	)
Net increase (decrease) in net assets resulting from operations		(13,578,948	)		25,863,823
DISTRIBUTIONS TO SHAREHOLDERS(a)(b)
Class I		(10,593,725	)		(8,390,075	)
Class III		(14,484,449	)		(11,127,344	)
Decrease in net assets resulting from distributions to shareholders		(25,078,174	)		(19,517,419	)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from capital share transactions		22,839,455			96,093,493
NET ASSETS(b)
Total increase (decrease) in net assets		(15,817,667	)		102,439,897
Beginning of year		445,424,363			342,984,466
End of year	$	429,606,696		$	445,424,363

^(a)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(b)  Prior year distribution character information and undistributed (distributions in excess of) net investment income has been modified or removed to conform with current year RegulationS-X presentation changes. Refer to Note 12 for this prior year information.

See notes to financial statements.

24 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Financial Highlights

(For a share outstanding throughout each period)

	BlackRock High Yield V.I. Fund
	Class I
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	7.39		$	7.24		$	6.77		$	7.44		$	7.67
Net investment income(a)		0.38			0.38			0.37			0.36			0.40
Net realized and unrealized gain (loss)		(0.57	)		0.15			0.48			(0.61	)		(0.18	)
Net increase (decrease) from investment operations		(0.19	)		0.53			0.85			(0.25	)		0.22
Distributions from net investment income(b)		(0.40	)		(0.38	)		(0.38	)		(0.42	)		(0.45	)
Net asset value, end of year	$	6.80		$	7.39		$	7.24		$	6.77		$	7.44
Total Return(c)
Based on net asset value		(2.79	)%		7.48	%		12.92	%		(3.60	)%		2.89	%
Ratios to Average Net Assets(d)
Total expenses		0.77	%		0.78	%		0.80	%		0.84	%		0.87	%
Total expenses after fees waived and/or reimbursed		0.63	%		0.67	%		0.68	%		0.70	%		0.73	%
Net investment income		5.30	%		5.13	%		5.29	%		4.86	%		5.23	%
Supplemental Data
Net assets, end of year (000)	$	185,736		$	201,945		$	152,835		$	127,742		$	139,729
Portfolio turnover rate		79	%		75	%		89	%		73	%		87	%

^(a)  Based on average shares outstanding.

^(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Investments in underlying funds		0.01	%		0.01	%		0.01	%		0.01	%		—	%

See notes to financial statements.

FINANCIAL HIGHLIGHTS 25

Financial Highlights  (continued)

(For a share outstanding throughout each period)

	BlackRock High Yield V.I. Fund (continued)
	Class III
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	7.38		$	7.24		$	6.76		$	7.43		$	7.67
Net investment income(a)		0.36			0.36			0.36			0.34			0.38
Net realized and unrealized gain (loss)		(0.56	)		0.14			0.48			(0.61	)		(0.18	)
Net increase (decrease) from investment operations		(0.20	)		0.50			0.84			(0.27	)		0.20
Distributions from net investment income(b)		(0.38	)		(0.36	)		(0.36	)		(0.40	)		(0.44	)
Net asset value, end of year	$	6.80		$	7.38		$	7.24		$	6.76		$	7.43
Total Return(c)
Based on net asset value		(2.89	)%		7.08	%		12.82	%		(3.85	)%		2.51	%
Ratios to Average Net Assets(d)
Total expenses		1.02	%		1.03	%		1.00	%		1.06	%		1.07	%
Total expenses after fees waived and/or reimbursed		0.87	%		0.92	%		0.92	%		0.94	%		0.98	%
Net investment income		5.05	%		4.87	%		5.05	%		4.63	%		4.86	%
Supplemental Data
Net assets, end of year (000)	$	243,871		$	243,479		$	190,149		$	95,139		$	51,524
Portfolio turnover rate		79	%		75	%		89	%		73	%		87	%

^(a)  Based on average shares outstanding.

^(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Investments in underlying funds		0.01	%		0.01	%		0.01	%		0.01	%		—	%

See notes to financial statements.

26 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements

1. ORGANIZATION

BlackRock Variable Series Funds II, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Company is organized as a Maryland corporation that is comprised of 3 separate portfolios. The funds offer shares to insurance companies for their separate accounts to fund benefits under certain variable annuity and variable life insurance contracts. The financial statements presented are for BlackRock High Yield V.I. Fund (the “Fund”). The Fund is classified as diversified. Class I and Class III Shares have identical voting, dividend, liquidation and other rights, except that only shares of the respective classes are entitled to vote on matters concerning only that class. In addition, Class III Shares bear certain expenses related to the distribution of such shares.

The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex ofopen-end funds referred to as the Equity-Bond Complex.

Reorganization:The Board of Directors of the Company (the “Board”) approved an Agreement and Plan of Reorganization with respect to the following Target Fund (“Target Fund”), pursuant to which the Target Fund reorganized into a newly created series (“Acquiring Fund”) of BlackRock Variable Series Funds II, Inc., a newly organized Maryland corporation. The reorganization (the “Reorganization”) closed on September 17, 2018 and was not subject to approval by shareholders of the Target Fund.

Target Fund	Target Fund’s Registrant		Acquiring Fund		Acquiring Fund’s Registrant
BlackRock High Yield V.I. Fund		BlackRock Variable Series Funds, Inc.		BlackRock High Yield V.I. Fund		BlackRock Variable Series Funds II, Inc.

The Reorganization was effected in connection with the proposed reconfiguration of the boards of directors/trustees of certain BlackRock-advised funds.

The Acquiring Fund has the same investment objective, strategies and policies, investment adviser, portfolio management team and service providers as the Target Fund. The Target Fund is the performance and accounting survivor of the Reorganization, meaning that the Acquiring Fund assumed the performance and financial history of the Target Fund upon completion of the Reorganization. In addition, the Acquiring Fund is subject to the same contractual arrangements, including the same contractual fees and expenses, as those of the Target Fund. The Reorganization wastax-free, meaning that the Target Fund’s shareholders became shareholders of the Acquiring Fund without realizing any gain or loss for federal income tax purposes.

As a result, the Acquiring Fund acquired all of the assets and assumed all of the liabilities of the Target Fund in exchange for an equal aggregate value of newly-issued shares of the Acquiring Fund. Each shareholder of a Target Fund received shares of the Acquiring Fund in an amount equal to the aggregate net asset value (“NAV”) of such shareholder’s Target Fund shares, as determined at the close of business on September 14, 2018.

The Reorganization was accomplished by atax-free exchange of shares of the Acquiring Fund in the following amounts and at the following conversion ratio:

Target Fund	Shares Prior to Reorganization		Conversion Ratio		Shares Post-Reorganization
BlackRock High Yield V.I. Fund		69,393,119		1		69,393,119

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. However, the cost basis of the investments received from the Target Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

Prior to the Reorganization, the Acquiring Fund had not yet commenced operations and had no assets or liabilities. The Target Fund’s net assets, fair value and cost of investments and derivative financial instruments prior to the Reorganizations was as follows:

Target Fund	Net Assets		Fair Value of Investments		Cost of Investments
BlackRock High Yield V.I. Fund	$	504,306,175	$	501,662,096	$	505,106,715

Prior to the Reorganization’s effective date, the Target Fund began to incur expenses in connection with a potential realignment and consolidation of the boards of directors/trustees of certain BlackRock-advised funds. These expenses and liabilities have been assumed by the Acquiring Fund. The Manager has voluntarily agreed to reimburse certain Acquiring Funds for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on theex-dividend

NOTESTO FINANCIAL STATEMENTS 27

Notes to Financial Statements  (continued)

date. Dividends from foreign securities where theex-dividend date may have passed are subsequently recorded when the Fund is informed of theex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Upon notification from issuers, a portion of the dividend income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., futures contracts, forward foreign currency exchange contracts and swaps) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments. Doing so allows the investment to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on theex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit,non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management is currently evaluating the impact of this guidance to the Fund.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

• Fixed-income securities for which market quotations are readily available are generally valued using the last available bid prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each

28 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

• Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-tradedover-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

• Investments inopen-end U.S. mutual funds are valued at NAV each business day.

• Futures contracts traded on exchanges are valued at their last sale price.

• Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

• Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in anarm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement.

The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.

	Standard Inputs Generally Considered By Third Party Pricing Services
Market approach	(i)  recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers; (ii)   recapitalizations and other transactions across the capital structure; and (iii)  market multiples of comparable issuers.
Income approach	(i)  future cash flows discounted to present and adjusted as appropriate for liquidity, credit and/or market risks; (ii)   quoted prices for similar investments or assets in active markets; and (iii)  other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.
Cost approach	(i)  audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company; (ii)   changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company; (iii)  relevant news and other public sources; and (iv)  known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.

NOTESTO FINANCIAL STATEMENTS 29

Notes to Financial Statements  (continued)

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/ornon-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. SECURITIES AND OTHER INVESTMENTS

Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, a fund may subsequently have to reinvest the proceeds at lower interest rates. If a fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.

Non-agency mortgage-backed securities are securities issued bynon-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks.Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.

Capital Securities and Trust Preferred Securities: Capital securities, including trust preferred securities, are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics. In the case of trust preferred securities, an affiliated business trust of a corporation issues these securities, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured with either a fixed or adjustable coupon that can have either a perpetual or stated maturity date. For trust preferred securities, the issuing bank or corporation pays interest to the trust, which is then distributed to holders of these securities as a dividend. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. These securities generally are rated below that of the issuing company’s senior debt securities and are freely callable at the issuer’s option.

Preferred Stocks: Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well), but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

30 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

Floating Rate Loan Interests: Floating rate loan interests are typically issued to companies (the “borrower”) by banks, other financial institutions, or privately and publicly offered corporations (the “lender”). Floating rate loan interests are generallynon-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged or in bankruptcy proceedings. In addition, transactions in floating rate loan interests may settle on a delayed basis, which may result in proceeds from the sale not being readily available for a fund to make additional investments or meet its redemption obligations. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. Since the rates reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of a fund to the extent that it invests in floating rate loan interests. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. These investments are treated as investments in debt securities for purposes of a fund’s investment policies.

When a fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, a fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by a fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. A fund may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.

Floating rate loan interests are usually freely callable at the borrower’s option. A fund may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in a fund having a contractual relationship only with the lender, not with the borrower. A fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, a fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower. A fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, a fund assumes the credit risk of both the borrower and the lender that is selling the Participation. A fund’s investment in loan participation interests involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, a fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in a fund having a direct contractual relationship with the borrower, and a fund may enforce compliance by the borrower with the terms of the loan agreement.

In connection with floating rate loan interests, the Fund may also enter into unfunded floating rate loan interests (“commitments”). In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income, which is included in interest income in the Statement of Operations, is recognized ratably over the commitment period. Unfunded floating rate loan interests aremarked-to-market daily, and any unrealized appreciation (depreciation) is included in the Statement of Assets and Liabilities and Statement of Operations. As of period end, the Fund had the following unfunded floating rate loan interests:

Borrower	Par		Commitment Amount		Value		Unrealized Appreciation (Depreciation)
Access CIG LLC, Term Loan		11,356	$	11,356	$	11,217	$	(139	)
Dentalcorp Perfect Smile ULC, Delayed Draw Term Loan		16,622		16,622		16,103		(519	)
Mavis Tire Express Services Corp., Delayed Draw 1st Lien Term Loan		13,960		13,964		13,437		(527	)
							$	(1,185	)

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund are required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statement of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

NOTESTO FINANCIAL STATEMENTS 31

Notes to Financial Statements  (continued)

Forward Foreign Currency Exchange Contracts: Forward foreign currency exchange contracts are entered into to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk).

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.

The contract ismarked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed.Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies. Cash amounts pledged for forward foreign currency exchange contracts are considered restricted and are included in cash pledged as collateral for OTC derivatives in the Statement of Assets and Liabilities.

Swaps: Swap contracts are entered into to manage exposure to issuers, markets and securities. Such contracts are agreements between the Fund and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through the broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited is shown as cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Amounts pledged, which are considered restricted cash, are included in cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.

• Credit default swaps — Credit default swaps are entered into to manage exposure to the market or certain sectors of the market, to reduce risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which a fund is not otherwise exposed (credit risk).

The Fund may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Fund will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting themark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively.Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is

32 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the counterparty is not permitted to sell,re-pledge or use cash andnon-cash collateral it receives. The Fund generally agrees not to usenon-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Fund from its counterparties are not fully collateralized, it bears the risk of loss from counterpartynon-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, it bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

6. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

For such services, the Fund pays the Manager a monthly fee based on a percentage of the aggregate average daily net assets of the Fund and BlackRock Total Return V.I. Fund, a series of the Company, at the following annual rates:

Average Daily Net Assets	Investment Advisory Fees
First $250 Million		0.55	%
$250 Million — $500 Million		0.50
$500 Million — $750 Million		0.45
Greater than $750 Million		0.40

For the year ended December 31, 2018, the aggregate average daily net assets of the Fund and BlackRock Total Return V.I. Fund were approximately $925,048,876.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.25% based upon the average daily net assets attributable to Class III.

BRIL and broker-dealers, pursuant to sub-agreements with BRIL, provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.

For the year ended December 31, 2018, the class specific distribution fees borne directly by Class III were $690,432.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping,sub-transfer agency and shareholder services tosub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the year ended December 31, 2018, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

For the year ended December 31, 2018, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:

Class I		Class III		Total
$	316,414	$	437,205	$	753,619

Expense Limitations, Waivers and Reimbursements: With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount waived was $10,938.

The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through April 30, 2020. The contractual agreement may be terminated upon 90 days’ notice by a majority of the directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”), or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager pursuant to this arrangement.

For the year ended December 31, 2018, the Fund reimbursed the Manager $5,150 for certain accounting services, which is included in accounting services in the Statement of Operations.

NOTESTO FINANCIAL STATEMENTS 33

Notes to Financial Statements  (continued)

The Fund has begun to incur expenses in connection with a proposed realignment and consolidation of the boards of directors of certain BlackRock-advised funds, including the Fund. The Manager has voluntarily agreed to reimburse the Fund for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount reimbursed was $187,049.

The Manager has contractually agreed to reimburse transfer agent fees in order to limit such expenses to a percentage of average daily net assets as follows:

Class I	0.06	%
Class III	0.05

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2020, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund.

These amounts waived and/or reimbursed are shown as transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations. For the year ended December 31, 2018, class specific expense waivers and/or reimbursements were as follows:

	Class I		Class III		Total
Transfer agent fees waived and/or reimbursed	$	200,928	$	299,402	$	500,330

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I		Class III
	1.25%		1.50%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2020, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager.

Interfund Lending: In accordance with an exemptive order (the “Order”) from the U.S. Securities and Exchange Commission (“SEC”), the Fund may participate in a joint lending and borrowing facility for temporary purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the Fund’s investment policies and restrictions. The Fund is currently permitted to borrow under the Interfund Lending Program.

A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets to any one borrowing fund through the Interfund Lending Program. A borrowing BlackRock fund may not borrow through the Interfund Lending Program or from any other source more than 33¹/₃% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.

During the year ended December 31, 2018, the Fund did not participate in the Interfund Lending Program.

Directors and Officers: Certain directors and/or officers of the Company are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Directors and Officer in the Statement of Operations.

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the year ended December 31, 2018, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule17a-7 under the 1940 Act were as follows:

Purchases	$	39,630,877
Sales		10,140,303
Net Realized Loss		(134,328	)

7. PURCHASES AND SALES

For the year ended December 31, 2018, purchases and sales of investments, including paydowns and excluding short-term securities, were $376,361,530 and $360,689,959, respectively.

8. INCOME TAX INFORMATION

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2018. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

34 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

Management has analyzed tax laws and regulations and their application to the Fund as of December 31, 2018, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

The tax character of distributions paid was as follows:

	12/31/18		12/31/17
Ordinary income	$	25,078,174	$	19,517,419

As of December 31, 2018, the tax components of accumulated loss were as follows:

Capital loss carryforward	$	(7,387,971	)
Net unrealized losses(a)		(31,768,157	)
	$	(39,156,128	)

^(a)  The difference between book-basis and tax-basis net unrealized losses was attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains/losses on certain futures and foreign currency contracts, the accounting for swap agreements and the classification of investments.

As of December 31, 2018, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $7,387,971.

As of December 31, 2018, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	462,825,003
Gross unrealized appreciation	$	469,249
Gross unrealized depreciation		(31,871,823	)
Net unrealized depreciation	$	(31,402,574	)

9. BANK BORROWINGS

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of(a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2019 unless extended or renewed. Prior to April 19, 2018, the aggregate commitment amount was $2.1 billion and the fee was 0.12% per annum. Participating Funds paid an upfront commitment fee of 0.02% on the total commitment amounts, in addition to administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the year ended December 31, 2018, the Fund did not borrow under the credit agreement.

10. PRINCIPAL RISKS

In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. The Fund’s prospectus provides details of the risks to which the Fund is subject.

The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Fund portfolio’s current earnings rate.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the

NOTESTO FINANCIAL STATEMENTS 35

Notes to Financial Statements  (continued)

resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

A derivative contract may suffer amark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund.

With exchange-traded futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk:The Fund invests a significant portion of its assets in fixed income securities and/or uses derivatives tied to the fixed income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

Certain Funds may invest in securities that are rated below investment grade quality (sometimes called “junk bonds”), which are predominantly speculative, have greater credit risk and generally are less liquid and have more volatile prices than higher quality securities.

11. CAPITAL SHARE TRANSACTIONS

Transactions in capital shares for each class were as follows:

	Year Ended 12/31/2018						Year Ended 12/31/2017
	Shares			Amount			Shares			Amount
Class I
Shares sold		5,042,504		$	36,340,639			8,305,552		$	61,351,404
Shares issued in reinvestment of distributions		1,458,219			10,550,832			1,123,883			8,293,740
Shares redeemed		(6,544,646	)		(47,246,857	)		(3,183,322	)		(23,471,934	)
Net increase (decrease)		(43,923	)	$	(355,386	)		6,246,113		$	46,173,210
Class III
Shares sold		33,609,633		$	243,303,797			27,190,401		$	200,516,323
Shares issued in reinvestment of distributions		1,977,382			14,290,069			1,490,839			11,005,500
Shares redeemed		(32,705,712	)		(234,399,025	)		(21,963,775	)		(161,601,540	)
Net increase		2,881,303		$	23,194,841			6,717,465		$	49,920,283
Total Net Increase		2,837,380		$	22,839,455			12,963,578		$	96,093,493

12. REGULATIONS-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act ReleaseNo. 33-10532, Disclosure Update and Simplification. The Fund has adopted the amendments pertinent to RegulationS-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statement of Assets and Liabilities, Statements of Changes in Net Assets and Notes to the Financial Statements.

Prior year distribution information and Distributions in excess of net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the RegulationS-X changes.

36 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

Distributions for the year ended December 31, 2017 were classified as follows:

Share Class	Net Investment Income
Class I		(8,390,075	)
Class III		(11,127,344	)

Distributions in excess of net investment income as of December 31, 2017 was $(533,776).

13. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

NOTESTO FINANCIAL STATEMENTS 37

Report of Independent Registered Public Accounting Firm

To the Shareholders of BlackRock High Yield V.I. Fund and the Board of Directors of BlackRock Variable Series Funds II, Inc.:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of BlackRock High Yield V.I. Fund of BlackRock Variable Series Funds II, Inc. (the “Fund”), including the schedule of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian, agent banks and brokers; when replies were not received from agent banks or brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more BlackRock investment companies since 1992.

38 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement

The Board of Directors (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Variable Series Funds II, Inc. (the “Corporation”) met in person on May 8, 2018 (the “Organizational Meeting”) to consider the initial approval of the investment advisory agreement (the “Advisory Agreement” or the “Agreement”) between the Corporation, on behalf of BlackRock High Yield V.I. Fund (the “High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “U.S. Government Bond V.I. Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of the Corporation, and BlackRock Advisors, LLC (the “Manager” or “BlackRock”), each Fund’s investment advisor.

On September 17, 2018, each Fund acquired the assets, subject to the liabilities of BlackRock High Yield V.I. Fund (the “Predecessor High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Predecessor Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “Predecessor U.S. Government Bond V.I. Fund”) (each, a “Predecessor Fund,” and collectively, the “Predecessor Funds”), each a series of BlackRock Variable Series Funds, Inc. (the “Predecessor Corporation”), respectively, through a reorganization (the “Reorganization”). Each Fund has the same investment objectives, strategies and policies, portfolio management team and contractual arrangements, including the same contractual fees and expenses, as its respective Predecessor Fund. As a result of the Reorganization, each Fund adopted the performance and financial history of its respective Predecessor Fund. The Agreement is substantially similar to the advisory agreement (the “Predecessor Advisory Agreement” or the “Predecessor Agreement”) between the Predecessor Corporation, on behalf of each Predecessor Fund, and the Manager.

Activities and Composition of the Board

On the date of the Organizational Meeting, the Board consisted of eleven individuals, nine of whom were not “interested persons” of the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of each Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreement

Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Agreement. In connection with this deliberative process, the Board assessed, among other things, the nature, extent and quality of the services to be provided to each Fund (and those provided to each Predecessor Fund) by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management; accounting, administrative and shareholder services; oversight of each Fund’s (and each Predecessor Fund’s) service providers; marketing and promotional services; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements.

Board Considerations in Approving the Agreement

The Approval Process: At the Organizational Meeting, the Board reviewed materials relating to its consideration of the proposed Agreement. The Predecessor Agreement was most recently considered and approved by the board of directors of the Predecessor Corporation (the “Predecessor Board”) at in person meetings held on April 10, 2018 (the “April Meeting”) and May 8, 2018 (the “May Meeting”). The factors considered by the Board Members at the Organizational Meeting in connection with approval of the proposed Agreement were identical to the factors considered by them as members of the Predecessor Board at the April and May Meetings for the Predecessor Agreement. (Accordingly, references below to the “Board” mean both the Board and the Predecessor Board, and references below to the Board Members mean the members of both the Board and the Predecessor Board, unless the context requires otherwise.) These factors included, among other things: (a) the nature, extent and quality of the services to be provided by BlackRock (and those provided by BlackRock to each Predecessor Fund); (b) the investment performance of each Predecessor Fund as compared with a peer group of funds (“Performance Peers”) and other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with each Fund and each Predecessor Fund; (d) the sharing of potential economies of scale;(e) fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with each Fund and each Predecessor Fund; and (f) other factors deemed relevant by the Board Members.

In determining whether to approve the Predecessor Agreement, the Board met with the relevant investment advisory personnel from BlackRock and considered all information it deemed reasonably necessary to evaluate the terms of the Predecessor Agreement. These meetings were considered by the Board in evaluating approval of the Agreement. The Board received materials in advance of the Organizational Meeting relating to its consideration of the Agreement, including, among other things, (a) fees and estimated expense ratios of each Fund and the fees and expense ratios of each Predecessor Fund in comparison to the fees and expense ratios of a peer group of funds as determined by Broadridge Financial Solutions, Inc. (“Broadridge”) (“Expense Peers”); (b) information regarding BlackRock’s economic outlook for each Predecessor Fund and its general investment outlook for the markets; (c) information regarding fees paid to service providers that are affiliates of BlackRock; and (d) information outlining the legal duties of the Board under the 1940 Act with respect to the consideration and approval of the Agreement. The Board also received information at prior Board meetings concerning compliance records and regulatory matters relating to BlackRock.

The Board also considered other matters it deemed important to the approval process, such as other payments to be made to BlackRock or its affiliates, securities lending and cash management, services related to the valuation and pricing of Fund portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services to be Provided by BlackRock:The Board, including the Independent Board Members, considered the nature, extent and quality of services to be provided by BlackRock, including the investment advisory services to be provided to each Fund and those provided to each Predecessor Fund and the resulting performance of each Predecessor Fund. Throughout the year, the Board Members compared Predecessor Fund performance to the performance of a

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 39

Disclosure of Investment Advisory Agreement  (continued)

comparable group of mutual funds, a relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers, in connection with its evaluation of each Predecessor Fund. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing each Predecessor Fund’s performance and each Fund’s investment objective(s), strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board considered BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives that had been presented in connection with the Board’s evaluation of the Predecessor Agreement.

In addition to investment advisory services, the Board considered the quality of the administrative and othernon-investment advisory services to be provided to each Fund (and those provided to each Predecessor Fund). The Board considered that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with certain administrative, shareholder and other services (in addition to any such services provided to each Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In particular, the Board noted that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of other service providers including, among others, each Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certainopen-end funds; and (viii) performing administrative functions necessary for the operation of each Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing each Fund’s distribution partners, and shareholder call center and other services. The Board considered the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each Predecessor Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Predecessor Fund. In connection with its review of each Predecessor Fund performance history, the Board had been provided with reports independently prepared by Broadridge, which included a comprehensive analysis of each Predecessor Fund’s performance as of December 31, 2017. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with this review, the Board had received and reviewed information regarding the investment performance of each Predecessor Fund as compared to its Performance Peers.

In evaluating performance, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, the Board recognized that it is possible that long-term performance can be impacted by even one period of significant outperformance or underperformance, so that a single investment theme has the ability to affect long-term performance disproportionately.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor High Yield V.I. Fund ranked in the second, third and first quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor High Yield V.I. Fund’s underperformance during the applicable period.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor Total Return V.I. Fund ranked in the third, third, and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor Total Return V.I. Fund’s underperformance during the applicable periods.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor U.S. Government Bond V.I. Fund ranked in the third, second and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor U.S. Government Bond V.I. Fund’s underperformance during the applicable period.

C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services to be Provided and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with each Fund and each Predecessor Fund:In connection with the initial approval of the Agreement, the Board, including the Independent Board Members, considered that each Fund’s proposed contractual management fee rate was identical to each Predecessor Fund’s contractual management fee rate. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also considered that each Fund’s estimated total net expense ratio was identical to each Predecessor Fund’s total expense ratio. The Board also considered the comparison of each Predecessor Fund’s actual and contractual management fee rate to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, including any12b-1 or non12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts andsub-advised mutual funds (including mutual funds sponsored by third parties) that had been presented in connection with its evaluation of the Predecessor Agreement.

The Board considered BlackRock’s profitability methodology, including an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Predecessor Fund, which would be the same services to be provided to each Fund. The Board reviewed BlackRock’s estimated profitability with respect to each Predecessor Fund and other funds the Board currently oversees for the year ended December 31, 2017 compared to available aggregate estimated profitability data provided for the prior two years. The Board considered its review of, in connection with its review of the Predecessor Agreement, BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates, including BlackRock’s assumptions and methodology

40 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement  (continued)

of allocating expenses in the estimated profitability analysis and the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. In connection with its review of the Predecessor Agreement, the Board reviewed BlackRock’s operating margin, in general, compared to that of certain other publicly-traded asset management firms and considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the estimated cost of the services to be provided to each Fund based on its review of the estimated cost of the services provided to each Predecessor Fund by BlackRock, and BlackRock’s and its affiliates’ estimated profits relating to the management and distribution of each Predecessor Fund and the other funds advised by BlackRock and its affiliates. As part of this analysis, the Board had reviewed BlackRock’s methodology in allocating its costs of managing the Predecessor Funds to each Predecessor Fund. The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board Members. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing each Fund and each Predecessor Fund in contrast to what is required of BlackRock with respect to other products with similar investment mandates across theopen-end fund, exchange-traded fund,closed-end fund,sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that the Predecessor High Yield V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Predecessor High Yield V.I. Fund’s Expense Peers. The Board also noted that the High Yield V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the High Yield V.I. Fund, combined with the assets of Total Return V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the High Yield V.I. Fund’s total expenses as a percentage of the High Yield V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the High Yield V.I. Fund on aclass-by-class basis.

The Board noted that the Predecessor Total Return V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to the Predecessor Total Return V.I. Fund’s Expense Peers. The Board also noted that the Total Return V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Total Return V.I. Fund, combined with the assets of High Yield V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the Total Return V.I. Fund’s total expenses as a percentage of the Total Return V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the Total Return V.I. Fund on aclass-by-class basis.

The Board noted that the Predecessor U.S. Government Bond V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the first and fourth quartiles, respectively, relative to the Predecessor U.S. Government Bond V.I. Fund’s Expense Peers. The Board also noted that the U.S. Government Bond V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the U.S. Government Bond V.I. Fund increases above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the U.S. Government Bond V.I. Fund’s total expenses as a percentage of the U.S. Government Bond V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the U.S. Government Bond V.I. Fund on aclass-by-class basis. In addition, the Board noted that BlackRock has voluntarily agreed to waive a portion of the advisory fee payable by the U.S. Government Bond V.I. Fund. After discussion between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver.

D. Economies of Scale:The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and expense caps had been approved by the Board. The Board also considered the extent to which each Predecessor Fund benefited from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable each Fund to more fully participate in these economies of scale. The Board considered each Predecessor Fund’s asset levels and, in light of those asset levels, whether the current fee schedule was appropriate for each Fund. In its consideration, the Board Members took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members:The Board, including the Independent Board Members, also took into account other potential ancillary or“fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with each Fund based on its review of the Predecessor Agreement, including both tangible and intangible benefits, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to each Fund (and each Predecessor Fund), including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also considered that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the Agreement, the Board also considered information regarding BlackRock’s brokerage and soft dollar practices and reports from BlackRock which included information on brokerage commissions and trade execution practices that it had received in consideration of the Predecessor Agreement.

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 41

Disclosure of Investment Advisory Agreement  (continued)

The Board considered the competitive nature of theopen-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of each Fund.

Conclusion

Following discussion, the Board, including the Independent Board Members, approved the Advisory Agreement between the Manager and the Corporation, on behalf of each Fund, for atwo-year term beginning on the effective date of the Advisory Agreement. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its decision to approve the Agreement, the Board did not identify any single factor or group of factors asall-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.

42 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Glossary of Terms Used in this Report

Currency
EUR	Euro
GBP	British Pound
USD	United States Dollar
Portfolio Abbreviations
CDX	Credit Default Swap Index
DAC	Designated Activity Company
EURIBOR	Euro Interbank Offered Rate
LIBOR	London Interbank Offered Rate
OTC	Over-The-Counter
S&P	Standard & Poor’s

GLOSSARYOF TERMS USEDINTHIS REPORT 43

DECEMBER 31, 2018

ANNUAL REPORT

BlackRock Variable Series Funds II, Inc.

^Ø  BlackRock Total Return V.I. Fund

Not FDIC Insured • May Lose Value • No Bank Guarantee

Fund Summary  as of December 31, 2018 BlackRock Total Return V.I. Fund

Investment Objective

BlackRock Total Return V.I. Fund’s (the “Fund”) investment objective is to maximize total return, consistent with income generation and prudent investment management.

On May 8, 2018, the Board of Directors of the Company (the “Board”) and, on May 23, 2018, the Board of Trustees of State Farm Variable Product Trust each approved a reorganization of the State Farm Bond Fund (the “State Farm Fund”), with and into the Fund. At a special shareholder meeting on September 14, 2018, the shareholders of the State Farm Fund approved the reorganization, which was completed on October 29, 2018.

Portfolio Management Commentary

How did the Fund perform?

For the12-month period ended December 31, 2018, the Fund underperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index.

What factors influenced performance?

The Fund’sout-of-benchmark exposure to emerging market issues was among the most significant detractors from performance as the sentiment with respect to the sector deteriorated in the second quarter of 2018. An overweight to U.S. investment grade corporate credit and agency mortgage-backed security (“MBS”) relative value strategies also detracted from performance during the period.

Positive contributions to performance for the period came from allocations to U.S. securitized assets includingnon-agency MBS, collateralized loan obligations (“CLOs”) and commercial mortgage-backed securities (“CMBS”).Out-of-benchmark exposure to municipal bonds contributed positively as well.

The Fund’s underweight positioning with respect to duration (and corresponding interest rate sensitivity) added to performance relative to the benchmark.

The Fund held derivatives including options, futures contracts and swaps for risk management purposes as well as to manage exposures with the goal of generating return. The use of derivatives to manage portfolio duration generally added to the Fund’s performance during the period.

Describe recent portfolio activity.

Entering 2018 the Fund was positioned with a preference for the front end of the yield curve given the more attractive risk versus reward profile relative to longer-dated Treasuries. The Fund also emphasized income-oriented opportunities within high quality assets with less interest rate risk by holding overweight exposure to securitized assets, most notablynon-agency MBS and CLOs. As the first quarter of 2018 progressed, while maintaining an underweight, the Fund’s duration was tactically increased as a strategy against an uptick in investor risk aversion, mostly concentrated on the front end of the yield curve. The Fund maintained a positive stance on emerging markets based on the backdrop of synchronized developed market growth.

Into the second quarter of 2018, the Fund maintained an underweight duration stance relative to the benchmark given firming U.S. inflation and growth alongside increased Treasury issuance. That said, the Fund took a tactical approach to duration management given the crosscurrents impacting Treasury yields including geopolitical risk and dovish European Central Bank rhetoric. The Fund’s overweight to emerging markets was reduced as broad-based selling pressure impacted the sector during the second quarter amid tightening financial conditions from a stronger U.S. dollar and higher developed market rates. The Fund was long the U.S. dollar relative to other developed market currencies as a hedge against geopolitical risk.

The Fund moved to an overweight duration position versus the benchmark in the third quarter as the rise in interest rates provided an attractive entry point. The overweight to the front end of the curve was increased with a steepening bias given the attractive risk versus reward profile relative to longer-dated Treasuries. The Fund had a slightly cautious stance on corporate credit given rich valuations.

As the fourth quarter progressed, the Fund rotated from floating to fixed rate exposure in lower quality credit, reducing the Fund’s bank loan position in favor of high yield corporate bonds. Late in the period the Fund tactically added back investment grade exposure on new issuance to move to a neutral weight relative to the benchmark, while further trimming emerging markets exposure. Despite broader market weakness during the year, securitized assets held up relatively well, so the Fund took some profits on that position. The Fund reduced its overweight duration stance toward the end of the period while shifting exposure farther out on the yield curve.

While the reported cash balance at period end for the Fund was slightly elevated, the Fund held a combination of physical cash with the remainder consisting of cash equivalents used in various fashions. These purposes include but are not limited to borrowed bonds for shorting, committed cash for currency trades, and commercial paper for additional short-dated return. These positions did not have a material impact on performance.

Describe portfolio positioning at period end.

At the end of the period, the Fund’s duration was maintained at a modest overweight relative to the benchmark, with a preference for the middle of the yield curve on the view that U.S. interest rates should be range-bound near term with the U.S. Federal Reserve (the “Fed”) at a near-neutral policy stance. The Fund preferred sectors that should benefit from more accommodative Fed policy going forward such as agency MBS and municipal bonds, as well as local currency emerging market debt. The Fund balanced less liquid holdings of securitized assets with front end Treasuries and other shorter-dated assets.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

2 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Fund Summary  as of December 31, 2018 (continued) BlackRock Total Return V.I. Fund

TOTAL RETURN BASED ON A $10,000 INVESTMENT

^(a)  Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses. The returns for Class III Shares prior to August 14, 2012, the recommencement of operations of Class III Shares, are based upon the performance of Class I Shares of the Predecessor Fund (as defined below), as adjusted to reflect the distribution and/or service (12b-1) fees applicable to Class III Shares.

^(b)  Under normal circumstances, the Fund invests at least 80%, and typically invests 90% or more, of its assets in fixed income securities, such as corporate bonds and notes, mortgage-backed securities, asset-backed securities, convertible securities, preferred securities, government obligations and money market securities. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of BlackRock Total Return V.I. Fund (the “Predecessor Fund”), a tax-free reorganization (the “Board Reorganization”). The Predecessor Fund is the performance and accounting survivor of the Board Reorganization.

^(c)  A widely recognized unmanaged market-weighted index, comprised of investment-grade corporate bonds rated BBB or better, mortgages and U.S Treasury and U.S. Government agency issues with at least one year to maturity.

Performance Summary for the Period Ended December 31, 2018

	Standardized 30-Day Yields  (b)			Unsubsidized 30-Day Yields  (b)			6-Month Total Returns (c)			Average Annual Total Returns
										1 Year (c)			5 Years (c)			10 Years (c)
Class I(a)		3.04	%		2.84	%		1.03	%		(0.46	)%		2.53	%		5.21	%
Class III(a)		2.73			2.62			0.96			(0.63	)		2.22			4.92	(d)
Bloomberg Barclays U.S. Aggregate Bond Index		—			—			1.65			0.01			2.52			3.48

^(a)  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on the ex-dividend/payable date. Insurance-related fees and expenses are not reflected in these returns. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of the Predecessor Fund, a series of BlackRock Variable Series Funds, Inc., through the Board Reorganization. The Predecessor Fund is the performance and accounting survivor of the Board Reorganization.

^(b)  The standardized 30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized 30-day yield excludes the effects of any waivers and/or reimbursements.

^(c)  For a portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

^(d)  The returns for Class III Shares prior to August 14, 2012, the recommencement of operations of Class III Shares, are based upon the performance of the Predecessor Fund’s Class I Shares, as adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example

	Actual								Hypothetical (a)
					Including Interest Expense and Fees		Excluding Interest Expense and Fees				Including Interest Expense and Fees				Excluding Interest Expense and Fees
	Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Expenses Paid During the Period (c)		Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Ending Account Value (12/31/18)		Expenses Paid During the Period (c)
Class I	$	1,000.00	$	1,010.30	$	2.84	$	2.74	$	1,000.00	$	1,022.38	$	2.85	$	1,022.48	$	2.75
Class III		1,000.00		1,009.60		4.41		4.36		1,000.00		1,020.82		4.43		1,020.87		4.38

^(a)  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

^(b)  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.56% for Class I and 0.87% for Class III ), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period shown).

^(c)  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.54% for Class I and 0.86% for Class III ), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period shown).

See “Disclosure of Expenses” on page 4 for further information on how expenses were calculated.

FUND SUMMARY 3

Fund Summary  as of December 31, 2018 (continued) BlackRock Total Return V.I. Fund

Portfolio Information

PORTFOLIO COMPOSITION

Asset Type	Percent of Total Investments (a)
U.S. Government Sponsored Agency Securities		37	%
Corporate Bonds		31
U.S. Treasury Obligations		12
Asset-Backed Securities		7
Municipal Bonds		6
Non-Agency Mortgage-Backed Securities		4
Foreign Government Obligations		2
Floating Rate Loan Interests		1
Capital Trusts		—	(b)
Foreign Agency Obligations		—	(b)
Other Interests		—	(b)

^(a)  Total investments exclude short-term securities, options purchased, options written, TBA sale commitments and borrowed bonds.

^(b)  Representing less than 1% of the Fund’s total long investments.

CREDIT QUALITY ALLOCATION ^(a)

Credit Rating	Percent of Total Investments (b)
AAA/Aaa(c)		56	%
AA/Aa		6
A		15
BBB/Baa		17
BB/Ba		1
B		1
CCC/Caa		—	(d)
CC/Ca		1
C		—	(d)
NR		3

^(a)  For financial reporting purposes, credit quality ratings shown above reflect the highest rating assigned by either Standard & Poor’s (“S&P”) or Moody’s Investors Service if ratings differ. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. Investment grade ratings are credit ratings of BB/Baa or higher. Below investment grade ratings are credit ratings of BB/Ba or lower. Investments designated N/R are not rated by either rating agency. Unrated investments do not necessarily indicate low rating quality. Credit quality ratings are subject to change.

^(b)  Total Investments exclude short-term securities, options purchased, options written, TBA sale commitments and borrowed bonds.

^(c)  The investment adviser evaluates the credit quality of unrated investments based upon certain factors including, but not limited to, credit ratings for similar investments and financial analysis of sectors, individual investments and/or issuers. Using this approach, the investment advisor has deemed unrated U.S. Government Sponsored Agency Securities and U.S. Treasury Obligations to be of similar credit quality as investments rated AAA/Aaa.

^(d)  Represents less than 1% of the Fund’s total investments.

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including 12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example on the previous page (which is based on a hypothetical investment of $1,000 invested on July 1, 2018 and held through December 31, 2018) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical example is useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

4 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Fund Summary  as of December 31, 2018 (continued) BlackRock Total Return V.I. Fund

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance returns and net asset value (“NAV”). However, there is no guarantee that these objectives can be achieved in all interest rate environments.

The Fund may utilize leverage by entering into reverse repurchase agreements.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is distributed to the Fund’s shareholders, and the value of these portfolio holdings is reflected in the Fund’s per share NAV. However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other ongoing costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Fund had not used leverage.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can also influence the value of portfolio investments. As a result, changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on the Fund’s performance from leverage. Changes in the direction of interest rates are difficult to predict accurately, and there is no assurance that the Fund’s leveraging strategy will be successful.

The use of leverage also generally causes greater changes in the Fund’s NAV and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV of the Fund’s shares than if the Fund were not leveraged. In addition, the Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of the leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund incurs expenses in connection with the use of leverage, all of which are borne by the Fund’s shareholders and may reduce income.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

FUND SUMMARY 5

Schedule of Investments December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities — 8.1%
Accredited Mortgage Loan Trust, Series 2006-1, Class M2, (LIBOR USD 1 Month + 0.34%), 2.59%, 04/25/36(a)	USD		190	$	95,063
ACE Securities Corp. Home Equity Loan Trust(a):
Series 2003-OP1, Class A2, (LIBOR USD 1 Month + 0.72%), 3.23%, 12/25/33			122		118,357
Series 2007-HE4, Class A2A, (LIBOR USD 1 Month + 0.13%), 2.64%, 05/25/37			100		28,674
Adams Mill CLO Ltd., Series 2014-1A, Class A2R, (LIBOR USD 3 Month + 1.10%), 3.54%, 07/15/26(a)(b)			234		233,810
Ajax Mortgage Loan Trust(b):
Series 2017-D, Class A, 3.75%, 12/25/57			383		384,679
Series 2018-A, Class A, 3.85%, 04/25/58(c)			376		360,865
Series 2018-A, Class B, 0.00%, 04/25/58(c)			91		49,989
Series 2018-D, Class B, 0.00%, 08/25/58(c)(d)			110		61,736
Series 2018-E, Class A, 4.38%, 06/25/58(d)			220		218,854
Series 2018-E, Class B, 5.25%, 06/25/58(d)			100		97,779
Series 2018-E, Class C, 0.00%, 06/25/58(d)			100		28,700
Series 2018-F, Class A, 4.38%, 11/25/58(d)			900		895,669
Series 2018-F, Class B, 5.25%, 11/25/58(d)			130		127,112
Series 2018-F, Class C, 0.00%, 11/25/58			310		129,348
Series 2018-G, Class A, 4.38%, 06/25/57(e)			766		762,475
Series 2018-G, Class B, 5.25%, 06/25/57(e)			103		100,682
Series 2018-G, Class C, 5.25%, 06/25/57			228		210,342
Allegro CLO II-S Ltd., Series 2014-1RA, Class A1, (LIBOR USD 3 Month + 1.08%), 3.23%, 10/21/28(a)(b)			500		497,907
Allegro CLO V Ltd., Series 2017-1A, Class A, (LIBOR USD 3 Month + 1.24%), 3.68%, 10/16/30(a)(b)			250		249,140
ALM V Ltd.(a)(b):
Series 2012-5A, Class A1R3, (LIBOR USD 3 Month + 0.91%), 3.35%, 10/18/27			290		289,019
Series 2012-5A, Class A2R3, (LIBOR USD 3 Month + 1.25%), 3.69%, 10/18/27			250		246,015
Series 2012-5A, Class BR3, (LIBOR USD 3 Month + 1.65%), 4.09%, 10/18/27			250		244,370
ALM XII Ltd., Series 2015-12A, Class A1R2, (LIBOR USD 3 Month + 0.89%), 3.33%, 04/16/27(a)(b)			250		248,020
ALM XVI Ltd., Series 2015-16A, Class A2R2, (LIBOR USD 3 Month + 1.50%), 3.94%, 07/15/27(a)(b)			255		251,329
American Homes 4 Rent Trust, Series 2014-SFR3, Class A, 3.68%, 12/17/36(b)			186		186,669
AMMC CLO 19 Ltd., Series 2016-19A, Class C, (LIBOR USD 3 Month + 2.80%), 5.24%, 10/15/28(a)(b)			100		99,837
Anchorage Capital CLO 1 Ltd., Series 2018-1RA, Class A1, (LIBOR USD 3 Month + 0.99%), 3.43%, 04/13/31(a)(b)			310		303,962
Anchorage Capital CLO 4-R Ltd.(a)(b):
Series 2014-4RA, Class A, (LIBOR USD 3 Month + 1.05%), 3.56%, 01/28/31			250		247,254
Series 2014-4RA, Class C, (LIBOR USD 3 Month + 1.85%), 4.36%, 01/28/31			250		235,816
Anchorage Capital CLO 5-R Ltd.(a)(b):
Series 2014-5RA, Class B, (LIBOR USD 3 Month + 1.45%), 3.89%, 01/15/30			500		488,553
Series 2014-5RA, Class C, (LIBOR USD 3 Month + 1.85%), 4.29%, 01/15/30			250		236,916
Anchorage Capital CLO 6 Ltd., Series 2015-6A, Class AR, (LIBOR USD 3 Month + 1.27%), 3.71%, 07/15/30(a)(b)			250		247,508
Anchorage Capital CLO 7 Ltd., Series 2015-7A, Class AR, (LIBOR USD 3 Month + 0.96%), 3.40%, 10/15/27(a)(b)			750		748,443

Security		Par (000)		Value
Asset-Backed Securities (continued)
Apidos CLO XII, Series 2013-12A, Class AR, (LIBOR USD 3 Month + 1.08%), 3.52%, 04/15/31(a)(b)	USD		500	$	494,915
Apidos CLO XV, Series 2013-15A, Class A1RR, (LIBOR USD 3 Month + 1.01%), 3.48%, 04/20/31(a)(b)			500		491,262
Arbor Realty Collateralized Loan Obligation Ltd., Series 2017-FL3, Class A, (LIBOR USD 1 Month + 0.99%), 3.45%, 12/15/27(a)(b)			130		129,287
Arbor Realty Commercial Real Estate Notes Ltd.(a)(b):
Series 2016-FL1A, Class A, (LIBOR USD 1 Month + 1.70%), 4.16%, 09/15/26			130		131,442
Series 2017-FL2, Class A, (LIBOR USD 1 Month + 0.99%), 3.45%, 08/15/27			250		249,019
Ares XXXIII CLO Ltd., Series 2015-1A, Class B2R, (LIBOR USD 3 Month + 2.80%), 5.55%, 12/05/25(a)(b)			250		248,924
Ares XXXVII CLO Ltd., Series 2015-4A, Class A1R, (LIBOR USD 3 Month + 1.17%), 3.61%, 10/15/30(a)(b)			250		248,326
Argent Mortgage Loan Trust, Series 2005-W1, Class A2, (LIBOR USD 1 Month + 0.48%), 2.99%, 05/25/35(a)(c)			55		48,465
Avery Point V CLO Ltd., Series 2014-5A, Class AR, (LIBOR USD 3 Month + 0.98%), 3.43%, 07/17/26(a)(b)			205		204,526
Avery Point VI CLO Ltd., Series 2015-6A, Class BR, (LIBOR USD 3 Month + 1.50%), 4.08%, 08/05/27(a)(b)			250		242,691
B2R Mortgage Trust(b):
Series 2015-1, Class A1, 2.52%, 05/15/48			29		28,425
Series 2015-2, Class A, 3.34%, 11/15/48			52		51,574
Babson CLO Ltd., Series 2015-2A, Class AR, (LIBOR USD 3 Month + 1.19%), 3.66%, 10/20/30(a)(b)			260		258,465
BankAmerica Manufactured Housing Contract Trust, Series 1998-2, Class B1, 7.93%, 12/10/25(d)			300		194,611
Bayview Financial Revolving Asset Trust(a)(b):
Series 2004-B, Class A1, (LIBOR USD 1 Month + 1.00%), 3.51%, 05/28/39			137		118,476
Series 2005-A, Class A1, (LIBOR USD 1 Month + 1.00%), 3.51%, 02/28/40			184		176,308
Series 2005-E, Class A1, (LIBOR USD 1 Month + 1.00%), 3.51%, 12/28/40			76		70,907
BCMSC Trust(d):
Series 2000-A, Class A2, 7.58%, 06/15/30			40		12,923
Series 2000-A, Class A3, 7.83%, 06/15/30			37		12,404
Series 2000-A, Class A4, 8.29%, 06/15/30			63		22,562
Bear Stearns Asset-Backed Securities I Trust(a):
Series 2007-FS1, Class 1A3, (LIBOR USD 1 Month + 0.17%), 2.68%, 05/25/35			83		86,969
Series 2007-HE2, Class 23A, (LIBOR USD 1 Month + 0.14%), 2.65%, 03/25/37			54		54,081
Series 2007-HE3, Class 1A4, (LIBOR USD 1 Month + 0.35%), 2.86%, 04/25/37			199		156,176
Bear Stearns Asset-Backed Securities Trust, Series 2005-4, Class M2, (LIBOR USD 1 Month + 1.20%), 3.52%, 01/25/36(a)			7		6,848
Benefit Street Partners CLO VI Ltd., Series 2015-VIA, Class A1R, (LIBOR USD 3 Month + 1.24%), 3.68%, 10/18/29(a)(b)			250		249,271
BlueMountain CLO Ltd., Series 2013-2A, Class A1R, (LIBOR USD 3 Month + 1.18%), 3.65%, 10/22/30(a)(b)			500		496,846

6 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities (continued)
BSPRT Issuer Ltd., Series 2017-FL1, Class A, (LIBOR USD 1 Month + 1.35%), 3.81%, 06/15/27(a)(b)	USD		28	$	28,253
Carlyle Global Market Strategies CLO Ltd., Series 2012-4A, Class AR, (LIBOR USD 3 Month + 1.45%), 3.92%, 01/20/29(a)(b)			300		300,105
Carrington Mortgage Loan Trust(a):
Series 2006-FRE2, Class A2, (LIBOR USD 1 Month + 0.12%), 2.63%, 10/25/36			70		51,478
Series 2006-FRE2, Class A3, (LIBOR USD 1 Month + 0.16%), 2.67%, 10/25/36			140		103,206
Series 2006-FRE2, Class A5, (LIBOR USD 1 Month + 0.08%), 2.59%, 10/25/36			24		17,264
Series 2006-NC4, Class A3, (LIBOR USD 1 Month + 0.16%), 2.67%, 10/25/36			88		81,823
Series 2007-RFC1, Class A4, (LIBOR USD 1 Month + 0.22%), 2.73%, 10/25/36			100		67,329
CBAM Ltd., Series 2017-1A, Class A1, (LIBOR USD 3 Month + 1.25%), 3.72%, 07/20/30(a)(b)			250		248,705
C-BASS Trust:
Series 2006-CB7, Class A4, (LIBOR USD 1 Month + 0.16%), 2.67%, 10/25/36(a)			61		46,284
Series 2007-CB1, Class AF4, 3.58%, 01/25/37(e)			73		33,032
Series 2007-CB5, Class A2, (LIBOR USD 1 Month + 0.17%), 2.49%, 04/25/37(a)			58		43,163
Cedar Funding II CLO Ltd., Series 2013-1A, Class BR, (LIBOR USD 3 Month + 1.75%), 4.52%, 06/09/30(a)(b)			250		247,582
Cedar Funding VI CLO Ltd., Series 2016-6A, Class AR, (LIBOR USD 3 Month + 1.09%), 3.56%, 10/20/28(a)(b)			430		426,393
Cedar Funding VIII CLO Ltd., Series 2017-8A, Class A1, (LIBOR USD 3 Month + 1.25%), 3.70%, 10/17/30(a)(b)			510		507,265
CIFC Funding Ltd.(a)(b):
Series 2013-2A, Class A1LR, (LIBOR USD 3 Month + 1.21%), 3.65%, 10/18/30			230		228,884
Series 2014-4RA, Class A1A, (LIBOR USD 3 Month + 1.13%), 3.59%, 10/17/30			540		538,216
Citicorp Residential Mortgage Trust, Series 2007-2, Class M1, 5.13%, 06/25/37(e)			100		93,972
Citigroup Mortgage Loan Trust(a):
Series 2006-NC1, Class A2D, (LIBOR USD 1 Month + 0.25%), 2.76%, 08/25/36			100		97,643
Series 2007-AHL2, Class A3B, (LIBOR USD 1 Month + 0.20%), 2.71%, 05/25/37			255		188,244
Series 2007-AHL2, Class A3C, (LIBOR USD 1 Month + 0.27%), 2.78%, 05/25/37			116		86,174
Citigroup Mortgage Loan Trust, Inc.,Series 2006-WFH4, Class M3, (LIBOR USD 1 Month + 0.32%), 2.83%, 11/25/36(a)			100		84,330
Conseco Finance Corp.:
Series 1997-3, Class M1, 7.53%, 03/15/28(d)			56		55,661
Series 1997-6, Class M1, 7.21%, 01/15/29(d)			36		36,451
Series 1998-8, Class M1, 6.98%, 09/01/30(d)			112		95,772
Series 1999-5, Class A5, 7.86%, 03/01/30(d)			46		32,810
Series 1999-5, Class A6, 7.50%, 03/01/30(d)			33		22,818
Series 2001-D, Class B1, (LIBOR USD 1 Month + 2.50%), 4.96%, 11/15/32(a)			74		73,935
Conseco Finance Securitizations Corp.:
Series 2000-1, Class A5, 8.06%, 09/01/29(d)			57		26,414
Series 2000-4, Class A6, 8.31%, 05/01/32(d)			152		69,064
Series 2000-5, Class A7, 8.20%, 05/01/31			147		88,188

Security		Par (000)		Value
Asset-Backed Securities (continued)
Countrywide Asset-Backed Certificates(a):
Series 2003-BC3, Class A2, (LIBOR USD 1 Month + 0.62%), 3.13%, 09/25/33	USD		117	$	113,954
Series 2006-S10, Class A3, (LIBOR USD 1 Month + 0.32%), 2.83%, 10/25/36			40		37,841
Series 2006-SPS1, Class A, (LIBOR USD 1 Month + 0.22%), 2.73%, 12/25/25			2		2,349
Series 2007-S3, Class A3, (LIBOR USD 1 Month + 0.38%), 2.89%, 05/25/37			69		64,555
Credit-Based Asset Servicing & Securitization LLC:
Series 2006-CB2, Class AF4, 3.46%, 12/25/36(e)			15		13,703
Series 2006-MH1, Class B1, 6.25%, 10/25/36(b)(e)			100		100,232
Series 2006-SL1, Class A2, 5.56%, 09/25/36(b)(e)			87		13,856
Series 2007-CB6, Class A4, (LIBOR USD 1 Month + 0.34%), 2.85%, 07/25/37(a)(b)			59		38,060
Series 2007-RP1, Class A, (LIBOR USD 1 Month + 0.31%), 2.82%, 05/25/46(a)(b)			44		38,193
CWABS Asset-Backed Certificates Trust:
Series 2005-16, Class 1AF, 5.69%, 05/25/36(d)			146		141,525
Series 2005-16, Class 2AF3, 5.67%, 05/25/36(d)			30		28,957
Series 2006-11, Class 3AV2, (LIBOR USD 1 Month + 0.16%), 2.67%, 09/25/46(a)			9		9,203
CWABS Revolving Home Equity Loan Trust, Series 2004-U, Class 2A, (LIBOR USD 1 Month + 0.27%), 2.73%, 03/15/34(a)			28		26,965
CWABS, Inc. Asset-Backed Certificates Trust, Series 2004-5, Class A, (LIBOR USD 1 Month + 0.90%), 3.41%, 10/25/34(a)			116		116,272
CWHEQ Home Equity Loan Trust:
Series 2006-S5, Class A4, 5.84%, 06/25/35			1		2,547
Series 2006-S5, Class A5, 6.16%, 06/25/35			15		16,257
Series 2007-S1, Class A3, 5.81%, 11/25/36(d)			6		5,739
CWHEQ Revolving Home Equity Loan Resuritization Trust(a)(b):
Series 2006-RES, Class 4Q1B, (LIBOR USD 1 Month + 0.30%), 2.76%, 12/15/33(c)			22		20,381
Series 2006-RES, Class 5B1B, (LIBOR USD 1 Month + 0.19%), 2.65%, 05/15/35(c)			12		11,494
Series 2006-RES, Class 5F1A, (LIBOR USD 1 Month + 0.24%), 2.70%, 12/15/35			135		131,914
CWHEQ Revolving Home Equity Loan Trust(a):
Series 2005-B, Class 2A, (LIBOR USD 1 Month + 0.18%), 2.64%, 05/15/35			22		20,763
Series 2006-C, Class 2A, (LIBOR USD 1 Month + 0.18%), 2.64%, 05/15/36			133		127,817
Series 2006-H, Class 1A, (LIBOR USD 1 Month + 0.15%), 2.61%, 11/15/36			76		62,139
DCP Rights LLC, Series 2014-1A, Class A, 5.46%, 10/25/44(b)			212		216,951
Dorchester Park CLO Ltd., Series 2015-1A, Class BR, (LIBOR USD 3 Month + 1.45%), 3.92%, 04/20/28(a)(b)			250		245,683
Dryden 53 CLO Ltd., Series 2017-53A, Class A, (LIBOR USD 3 Month + 1.12%), 3.56%, 01/15/31(a)(b)			800		793,562
Dryden XXV Senior Loan Fund, Series 2012-25A, Class ARR, (LIBOR USD 3 Month + 0.90%), 3.34%, 10/15/27(a)(b)			250		248,020
First Franklin Mortgage Loan Trust(a):
Series 2004-FFH3, Class M3, (LIBOR USD 1 Month + 1.05%), 3.56%, 10/25/34			33		28,887
Series 2006-FF16, Class 2A3, (LIBOR USD 1 Month + 0.14%), 2.65%, 12/25/36			772		451,820

SCHEDULE OF INVESTMENTS 7

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities (continued)
Series 2006-FF17, Class A5, (LIBOR USD 1 Month + 0.15%), 2.66%, 12/25/36	USD		644	$	549,452
Series 2006-FFH1, Class M2, (LIBOR USD 1 Month + 0.40%), 2.91%, 01/25/36			107		61,811
Flatiron CLO Ltd., Series 2015-1A, Class AR, (LIBOR USD 3 Month + 0.89%), 3.33%, 04/15/27(a)(b)			250		248,358
Fremont Home Loan Trust, Series 2006-3, Class 1A1, (LIBOR USD 1 Month + 0.14%), 2.65%, 02/25/37(a)			256		196,281
GE-WMC Asset-Backed Pass-Through Certificates(a):
Series 2005-2, Class A2C, (LIBOR USD 1 Month + 0.25%), 2.76%, 12/25/35			20		19,826
Series 2005-2, Class M1, (LIBOR USD 1 Month + 0.44%), 2.95%, 12/25/35			180		103,708
GE-WMC Mortgage Securities Trust, Series 2006-1, Class A2B, (LIBOR USD 1 Month + 0.15%), 2.66%, 08/25/36(a)			686		419,253
GSAA Home Equity Trust, Series 2007-2, Class AF3, 5.92%, 03/25/37(d)			29		10,065
GSAMP Trust(a):
Series 2006-FM2, Class A2B, (LIBOR USD 1 Month + 0.12%), 2.63%, 09/25/36			81		38,108
Series 2007-H1, Class A1B, (LIBOR USD 1 Month + 0.20%), 2.71%, 01/25/47			30		18,701
Series 2007-HS1, Class M6, (LIBOR USD 1 Month + 2.25%), 4.76%, 02/25/47			40		40,430
Halcyon Loan Advisors Funding Ltd., Series 2015-2A, Class AR, (LIBOR USD 3 Month + 1.08%), 3.57%, 07/25/27(a)(b)			430		429,899
Highbridge Loan Management Ltd., Series 6A-2015, Class A1R, (LIBOR USD 3 Month + 1.00%), 3.58%, 02/05/31(a)(b)			250		245,717
Home Equity Asset Trust, Series 2007-1, Class 2A3, (LIBOR USD 1 Month + 0.15%), 2.66%, 05/25/37(a)			90		73,305
Home Equity Mortgage Loan Asset-Backed Trust(a):
Series 2004-A, Class M2, (LIBOR USD 1 Month + 2.03%), 4.53%, 07/25/34			26		26,360
Series 2007-A, Class 2A2, (LIBOR USD 1 Month + 0.19%), 2.70%, 04/25/37			72		53,531
Series 2007-B, Class 2A3, (LIBOR USD 1 Month + 0.20%), 2.71%, 07/25/37			123		76,983
Home Equity Mortgage Trust, Series 2006-2, Class 1A1, 5.87%, 07/25/36(e)			74		24,487
Home Loan Mortgage Loan Trust, Series 2005-1, Class A3, (LIBOR USD 1 Month + 0.72%), 3.18%, 04/15/36(a)			27		24,647
ICG US CLO Ltd., Series 2015-1A, Class A1R, (LIBOR USD 3 Month + 1.14%), 3.59%, 10/19/28(a)(b)			250		247,771
Invitation Homes Trust(a)(b):
Series 2018-SFR1, Class F, (LIBOR USD 1 Month + 2.50%), 4.96%, 03/17/37			100		99,195
Series 2018-SFR3, Class A, (LIBOR USD 1 Month + 1.00%), 3.46%, 07/17/37			130		128,760
Irwin Home Equity Loan Trust, Series 2006-3, Class 2A3, 6.53%, 09/25/37(b)(e)			53		51,086
JPMorgan Mortgage Acquisition Trust,Series 2006-CW1, Class M1, (LIBOR USD 1 Month + 0.27%), 2.78%, 05/25/36(a)			100		94,731
KKR CLO 23 Ltd., Series 23, Class B, (LIBOR USD 3 Month + 1.75%), 4.24%, 10/20/31(a)(b)			250		245,266
LCM 26 Ltd., Series 26A, Class A1, (LIBOR USD 3 Month + 1.07%), 3.54%, 01/20/31(a)(b)			280		276,740

Security		Par (000)		Value
Asset-Backed Securities (continued)
LCM XX LP, Series 20A, Class AR, (LIBOR USD 3 Month + 1.04%), 3.38%, 10/20/27(a)(b)	USD		250	$	248,180
LCM XXIV Ltd., Series 24A, Class A, (LIBOR USD 3 Month + 1.31%), 3.78%, 03/20/30(a)(b)			250		249,953
Lehman ABS Manufactured Housing Contract Trust, Series 2001-B, Class M1, 6.63%, 04/15/40(d)			90		94,266
Lendmark Funding Trust, Series 2017-1A, Class A, 2.83%, 12/22/25(b)			510		503,190
Litigation Fee Residual Funding LLC, Series 2015-1, Class A, 4.00%, 10/30/27(c)			82		81,412
LoanCore Issuer Ltd., Series 2018-CRE1, Class A, (LIBOR USD 1 Month + 1.13%), 3.59%, 05/15/28(a)(b)			250		248,678
Long Beach Mortgage Loan Trust(a):
Series 2006-2, Class 1A, (LIBOR USD 1 Month + 0.18%), 2.69%, 03/25/46			241		179,744
Series 2006-3, Class 2A3, (LIBOR USD 1 Month + 0.18%), 2.69%, 05/25/46			355		142,467
Series 2006-4, Class 2A3, (LIBOR USD 1 Month + 0.16%), 2.67%, 05/25/36			380		170,249
Series 2006-4, Class 2A4, (LIBOR USD 1 Month + 0.26%), 2.77%, 05/25/36			422		192,590
Series 2006-9, Class 2A2, (LIBOR USD 1 Month + 0.11%), 2.62%, 10/25/36			55		23,516
Series 2006-9, Class 2A3, (LIBOR USD 1 Month + 0.16%), 2.67%, 10/25/36			336		144,883
Series 2006-9, Class 2A4, (LIBOR USD 1 Month + 0.23%), 2.74%, 10/25/36			125		54,123
Series 2006-10, Class 2A3, (LIBOR USD 1 Month + 0.16%), 2.67%, 11/25/36			86		35,828
Series 2006-10, Class 2A4, (LIBOR USD 1 Month + 0.22%), 2.73%, 11/25/36			65		27,115
Madison Avenue Manufactured Housing Contract Trust, Series 2002-A, Class B2, (LIBOR USD 1 Month + 3.25%), 5.76%, 03/25/32(a)			40		40,709
Madison Park Funding XIII Ltd., Series 2014-13A, Class AR2, (LIBOR USD 3 Month + 0.95%), 3.40%, 04/19/30(a)(b)			330		326,895
Madison Park Funding XVIII Ltd., Series 2015-18A, Class A1R, (LIBOR USD 3 Month + 1.19%), 3.66%, 10/21/30(a)(b)			510		504,157
Madison Park Funding XXVI Ltd., Series 2017-26A, Class AR, (LIBOR USD 3 Month + 1.20%), 3.71%, 07/29/30(a)(b)			270		268,558
Marathon CRE Ltd., Series 2018-FL1, Class A, (LIBOR USD 1 Month + 1.15%), 3.61%, 06/15/28(a)(b)			100		99,526
Marble Point CLO XI Ltd., Series 2017-2A, Class A, (LIBOR USD 3 Month + 1.18%), 3.62%, 12/18/30(a)(b)			250		247,122
MASTR Asset-Backed Securities Trust,Series 2006-HE2, Class A3, (LIBOR USD 1 Month + 0.15%), 2.66%, 06/25/36(a)			213		115,464
MASTR Specialized Loan Trust, Series 2006-3, Class A, (LIBOR USD 1 Month + 0.26%), 2.77%, 06/25/46(a)(b)			19		17,625
Merrill Lynch Mortgage Investors Trust(a):
Series 2006-OPT1, Class M1, (LIBOR USD 1 Month + 0.26%), 2.77%, 08/25/37			40		12,627
Series 2006-RM3, Class A2B, (LIBOR USD 1 Month + 0.09%), 2.60%, 06/25/37			28		8,310
Morgan Stanley ABS Capital I, Inc. Trust(a):
Series 2005-HE1, Class A2MZ, (LIBOR USD 1 Month + 0.60%), 3.11%, 12/25/34			155		151,581

8 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities (continued)
Series 2005-HE5, Class M4, (LIBOR USD 1 Month + 0.87%), 3.38%, 09/25/35	USD		141	$	61,042
Series 2007-NC1, Class A1, (LIBOR USD 1 Month + 0.13%), 2.64%, 11/25/36			471		280,387
MP CLO III Ltd., Series 2013-1A, Class AR, (LIBOR USD 3 Month + 1.25%), 3.72%, 10/20/30(a)(b)			250		248,636
MP CLO VIII Ltd., Series 2015-2A, Class AR, (LIBOR USD 3 Month + 0.91%), 3.42%, 10/28/27(a)(b)			270		267,287
Navient Private Education Loan Trust(b):
Series 2014-AA, Class A2B, (LIBOR USD 1 Month + 1.25%), 3.71%, 02/15/29(a)			380		384,132
Series 2014-CTA, Class B, (LIBOR USD 1 Month + 1.75%), 4.21%, 10/17/44(a)			200		202,619
Series 2016-AA, Class B, 3.50%, 12/16/58(d)			100		95,532
Neuberger Berman Loan Advisers CLO 26 Ltd., Series 2017-26A, Class A, (LIBOR USD 3 Month + 1.17%), 3.62%, 10/18/30(a)(b)			250		247,992
Oakwood Mortgage Investors, Inc.(d):
Series 2001-D, Class A2, 5.26%, 01/15/19			23		17,221
Series 2001-D, Class A4, 6.93%, 09/15/31			13		11,205
Series 2002-B, Class M1, 7.62%, 06/15/32			79		65,631
OCP CLO Ltd.(a)(b):
Series 2016-12A, Class A1R, (LIBOR USD 3 Month + 1.12%), 3.56%, 10/18/28			216		214,675
Series 2017-13A, Class A1A, (LIBOR USD 3 Month + 1.26%), 3.70%, 07/15/30			300		298,596
Series 2017-14A, Class B, (LIBOR USD 3 Month + 1.95%), 4.59%, 11/20/30			250		235,267
Octagon Investment Partners 24 Ltd.(a)(b):
Series 2015-1A, Class A1R, (LIBOR USD 3 Month + 0.90%), 3.54%, 05/21/27			470		468,700
Series 2015-1A, Class A2AR, (LIBOR USD 3 Month + 1.35%), 3.99%, 05/21/27			310		301,760
Octagon Investment Partners XIX Ltd., Series 2014-1A, Class AR, (LIBOR USD 3 Month + 1.10%), 3.54%, 04/15/26(a)(b)			272		271,154
Octagon Investment Partners XVI Ltd., Series 2013-1A, Class A1R, (LIBOR USD 3 Month + 1.02%), 3.36%, 07/17/30(a)(b)			250		246,235
Octagon Investment Partners XVII Ltd., Series 2013-1A, Class A1R2, (LIBOR USD 3 Month + 1.00%), 3.49%, 01/25/31(a)(b)			250		245,635
OFSI Fund VI Ltd., Series 2014-6A, Class A2R, (LIBOR USD 3 Month + 1.13%), 3.57%, 03/20/25(a)(b)			201		200,169
OHA Loan Funding Ltd., Series 2013-2A, Class AR, (LIBOR USD 3 Month + 1.04%), 3.72%, 05/23/31(a)(b)			225		221,089
OneMain Financial Issuance Trust, Series 2016-2A, Class A, 4.10%, 03/20/28(b)			52		51,653
Option One Mortgage Accep Corp. Asset-Backed Certificates, Series 2003-4, Class A2, (LIBOR USD 1 Month + 0.64%), 3.15%, 07/25/33(a)			179		177,007
Option One Mortgage Loan Trust:
Series 2007-CP1, Class 2A3, (LIBOR USD 1 Month + 0.21%), 2.72%, 03/25/37(a)			90		58,863
Series 2007-FXD1, Class 1A1, 5.87%, 01/25/37(e)			105		97,623
Series 2007-FXD1, Class 2A1, 5.87%, 01/25/37(e)			276		258,395
Series 2007-FXD2, Class 1A1, 5.82%, 03/25/37(e)			455		445,186
Origen Manufactured Housing Contract Trust, Series 2007-B, Class A1, (LIBOR USD 1 Month + 1.20%), 3.66%, 10/15/37(a)(b)(c)			88		85,248
Ownit Mortgage Loan Trust, Series 2006-2, Class A2C, 6.00%, 01/25/37(e)			70		63,982

Security		Par (000)		Value
Asset-Backed Securities (continued)
OZLM Funding III Ltd., Series 2013-3A, Class BR, (LIBOR USD 3 Month + 3.00%), 5.47%, 01/22/29(a)(b)	USD		320	$	319,450
OZLM Funding IV Ltd., Series 2013-4A, Class A1R, (LIBOR USD 3 Month + 1.25%), 3.72%, 10/22/30(a)(b)			390		387,945
OZLM XIV Ltd., Series 2015-14A, Class A2AR, (LIBOR USD 3 Month + 1.70%), 4.14%, 01/15/29(a)(b)			250		247,198
Palmer Square CLO Ltd.(a)(b):
Series 2014-1A, Class A1R2, (LIBOR USD 3 Month + 1.13%), 3.58%, 01/17/31			250		247,213
Series 2018-1A, Class A1, (LIBOR USD 3 Month + 1.03%), 3.47%, 04/18/31			250		245,617
Park Avenue Institutional Advisers CLO Ltd.(a)(b):
Series 2017-1A, Class A1, (LIBOR USD 3 Month + 1.22%), 3.83%, 11/14/29			280		278,996
Series 2017-1A, Class A2, (LIBOR USD 3 Month + 1.70%), 4.31%, 11/14/29			300		294,995
Progress Residential Trust(b):
Series 2015-SFR3, Class A, 3.07%, 11/12/32			198		196,169
Series 2017-SFR1, Class A, 2.77%, 08/17/34			100		97,786
Series 2018-SFR1, Class F, 4.78%, 03/17/35			100		99,050
PRPM LLC, Series 2017-1A, Class A1, 4.25%, 01/25/22(b)(e)			48		48,339
Race Point IX CLO Ltd., Series 2015-9A, Class A1AR, (LIBOR USD 3 Month + 1.21%), 3.65%, 10/15/30(a)(b)			500		496,438
Race Point X CLO Ltd., Series 2016-10A, Class A1R, (LIBOR USD 3 Month + 1.10%), 3.59%, 07/25/31(a)(b)			250		247,201
RAMP Trust(a):
Series 2006-RS6, Class A4, (LIBOR USD 1 Month + 0.27%), 2.78%, 11/25/36			238		198,995
Series 2007-RS1, Class A3, (LIBOR USD 1 Month + 0.17%), 2.68%, 02/25/37			170		87,056
Regatta VI Funding Ltd., Series 2016-1A, Class AR, (LIBOR USD 3 Month + 1.08%), 3.55%, 07/20/28(a)(b)			330		327,632
Rockford Tower CLO Ltd.(a)(b):
Series 2017-1A, Class A, (LIBOR USD 3 Month + 1.37%), 3.81%, 04/15/29			250		250,229
Series 2017-1A, Class B, (LIBOR USD 3 Month + 1.80%), 4.24%, 04/15/29			250		250,109
Series 2017-2A, Class B, (LIBOR USD 3 Month + 1.75%), 4.19%, 10/15/29			250		246,272
Series 2017-2A, Class C, (LIBOR USD 3 Month + 2.30%), 4.74%, 10/15/29			250		242,529
Series 2017-3A, Class A, (LIBOR USD 3 Month + 1.19%), 3.66%, 10/20/30			250		247,226
Romark WM-R Ltd., Series 2018-1A, Class A1, (LIBOR USD 3 Month + 1.03%), 3.50%, 04/20/31(a)(b)			250		245,847
RR Ltd., Series 2018-3A, Class A1R2, (LIBOR USD 3 Month + 1.09%), 3.53%, 01/15/30(a)(b)			1,250		1,230,180
Securitized Asset-Backed Receivables LLC Trust(a):
Series 2006-WM4, Class A1, (LIBOR USD 1 Month + 0.19%), 2.70%, 11/25/36(b)			102		60,189
Series 2006-WM4, Class A2A, (LIBOR USD 1 Month + 0.08%), 2.59%, 11/25/36			49		18,717
Series 2006-WM4, Class A2C, (LIBOR USD 1 Month + 0.16%), 2.67%, 11/25/36			146		56,709
SG Mortgage Securities Trust, Series 2006-OPT2, Class A3D, (LIBOR USD 1 Month + 0.21%), 2.72%, 10/25/36(a)			100		78,413

SCHEDULE OF INVESTMENTS 9

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities (continued)
Silver Creek CLO Ltd., Series 2014-1A, Class AR, (LIBOR USD 3 Month + 1.24%), 3.71%, 07/20/30(a)(b)	USD		250	$	249,298
SLM Private Credit Student Loan Trust, Series 2004-B, Class A3, (LIBOR USD 3 Month + 0.33%), 3.12%, 03/15/24(a)			277		276,068
SMB Private Education Loan Trust, Series 2015-B, Class B, 3.50%, 12/17/40(b)			100		97,250
Sound Point CLO XII Ltd., Series 2016-2A, Class A, (LIBOR USD 3 Month + 1.66%), 4.13%, 10/20/28(a)(b)			250		249,961
Sound Point CLO XIV Ltd., Series 2016-3A, Class A, (LIBOR USD 3 Month + 1.53%), 4.01%, 01/23/29(a)(b)			260		260,147
Sound Point CLO XV Ltd., Series 2017-1A, Class A, (LIBOR USD 3 Month + 1.39%), 3.87%, 01/23/29(a)(b)			250		250,293
Soundview Home Loan Trust, Series 2004-WMC1, Class M2, (LIBOR USD 1 Month + 0.80%), 3.30%, 01/25/35(a)			2		1,964
SpringCastle America Funding LLC, Series 2016-AA, Class A, 3.05%, 04/25/29(b)			232		230,106
Stanwich Mortgage Loan Co. LLC, Series 2017-NPB1, Class A1, 3.60%, 05/17/22(b)(c)(e)			357		355,312
Structured Asset Securities Corp. Mortgage Pass-Through Certificates, Series 2004-23XS, Class 2A1, (LIBOR USD 1 Month + 0.30%), 2.81%, 01/25/35(a)			117		114,161
Symphony CLO XII Ltd., Series 2013-12A, Class AR, (LIBOR USD 3 Month + 1.03%), 3.47%, 10/15/25(a)(b)			238		236,480
TCI-Flatiron CLO Ltd., Series 2017-1A, Class A, (LIBOR USD 3 Month + 1.20%), 3.84%, 11/17/30(a)(b)			250		248,687
Tricon American Homes Trust, Series 2018-SFR1, Class E, 4.56%, 05/17/37(b)			100		98,711
Union Pacific Railroad Co. Pass-Through Trust, Series 2014-1, 3.23%, 05/14/26			98		96,537
Venture CDO Ltd., Series 2018-35A, Class AS, (LIBOR USD 3 Month + 1.15%), 3.65%, 10/22/31(a)(b)			100		99,818
Venture XVIII CLO Ltd., Series 2014-18A, Class AR, (LIBOR USD 3 Month + 1.22%), 3.66%, 10/15/29(a)(b)			315		315,002
Voya CLO Ltd., Series 2017-4A, Class A1, (LIBOR USD 3 Month + 1.13%), 3.57%, 10/15/30(a)(b)			250		247,852
Wachovia Asset Securitization Issuance II LLC Trust, Series 2007-HE2A, Class A, (LIBOR USD 1 Month + 0.13%), 2.64%, 07/25/37(a)(b)			91		87,101
WaMu Asset-Backed Certificates Trust(a):
Series 2007-HE2, Class 2A3, (LIBOR USD 1 Month + 0.25%), 2.76%, 04/25/37			547		281,021
Series 2007-HE2, Class 2A4, (LIBOR USD 1 Month + 0.36%), 2.87%, 04/25/37			34		17,770
Washington Mutual Asset-Backed CertificatesTrust(a):
Series 2006-HE4, Class 2A2, (LIBOR USD 1 Month + 0.18%), 2.69%, 09/25/36			162		76,193
Series 2006-HE5, Class 1A, (LIBOR USD 1 Month + 0.16%), 2.66%, 10/25/36			182		147,863
Series 2007-HE2, Class 2A2, (LIBOR USD 1 Month + 0.22%), 2.73%, 02/25/37			207		88,704
Wellfleet CLO Ltd., Series 2017-1A, Class A1, (LIBOR USD 3 Month + 1.32%), 3.79%, 04/20/29(a)(b)			250		250,189

Security		Par (000)		Value
Asset-Backed Securities (continued)
Yale Mortgage Loan Trust, Series 2007-1, Class A, (LIBOR USD 1 Month + 0.40%), 2.91%, 06/25/37(a)(b)	USD		94	$	38,652
York CLO-2 Ltd., Series 2015-1A, Class AR, (LIBOR USD 3 Month + 1.15%), 3.62%, 01/22/31(a)(b)			250		247,371
Total Asset-Backed Securities — 8.1% (Cost: $46,331,909)					45,585,863
Corporate Bonds — 35.3%
Aerospace & Defense — 1.4%
BAE Systems Holdings, Inc.(b):
2.85%, 12/15/20			269		265,457
3.80%, 10/07/24			65		64,868
3.85%, 12/15/25			215		213,157
4.75%, 10/07/44			8		8,033
Boeing Co. (The), 6.13%, 02/15/33			35		44,303
General Dynamics Corp., 3.75%, 05/15/28			160		161,455
Harris Corp.:
2.70%, 04/27/20			28		27,761
4.40%, 06/15/28			340		338,460
5.05%, 04/27/45			135		138,871
L3 Technologies, Inc.:
4.95%, 02/15/21			70		71,632
3.85%, 06/15/23			270		270,420
3.85%, 12/15/26			215		208,132
4.40%, 06/15/28			40		39,991
Lockheed Martin Corp.:
2.90%, 03/01/25			90		86,381
3.55%, 01/15/26			44		43,661
3.60%, 03/01/35			249		231,859
4.50%, 05/15/36			18		18,573
4.07%, 12/15/42			379		361,636
3.80%, 03/01/45			95		86,560
4.70%, 05/15/46			220		229,247
4.09%, 09/15/52			56		52,271
Northrop Grumman Corp.:
2.55%, 10/15/22			220		212,884
3.25%, 08/01/23			1,120		1,102,221
2.93%, 01/15/25			1,110		1,053,262
3.25%, 01/15/28			364		339,612
3.85%, 04/15/45			100		88,288
4.03%, 10/15/47			140		127,331
Raytheon Co., 7.20%, 08/15/27			60		75,511
Rockwell Collins, Inc.:
3.20%, 03/15/24			370		356,314
3.50%, 03/15/27			370		347,314
United Technologies Corp.:
1.95%, 11/01/21			600		575,970
4.13%, 11/16/28			470		465,630
4.50%, 06/01/42			285		269,251
4.15%, 05/15/45			98		87,644
4.63%, 11/16/48			35		33,799
					8,097,759
Air Freight & Logistics — 0.2%
FedEx Corp.:
3.30%, 03/15/27			370		351,817
4.90%, 01/15/34			185		189,071
3.90%, 02/01/35			94		85,104
3.88%, 08/01/42			115		95,487
4.05%, 02/15/48			270		226,166
					947,645

10 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Airlines — 0.4%
Air Canada Pass-Through Trust, Series 2017-1, Class B, 3.70%, 01/15/26(b)	USD		1	$	949
American Airlines Group, Inc., 4.63%, 03/01/20(b)			103		102,485
American Airlines Pass-Through Trust:
Series 2015-1, Class B, 3.70%, 05/01/23			7		6,563
Series 2015-2, Class B, 4.40%, 09/22/23			255		249,827
Series 2016-1, Class B, 5.25%, 01/15/24			8		8,176
Series 2017-1, Class B, 4.95%, 02/15/25			18		17,597
Series 2017-2, Class B, 3.70%, 10/15/25			19		18,367
Series 2015-1, Class A, 3.38%, 05/01/27			222		210,906
Delta Air Lines, Inc.:
2.88%, 03/13/20			871		865,214
2.60%, 12/04/20			340		334,326
3.40%, 04/19/21			30		29,750
3.63%, 03/15/22			82		80,244
Gol Finance, Inc., 7.00%, 01/31/25(b)			152		134,710
Turkish Airlines Pass-Through Trust, Series 2015-1, Class A, 4.20%, 03/15/27(b)			33		28,727
United Airlines Pass-Through Trust:
Series 2014-1, Class B, 4.75%, 04/11/22			16		16,352
Series 2016-1, Class B, 3.65%, 01/07/26			5		4,469
Series 2018-1, Class B, 4.60%, 03/01/26			80		80,034
Series 2015-1, Class AA, 3.45%, 12/01/27			1		831
Series 2016-2, Class AA, 2.88%, 10/07/28			33		30,442
US Airways Pass-Through Trust:
Series 2012-2, Class B, 6.75%, 06/03/21			7		7,549
Series 2013-1, Class B, 5.38%, 11/15/21			27		27,719
					2,255,237
Auto Components — 0.1%
Aptiv plc, 4.25%, 01/15/26			57		55,452
ZF North America Capital, Inc., 4.75%, 04/29/25(b)			375		349,000
					404,452
Automobiles — 0.6%
BMW US Capital LLC, 2.80%, 04/11/26(b)			110		100,836
Daimler Finance North America LLC(b):
3.10%, 05/04/20			340		338,119
2.30%, 02/12/21			150		146,358
3.35%, 05/04/21			430		428,696
2.00%, 07/06/21			370		355,998
3.75%, 11/05/21			150		150,511
General Motors Co.:
6.25%, 10/02/43			30		28,120
6.75%, 04/01/46			45		43,565
5.40%, 04/01/48			35		29,808
Hyundai Capital America, 2.55%, 04/03/20(b)			786		775,817
Toyota Motor Corp., 3.67%, 07/20/28			65		65,778
Volkswagen Group of America Finance LLC(b):
2.40%, 05/22/20			200		196,891
3.88%, 11/13/20			410		412,000
4.00%, 11/12/21			605		604,624
					3,677,121
Banks — 6.8%
ABN AMRO Bank NV, 2.65%, 01/19/21(b)			275		271,042
Banco Santander SA, 3.85%, 04/12/23			200		194,333
Bank of America Corp.:
2.63%, 10/19/20			175		173,166
(LIBOR USD 3 Month + 0.66%), 2.37%, 07/21/21(a)			485		476,321
(LIBOR USD 3 Month + 0.63%), 2.33%, 10/01/21(a)			1,225		1,201,089
5.70%, 01/24/22			420		445,147

Security		Par (000)		Value
Banks (continued)
(LIBOR USD 3 Month + 0.63%), 3.50%, 05/17/22(a)	USD		280	$	280,042
3.30%, 01/11/23			92		90,607
4.00%, 04/01/24			115		115,637
4.20%, 08/26/24			295		292,581
Series L, 3.95%, 04/21/25			660		639,497
3.88%, 08/01/25			460		455,061
(LIBOR USD 3 Month + 0.81%), 3.37%, 01/23/26(a)			140		133,853
3.50%, 04/19/26			166		159,748
Series L, 4.18%, 11/25/27			145		139,369
(LIBOR USD 3 Month + 1.04%), 3.42%, 12/20/28(a)			1,475		1,377,870
(LIBOR USD 3 Month + 1.07%), 3.97%, 03/05/29(a)			200		194,408
Barclays plc:
(LIBOR USD 3 Month + 1.36%), 4.34%, 05/16/24(a)			680		661,128
(LIBOR USD 3 Month + 1.90%), 4.97%, 05/16/29(a)			380		366,387
4.95%, 01/10/47			200		176,739
BNP Paribas SA(b):
2.95%, 05/23/22			200		192,745
3.80%, 01/10/24			470		457,602
Citigroup, Inc.:
2.50%, 07/29/19			453		451,452
2.90%, 12/08/21			620		609,973
(LIBOR USD 3 Month + 0.95%), 2.88%, 07/24/23(a)			114		110,321
3.75%, 06/16/24			255		253,212
4.40%, 06/10/25			425		415,924
(LIBOR USD 3 Month + 1.56%), 3.89%, 01/10/28(a)			145		139,912
Citizens Bank NA:
2.25%, 03/02/20			544		538,176
2.65%, 05/26/22			555		539,203
Credit Suisse Group Funding Guernsey Ltd.:
2.75%, 03/26/20			500		494,606
3.13%, 12/10/20			1,330		1,316,992
Fifth Third Bank, 2.25%, 06/14/21			216		210,858
HSBC Holdings plc:
5.10%, 04/05/21			200		206,822
2.65%, 01/05/22			400		388,051
(LIBOR USD 3 Month + 0.99%), 3.95%, 05/18/24(a)			200		198,920
(USD Swap Rate 5 Year + 3.75%), 6.00%(a)(f)			380		342,183
Huntington National Bank (The), 3.25%, 05/14/21			280		279,304
ING Groep NV, 4.10%, 10/02/23			455		454,724
Intesa Sanpaolo SpA(b):
6.50%, 02/24/21			200		205,036
5.02%, 06/26/24			611		554,105
JPMorgan Chase & Co.:
2.20%, 10/22/19			370		366,896
2.55%, 03/01/21			305		300,699
4.63%, 05/10/21			185		190,388
4.35%, 08/15/21			750		767,495
(LIBOR USD 3 Month + 0.61%), 3.51%, 06/18/22(a)			380		380,860
2.97%, 01/15/23			215		209,621
3.20%, 01/25/23			370		364,609
(LIBOR USD 3 Month + 0.73%), 3.56%, 04/23/24(a)			85		84,357
3.63%, 05/13/24			370		367,536

SCHEDULE OF INVESTMENTS 11

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Banks (continued)
(LIBOR USD 3 Month + 0.89%), 3.80%, 07/23/24(a)	USD		511	$	511,923
(LIBOR USD 3 Month + 1.00%), 4.02%, 12/05/24(a)			790		796,286
(LIBOR USD 3 Month + 1.34%), 3.78%, 02/01/28(a)			310		300,923
(LIBOR USD 3 Month + 1.38%), 3.54%, 05/01/28(a)			220		209,745
(LIBOR USD 3 Month + 1.26%), 4.20%, 07/23/29(a)			310		309,058
(LIBOR USD 3 Month + 1.33%), 4.45%, 12/05/29(a)			210		213,600
(LIBOR USD 3 Month + 1.36%), 3.88%, 07/24/38(a)			330		299,702
KeyCorp, 4.15%, 10/29/25			110		111,733
Lloyds Banking Group plc:
4.45%, 05/08/25			200		198,593
4.65%, 03/24/26			520		488,898
3.75%, 01/11/27			485		445,568
Mitsubishi UFJ Financial Group, Inc.:
3.54%, 07/26/21			35		35,131
3.00%, 02/22/22			85		83,810
3.46%, 03/02/23			935		929,260
Mizuho Financial Group, Inc.:
2.27%, 09/13/21			200		193,648
2.95%, 02/28/22			2,048		2,007,793
Nordea Bank AB(b):
2.13%, 05/29/20			310		305,295
3.75%, 08/30/23			225		221,932
Royal Bank of Scotland Group plc(a):
(LIBOR USD 3 Month + 1.48%), 3.50%, 05/15/23			200		192,323
(LIBOR USD 3 Month + 1.91%), 5.08%, 01/27/30			375		361,600
Santander UK Group Holdings plc, 2.88%, 08/05/21			635		612,555
Santander UK plc, 5.00%, 11/07/23(b)			550		537,069
Standard Chartered plc, (LIBOR USD 3 Month + 1.15%), 4.25%, 01/20/23(a)(b)			345		341,535
Sumitomo Mitsui Trust Bank Ltd.(b):
2.05%, 03/06/19			1,634		1,631,164
1.95%, 09/19/19			555		550,069
SunTrust Banks, Inc., 4.00%, 05/01/25			70		70,225
Toronto-Dominion Bank (The):
1.80%, 07/13/21			370		358,045
3.50%, 07/19/23			120		120,826
UBS Group Funding Switzerland AG(b):
2.95%, 09/24/20			795		786,594
(LIBOR USD 3 Month + 0.95%), 2.86%, 08/15/23(a)			510		490,511
4.13%, 09/24/25			470		468,262
UniCredit SpA, (USD Swap Rate 5 Year + 3.70%), 5.86%, 06/19/32(a)(b)			215		188,719
US Bancorp:
2.95%, 07/15/22			190		187,415
3.70%, 01/30/24			370		375,736
3.10%, 04/27/26			70		66,282
Series V, 2.38%, 07/22/26			750		683,998
US Bank NA, (LIBOR USD 3 Month + 0.29%), 3.10%, 05/21/21(a)			265		264,638
Wells Fargo & Co.:
2.60%, 07/22/20			77		76,254
2.55%, 12/07/20			95		93,661
3.00%, 01/22/21			370		368,348
2.50%, 03/04/21			475		467,197
3.50%, 03/08/22			210		209,301

Security		Par (000)		Value
Banks (continued)
2.63%, 07/22/22	USD		470	$	453,203
3.00%, 02/19/25			370		348,698
3.00%, 10/23/26			370		342,518
Wells Fargo Bank NA:
(LIBOR USD 3 Month + 0.49%), 3.33%, 07/23/21(a)			540		539,474
3.63%, 10/22/21			250		251,479
					38,337,204
Beverages — 0.5%
Anheuser-Busch Cos. LLC(b):
3.65%, 02/01/26			20		18,911
4.70%, 02/01/36			655		607,446
4.90%, 02/01/46			240		222,572
Anheuser-Busch InBev Finance, Inc.:
2.63%, 01/17/23			854		812,824
3.30%, 02/01/23			530		515,345
Anheuser-Busch InBev Worldwide, Inc., 2.50%, 07/15/22			145		138,445
Constellation Brands, Inc., (LIBOR USD 3 Month + 0.70%), 3.21%, 11/15/21(a)			230		227,245
Keurig Dr. Pepper, Inc.(b):
3.55%, 05/25/21			95		94,856
4.06%, 05/25/23			140		139,515
PepsiCo, Inc.:
2.75%, 03/01/23			115		113,307
4.00%, 05/02/47			160		156,414
					3,046,880
Biotechnology — 0.8%
AbbVie, Inc.:
2.30%, 05/14/21			340		332,034
3.75%, 11/14/23			205		203,964
3.60%, 05/14/25			290		278,163
4.25%, 11/14/28			125		121,350
4.50%, 05/14/35			300		277,532
4.40%, 11/06/42			90		79,147
4.88%, 11/14/48			50		46,650
Amgen, Inc.:
2.20%, 05/22/19			370		368,572
3.63%, 05/22/24			370		368,876
4.40%, 05/01/45			162		151,500
Baxalta, Inc., 5.25%, 06/23/45			36		36,490
Celgene Corp., 3.25%, 02/20/23			575		561,460
Gilead Sciences, Inc.:
2.55%, 09/01/20			370		367,008
2.50%, 09/01/23			117		112,869
3.70%, 04/01/24			170		169,716
3.65%, 03/01/26			370		362,674
4.60%, 09/01/35			27		27,260
4.00%, 09/01/36			130		118,511
5.65%, 12/01/41			140		154,671
4.50%, 02/01/45			105		100,979
4.15%, 03/01/47			48		44,215
					4,283,641
Building Products — 0.0%
Johnson Controls International plc, 5.13%, 09/14/45			70		69,892
LafargeHolcim Finance US LLC, 4.75%, 09/22/46(b)			240		208,431
					278,323
Capital Markets — 2.1%
ARI Investments LLC, (LIBOR USD 1 Month + 2.90%), 5.28%, 01/06/25(a)(c)			894		894,031

12 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Capital Markets (continued)
Bank of New York Mellon Corp. (The):
2.20%, 03/04/19	USD		750	$	749,121
3.40%, 05/15/24			370		368,084
(LIBOR USD 3 Month + 1.07%), 3.44%, 02/07/28(a)			117		114,162
CME Group, Inc., 3.75%, 06/15/28			10		10,134
Credit Suisse Group AG(a)(b):
(LIBOR USD 3 Month + 1.24%), 4.21%, 06/12/24			325		324,159
(USD Swap Semi 5 Year + 4.33%), 7.25%(f)			240		226,404
Deutsche Bank AG:
2.70%, 07/13/20			447		434,769
2.95%, 08/20/20			100		97,062
4.25%, 02/04/21			675		665,223
4.25%, 10/14/21			130		127,108
Goldman Sachs & Co. LLC, (LIBOR USD 3 Month + 0.44%), 3.06%, 02/08/19(a)			2,000		1,998,752
Goldman Sachs Group, Inc. (The):
2.00%, 04/25/19			68		67,763
2.75%, 09/15/20			65		64,328
2.35%, 11/15/21			498		480,177
(LIBOR USD 3 Month + 1.17%), 3.79%, 05/15/26(a)			230		220,748
(LIBOR USD 3 Month + 1.51%), 3.69%, 06/05/28(a)			615		571,563
(LIBOR USD 3 Month + 1.30%), 4.22%, 05/01/29(a)			735		707,355
(LIBOR USD 3 Month + 1.37%), 4.02%, 10/31/38(a)			140		123,201
Intercontinental Exchange, Inc.:
3.45%, 09/21/23			110		110,552
4.00%, 10/15/23			230		235,497
3.75%, 09/21/28			45		45,029
Moody’s Corp., 2.75%, 12/15/21			230		225,560
Morgan Stanley:
2.75%, 05/19/22			580		564,271
6.25%, 08/09/26			283		313,371
3.63%, 01/20/27			180		171,071
(LIBOR USD 3 Month + 1.34%), 3.59%, 07/22/28(a)			980		926,594
(LIBOR USD 3 Month + 1.14%), 3.77%, 01/24/29(a)			530		507,091
Northern Trust Corp., (LIBOR USD 3 Month + 1.13%), 3.38%, 05/08/32(a)			80		74,440
Nuveen LLC, 4.00%, 11/01/28(b)			110		113,347
S&P Global, Inc., 4.00%, 06/15/25			35		35,639
State Street Corp., 2.65%, 05/19/26			103		96,438
					11,663,044
Chemicals — 0.4%
Cydsa SAB de CV, 6.25%, 10/04/27(b)			300		268,125
Dow Chemical Co. (The):
9.00%, 04/01/21			135		149,699
3.00%, 11/15/22			85		82,449
4.38%, 11/15/42			23		20,183
4.63%, 10/01/44			103		93,589
DowDuPont, Inc.:
4.49%, 11/15/25			820		844,252
5.42%, 11/15/48			440		457,135
Sherwin-Williams Co. (The):
4.00%, 12/15/42			20		16,816
4.50%, 06/01/47			75		67,632
					1,999,880

Security		Par (000)		Value
Commercial Services & Supplies — 0.1%
Catholic Health Initiatives, 4.35%, 11/01/42	USD		30	$	27,137
Republic Services, Inc.:
4.75%, 05/15/23			90		94,206
2.90%, 07/01/26			131		123,563
3.95%, 05/15/28			105		105,068
Waste Management, Inc., 3.90%, 03/01/35			106		102,883
					452,857
Communications Equipment — 0.0%
Cisco Systems, Inc., 2.95%, 02/28/26			95		90,579
Juniper Networks, Inc., 3.30%, 06/15/20			63		62,764
					153,343
Consumer Finance — 2.0%
AerCap Ireland Capital DAC, 4.63%, 10/30/20			462		465,224
American Express Co.:
3.70%, 11/05/21			705		711,333
3.70%, 08/03/23			195		195,564
American Express Credit Corp., 2.25%, 08/15/19			177		176,196
Capital One Financial Corp.:
2.40%, 10/30/20			252		246,713
3.45%, 04/30/21			175		174,918
3.75%, 03/09/27			80		74,303
Discover Financial Services, 4.10%, 02/09/27			104		97,091
Ford Motor Credit Co. LLC:
3.20%, 01/15/21			200		193,951
5.75%, 02/01/21			430		438,556
3.22%, 01/09/22			1,070		1,004,801
2.98%, 08/03/22			235		217,191
General Motors Financial Co., Inc.:
3.10%, 01/15/19			41		40,998
4.20%, 03/01/21			92		91,951
3.20%, 07/06/21			760		742,373
4.20%, 11/06/21			1,500		1,499,325
3.15%, 06/30/22			630		601,749
4.00%, 01/15/25			301		281,560
4.00%, 10/06/26			45		40,402
HSBC USA, Inc., 2.35%, 03/05/20			655		648,387
Hyundai Capital Services, Inc., 3.00%, 08/29/22(b)			250		241,569
John Deere Capital Corp.:
2.80%, 03/04/21			370		367,880
3.40%, 09/11/25			370		367,443
Synchrony Financial:
2.60%, 01/15/19			94		93,968
2.70%, 02/03/20			48		47,185
Tarjeta Naranja SA, (Argentina Deposit Rates Badlar Private Banks ARS 30 to 35 Days + 3.50%), 52.29%, 04/11/22(a)(b)			108		43,201
Toyota Motor Credit Corp.:
2.10%, 01/17/19			750		749,645
2.75%, 05/17/21			750		745,772
3.05%, 01/11/28			115		110,965
Unifin Financiera SAB de CV SOFOM ENR, 7.25%, 09/27/23(b)			500		459,625
					11,169,839
Containers & Packaging — 0.0%
Reynolds Group Issuer, Inc., 5.75%, 10/15/20			237		236,838
Diversified Consumer Services — 0.1%
Boston University, Series CC, 4.06%, 10/01/48			82		82,251
George Washington University (The), Series 2018, 4.13%, 09/15/48			150		150,101
President & Fellows of Harvard College, 5.63%, 10/01/38			229		286,139

SCHEDULE OF INVESTMENTS 13

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Diversified Consumer Services (continued)
University of Notre Dame du Lac, Series 2017, 3.39%, 02/15/48	USD		85	$	80,327
University of Southern California, 3.03%, 10/01/39			75		68,011
Wesleyan University, 4.78%, 07/01/2116			79		80,786
					747,615
Diversified Financial Services — 0.3%
AXA Equitable Holdings, Inc.(b):
3.90%, 04/20/23			30		29,628
5.00%, 04/20/48			65		57,657
GE Capital International Funding Co. Unlimited Co., 4.42%, 11/15/35			400		335,027
ORIX Corp., 2.90%, 07/18/22			155		151,450
Shell International Finance BV:
2.38%, 08/21/22			370		360,717
2.25%, 01/06/23			430		413,540
4.13%, 05/11/35			86		85,351
3.63%, 08/21/42			44		39,886
Synchrony Bank, 3.65%, 05/24/21			485		474,547
Woodside Finance Ltd., 3.65%, 03/05/25(b)			16		15,197
					1,963,000
Diversified Telecommunication Services — 1.1%
AT&T, Inc.:
3.40%, 05/15/25			95		89,457
4.13%, 02/17/26			60		58,632
4.30%, 02/15/30			1,045		987,510
5.25%, 03/01/37			224		220,019
4.35%, 06/15/45			830		701,406
5.15%, 02/15/50			220		203,810
Axtel SAB de CV, 6.38%, 11/14/24(b)			200		189,250
Deutsche Telekom International Finance BV, 3.60%, 01/19/27(b)			225		212,211
Telefonica Emisiones SA, 4.67%, 03/06/38			280		253,286
TELUS Corp., 4.60%, 11/16/48			25		24,781
Verizon Communications, Inc.:
(LIBOR USD 3 Month + 0.55%), 3.20%, 05/22/20(a)			205		204,552
4.33%, 09/21/28			1,419		1,424,832
4.50%, 08/10/33			450		444,189
4.40%, 11/01/34			75		72,284
4.13%, 08/15/46			480		423,493
5.50%, 03/16/47			490		521,074
					6,030,786
Electric Utilities — 2.4%
AEP Texas, Inc., 3.95%, 06/01/28(b)			390		390,582
AEP Transmission Co. LLC, 4.25%, 09/15/48			170		171,293
Alabama Power Co.:
4.15%, 08/15/44			180		176,101
Series A, 4.30%, 07/15/48			155		155,250
Alliant Energy Finance LLC, 3.75%, 06/15/23(b)			65		65,401
Appalachian Power Co., 4.60%, 03/30/21			370		378,891
Baltimore Gas & Electric Co.:
2.80%, 08/15/22			370		362,657
3.50%, 08/15/46			77		68,332
3.75%, 08/15/47			85		77,943
4.25%, 09/15/48			185		183,716
CenterPoint Energy Houston Electric LLC:
3.55%, 08/01/42			20		18,194
3.95%, 03/01/48			140		136,023
Commonwealth Edison Co., 2.55%, 06/15/26			370		346,373
DTE Electric Co., Series A, 4.05%, 05/15/48			200		198,180
Duke Energy Carolinas LLC:
3.95%, 11/15/28			285		292,387
3.70%, 12/01/47			85		77,204

Security		Par (000)		Value
Electric Utilities (continued)
Duke Energy Corp.:
4.80%, 12/15/45	USD		220	$	224,071
3.75%, 09/01/46			240		207,493
Duke Energy Florida LLC:
3.80%, 07/15/28			100		100,999
4.20%, 07/15/48			90		89,612
Duke Energy Progress LLC:
3.00%, 09/15/21			75		75,107
3.25%, 08/15/25			135		131,367
3.70%, 09/01/28			345		348,502
4.20%, 08/15/45			85		84,344
Emera US Finance LP:
2.15%, 06/15/19			147		145,798
2.70%, 06/15/21			222		216,272
Entergy Corp., 2.95%, 09/01/26			210		193,741
Entergy Louisiana LLC:
5.40%, 11/01/24			65		71,449
4.20%, 09/01/48			185		182,590
Exelon Corp.:
2.45%, 04/15/21			38		37,165
4.95%, 06/15/35			48		48,331
4.45%, 04/15/46			335		315,105
FirstEnergy Transmission LLC, 4.35%, 01/15/25(b)			475		479,968
Florida Power & Light Co.:
3.95%, 03/01/48			250		244,161
4.13%, 06/01/48			150		150,384
Genneia SA, 8.75%, 01/20/22(b)			138		124,373
Indiana Michigan Power Co., Series J, 3.20%, 03/15/23			750		742,346
Kansas City Power & Light Co.:
3.15%, 03/15/23			750		741,919
4.20%, 03/15/48			235		227,919
MidAmerican Energy Co., 4.40%, 10/15/44			91		93,753
Mid-Atlantic Interstate Transmission LLC, 4.10%, 05/15/28(b)			70		69,501
Northern States Power Co.:
2.15%, 08/15/22			370		355,637
3.40%, 08/15/42			170		153,209
4.00%, 08/15/45			100		97,451
4.20%, 09/01/48			65		63,931
Ohio Power Co., Series G, 6.60%, 02/15/33			140		174,782
Oncor Electric Delivery Co. LLC:
3.70%, 11/15/28(b)			5		5,053
4.55%, 12/01/41			120		125,119
Pacific Gas & Electric Co., 6.05%, 03/01/34			100		92,656
PacifiCorp, 4.13%, 01/15/49			60		59,045
Public Service Co. of Colorado, 2.50%, 03/15/23			750		728,231
Public Service Electric & Gas Co., 3.65%, 09/01/28			210		212,620
Southern California Edison Co., 3.88%, 06/01/21			750		756,501
Southern Co. (The), 4.40%, 07/01/46			235		216,073
Southwestern Electric Power Co., Series M, 4.10%, 09/15/28			105		105,372
Stoneway Capital Corp., 10.00%, 03/01/27(b)			145		129,194
Tampa Electric Co.:
2.60%, 09/15/22			120		116,335
4.30%, 06/15/48			30		28,667
4.45%, 06/15/49			110		107,236
Trans-Allegheny Interstate Line Co., 3.85%, 06/01/25(b)			250		248,942
Virginia Electric & Power Co.:
Series C, 2.75%, 03/15/23			210		204,760
3.45%, 02/15/24			750		749,161
Series A, 3.50%, 03/15/27			291		286,584

14 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Electric Utilities (continued)
4.00%, 01/15/43	USD		170	$	160,552
4.45%, 02/15/44			44		44,245
Series B, 4.20%, 05/15/45			93		90,215
Series C, 4.00%, 11/15/46			110		104,044
					13,860,412
Electrical Equipment — 0.0%
Eaton Corp., 2.75%, 11/02/22			118		114,766
Electronic Equipment, Instruments & Components — 0.1%
Amphenol Corp., 3.20%, 04/01/24			114		110,539
Corning, Inc., 4.38%, 11/15/57			500		419,650
Tyco Electronics Group SA:
3.45%, 08/01/24			30		29,200
3.13%, 08/15/27			65		60,125
					619,514
Energy Equipment & Services — 0.2%
Baker Hughes a GE Co. LLC, 3.34%, 12/15/27			165		151,815
Halliburton Co.:
3.80%, 11/15/25			590		571,703
5.00%, 11/15/45			39		38,292
Odebrecht Drilling Norbe VIII/IX Ltd., 6.35%, 12/01/21(b)			41		39,283
Odebrecht Offshore Drilling Finance Ltd., 6.72%, 12/01/22(b)			27		24,799
Schlumberger Holdings Corp., 3.00%, 12/21/20(b)			164		162,579
					988,471
Entertainment — 0.3%
NBCUniversal Media LLC, 4.45%, 01/15/43			201		193,750
Viacom, Inc.:
4.50%, 03/01/21			69		70,219
6.88%, 04/30/36			90		96,585
Warner Media LLC:
2.10%, 06/01/19			630		626,389
3.55%, 06/01/24			370		356,923
3.60%, 07/15/25			50		47,356
4.65%, 06/01/44			55		48,135
4.85%, 07/15/45			246		220,729
					1,660,086
Equity Real Estate Investment Trusts (REITs) — 0.2%
American Tower Corp.:
3.30%, 02/15/21			81		80,535
3.45%, 09/15/21			77		76,986
3.00%, 06/15/23			650		625,380
4.40%, 02/15/26			16		15,988
CC Holdings GS V LLC, 3.85%, 04/15/23			100		99,029
Crown Castle International Corp.:
3.40%, 02/15/21			48		47,983
2.25%, 09/01/21			197		190,463
3.20%, 09/01/24			405		384,226
					1,520,590
Food & Staples Retailing — 0.3%
Kroger Co. (The), 2.65%, 10/15/26			270		240,424
Walgreen Co., 3.10%, 09/15/22			370		360,936
Walgreens Boots Alliance, Inc.:
3.80%, 11/18/24			100		98,479
3.45%, 06/01/26			685		644,508
4.80%, 11/18/44			8		7,284
Walmart, Inc.:
3.55%, 06/26/25			160		161,765
4.05%, 06/29/48			75		74,626
					1,588,022

Security		Par (000)		Value
Food Products — 0.5%
Campbell Soup Co.:
4.25%, 04/15/21	USD		750	$	761,226
8.88%, 05/01/21			100		110,538
Conagra Brands, Inc., 3.80%, 10/22/21			15		15,005
General Mills, Inc.:
3.20%, 04/16/21			105		104,424
4.00%, 04/17/25			113		111,208
3.20%, 02/10/27			370		340,187
Mondelez International, Inc., 4.00%, 02/01/24			370		375,357
Tyson Foods, Inc.:
3.90%, 09/28/23			30		29,958
3.95%, 08/15/24			185		183,927
3.55%, 06/02/27			170		158,431
5.10%, 09/28/48			25		23,990
Unilever Capital Corp., 4.25%, 02/10/21			750		770,357
					2,984,608
Gas Utilities — 0.1%
Atmos Energy Corp., 3.00%, 06/15/27			370		352,846
Health Care Equipment & Supplies — 0.8%
Abbott Laboratories:
3.88%, 09/15/25			25		25,315
3.75%, 11/30/26			500		493,798
Baxter International, Inc.:
1.70%, 08/15/21			20		19,188
2.60%, 08/15/26			370		337,751
Becton Dickinson and Co.:
2.13%, 06/06/19			600		596,505
2.68%, 12/15/19			114		112,916
2.89%, 06/06/22			425		411,621
3.30%, 03/01/23			170		167,019
4.69%, 12/15/44			30		28,079
Covidien International Finance SA, 2.95%, 06/15/23			105		102,805
Danaher Corp., 2.40%, 09/15/20			370		366,610
Edwards Lifesciences Corp., 4.30%, 06/15/28			55		55,607
Medtronic, Inc.:
4.13%, 03/15/21			750		765,742
3.50%, 03/15/25			250		249,012
4.38%, 03/15/35			625		639,900
					4,371,868
Health Care Providers & Services — 1.2%
Aetna, Inc.:
4.50%, 05/15/42			88		81,694
4.13%, 11/15/42			32		27,702
4.75%, 03/15/44			60		57,247
AHS Hospital Corp., 5.02%, 07/01/45			49		54,426
Anthem, Inc.:
3.70%, 08/15/21			161		162,082
3.50%, 08/15/24			75		73,566
4.10%, 03/01/28			45		44,106
Baylor Scott & White Holdings, 4.19%, 11/15/45			40		39,427
CHRISTUS Health, Series C, 4.34%, 07/01/28			113		115,313
Cigna Corp., 3.25%, 04/15/25			316		300,312
CVS Health Corp.:
3.70%, 03/09/23			655		647,988
4.00%, 12/05/23			235		235,671
4.10%, 03/25/25			330		326,707
4.78%, 03/25/38			85		81,452
5.13%, 07/20/45			890		866,334
5.05%, 03/25/48			260		252,879
Dignity Health, 2.64%, 11/01/19			149		148,130
Halfmoon Parent, Inc., 3.20%, 09/17/20(b)			890		886,342

SCHEDULE OF INVESTMENTS 15

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Health Care Providers & Services (continued)
Kaiser Foundation Hospitals:
3.50%, 04/01/22	USD		145	$	147,418
4.15%, 05/01/47			40		39,507
Laboratory Corp. of America Holdings, 2.63%, 02/01/20			63		62,562
Mercy Health, Series 2018, 4.30%, 07/01/28			79		80,588
Montefiore Obligated Group, Series 18-C, 5.25%, 11/01/48			127		122,958
Ochsner Clinic Foundation, 5.90%, 05/15/45			33		39,955
Partners Healthcare System, Inc., Series 2011, 3.44%, 07/01/21			20		20,203
PeaceHealth Obligated Group, Series 2018, 4.79%, 11/15/48			107		113,116
Providence St. Joseph Health Obligated Group, Series A, 3.93%, 10/01/48			97		92,396
Southern Baptist Hospital of Florida, Inc., 4.86%, 07/15/45			35		38,093
SSM Health Care Corp., Series 2018, 3.69%, 06/01/23			309		311,834
Sutter Health, Series 2018, 3.70%, 08/15/28			118		118,323
Toledo Hospital (The), 5.75%, 11/15/38			198		209,071
Trinity Health Corp., 4.13%, 12/01/45			87		82,662
UnitedHealth Group, Inc.:
3.75%, 07/15/25			220		222,699
3.70%, 12/15/25			245		247,445
3.10%, 03/15/26			90		86,857
4.63%, 07/15/35			16		16,960
4.20%, 01/15/47			123		122,216
3.75%, 10/15/47			110		100,668
4.45%, 12/15/48			80		82,347
					6,759,256
Hotels, Restaurants & Leisure — 0.2%
McDonald’s Corp.:
3.35%, 04/01/23			355		353,205
3.70%, 01/30/26			215		210,762
3.50%, 03/01/27			105		101,977
4.70%, 12/09/35			160		160,706
3.70%, 02/15/42			65		56,189
4.88%, 12/09/45			122		122,811
4.45%, 03/01/47			90		86,049
4.45%, 09/01/48			30		28,538
					1,120,237
Household Products — 0.1%
Procter & Gamble Co. (The), 2.30%, 02/06/22			750		738,344
Industrial Conglomerates — 0.0%
General Electric Co., 4.50%, 03/11/44			16		13,049
Honeywell International, Inc., 3.81%, 11/21/47			55		52,211
					65,260
Insurance — 0.4%
Ambac Assurance Corp., 5.10%, 06/07/20(b)			15		19,744
Ambac LSNI LLC, (LIBOR 3 Month + 5.00%), 7.80%, 02/12/23(a)(b)			100		100,429
Aon Corp., 4.50%, 12/15/28			380		384,677
Aon plc, 4.75%, 05/15/45			50		49,061
Hartford Financial Services Group, Inc. (The), 4.30%, 04/15/43			35		32,515
Marsh & McLennan Cos., Inc.:
4.05%, 10/15/23			105		106,535
3.50%, 06/03/24			316		311,271
3.50%, 03/10/25			135		132,618
3.75%, 03/14/26			5		4,941

Security		Par (000)		Value
Insurance (continued)
4.35%, 01/30/47	USD		28	$	26,112
4.20%, 03/01/48			150		136,237
MetLife, Inc., 4.13%, 08/13/42			65		60,860
Principal Financial Group, Inc., 4.30%, 11/15/46			40		36,803
Prudential Financial, Inc., 3.88%, 03/27/28			240		241,189
Travelers Cos., Inc. (The), 4.60%, 08/01/43			120		124,424
Trinity Acquisition plc, 4.40%, 03/15/26			80		79,497
Willis North America, Inc., 3.60%, 05/15/24			401		391,520
					2,238,433
Internet & Direct Marketing Retail — 0.0%
Alibaba Group Holding Ltd., 3.60%, 11/28/24			220		214,380
IT Services — 0.4%
DXC Technology Co., 2.88%, 03/27/20			104		103,101
Fidelity National Information Services, Inc.:
3.63%, 10/15/20			7		7,032
3.00%, 08/15/26			530		487,582
4.50%, 08/15/46			38		34,559
4.75%, 05/15/48			150		139,433
Fiserv, Inc.:
3.85%, 06/01/25			65		64,421
4.20%, 10/01/28			195		194,609
IBM Credit LLC, 3.45%, 11/30/20			210		211,086
International Business Machines Corp., 2.90%, 11/01/21			100		98,647
Total System Services, Inc.:
3.80%, 04/01/21			60		59,988
3.75%, 06/01/23			85		84,309
4.80%, 04/01/26			235		236,828
Visa, Inc.:
3.15%, 12/14/25			306		300,703
4.15%, 12/14/35			103		106,524
4.30%, 12/14/45			75		77,511
					2,206,333
Life Sciences Tools & Services — 0.2%
Thermo Fisher Scientific, Inc.:
4.50%, 03/01/21			90		91,984
3.15%, 01/15/23			50		49,000
3.00%, 04/15/23			220		214,035
3.65%, 12/15/25			370		364,562
2.95%, 09/19/26			238		219,638
					939,219
Media — 1.3%
CBS Corp., 2.30%, 08/15/19			96		95,288
Charter Communications Operating LLC:
3.58%, 07/23/20			685		684,262
4.46%, 07/23/22			40		40,384
4.50%, 02/01/24			380		379,423
4.91%, 07/23/25			329		327,144
6.38%, 10/23/35			759		779,073
5.75%, 04/01/48			225		210,694
Comcast Corp.:
3.30%, 10/01/20			485		486,855
3.45%, 10/01/21			45		45,456
3.13%, 07/15/22			750		748,017
3.38%, 02/15/25			45		44,074
3.15%, 03/01/26			350		334,885
4.15%, 10/15/28			190		192,932
4.25%, 10/15/30			155		156,753
4.40%, 08/15/35			96		92,870
3.20%, 07/15/36			581		499,780
3.40%, 07/15/46			455		377,002
4.95%, 10/15/58			105		106,749

16 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Media (continued)
Cox Communications, Inc., 3.15%, 08/15/24(b)	USD		550	$	529,102
Discovery Communications LLC:
4.38%, 06/15/21			210		213,702
3.80%, 03/13/24			151		147,305
3.95%, 06/15/25(b)			140		134,480
5.20%, 09/20/47			75		68,928
Interpublic Group of Cos., Inc. (The):
3.50%, 10/01/20			60		60,074
3.75%, 10/01/21			35		35,219
Time Warner Cable LLC:
5.00%, 02/01/20			58		58,814
4.13%, 02/15/21			160		160,655
4.00%, 09/01/21			22		21,866
5.50%, 09/01/41			63		57,411
4.50%, 09/15/42			9		7,235
					7,096,432
Metals & Mining — 0.2%
Anglo American Capital plc, 3.63%, 09/11/24(b)			270		255,217
Barrick Gold Corp.:
3.85%, 04/01/22			370		371,857
5.25%, 04/01/42			80		79,997
BHP Billiton Finance USA Ltd., 5.00%, 09/30/43			90		98,324
Largo Resources Ltd., 9.25%, 06/01/21(b)			11		11,564
Newmont Mining Corp., 3.50%, 03/15/22			250		247,391
Nucor Corp., 5.20%, 08/01/43			40		42,421
Steel Dynamics, Inc., 5.13%, 10/01/21			110		109,862
					1,216,633
Multi-Utilities — 0.1%
Ameren Illinois Co., 3.80%, 05/15/28			120		122,073
Consumers Energy Co.:
3.80%, 11/15/28			50		51,206
4.05%, 05/15/48			45		44,374
DTE Energy Co., Series D, 3.70%, 08/01/23			130		129,090
NiSource, Inc.:
2.65%, 11/17/22			30		28,722
3.49%, 05/15/27			210		200,391
WEC Energy Group, Inc., 3.38%, 06/15/21			45		44,971
					620,827
Oil, Gas & Consumable Fuels — 3.9%
Anadarko Petroleum Corp.:
0.00%, 10/10/36(g)			1,000		417,049
6.20%, 03/15/40			190		196,317
Andeavor Logistics LP:
5.50%, 10/15/19			245		247,063
6.38%, 05/01/24			370		382,025
5.25%, 01/15/25			40		40,719
5.20%, 12/01/47			170		153,048
Apache Corp.:
3.25%, 04/15/22			586		573,941
2.63%, 01/15/23			104		98,239
5.10%, 09/01/40			80		72,459
4.75%, 04/15/43			225		192,996
BP Capital Markets America, Inc., 3.79%, 02/06/24			180		181,942
BP Capital Markets plc, 2.32%, 02/13/20			46		45,607
Buckeye Partners LP, 4.88%, 02/01/21			390		394,333
Cimarex Energy Co.:
4.38%, 06/01/24			300		298,330
3.90%, 05/15/27			200		185,588
Concho Resources, Inc.:
4.38%, 01/15/25			500		493,852
3.75%, 10/01/27			330		310,650

Security		Par (000)		Value
Oil, Gas & Consumable Fuels (continued)
Continental Resources, Inc.:
5.00%, 09/15/22	USD		572	$	567,941
4.50%, 04/15/23			613		603,301
3.80%, 06/01/24			185		175,134
Devon Energy Corp.:
4.00%, 07/15/21			100		100,098
5.85%, 12/15/25			200		212,127
Enbridge, Inc.:
2.90%, 07/15/22			205		198,391
3.70%, 07/15/27			165		156,279
(LIBOR USD 3 Month + 3.42%), 5.50%, 07/15/77(a)			170		143,940
Energy Transfer LP:
4.25%, 03/15/23			540		519,750
5.88%, 01/15/24			327		332,722
Energy Transfer Operating LP:
4.90%, 02/01/24			40		40,483
6.50%, 02/01/42			340		339,329
Energy Transfer Partners LP:
5.88%, 03/01/22			405		421,392
5.00%, 10/01/22			70		71,438
4.50%, 11/01/23			1,110		1,110,360
Enterprise Products Operating LLC:
4.45%, 02/15/43			177		160,619
5.10%, 02/15/45			248		248,900
4.80%, 02/01/49			40		38,858
EOG Resources, Inc.:
2.63%, 03/15/23			370		355,458
4.15%, 01/15/26			85		87,242
Exxon Mobil Corp., 1.82%, 03/15/19			529		528,025
Hess Corp., 5.80%, 04/01/47			85		76,292
Kinder Morgan Energy Partners LP:
5.80%, 03/15/35			55		56,228
6.38%, 03/01/41			32		33,962
5.00%, 03/01/43			220		199,631
Kinder Morgan, Inc.:
3.05%, 12/01/19			320		318,155
3.15%, 01/15/23			490		476,151
5.55%, 06/01/45			20		19,807
5.05%, 02/15/46			400		365,255
Marathon Oil Corp., 2.70%, 06/01/20			420		413,794
Marathon Petroleum Corp.:
5.13%, 03/01/21			515		529,866
4.75%, 12/15/23(b)			730		749,049
5.85%, 12/15/45			65		64,175
MPLX LP:
4.88%, 12/01/24			520		529,324
4.88%, 06/01/25			90		90,824
4.13%, 03/01/27			210		199,944
5.20%, 03/01/47			68		62,594
Northwest Pipeline LLC, 4.00%, 04/01/27			335		325,609
Petrobras Global Finance BV:
8.75%, 05/23/26			102		114,495
7.38%, 01/17/27			193		198,307
6.00%, 01/27/28			102		96,135
Pioneer Natural Resources Co.:
3.95%, 07/15/22			40		40,119
4.45%, 01/15/26			505		509,873
Plains All American Pipeline LP, 3.65%, 06/01/22			30		29,452
Resolute Energy Corp., 8.50%, 05/01/20			245		241,325
Sabine Pass Liquefaction LLC:
5.63%, 04/15/23			320		337,146
5.75%, 05/15/24			460		479,944

SCHEDULE OF INVESTMENTS 17

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Oil, Gas & Consumable Fuels (continued)
5.63%, 03/01/25	USD		645	$	669,806
5.88%, 06/30/26			498		527,285
Spectra Energy Partners LP, 4.50%, 03/15/45			230		207,972
Sunoco Logistics Partners Operations LP, 5.40%, 10/01/47			275		249,207
Tecpetrol SA, 4.88%, 12/12/22(b)			37		33,948
Texas Eastern Transmission LP(b):
3.50%, 01/15/28			515		486,225
4.15%, 01/15/48			75		66,752
TransCanada PipeLines Ltd.:
4.88%, 01/15/26			485		501,988
4.25%, 05/15/28			115		113,889
6.10%, 06/01/40			155		172,998
Transcontinental Gas Pipe Line Co. LLC:
7.85%, 02/01/26			202		244,195
4.00%, 03/15/28			200		195,568
4.60%, 03/15/48			40		37,401
Valero Energy Corp.:
3.65%, 03/15/25			186		177,499
3.40%, 09/15/26			119		109,163
Williams Cos., Inc. (The):
4.13%, 11/15/20			230		231,826
7.88%, 09/01/21			105		114,666
4.00%, 11/15/21			80		80,311
3.70%, 01/15/23			130		126,816
4.55%, 06/24/24			70		70,680
4.00%, 09/15/25			225		217,252
Series A, 7.50%, 01/15/31			85		101,466
5.75%, 06/24/44			170		170,855
					22,161,169
Paper & Forest Products — 0.1%
Georgia-Pacific LLC:
5.40%, 11/01/20(b)			145		150,245
3.73%, 07/15/23(b)			126		127,199
7.38%, 12/01/25			97		116,968
Suzano Austria GmbH, 6.00%, 01/15/29(b)			345		351,469
					745,881
Pharmaceuticals — 1.4%
Allergan Finance LLC, 3.25%, 10/01/22			235		229,764
Allergan Funding SCS:
3.45%, 03/15/22			1,285		1,264,495
3.80%, 03/15/25			1,090		1,064,083
Bayer US Finance II LLC, 3.60%, 07/15/42(b)			107		78,944
Bayer US Finance LLC, 3.38%, 10/08/24(b)			200		188,599
GlaxoSmithKline Capital plc, 2.85%, 05/08/22			450		444,543
GlaxoSmithKline Capital, Inc., 3.88%, 05/15/28			100		101,622
Johnson & Johnson:
2.63%, 01/15/25			225		216,706
2.45%, 03/01/26			45		42,265
3.63%, 03/03/37			35		33,667
Merck & Co., Inc., 3.60%, 09/15/42			25		23,614
Pfizer, Inc.:
2.10%, 05/15/19			370		369,031
3.40%, 05/15/24			370		372,601
Sanofi, 4.00%, 03/29/21			750		767,052
Shire Acquisitions Investments Ireland DAC:
1.90%, 09/23/19			740		729,630
2.40%, 09/23/21			110		106,368
3.20%, 09/23/26			499		451,556
Takeda Pharmaceutical Co. Ltd.(b):
3.80%, 11/26/20			210		211,267
4.40%, 11/26/23			465		470,093
5.00%, 11/26/28			400		408,544

Security		Par (000)		Value
Pharmaceuticals (continued)
Wyeth LLC:
6.45%, 02/01/24	USD		45	$	51,527
5.95%, 04/01/37			225		269,835
					7,895,806
Road & Rail — 0.6%
Burlington Northern Santa Fe LLC:
3.00%, 03/15/23			1,120		1,111,957
6.15%, 05/01/37			82		99,889
4.15%, 04/01/45			20		19,390
4.70%, 09/01/45			35		36,597
4.13%, 06/15/47			120		116,133
4.15%, 12/15/48			50		48,693
CSX Corp.:
4.25%, 03/15/29			215		218,290
4.75%, 11/15/48			110		111,194
4.25%, 11/01/66			59		51,007
Norfolk Southern Corp.:
3.85%, 01/15/24			170		172,080
3.65%, 08/01/25			175		175,913
2.90%, 06/15/26			180		170,446
4.05%, 08/15/52			112		100,026
Penske Truck Leasing Co. LP, 3.40%, 11/15/26(b)			273		255,136
Ryder System, Inc., 3.75%, 06/09/23			15		14,908
Union Pacific Corp.:
3.75%, 07/15/25			260		262,467
2.75%, 03/01/26			70		65,287
3.95%, 09/10/28			130		129,823
3.38%, 02/01/35			87		76,139
3.60%, 09/15/37			230		205,557
3.80%, 10/01/51			35		29,686
3.88%, 02/01/55			134		114,415
					3,585,033
Semiconductors & Semiconductor Equipment — 1.1%
Analog Devices, Inc.:
2.50%, 12/05/21			215		209,872
3.90%, 12/15/25			20		19,627
3.50%, 12/05/26			570		545,550
5.30%, 12/15/45			65		68,376
Applied Materials, Inc.:
3.90%, 10/01/25			470		472,965
5.10%, 10/01/35			130		138,348
4.35%, 04/01/47			139		135,899
Broadcom Corp.:
2.38%, 01/15/20			38		37,525
3.00%, 01/15/22			1,165		1,120,384
2.65%, 01/15/23			35		32,573
3.63%, 01/15/24			70		66,227
Lam Research Corp.:
2.75%, 03/15/20			121		119,863
2.80%, 06/15/21			105		103,831
NVIDIA Corp., 3.20%, 09/16/26			250		237,112
NXP BV(b):
4.13%, 06/01/21			450		444,375
3.88%, 09/01/22			820		787,200
4.88%, 03/01/24			130		130,571
QUALCOMM, Inc.:
2.60%, 01/30/23			145		139,537
2.90%, 05/20/24			145		138,068
3.45%, 05/20/25			120		115,456
3.25%, 05/20/27			245		227,899
4.80%, 05/20/45			118		112,395
4.30%, 05/20/47			275		244,242

18 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Semiconductors & Semiconductor Equipment (continued)
Texas Instruments, Inc.:
2.75%, 03/12/21	USD		370	$	367,764
2.25%, 05/01/23			90		86,488
4.15%, 05/15/48			70		69,848
					6,171,995
Software — 0.8%
Autodesk, Inc., 3.50%, 06/15/27			425		397,247
Microsoft Corp.:
2.40%, 08/08/26			370		344,968
3.50%, 02/12/35			231		220,468
3.45%, 08/08/36			705		664,011
3.70%, 08/08/46			725		694,538
Oracle Corp.:
2.50%, 10/15/22			35		34,064
2.40%, 09/15/23			115		110,358
3.40%, 07/08/24			215		214,573
2.65%, 07/15/26			575		532,888
3.25%, 11/15/27			46		44,366
3.90%, 05/15/35			181		173,257
4.00%, 07/15/46			183		170,755
4.00%, 11/15/47			65		60,560
VMware, Inc., 2.30%, 08/21/20			610		597,469
					4,259,522
Specialty Retail — 0.1%
Home Depot, Inc. (The):
3.90%, 12/06/28			110		112,668
5.88%, 12/16/36			65		78,094
3.50%, 09/15/56			90		75,675
Lowe’s Cos., Inc.:
3.38%, 09/15/25			125		118,619
4.38%, 09/15/45			150		134,696
3.70%, 04/15/46			55		44,855
					564,607
Technology Hardware, Storage & Peripherals — 0.3%
Apple, Inc.:
3.00%, 02/09/24			276		272,569
2.85%, 05/11/24			550		536,603
4.50%, 02/23/36			345		362,805
3.85%, 05/04/43			265		250,949
3.45%, 02/09/45			39		34,533
4.65%, 02/23/46			224		237,113
Dell International LLC, 8.35%, 07/15/46(b)			37		40,063
Seagate HDD Cayman, 4.25%, 03/01/22			75		71,676
					1,806,311
Thrifts & Mortgage Finance — 0.1%
BPCE SA, 3.00%, 05/22/22(b)			330		318,760
Washington Mutual Escrow Bonds(c):
0.00%, 11/06/09			300		—
0.00%, 09/19/17(g)			250		—
0.00%, 09/29/17			500		—
					318,760
Tobacco — 0.4%
Altria Group, Inc.:
2.85%, 08/09/22			85		81,598
4.00%, 01/31/24			380		373,443
BAT Capital Corp.:
3.22%, 08/15/24			915		842,801
4.54%, 08/15/47			212		168,763
Reynolds American, Inc., 4.45%, 06/12/25			590		568,899
					2,035,504

Security		Par (000)		Value
Trading Companies & Distributors — 0.1%
Air Lease Corp., 2.63%, 07/01/22	USD		175	$	165,883
GATX Corp.:
2.60%, 03/30/20			59		58,427
3.85%, 03/30/27			86		81,713
					306,023
Wireless Telecommunication Services — 0.5%
Rogers Communications, Inc., 5.00%, 03/15/44			22		22,878
Sprint Spectrum Co. LLC(b):
3.36%, 09/20/21			544		537,015
4.74%, 03/20/25			1,085		1,064,656
Vodafone Group plc:
3.75%, 01/16/24			518		510,557
4.13%, 05/30/25			145		143,244
5.25%, 05/30/48			540		506,972
					2,785,322
Total Corporate Bonds — 35.3% (Cost: $203,462,175)					199,657,934
Floating Rate Loan Interests — 0.7%(h)
Banks — 0.1%
Goldman Sachs Bank USA, Term Loan, (LIBOR USD 6 Month + 0.00%),0.00% - 4.44%, 09/17/19(c)			427		426,783
Construction Materials — 0.0%
Foundation Building Materials, Inc., 1st Lien Term Loan B, (LIBOR USD 1 Month + 3.25%), 5.71%, 08/13/25(c)			135		126,225
Diversified Financial Services — 0.3%(c)
Goldman Sachs Lending Partners LLC, Term Loan, (LIBOR USD 1 Month + 1.90%),0.00% - 4.24%, 09/17/19			175		174,921
Lstar 18-1 Securities Financing, Term Loan, (LIBOR USD 1 Month + 2.00%), 4.35%, 04/01/21			1,311		1,306,393
					1,481,314
Gas Utilities — 0.0%
Midcoast Operating LP, Term Loan, (LIBOR USD 3 Month + 5.50%), 8.30%, 06/30/25			130		125,583
Machinery — 0.0%
Gates Global LLC, Term Loan B, (LIBOR USD 1 Month + 2.75%), 5.27%, 04/01/24			13		12,721
Thrifts & Mortgage Finance — 0.3%(c)
Caliber Home Loans, Inc., Term Loan, (LIBOR USD 1 Month + 3.25%),5.26% - 5.51%, 04/24/21			533		532,139
Roundpoint Mortgage Servicing Corp., Term Loan, 08/08/20(i)			1,025		1,024,993
					1,557,132
Total Floating Rate Loan Interests — 0.7% (Cost: $3,743,398)					3,729,758
Foreign Agency Obligations — 0.1%
Argentina — 0.0%
YPF SA:
8.75%, 04/04/24			33		31,020
8.75%, 04/04/24(b)			64		60,160
					91,180
France — 0.0%
Electricite de France SA, 4.50%, 09/21/28(b)			200		193,847

SCHEDULE OF INVESTMENTS 19

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Panama — 0.1%
Aeropuerto Internacional de Tocumen SA, 5.63%, 05/18/36(b)	USD		200	$	202,000
Total Foreign Agency Obligations — 0.1% (Cost: $507,041)					487,027
Foreign Government Obligations — 2.3%
Argentina — 0.3%
Bonos de la Nacion Argentina con Ajuste por CER, 4.00%, 03/06/20	ARS		1,907		43,959
Republic of Argentina:
8.00%, 10/08/20	USD		147		137,480
6.88%, 04/22/21			155		140,081
5.63%, 01/26/22			713		601,594
4.63%, 01/11/23			74		58,367
8.75%, 05/07/24			145		131,882
5.88%, 01/11/28			115		82,369
7.63%, 04/22/46			192		138,720
6.88%, 01/11/48			206		142,913
7.13%, 06/28/2117			121		86,515
					1,563,880
Colombia — 0.3%
Republic of Colombia:
7.50%, 08/26/26	COP		1,446,000		468,672
3.88%, 04/25/27	USD		1,213		1,157,505
7.00%, 06/30/32	COP		1,044,000		316,519
					1,942,696
Dominican Republic — 0.0%
Dominican Republic, 5.95%, 01/25/27	USD		108		107,271
Ecuador — 0.0%
Republic of Ecuador, 7.88%, 01/23/28			200		162,250
Egypt — 0.1%
Arab Republic of Egypt:
5.75%, 04/29/20			145		146,269
5.58%, 02/21/23(b)			200		189,000
					335,269
Hungary — 0.1%
Republic of Hungary, 5.38%, 03/25/24			280		298,476
Indonesia — 0.1%
Republic of Indonesia:
4.10%, 04/24/28			429		415,594
7.50%, 05/15/38	IDR		3,583,000		226,865
					642,459
Mexico — 0.9%
United Mexican States:
4.15%, 03/28/27	USD		3,543		3,414,566
7.50%, 06/03/27	MXN		30		142,100
3.75%, 01/11/28	USD		280		261,590
7.75%, 11/23/34	MXN		50		229,834
10.00%, 11/20/36			30		167,835
8.50%, 11/18/38			70		342,422
7.75%, 11/13/42			70		313,988
					4,872,335
Nigeria — 0.0%
Federal Republic of Nigeria, 9.25%, 01/21/49(b)	USD		200		194,250
Oman — 0.0%
Oman Sovereign Sukuk SAOC, 5.93%, 10/31/25(b)			245		233,056

Security		Par (000)		Value
Panama — 0.1%
Republic of Panama, 3.75%, 03/16/25	USD		530	$	525,892
Peru — 0.1%
Republic of Peru:
7.35%, 07/21/25			217		263,330
4.13%, 08/25/27			184		189,980
					453,310
Philippines — 0.1%
Republic of the Philippines, 3.00%, 02/01/28			908		859,195
Russia — 0.0%
Russian Federation, 4.25%, 06/23/27			200		189,750
South Africa — 0.1%
Republic of South Africa:
4.85%, 09/27/27			239		222,569
8.75%, 02/28/48	ZAR		2,465		152,372
					374,941
Uruguay — 0.1%
Oriental Republic of Uruguay, 4.38%, 10/27/27	USD		516		516,791
Total Foreign Government Obligations — 2.3% (Cost: $13,607,944)					13,271,821
Municipal Bonds — 6.5%
Adams & Weld Counties School District No. 27J, Series 2017, GO, 5.00%, 12/01/42			60		68,414
Alamo Community College District;
Series 2017, GO, 5.00%, 08/15/35			40		46,363
Series 2017, GO, 5.00%, 08/15/36			50		57,665
Series 2017, GO, 5.00%, 08/15/37			60		68,952
Series 2017, GO, 5.00%, 08/15/38			50		57,215
American Municipal Power, Inc. (Combined Hydroelectric Project);
Series 2010B, RB, 7.83%, 02/15/41			50		73,274
Series 2009B, RB, 6.45%, 02/15/44			30		38,519
Arizona Health Facilities Authority (Banner Health), Series 2007B, RB, VRDN, 2.42%, 01/01/37(a)(j)			35		33,328
Arizona State University, Series 2017B, RB, 5.00%, 07/01/43			40		45,414
Bay Area Toll Authority;
Series 2010S-1, RB, 6.92%, 04/01/40			90		120,154
Series 2010S-1, RB, 7.04%, 04/01/50			395		561,212
Berks County Industrial Development Authority (Tower Health Project);
Series 2017, RB, 5.00%, 11/01/47			60		64,886
Series 2017, RB, 5.00%, 11/01/50			60		64,515
Buckeye Tobacco Settlement Financing Authority, Series 2007A-2, RB, 5.88%, 06/01/47			180		170,773
Buena Park School District, Series 2018, GO, 5.00%, 08/01/47			30		34,118
California Health Facilities Financing Authority (Cedars- Sinai Medical Center);
Series 2016A, RB, 5.00%, 08/15/33			40		46,414
Series 2017A, RB, 5.00%, 08/15/47			60		65,847
California Infrastructure & Economic Development Bank;
Series 2017, RB, 5.00%, 05/15/47			20		22,737
Series 2017, RB, 5.00%, 05/15/52			20		22,616
California Municipal Finance Authority (LINXS APM Project), Series 2018A, RB, 5.00%, 12/31/47			50		54,287
California State Public Works Board (Various Capital Projects), Series 2009G, Sub-Series G-2, RB, 8.36%, 10/01/34			35		50,854

20 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Municipal Bonds (continued)
Canaveral Port Authority;
Series 2018A, RB, 5.00%, 06/01/45	USD		80	$	86,612
Series 2018B, RB, 5.00%, 06/01/48			80		88,066
Central Puget Sound Regional Transit Authority, Series 2015S-1, RB, 5.00%, 11/01/50			60		66,964
Central Texas Regional Mobility Authority;
Series 2015A, RB, 5.00%, 01/01/45			30		32,269
Series 2016, RB, 5.00%, 01/01/46			30		32,384
Chesapeake Bay Bridge & Tunnel District (Parallel Thimble Shoal Tunnel Project);
Series 2016, RB, 5.00%, 07/01/41			30		33,786
Series 2016, RB, 5.00%, 07/01/51			25		27,008
Chicago O’Hare International Airport, Series 2018C, RB, 4.47%, 01/01/49			360		365,224
City & County of Denver;
Series 2016A, RB, 5.00%, 08/01/44			100		112,025
Series 2018A-1, RB, 5.00%, 08/01/48			70		78,068
City & County of Denver Airport System;
Series 2017A, RB, 5.00%, 11/15/29			40		46,525
Series 2017A, RB, 5.00%, 11/15/30			30		34,665
City of Atlanta;
Series 2015, RB, 5.00%, 11/01/40			30		33,342
Series 2018A, RB, 5.00%, 11/01/41			90		102,740
Series 2018B, RB, 5.00%, 11/01/43			70		79,794
Series 2018B, RB, 5.00%, 11/01/47			60		68,197
City of Aurora;
Series 2016, RB, 5.00%, 08/01/41			120		135,377
Series 2016, RB, 5.00%, 08/01/46			130		146,471
City of Austin Water & Wastewater System, Series 2014, RB, 5.00%, 11/15/43			60		66,093
City of Cartersville, Series 2018, RB, 5.00%, 06/01/48			60		68,453
City of Colorado Springs Utilities System,Series 2017A-2, RB, 5.00%, 11/15/42			30		34,288
City of Columbia Waterworks & Sewer System;
Series 2018, RB, 5.00%, 02/01/42			40		45,870
Series 2018, RB, 5.00%, 02/01/48			50		57,083
City of Long Beach, Series 2017C, RB, 5.00%, 05/15/47			70		79,457
City of New York;
Series 2018F, Sub-Series F-1, GO, 5.00%, 04/01/40			90		102,717
Series 2018F, Sub-Series F-1, GO, 5.00%, 04/01/43			375		427,020
Series 2018F, Sub-Series F-1, GO, 5.00%, 04/01/45			660		749,866
City of Portland (Portland Building Project);
Series 2018B, GO, 5.00%, 06/15/37			50		58,805
Series 2018B, GO, 5.00%, 06/15/40			60		69,917
City of Riverside, Series 2010A, RB, 7.61%, 10/01/40			50		73,155
City of San Antonio Electric & Gas Systems;
Series 2010A, RB, 5.81%, 02/01/41			160		202,882
Series 2013, RB, 5.00%, 02/01/48(k)			45		48,537
Clark County School District;
Series 2018A, GO, 5.00%, 06/15/30			20		23,288
Series 2018A, GO, 5.00%, 06/15/31			70		81,133
Series 2018A, GO, 5.00%, 06/15/33			70		80,512
Series 2018A, GO, 5.00%, 06/15/34			70		79,836
Colorado Health Facilities Authority (Catholic Health Initiatives), Series 2011A, RB, 5.25%, 02/01/31			25		26,263
Commonwealth Financing Authority;
Series 2018A, RB, 3.86%, 06/01/38			80		78,894
Series 2016A, RB, 4.14%, 06/01/38			60		60,632

Security		Par (000)		Value
Municipal Bonds (continued)
Commonwealth of Massachusetts;
Series 2017F, GO, 5.00%, 11/01/42	USD		70	$	79,678
Series 2018A, GO, 5.00%, 01/01/45			80		90,910
Series 2017F, GO, 5.00%, 11/01/45			60		68,048
Commonwealth of Massachusetts Transportation Fund (Rail Enhancement & Accelerated Bridge Programs), Series 2018A, RB, 5.00%, 06/01/48			120		136,907
Commonwealth of Puerto Rico, Series 2014A, GO, 8.00%, 07/01/35(l)(m)			410		220,375
Connecticut Housing Finance Authority, Series 2015A, RB, 3.75%, 11/15/40			1,350		1,336,027
Connecticut State Health & Educational Facilities Authority (Hartford Healthcare Corp.);
Series 2015F, RB, 5.00%, 07/01/45			60		63,754
Series 2015L, RB, 5.00%, 07/01/45			90		98,547
Contra Costa Community College District, Series 2010B, GO, 6.50%, 08/01/34			10		12,705
County of Anne Arundel, Series 2018, GO, 5.00%, 10/01/47			60		68,770
County of Clark;
Series 2018A, GO, 5.00%, 06/01/43			110		125,785
Series 2018A, GO, 5.00%, 05/01/48			270		306,399
County of Franklin;
Series 2018, RB, 5.00%, 06/01/43			50		57,569
Series 2018, RB, 5.00%, 06/01/48			100		114,700
County of King;
Series 2017, RB, 5.00%, 07/01/42			40		45,606
Series 2015A, RB, 5.00%, 07/01/47			60		66,193
County of Miami-Dade;
Series 2016B, RB, 2.50%, 10/01/24			80		77,389
Series 2017D, RB, 3.35%, 10/01/29			20		19,102
Series 2017D, RB, 3.45%, 10/01/30			35		33,452
Series 2017D, RB, 3.50%, 10/01/31			30		28,570
Series 2018C, RB, 4.06%, 10/01/31			55		56,413
Series 2016A, GO, 5.00%, 07/01/35			20		22,782
Series 2015A, RB, 5.00%, 10/01/38			10		10,912
Series 2017B, RB, 5.00%, 10/01/40			60		66,488
Dallas Area Rapid Transit;
Series 2016A, RB, 5.00%, 12/01/41			60		67,042
Series 2016A, RB, 5.00%, 12/01/46			90		100,266
Denton Independent School District, Series 2018, GO, 5.00%, 08/15/43			90		102,185
District of Columbia, Series 2017D, GO, 5.00%, 06/01/42			75		85,062
District of Columbia Water & Sewer Authority, Series 2018B, RB, 5.00%, 10/01/49			50		56,765
DuBois Hospital Authority (Penn Highlands Healthcare), Series 2018, RB, 5.00%, 07/15/43			60		65,894
Dutchess County Local Development Corp. (Health Quest Systems, Inc. Project), Series 2016B, RB, 5.00%, 07/01/46			100		109,262
Florida Department of Management Services;
Series 2018A, 5.00%, 11/01/27			80		96,598
Series 2018A, 5.00%, 11/01/28			80		97,641
Series 2018A, 5.00%, 11/01/29			40		49,348
Florida State Board of Administration Finance Corp. (State Board of Administration Finance Corp.), Series 2016A, RB, 2.64%, 07/01/21			150		149,388
Grand Parkway Transportation Corp. (Grand Parkway Project), Series 2018A, RB, 5.00%, 10/01/43			170		192,567
Grant County Public Utility District No. 2 (The Priest Rapids Project), Series 2015M, RB, 4.58%, 01/01/40			15		15,772

SCHEDULE OF INVESTMENTS 21

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Municipal Bonds (continued)
Great Lakes Water Authority Water Supply System, Series 2016C, RB, 5.25%, 07/01/33	USD		20	$	23,189
Health & Educational Facilities Authority of the State of Missouri (Saint Luke’s Health System, Inc.);
Series 2016, RB, 5.00%, 11/15/29			25		28,388
Series 2016A, RB, 3.65%, 01/15/46			40		38,537
Series 2016B, RB, 3.09%, 09/15/51			160		136,715
Series 2017A, RB, 3.65%, 08/15/57			85		80,248
Houston Independent School District, Series 2018, GO, 5.00%, 07/15/36			60		70,210
Idaho Health Facilities Authority (Trinity Health Credit Group), Series 2017A, RB, 5.00%, 12/01/47			50		55,657
Indiana Finance Authority (CWA Authority Project);
Series 2018A, RB, 5.00%, 02/01/35			70		82,636
Series 2015A, RB, 5.00%, 10/01/45			130		141,756
Series 2016A, RB, 5.00%, 10/01/46			420		464,793
Indiana Housing & Community Development Authority, Series 2018A, RB, 3.80%, 07/01/38			30		30,114
JobsOhio Beverage System, Series 2013B, RB, 3.99%, 01/01/29			95		97,892
Kentucky Economic Development Finance Authority (Owensboro Health, Inc.), Series 2015A, RB, 5.25%, 06/01/50			30		31,410
Kentucky Turnpike Authority (Revitalization Projects), Series 2010A, RB, 5.00%, 07/01/20			60		62,701
Las Vegas Convention & Visitors Authority, Series 2018B, RB, 5.00%, 07/01/43			80		89,486
Las Vegas Valley Water District, Series 2016A, GO, 5.00%, 06/01/46			30		33,432
Lexington County Health Services District, Inc., Series 2016, RB, 5.00%, 11/01/41			30		32,143
Los Angeles Community College District, Series 2010E, GO, 6.60%, 08/01/42			215		295,414
Los Angeles County Metropolitan Transportation Authority, Series 2017A, RB, 5.00%, 07/01/42			90		103,336
Los Angeles Department of Water & Power System (Water System Revenue Bonds);
Series 2010D, RB, 6.57%, 07/01/45			45		62,398
Series 2010A, RB, 6.60%, 07/01/50			105		148,191
Los Angeles Unified School District, Series 2010I, GO, 6.76%, 07/01/34			375		482,591
Louisiana Public Facilities Authority, Series 2018E, RB, 5.00%, 07/01/48			50		54,473
Maryland Community Development Administration, Series 2018A, RB, 3.85%, 09/01/33			60		61,061
Maryland Stadium Authority (Baltimore City Public Schools Construction & Revitalization Program), Series 2016, RB, 5.00%, 05/01/41			50		55,731
Massachusetts Bay Transportation Authority;
Series 2017A, Sub-Series A-1, RB, 5.00%, 07/01/39			30		34,084
Series 2017A, Sub-Series A-1, RB, 5.00%, 07/01/40			30		34,012
Series 2017A, Sub-Series A-1, RB, 5.00%, 07/01/41			40		45,286
Series 2017A, Sub-Series A-1, RB, 5.00%, 07/01/42			40		45,255
Series 2017A, Sub-Series A-2, RB, 5.00%, 07/01/43			30		33,893
Massachusetts Development Finance Agency (Partners Healthcare System Issue);
Series 2018J-2, RB, 5.00%, 07/01/43			80		87,325
Series 2017L, RB, 5.00%, 07/01/44			100		108,491

Security		Par (000)		Value
Municipal Bonds (continued)
Series 2017, RB, 5.00%, 09/01/45	USD		30	$	33,574
Series 2016Q, RB, 5.00%, 07/01/47			50		54,975
Series 2018J-2, RB, 5.00%, 07/01/48			150		163,111
Series 2018J-2, RB, 5.00%, 07/01/53			80		86,137
Massachusetts Housing Finance Agency;
Series 2014B, RB, 4.50%, 12/01/39			25		25,844
Series 2014B, RB, 4.60%, 12/01/44			40		41,312
Series 2015A, RB, 4.50%, 12/01/48			40		41,319
Massachusetts Port Authority, Series 2016B, RB, 5.00%, 07/01/43			50		55,114
Massachusetts School Building Authority, Series 2018A, RB, 5.25%, 02/15/48			85		98,462
Massachusetts Water Resources Authority, Series 2016C, RB, 5.00%, 08/01/40			30		33,779
Mesquite Independent School District, Series 2017B, GO, 5.00%, 08/15/42			60		67,204
Metropolitan Atlanta Rapid Transit Authority;
Series 2015A, RB, 5.00%, 07/01/41			60		66,697
Series 2015A, RB, 5.00%, 07/01/42			60		66,659
Series 2015B, RB, 5.00%, 07/01/45			50		56,132
Metropolitan Government Nashville & Davidson County Health & Educational Facilities Board (Vanderbilt University Medical Center);
Series 2016A, RB, 5.00%, 07/01/40			40		43,159
Series 2016A, RB, 5.00%, 07/01/46			60		64,455
Metropolitan St. Louis Sewer District;
Series 2017A, RB, 5.00%, 05/01/42			80		91,141
Series 2017A, RB, 5.00%, 05/01/47			80		90,513
Metropolitan Transportation Authority;
Series 2010A, RB, 6.67%, 11/15/39			55		71,630
Series 2009C, RB, 7.34%, 11/15/39			520		738,156
Series 2010C-1, RB, 6.69%, 11/15/40			30		38,681
Series 2017A, RB, 5.00%, 11/15/42			60		67,918
Series 2015A, Sub-Series 2015A-1, RB, 5.00%, 11/15/45			40		43,325
Series 2017A, Sub-Series A-1, RB, 5.25%, 11/15/57			80		88,667
Metropolitan Washington Airports Authority;
Series 2016A, RB, 5.00%, 10/01/32			90		102,020
Series 2018A, RB, 5.00%, 10/01/43			90		100,509
Metropolitan Washington Airports Authority Dulles Toll Road (Dulles Metrorail and Capital Improvement Project), Series 2009D, RB, 7.46%, 10/01/46			30		43,092
Miami-Dade County Educational Facilities Authority (University of Miami Issue);
Series 2018A, RB, 5.00%, 04/01/48			60		66,752
Series 2015B, RB, 5.07%, 04/01/50			30		33,765
Series 2018A, RB, 5.00%, 04/01/53			80		88,207
Michigan Finance Authority (Henry Ford Health System);
Series 2016, RB, 5.00%, 11/15/41			30		32,321
Series 2017A-MI, RB, 5.00%, 12/01/47			190		202,834
Michigan State Housing Development Authority;
Series 2018B, RB, 3.55%, 10/01/33			30		30,044
Series 2018A, RB, 4.00%, 10/01/43			30		29,812
Series 2018A, RB, 4.05%, 10/01/48			20		19,862
Series 2018A, RB, 4.15%, 10/01/53			80		79,996
Mississippi Hospital Equipment & Facilities Authority (Baptist Memorial Health Corp.), Series 2016A, RB, 5.00%, 09/01/46			60		63,841
Municipal Electric Authority of Georgia (Plant Vogtle Units 3&4 Units Project), Series 2010A, RB, 6.64%, 04/01/57			40		42,290

22 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Municipal Bonds (continued)
New Hope Cultural Education Facilities Finance Corp. (Children’s Health System of Texas Project), Series 2017A, RB, 5.00%, 08/15/47	USD		60	$	66,737
New Jersey Transportation Trust Fund Authority;
Series 2010C, RB, 6.10%, 12/15/28			135		139,572
Series 2016A, Sub-Series A-1, RB, 5.00%, 06/15/29			30		33,302
Series 2018A, RB, 5.00%, 12/15/32			535		586,376
New Jersey Turnpike Authority, Series 2009F, RB, 7.41%, 01/01/40			565		796,085
New Orleans Aviation Board (North Terminal Project), Series 2015B, RB, 5.00%, 01/01/40			50		53,744
New York City Housing Development Corp.;
Series 2018C-1-A, RB, 3.70%, 11/01/38			40		39,776
Series 2018C-1-B, RB, 3.85%, 11/01/43			110		109,821
Series 2018C-1-A, RB, 4.00%, 11/01/53			120		119,324
New York City Transitional Finance Authority Building Aid, Series 2015S-2, RB, 5.00%, 07/15/40			30		33,291
New York City Transitional Finance Authority Future Tax Secured;
Series 2018, Sub-Series C-4, RB, 3.55%, 05/01/25			170		171,807
Series 2017F, Sub-Series F-2, RB, 3.05%, 05/01/27			160		153,954
Series 2017B, RB, 5.00%, 08/01/31			20		23,088
Series 2016E, Sub-Series E-1, RB, 5.00%, 02/01/35			40		45,257
Series 2017A, Sub-Series A-1, RB, 5.00%, 05/01/36			40		45,254
New York City Water & Sewer System;
Series 2018FF, RB, 5.00%, 06/15/39			120		138,020
Series 2018FF, RB, 5.00%, 06/15/40			90		103,199
Series 2010AA, RB, 5.75%, 06/15/41			35		43,771
Series 2010EE, RB, 6.01%, 06/15/42			25		32,268
Series 2011EE, RB, 5.38%, 06/15/43			200		212,172
Series 2011AA, RB, 5.44%, 06/15/43			60		72,716
Series 2011EE, RB, 5.50%, 06/15/43			240		255,698
Series 2011CC, RB, 5.88%, 06/15/44			40		51,290
Series 2017DD, RB, 5.00%, 06/15/47			70		78,573
New York Convention Center Development Corp.;
Series 2015, RB, 5.00%, 11/15/40			30		33,441
Series 2016A, RB, 5.00%, 11/15/46			90		100,786
New York State Dormitory Authority;
Series 2016A, RB, 5.00%, 02/15/31			30		34,743
Series 2015B, RB, 5.00%, 03/15/32			40		45,708
Series 2017B, RB, 5.00%, 02/15/36			60		68,952
Series 2017B, RB, 5.00%, 02/15/37			30		34,354
Series 2017B, RB, 5.00%, 02/15/38			30		34,232
Series 2018B, RB, 5.00%, 10/01/38			220		257,803
Series 2017B, RB, 5.00%, 02/15/39			30		34,134
Series 2018A, RB, 5.00%, 03/15/39			90		103,282
Series 2017B, RB, 5.00%, 02/15/40			30		34,086
Series 2010H, RB, 5.39%, 03/15/40			60		70,281
Series 2017B, RB, 5.00%, 02/15/41			60		68,027
Series 2018A, RB, 5.00%, 03/15/41			60		68,545
Series 2017B, RB, 5.00%, 02/15/42			80		90,638
Series 2018A, RB, 5.00%, 03/15/42			60		68,494
Series 2017B, RB, 5.00%, 02/15/43			40		45,287
Series 2017A, RB, 5.00%, 03/15/43			60		67,640
Series 2018A, RB, 5.00%, 03/15/43			60		68,443
Series 2018E, RB, 5.00%, 03/15/48			310		354,256
Series 2018A, RB, 5.00%, 10/01/48			40		52,638

Security		Par (000)		Value
Municipal Bonds (continued)
New York State Urban Development Corp.;
Series 2017B, RB, 2.86%, 03/15/24	USD		190	$	188,461
Series 2017B, RB, 3.12%, 03/15/25			100		99,181
Series 2017D, RB, 3.32%, 03/15/29			140		136,657
New York Transportation Development Corp. (LaGuardia Airport Terminal B Redevelopment Project);
Series 2016A, RB, 5.00%, 07/01/46			30		31,542
Series 2016A, RB, 5.25%, 01/01/50			340		361,294
North Carolina Turnpike Authority, Series 2018, RB, 5.00%, 01/01/35			60		68,678
Ohio Turnpike & Infrastructure Commission, Series 2013A, RB, 5.00%, 02/15/48			60		64,300
Omaha Public Power District, Series 2017A, RB, 5.00%, 02/01/42			70		79,642
Orange County Local Transportation Authority, Series 2010A, RB, 6.91%, 02/15/41			75		99,274
Oregon School Boards Association;
Series 2002B, GO, 5.48%, 06/30/22			170		185,560
Series 2002B, GO, 5.49%, 06/30/23			145		161,505
Series 2005A, GO, 4.76%, 06/30/28			160		172,693
Pennsylvania Economic Development Financing Authority (Pennsylvania Rapid Bridge Replacement Project (The)), Series 2015, RB, 5.00%, 06/30/23			310		336,688
Pennsylvania State University;
Series 2018, RB, 5.00%, 09/01/43			40		46,049
Series 2018, RB, 5.00%, 09/01/48			50		57,337
Pennsylvania Turnpike Commission;
Series 2016A-1, RB, 5.00%, 12/01/46			50		54,347
Series 2018B, RB, 5.00%, 12/01/48			90		99,553
Port Authority of New York & New Jersey;
Series 165, RB, 5.65%, 11/01/40			95		115,699
Series 181, RB, 4.96%, 08/01/46			210		241,091
Series 180-1, RB, 5.00%, 11/15/47			30		33,283
Series 174, RB, 4.46%, 10/01/62			105		106,828
Series 192, RB, 4.81%, 10/15/65			30		32,576
Port of Seattle, Series 2018A, RB, 5.00%, 05/01/43			30		32,885
Public Power Generation Agency, Series 2016A, RB, 5.00%, 01/01/35			40		44,482
Putnam County Development Authority, Series 2018A, RB, 5.00%, 03/15/42			130		143,654
Royal Oak Hospital Finance Authority (William Beaumont Hospital Obligated Group), Series 2014D, RB, 5.00%, 09/01/39			40		43,201
Sacramento County Sanitation Districts Financing Authority, Series 2035B, RB, VRDN, 2.36%, 12/01/35(a)(j)			60		58,275
Salt Lake City Corp.;
Series 2017A, RB, 5.00%, 07/01/47			105		115,596
Series 2017B, RB, 5.00%, 07/01/47			50		56,016
Salt River Project Agricultural Improvement & Power District;
Series 2017A, RB, 5.00%, 01/01/36			60		70,379
Series 2015A, RB, 5.00%, 12/01/45			220		244,264
San Antonio Water System, Series 2015B, RB, 5.00%, 05/15/39			150		167,356
San Diego County Regional Airport Authority, Series 2017A, RB, 5.00%, 07/01/47			50		56,331
San Diego Public Facilities Financing Authority, Series 2016A, RB, 5.00%, 05/15/39			50		57,347
San Diego Unified School District, Series 2017I, GO, 5.00%, 07/01/41			80		92,178

SCHEDULE OF INVESTMENTS 23

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Municipal Bonds (continued)
San Francisco City & County Airport Comm-San Francisco International Airport;
Series 2016B, RB, 5.00%, 05/01/46	USD		110	$	120,652
Series 2017A, RB, 5.00%, 05/01/47			70		77,419
San Jose Redevelopment Agency Successor Agency, Series 2017A-T, 2.96%, 08/01/24			250		247,400
South Carolina Ports Authority, Series 2018, RB, 5.00%, 07/01/55			70		75,715
South Carolina Public Service Authority;
Series 2016D, RB, 2.39%, 12/01/23			292		277,088
Series 2012E, RB, 3.72%, 12/01/23			80		79,053
Series 2014A, RB, 5.00%, 12/01/49			60		62,506
Series 2010C, RB, 6.45%, 01/01/50			136		172,373
Series 2015A, RB, 5.00%, 12/01/50			60		62,843
State of Alabama, Series 2018A, GO, 5.00%, 11/01/38			80		93,677
State of California;
Series 2017, GO, 2.25%, 10/01/23			195		189,803
Series 2009, GO, 7.50%, 04/01/34			60		81,764
Series 2018, GO, 4.60%, 04/01/38			815		840,550
Series 2009, GO, 7.55%, 04/01/39			85		121,767
Series 2009, GO, 7.30%, 10/01/39			85		116,681
Series 2009, GO, 7.35%, 11/01/39			620		855,904
State of Colorado, Series 2018N, 5.00%, 03/15/38			1,030		1,180,236
State of Connecticut, Series 2017A, GO, 3.31%, 01/15/26			155		151,945
State of Illinois;
Series 2018A, GO, 5.00%, 05/01/20			50		51,336
Series 2017D, GO, 5.00%, 11/01/22			60		63,283
Series 2017D, GO, 5.00%, 11/01/24			150		160,050
Series 2017A, GO, 5.00%, 12/01/24			30		32,020
Series 2017D, GO, 5.00%, 11/01/25			400		427,616
Series 2003, GO, 5.10%, 06/01/33			580		552,989
State of Minnesota;
Series 2018A, GO, 5.00%, 08/01/31			30		36,267
Series 2018A, GO, 5.00%, 08/01/32			30		36,097
Series 2018A, GO, 5.00%, 08/01/33			30		35,957
Series 2018A, GO, 5.00%, 08/01/34			20		23,859
Series 2018A, GO, 5.00%, 08/01/35			60		71,298
Series 2018A, GO, 5.00%, 08/01/36			170		201,069
State of Mississippi, Series 2018A, GO, 5.00%, 11/01/35			40		45,934
State of Ohio;
Series 2017A, GO, 5.00%, 03/15/32			90		100,858
Series 2017A, GO, 5.00%, 05/01/34			40		45,342
Series 2017A, GO, 5.00%, 05/01/35			40		45,242
Series 2017A, GO, 5.00%, 05/01/36			90		101,516
Series 2017A, GO, 5.00%, 05/01/37			70		78,742
State of Texas;
Series 2016, GO, 5.00%, 04/01/40			40		45,172
Series 2016, GO, 5.00%, 04/01/43			70		78,616
State of Washington;
Series R-2015C, GO, 5.00%, 07/01/30			150		170,399
Series R-2017A, GO, 5.00%, 08/01/30			30		35,012
Series 2016A-1, GO, 5.00%, 08/01/40			100		111,666
Series 2018B, GO, 5.00%, 08/01/40			40		45,588
Series 2017D, GO, 5.00%, 02/01/41			60		67,861
Series 2018B, GO, 5.00%, 08/01/41			40		45,524
Series 2018B, GO, 5.00%, 08/01/42			40		45,491
State of West Virginia;
Series 2018B, GO, 5.00%, 06/01/40			80		91,760
Series 2018B, GO, 5.00%, 12/01/40			80		91,760
Series 2018B, GO, 5.00%, 12/01/41			80		91,620

Security		Par (000)		Value
Municipal Bonds (continued)
State of Wisconsin;
Series 2017C, RB, 3.15%, 05/01/27	USD		115	$	113,384
Series 2017B, GO, 5.00%, 05/01/32			40		45,692
Series 2017B, GO, 5.00%, 05/01/33			30		34,194
Series 2017-3, GO, 5.00%, 11/01/33			50		58,564
Series 2017B, GO, 5.00%, 05/01/34			40		45,542
Series 2017B, GO, 5.00%, 05/01/36			50		56,678
Series 2017B, GO, 5.00%, 05/01/38			50		56,152
Sumter Landing Community Development District, Series 2016, RB, 4.17%, 10/01/47			100		99,660
Tennessee Housing Development Agency (Residential Finance Program);
Series 2018-3, RB, 3.75%, 07/01/38			30		29,999
Series 2018-3, RB, 3.85%, 07/01/43			20		19,906
Series 2018-3, RB, 3.95%, 01/01/49			10		10,000
Texas A&M University;
Series 2017B, RB, 2.76%, 05/15/26			175		169,344
Series 2017B, RB, 2.84%, 05/15/27			75		72,154
Texas Municipal Gas Acquisition & Supply Corp., Series 2008D, RB, 6.25%, 12/15/26			30		34,279
Texas Water Development Board;
Series 2018B, RB, 5.00%, 10/15/38			90		104,828
Series 2018A, RB, 5.00%, 10/15/43			90		102,996
Series 2017A, RB, 5.00%, 10/15/47			30		34,056
Series 2018B, RB, 5.00%, 04/15/49			580		664,976
Tobacco Settlement Finance Authority, Series 2007A, RB, 7.47%, 06/01/47			125		122,466
TSASC, Inc., Series 2017A, RB, 5.00%, 06/01/41			60		61,909
University of California;
Series 2017AX, RB, 3.06%, 07/01/25			100		98,693
Series 2013AJ, RB, 4.60%, 05/15/31			65		69,787
Series 2012AD, RB, 4.86%, 05/15/2112			20		20,994
University of California Medical Centre;
Series 2016L, RB, 5.00%, 05/15/47			50		55,620
Series 2009F, RB, 6.58%, 05/15/49			75		99,203
University of Delaware, Series 2018, RB, 4.22%, 11/01/58			75		76,788
University of Houston;
Series 2017A, RB, 5.00%, 02/15/33			30		34,190
Series 2017A, RB, 5.00%, 02/15/34			30		34,065
Series 2017A, RB, 5.00%, 02/15/35			70		79,197
Series 2017A, RB, 5.00%, 02/15/36			90		101,455
University of Oregon, Series 2016A, RB, 5.00%, 04/01/46			40		44,758
Upper Arlington City School District, Series 2018A, GO, 5.00%, 12/01/48			80		91,019
Virginia Small Business Financing Authority (Transform 66 P3 Project);
Series 2017, RB, 5.00%, 12/31/52			90		95,826
Series 2017, RB, 5.00%, 12/31/56			80		84,883
Washington Metropolitan Area Transit Authority, Series 2017B, RB, 5.00%, 07/01/36			40		46,024
Washington State Convention Center Public Facilities District, Series 2018, RB, 5.00%, 07/01/58			230		254,336
Weld County School District No. 4, Series 2016, GO, 5.25%, 12/01/41			50		57,679
West Virginia Hospital Finance Authority (West Virginia United Health System Obligated Group);
Series 2016A, RB, 5.00%, 06/01/19			25		25,321
Series 2016A, RB, 5.00%, 06/01/20			30		31,190
Series 2016A, RB, 5.00%, 06/01/21			30		31,947
Series 2016A, RB, 5.00%, 06/01/22			30		32,684
Series 2016A, RB, 5.00%, 06/01/23			25		27,771
Series 2016A, RB, 5.00%, 06/01/24			25		28,239

24 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Municipal Bonds (continued)
Wisconsin Health & Educational Facilities Authority (Thedacare, Inc.), Series 2015, RB, 5.00%, 12/15/44	USD		30	$	32,016
Total Municipal Bonds — 6.5% (Cost: $37,058,586)					36,983,654
Non-Agency Mortgage-Backed Securities — 4.4%
Collateralized Mortgage Obligations — 1.4%
Ajax Mortgage Loan Trust(c):
Series 2018-B, Class A, 3.75%, 02/26/57			392		377,453
Series 2018-B, Class B, 0.00%, 02/26/57(b)			127		35,601
Series 2018-D, Class A, 3.75%, 08/25/58(b)(d)			403		395,244
Alternative Loan Trust:
Series 2005-22T1, Class A1, 2.86%, 06/25/35(d)			166		146,985
Series 2005-72, Class A3, 3.11%, 01/25/36(d)			84		71,125
Series 2005-76, Class 2A1, 3.16%, 02/25/36(d)			28		25,778
Series 2006-11CB, Class 3A1, 6.50%, 05/25/36			69		53,483
Series 2006-15CB, Class A1, 6.50%, 06/25/36			11		8,491
Series 2006-OA6, Class 1A2, 2.72%, 07/25/46(d)			46		43,270
Series 2006-OA8, Class 1A1, 2.70%, 07/25/46(d)			15		14,800
Series 2006-OA14, Class 1A1, 3.89%, 11/25/46(d)			102		88,238
Series 2006-OA16, Class A4C, 2.85%, 10/25/46(d)			153		99,564
Series 2006-OC7, Class 2A3, 2.76%, 07/25/46(d)			87		67,620
Series 2006-OC10, Class 2A3, 2.74%, 11/25/36(d)			59		45,861
Series 2007-3T1, Class 1A1, 6.00%, 04/25/37			15		10,786
Series 2007-OA3, Class 1A1, 2.65%, 04/25/47(d)			26		24,995
American Home Mortgage Assets Trust(d):
Series 2006-3, Class 2A11, 3.10%, 10/25/46			71		61,736
Series 2006-4, Class 1A12, 2.72%, 10/25/46			86		61,478
Series 2006-5, Class A1, 3.08%, 11/25/46			132		65,666
Series 2007-1, Class A1, 2.86%, 02/25/47			70		42,638
APS Resecuritization Trust(b)(d):
Series 2016-1, Class 1MZ, 4.71%, 07/31/57			236		71,111
Series 2016-3, Class 3A, 5.36%, 09/27/46(c)			230		229,916
Series 2016-3, Class 4A, 5.11%, 04/27/47(c)			55		53,038
Banc of America Funding Trust, Series 2016-R2, Class 1A1, 4.70%, 05/01/33(b)(c)(d)			94		96,739
Bear Stearns Mortgage Funding Trust(d):
Series 2006-SL1, Class A1, 2.79%, 08/25/36			67		66,817
Series 2007-AR2, Class A1, 2.68%, 03/25/37			176		159,379
Series 2007-AR3, Class 1A1, 2.65%, 03/25/37			19		18,440
Series 2007-AR4, Class 1A1, 2.71%, 09/25/47			77		71,405
Series 2007-AR4, Class 2A1, 2.72%, 06/25/37			25		23,853
Chase Mortgage Finance Trust, Series 2007-S6, Class 1A1, 6.00%, 12/25/37			999		738,094
CHL Mortgage Pass-Through Trust:
Series 2006-OA4, Class A1, 3.12%, 04/25/46(d)			163		82,367
Series 2006-OA5, Class 3A1, 2.71%, 04/25/46(d)			29		26,463
Series 2007-15, Class 2A2, 6.50%, 09/25/37			263		193,477
Citicorp Mortgage Securities Trust:
Series 2007-9, Class 1A1, 6.25%, 12/25/37			79		68,856
Series 2008-2, Class 1A1, 6.50%, 06/25/38			108		91,428
Credit Suisse Mortgage Capital Certificates, Series 2009-12R, Class 3A1, 6.50%, 10/27/37(b)			281		160,787
CSFB Mortgage-Backed Pass-Through Certificates, Series 2005-10, Class 10A1, 3.86%, 11/25/35(d)			48		17,039
CSMC Trust(b)(d):
Series 2009-5R, Class 4A4, 3.80%, 06/25/36			76		70,131
Series 2014-11R, Class 16A1, 4.05%, 09/27/47			55		55,149
Series 2015-6R, Class 5A1, 2.68%, 03/27/36			7		7,054
Series 2015-6R, Class 5A2, 2.68%, 03/27/36			60		46,499

Security		Par (000)		Value
Collateralized Mortgage Obligations (continued)
Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-OA4, Class A2A, 2.68%, 08/25/47(d)	USD		185	$	126,310
Deutsche Alt-B Securities Mortgage Loan Trust, Series 2006-AB3, Class A8, 6.36%, 07/25/36(d)			15		12,869
GreenPoint Mortgage Funding Trust, Series 2006-AR2, Class 4A1, 4.16%, 03/25/36(d)			28		26,247
GSMPS Mortgage Loan Trust(b)(d):
Series 2005-RP1, Class 1AF, 2.86%, 01/25/35			53		49,522
Series 2005-RP2, Class 1AF, 2.86%, 03/25/35			64		59,750
Series 2006-RP1, Class 1AF1, 2.86%, 01/25/36			48		42,343
HarborView Mortgage Loan Trust(d):
Series 2007-3, Class 2A1B, 2.70%, 05/19/47			193		154,560
Series 2007-4, Class 2A2, 2.72%, 07/19/47			191		167,935
IndyMac INDX Mortgage Loan Trust(d):
Series 2007-AR19, Class 3A1, 3.74%, 09/25/37			93		64,062
Series 2007-FLX5, Class 2A2, 2.75%, 08/25/37			176		154,303
Lehman XS Trust, Series 2007-20N, Class A1, 3.66%, 12/25/37(d)			36		32,852
LSTAR Securities Investment Ltd., Series 2018-1, Class A, 3.89%, 02/01/23(b)(d)			150		151,512
MASTR Resecuritization Trust, Series 2008-3, Class A1, 2.63%, 08/25/37(b)(c)(d)			31		24,439
MCM Capital Partners I LP, 4.00%, 06/01/57(c)			233		228,369
MCM Trust(b):
Series 2018-NPL2, Class A, 4.00%, 10/25/28			1,100		1,085,700
Series 2018-NPL2, Class B, 0.00%, 10/25/28			1,000		284,200
Merrill Lynch Alternative Note Asset Trust,Series 2007-OAR2, Class A2, 2.72%, 04/25/37(d)			224		188,632
Mortgage Loan Resecuritization Trust,Series 2009-RS1, Class A85, 2.69%, 04/16/36(b)(d)			440		384,454
Nomura Asset Acceptance Corp. Alternative Loan Trust, Series 2007-2, Class A4, 2.93%, 06/25/37(d)			19		16,270
RALI Trust, Series 2007-QH9, Class A1, 3.41%, 11/25/37(d)			43		37,832
Reperforming Loan REMIC Trust, Series 2005-R3, Class AF, 2.91%, 09/25/35(b)(d)			7		6,491
Seasoned Credit Risk Transfer Trust(d):
Series 2017-3, Class M2, 4.75%, 07/25/56			100		96,504
Series 2018-1, Class BX, 6.88%, 05/25/57(c)			20		10,078
Series 2018-1, Class M, 4.75%, 05/25/57			20		18,858
Series 2018-3, Class M, 4.75%, 08/25/57(b)			90		87,066
STACR Trust, Series 2018-DNA2, Class M2, 4.66%, 12/25/30(b)(d)			110		106,789
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-3, Class 4A, 3.79%, 04/25/36(d)			80		66,077
Structured Asset Mortgage Investments II Trust(d):
Series 2006-AR4, Class 3A1, 2.70%, 06/25/36(c)			105		90,280
Series 2006-AR5, Class 2A1, 2.72%, 05/25/46			65		54,427
WaMu Mortgage Pass-Through Certificates Trust, Series 2005-AR2, Class B1, 3.04%, 01/25/45(d)			103		69,584
Washington Mutual Mortgage Pass-Through Certificates Trust:
Series 2006-4, Class 1A1, 6.00%, 04/25/36			97		86,562
Series 2006-4, Class 3A1, 6.50%, 05/25/36(e)			49		42,015
					8,115,746
Commercial Mortgage-Backed Securities — 2.7%
280 Park Avenue Mortgage Trust, Series 2017-280P, Class E, 4.57%, 09/15/34(b)(d)			150		146,980
AOA Mortgage Trust, Series 2015-1177, Class C, 3.01%, 12/13/29(b)(d)			100		97,630
Ashford Hospitality Trust, Series 2018-ASHF, Class D, 4.56%, 04/15/35(b)(d)			70		68,951

SCHEDULE OF INVESTMENTS 25

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
BAMLL Commercial Mortgage Securities Trust(b)(d):
Series 2015-200P, Class F, 3.60%, 04/14/33	USD		300	$	283,664
Series 2016-ISQ, Class E, 3.61%, 08/14/34			200		175,509
Series 2017-SCH, Class CL, 3.96%, 11/15/32			100		100,000
Series 2017-SCH, Class DL, 4.46%, 11/15/32			100		100,000
Series 2018-DSNY, Class D, 4.16%, 09/15/34			650		648,318
Banc of America Commercial Mortgage Trust, Series 2007-1, Class AMFX, 5.48%, 01/15/49(d)			10		10,181
Bancorp Commercial Mortgage Trust (The), Series 2018-CR3, Class A, 3.31%, 01/15/33(b)(d)			88		86,940
Bayview Commercial Asset Trust(b)(d):
Series 2005-2A, Class A1, 2.82%, 08/25/35			59		55,655
Series 2005-4A, Class A1, 2.81%, 01/25/36			54		51,454
Series 2005-4A, Class M1, 2.96%, 01/25/36			40		37,755
Series 2006-1A, Class A2, 2.87%, 04/25/36			14		13,361
Series 2006-3A, Class A1, 2.76%, 10/25/36			26		24,168
Series 2006-3A, Class A2, 2.81%, 10/25/36			21		20,191
Series 2007-2A, Class A1, 2.78%, 07/25/37			37		35,083
Series 2007-4A, Class A1, 2.96%, 09/25/37			199		186,817
BBCMS Mortgage Trust, Series 2018-TALL, Class A, 3.18%, 03/15/37(b)(d)			35		34,384
BBCMS Trust, Series 2015-SRCH, Class A1, 3.31%, 08/10/35(b)			100		98,253
Bear Stearns Commercial Mortgage Securities Trust, Series 2007-T26, Class AM, 5.46%, 01/12/45(d)			37		36,713
Benchmark Mortgage Trust:
Series 2018-B5, Class A4, 4.21%, 07/15/51			50		51,929
Series 2018-B7, Class A4, 4.51%, 11/15/51			217		230,772
BHMS, Series 2018-ATLS, Class A, 3.71%, 07/15/35(b)(d)			140		139,308
BSPRT Issuer Ltd., Series 2017-FL2, Class A, 3.28%, 10/15/34(b)(c)(d)			32		32,186
BWAY Mortgage Trust(b):
Series 2013-1515, Class A2, 3.45%, 03/10/33			150		149,342
Series 2013-1515, Class C, 3.45%, 03/10/33			105		102,450
BX Commercial Mortgage Trust, Series 2018-IND, Class H, 5.46%, 11/15/35(b)(d)			529		523,590
BXP Trust(b)(d):
Series 2017-CC, Class D, 3.55%, 08/13/37			60		55,955
Series 2017-CC, Class E, 3.55%, 08/13/37			110		98,606
Series 2017-GM, Class E, 3.42%, 06/13/39			50		45,597
CCRESG Commercial Mortgage Trust,Series 2016-HEAT, Class D, 5.49%, 04/10/29(b)(d)			20		20,434
CCUBS Commercial Mortgage Trust, Series 2017-C1, Class A4, 3.54%, 11/15/50			32		31,688
CD Mortgage Trust:
Series 2006-CD3, Class AM, 5.65%, 10/15/48			26		27,155
Series 2017-CD3, Class A4, 3.63%, 02/10/50			30		30,043
Series 2018-CD7, Class A4, 4.28%, 08/15/51			70		73,043
CFCRE Commercial Mortgage Trust, Series 2016-C3, Class A3, 3.87%, 01/10/48			10		10,125
CGBAM Commercial Mortgage Trust,Series 2015-SMRT, Class E, 3.79%, 04/10/28(b)(d)			100		99,479
CGDBB Commercial Mortgage Trust(b)(d):
Series 2017-BIOC, Class A, 3.25%, 07/15/32			190		188,224
Series 2017-BIOC, Class D, 4.06%, 07/15/32			110		108,218
Series 2017-BIOC, Class E, 4.61%, 07/15/32			170		167,332
Citigroup Commercial Mortgage Trust(d):
Series 2016-C1, Class C, 4.95%, 05/10/49			40		40,274
Series 2016-GC37, Class C, 4.92%, 04/10/49			20		20,522
Series 2016-P3, Class C, 4.83%, 04/15/49			10		10,197
CLNS Trust, Series 2017-IKPR, Class E, 5.90%, 06/11/32(b)(d)			125		124,010

Security		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Commercial Mortgage Pass-Through Certificates, Series 2014-CR14, Class A4, 4.24%, 02/10/47(d)	USD		30	$	31,225
Commercial Mortgage Trust:
Series 2005-C6, Class F, 5.68%, 06/10/44(b)(d)			97		98,580
Series 2014-CR16, Class A4, 4.05%, 04/10/47			177		182,643
Series 2014-CR17, Class A5, 3.98%, 05/10/47			59		60,724
Series 2014-CR19, Class A5, 3.80%, 08/10/47			50		50,991
Series 2014-LC15, Class A4, 4.01%, 04/10/47			50		51,491
Series 2014-TWC, Class E, 5.64%, 02/13/32(b)(d)			50		49,483
Series 2014-UBS4, Class C, 4.62%, 08/10/47(d)			50		49,578
Series 2015-CR23, Class CMD, 3.68%, 05/10/48(b)(d)			350		345,744
Series 2015-CR25, Class A4, 3.76%, 08/10/48			100		101,376
Series 2015-LC19, Class A4, 3.18%, 02/10/48			59		58,188
Series 2015-LC19, Class C, 4.26%, 02/10/48(d)			20		19,705
Series 2015-LC19, Class D, 2.87%, 02/10/48(b)			20		16,571
Series 2015-LC21, Class C, 4.30%, 07/10/48(d)			150		148,789
Series 2016-667M, Class D, 3.18%, 10/10/36(b)(d)			100		90,613
Core Industrial Trust(b):
Series 2015-TEXW, Class A, 3.08%, 02/10/34			99		98,832
Series 2015-WEST, Class A, 3.29%, 02/10/37			540		533,589
Credit Suisse First Boston Mortgage Securities Corp., Series 2004-C4, Class F, 5.23%, 10/15/39(b)(d)			330		330,432
CSMC Trust(b):
Series 2015-GLPB, Class A, 3.64%, 11/15/34			100		101,882
Series 2017-PFHP, Class A, 3.41%, 12/15/20(d)			60		59,754
Series 2017-TIME, Class A, 3.65%, 11/13/39			100		99,881
CSWF, Series 2018-TOP, Class A, 3.46%, 08/15/35(b)(d)			100		98,846
DBUBS Mortgage Trust(b):
Series 2017-BRBK, Class A, 3.45%, 10/10/34			140		139,036
Series 2017-BRBK, Class E, 3.53%, 10/10/34(d)			310		291,513
Series 2017-BRBK, Class F, 3.53%, 10/10/34(c)(d)			80		71,010
Eleven Madison Trust Mortgage Trust,Series 2015-11MD, Class A, 3.55%, 09/10/35(b)(d)			100		100,546
Exantas Capital Corp. Ltd., Series 2018-RSO6, Class A, 3.29%, 06/15/35(b)(d)			160		158,031
GAHR Commercial Mortgage Trust, Series 2015-NRF, Class EFX, 3.38%, 12/15/34(b)(d)			210		206,117
GPMT Ltd., Series 2018-FL1, Class A, 3.38%, 11/21/35(b)(d)			100		99,115
GRACE Mortgage Trust, Series 2014-GRCE, Class F, 3.59%, 06/10/28(b)(d)			330		324,902
GS Mortgage Securities Corp. II(b):
Series 2005-ROCK, Class A, 5.37%, 05/03/32			100		111,266
Series 2013-KING, Class D, 3.44%, 12/10/27(d)			124		123,036
Series 2013-KING, Class E, 3.44%, 12/10/27(d)			460		454,968
GS Mortgage Securities Corp. Trust(b):
Series 2017-500K, Class D, 3.76%, 07/15/32(d)			10		9,890
Series 2017-500K, Class E, 3.96%, 07/15/32(d)			20		19,689
Series 2017-500K, Class F, 4.26%, 07/15/32(d)			110		108,299
Series 2017-GPTX, Class A, 2.86%, 05/10/34			100		99,157
Series 2018-CHLL, Class E, 4.81%, 02/15/37(d)			100		99,975
GS Mortgage Securities Trust:
Series 2014-GC22, Class D, 4.69%, 06/10/47(b)(d)			33		29,490
Series 2015-GC32, Class C, 4.41%, 07/10/48(d)			30		29,653
Series 2015-GC32, Class D, 3.35%, 07/10/48			40		33,961
Series 2017-GS7, Class D, 3.00%, 08/10/50(b)			20		16,744
Hilton Orlando Trust, Series 2018-ORL, Class E, 5.11%, 12/15/34(b)(d)			100		98,643
HMH Trust, Series 2017-NSS, Class A, 3.06%, 07/05/31(b)			110		107,742

26 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
IMT Trust(b):
Series 2017-APTS, Class AFX, 3.48%, 06/15/34	USD		100	$	100,528
Series 2017-APTS, Class EFX, 3.50%, 06/15/34(d)			100		93,004
JPMBB Commercial Mortgage Securities Trust:
Series 2014-C21, Class A5, 3.77%, 08/15/47			50		50,773
Series 2015-C33, Class D1, 4.12%, 12/15/48(b)(d)			100		93,621
JPMCC Commercial Mortgage Securities Trust:
Series 2017-JP5, Class D, 4.65%, 03/15/50(b)(d)			100		94,578
Series 2017-JP7, Class B, 4.05%, 09/15/50			10		9,823
JPMDB Commercial Mortgage Securities Trust, Series 2017-C5, Class D, 4.57%, 03/15/50(b)(d)			121		110,675
JPMorgan Chase Commercial Mortgage Securities Trust:
Series 2012-CBX, Class A4FL, 3.76%, 06/15/45(b)(d)			100		102,063
Series 2014-C20, Class A5, 3.80%, 07/15/47			70		71,237
Series 2015-JP1, Class D, 4.24%, 01/15/49(d)			50		46,615
Series 2015-JP1, Class E, 4.24%, 01/15/49(b)(d)			100		90,505
Series 2015-UES, Class D, 3.62%, 09/05/32(b)(d)			130		128,629
Series 2015-UES, Class E, 3.62%, 09/05/32(b)(d)			100		97,925
Series 2016-NINE, Class A, 2.85%, 10/06/38(b)(d)			150		142,491
Lehman Brothers Small Balance Commercial Mortgage Trust, Series 2007-1A, Class 1A, 2.76%, 03/25/37(b)(d)			47		45,574
Madison Avenue Trust, Series 2013-650M, Class D, 4.03%, 10/12/32(b)(d)			101		101,244
Merrill Lynch Mortgage Trust, Series 2005-MKB2, Class F, 6.32%, 09/12/42(b)(d)			100		102,247
Morgan Stanley Bank of America Merrill Lynch Trust:
Series 2014-C16, Class A5, 3.89%, 06/15/47			140		143,100
Series 2015-C26, Class D, 3.06%, 10/15/48(b)			46		39,093
Morgan Stanley Capital I Trust:
Series 2006-T21, Class AJ, 5.24%, 10/12/52(d)			6		6,355
Series 2007-T27, Class AJ, 5.95%, 06/11/42(d)			77		82,034
Series 2015-MS1, Class D, 4.03%, 05/15/48(b)(d)			100		89,356
Series 2017-CLS, Class F, 5.06%, 11/15/34(b)(d)			211		207,436
Series 2017-H1, Class A5, 3.53%, 06/15/50			100		98,875
Series 2017-H1, Class C, 4.28%, 06/15/50(d)			100		96,260
Series 2017-H1, Class D, 2.55%, 06/15/50(b)			140		104,447
Series 2017-JWDR, Class D, 4.41%, 11/15/34(b)(d)			30		29,562
Series 2017-JWDR, Class E, 5.51%, 11/15/34(b)(d)			60		59,176
Series 2018-H3, Class A5, 4.18%, 07/15/51			50		51,564
Olympic Tower Mortgage Trust, Series 2017-OT, Class E, 3.95%, 05/10/39(b)(d)			190		169,552
Prima Capital CRE Securitization Ltd., Series 2015-4A, Class C, 4.00%, 08/24/49(b)(c)			100		98,800
Resource Capital Corp. Ltd.(b)(d):
Series 2017-CRE5, Class A, 3.26%, 07/15/34			31		31,326
Series 2017-CRE5, Class B, 4.46%, 07/15/34			38		37,740
UBS Commercial Mortgage Trust, Series 2018-C14, Class XA, 1.01%, 12/15/51(d)			1,160		87,639
Velocity Commercial Capital Loan Trust(d):
Series 2015-1, Class AFL, 4.94%, 06/25/45(b)			4		3,662
Series 2016-2, Class M4, 7.23%, 10/25/46			100		103,216
Series 2017-2, Class M3, 4.24%, 11/25/47(b)			174		172,581
Series 2017-2, Class M4, 5.00%, 11/25/47(b)			87		86,255
Waldorf Astoria Boca Raton Trust, Series 2016-BOCA, Class A, 3.81%, 06/15/29(b)(d)			120		119,765
Wells Fargo Commercial Mortgage Trust:
Series 2015-C27, Class C, 3.89%, 02/15/48			20		18,911
Series 2015-C31, Class A4, 3.70%, 11/15/48			140		141,247
Series 2015-NXS2, Class A5, 3.77%, 07/15/58(d)			110		111,563

Security		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Series 2015-NXS4, Class A4, 3.72%, 12/15/48	USD		20	$	20,217
Series 2015-P2, Class A4, 3.81%, 12/15/48			70		71,489
Series 2017-C38, Class A5, 3.45%, 07/15/50			42		41,186
Series 2017-C39, Class C, 4.12%, 09/15/50			20		19,212
Series 2017-C39, Class D, 4.36%, 09/15/50(b)(d)			20		18,019
Series 2017-C41, Class D, 2.60%, 11/15/50(b)(d)			60		47,923
Series 2017-HSDB, Class A, 3.28%, 12/13/31(b)(d)			151		150,285
Series 2018-C44, Class A5, 4.21%, 05/15/51			770		794,922
WFRBS Commercial Mortgage Trust:
Series 2011-C3, Class A3FL, 3.41%, 03/15/44(b)(d)			4		3,540
Series 2014-C21, Class A5, 3.68%, 08/15/47			60		60,887
					15,002,913
Interest Only Collateralized Mortgage Obligations — 0.0%
Banc of America Funding Trust, Series 2014-R2, Class 1C, 0.00%, 11/26/36(b)(c)(d)			153		30,347
Interest Only Commercial Mortgage-Backed Securities — 0.3%(d)
BAMLL Commercial Mortgage Securities Trust, Series 2016-SS1, Class XA, 0.56%, 12/15/35(b)			15,000		539,100
Banc of America Commercial Mortgage Trust, Series 2017-BNK3, Class XB, 0.63%, 02/15/50			1,000		43,430
BBCMS Trust, Series 2015-SRCH, Class XA, 0.96%, 08/10/35(b)			1,030		65,590
BB-UBS Trust, Series 2012-SHOW, Class XA, 0.60%, 11/05/36(b)			3,475		115,249
Benchmark Mortgage Trust, Series 2018-B8, Class XA, 0.67%, 01/15/52			5,000		257,851
CFCRE Commercial Mortgage Trust:
Series 2016-C4, Class XA, 1.73%, 05/10/58			178		16,734
Series 2016-C4, Class XB, 0.73%, 05/10/58(c)			170		8,245
Commercial Mortgage Trust:
Series 2015-3BP, Class XA, 0.06%, 02/10/35(b)			1,916		10,595
Series 2015-CR25, Class XA, 0.92%, 08/10/48			968		43,437
CSAIL Commercial Mortgage Trust, Series 2017-CX10, Class XB, 0.14%, 11/15/50			1,430		23,580
JPMBB Commercial Mortgage Securities Trust:
Series 2014-C22, Class XA, 0.88%, 09/15/47			1,268		48,861
Series 2014-C23, Class XA, 0.75%, 09/15/47			1,414		38,856
JPMDB Commercial Mortgage Securities Trust, Series 2016-C4, Class XC, 0.75%, 12/15/49(b)			1,800		88,135
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2016-JP3, Class XC, 0.75%, 08/15/49(b)			900		42,336
Morgan Stanley Bank of America Merrill Lynch Trust:
Series 2014-C19, Class XF, 1.19%, 12/15/47(b)			130		6,956
Series 2015-C22, Class XA, 1.11%, 04/15/48			38		1,875
Series 2015-C26, Class XD, 1.35%, 10/15/48(b)			120		9,430
Series 2016-C31, Class XA, 1.44%, 11/15/49			977		77,145
Morgan Stanley Capital I Trust(b):
Series 2016-UBS9, Class XD, 1.54%, 03/15/49			1,000		88,365
Series 2017-H1, Class XD, 2.20%, 06/15/50(c)			110		16,618
One Market Plaza Trust(b):
Series 2017-1MKT, Class XCP, 0.09%, 02/10/32			1,880		8,215
Series 2017-1MKT, Class XNCP, 0.00%, 02/10/32(c)			376		4
Wells Fargo Commercial Mortgage Trust,Series 2016-BNK1, Class XD, 1.26%, 08/15/49(b)			1,000		79,746
					1,630,353
Principal Only Collateralized Mortgage Obligations — 0.0%
Seasoned Credit Risk Transfer Trust,Series 2017-3, Class B, 0.00%, 07/25/56(g)			119		8,287
Total Non-Agency Mortgage-Backed Securities — 4.4% (Cost: $24,983,266)					24,787,646

SCHEDULE OF INVESTMENTS 27

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Beneficial Interest (000)		Value
Other Interests — 0.0%(c)(l)(m)(n)
Capital Markets — 0.0%
Lehman Brothers Holdings Capital Trust VII	USD		185	$	—
Lehman Brothers Holdings, Inc.			1,365		—
Total Other Interests — 0.0%					—
		Par (000)
Capital Trusts — 0.2%(f)
Capital Markets — 0.1%(h)
Bank of New York Mellon Corp. (The), Series F, 4.62%			270		241,988
State Street Corp., Series H, 5.63%			335		316,575
					558,563
Entertainment — 0.1%
NBCUniversal Enterprise, Inc., 5.25%(b)			300		303,750
Total Capital Trusts — 0.2% (Cost: $906,755)					862,313
U.S. Government Sponsored Agency Securities — 42.7%
Collateralized Mortgage Obligations — 0.2%
Federal Home Loan Mortgage Corp. Structured Agency Credit Risk Debt Notes(a):
Series 2018-DNA1, Class M2, (LIBOR USD 1 Month + 1.80%), 4.31%, 07/25/30			29		27,774
Series 2017-DNA2, Class M2, (LIBOR USD 1 Month + 3.45%), 5.96%, 10/25/29			250		264,548
Series 2016-DNA4, Class M3, (LIBOR USD 1 Month + 3.80%), 6.31%, 03/25/29			250		269,650
Series 2017-DNA3, Class B1, (LIBOR USD 1 Month + 4.45%), 6.96%, 03/25/30			250		264,520
Federal National Mortgage Association Variable Rate Notes(a):
Series 2017-C05, Class 1B1, (LIBOR USD 1 Month + 3.60%), 6.11%, 01/25/30			130		129,128
Series 2017-C07, Class 1B1, (LIBOR USD 1 Month + 4.00%), 6.51%, 05/25/30			120		120,327
					1,075,947
Commercial Mortgage-Backed Securities — 0.4%
Federal Home Loan Mortgage Corp.:
Series K058, Class A2, 2.65%, 08/25/26			31		29,837
Series K064, Class A2, 3.22%, 03/25/27			59		58,864
Series 2018-SB52, Class A10F, 3.48%, 06/25/28(h)			80		79,869
Series 2018-SB53, Class A10F, 3.66%, 06/25/28(h)			48		48,491
Series K076, Class A2, 3.90%, 06/25/51			42		43,817
Series 2017-K64, Class B, 3.98%, 05/25/50(b)(h)			20		19,360
Series 2018-K732, Class B, 4.06%, 05/25/25(b)(h)			100		99,705
Series 2018-K77, Class B, 4.16%, 05/25/51(b)			20		19,358
Federal Home Loan Mortgage Corp. Variable Rate Notes(h):
Series K063, Class A2, 3.43%, 01/25/27			130		131,593
Series K085, Class A2, 4.06%, 10/25/28			391		411,775
Federal National Mortgage Association, Series2018-M12, Class A1, 3.55%, 02/25/30			8		8,183

Security		Par (000)		Value
Commercial Mortgage-Backed Securities (continued)
Federal National Mortgage Association ACES Variable Rate Notes(h):
Series 2017-M7, Class A2, 2.96%, 02/25/27	USD		190	$	184,853
Series 2018-M14, Class A2, 3.58%, 08/25/28			1,029		1,049,017
Government National Mortgage Association:
Series 2016-158, Class VA, 2.00%, 03/16/35(c)			91		81,630
Series 2015-97, Class VA, 2.25%, 12/16/38			34		31,462
					2,297,814
Interest Only Commercial Mortgage-Backed Securities — 0.1%
Federal Home Loan Mortgage Corp. Variable Rate Notes, Series KW03, Class X1, 0.85%, 06/25/27(h)			268		14,417
Federal National Mortgage Association ACES Variable Rate Notes(h):
Series 2017-M12, Class X, 0.33%, 06/25/27			470		7,358
Series 2013-M5, Class X2, 2.18%, 01/25/22			382		11,597
Government National Mortgage Association Variable Rate Notes:
Series 2015-48, 0.67%, 02/16/50(h)			203		9,059
Series 2017-151, 0.71%, 09/16/57(h)			470		29,311
Series 2013-191, 0.75%, 11/16/53(h)			100		3,486
Series 2013-63, 0.79%, 09/16/51(h)			610		32,087
Series 2017-100, 0.81%, 05/16/59(h)			304		20,526
Series 2015-173, 0.89%, 09/16/55(h)			228		14,973
Series 2015-171, 0.89%, 11/16/55(h)			384		23,631
Series 2016-152, 0.93%, 08/15/58(h)			1,024		77,489
Series 2016-128, 0.95%, 09/16/56(h)			153		11,867
Series 2016-26, 0.96%, 02/16/58(h)			597		41,253
Series 2016-34, 0.99%, 01/16/58(h)			338		25,901
Series 2016-162, 1.00%, 09/16/58(h)			125		10,105
Series 2016-87, 1.00%, 08/16/58(h)			269		20,240
Series 2016-110, 1.03%, 05/16/58(h)			196		14,495
Series 2016-125, 1.06%, 12/16/57(h)			295		23,169
Series 2016-119, (LIBOR USD 1 Month + 0.00%), 1.12%, 04/16/58(a)			203		16,854
Series 2016-67, 1.17%, 07/16/57(h)			401		32,188
Series 2016-113, (LIBOR USD 1 Month + 0.00%), 1.19%, 02/16/58(a)			294		26,667
					466,673
Mortgage-Backed Securities — 42.0%
Federal Home Loan Mortgage Corp.:
2.50%, 02/01/24 - 04/01/31			724		709,847
2.50%, 01/15/34(o)			2,119		2,068,260
3.00%, 09/01/27 - 12/01/46			4,355		4,281,650
3.00%, 01/15/34 - 01/15/49(o)			7,776		7,627,914
3.50%, 09/01/30 - 01/01/48			9,842		9,917,484
3.50%, 01/15/49(o)			3,519		3,516,763
4.00%, 01/15/34 - 01/15/49(o)			6,623		6,752,881
4.00%, 08/01/40 - 08/01/47			2,950		3,029,559
4.50%, 02/01/39 - 08/01/48			2,756		2,885,638
4.50%, 01/15/49(o)			1,485		1,537,111
5.00%, 10/01/41 - 11/01/41			194		205,849
5.00%, 01/15/49(o)			802		839,889
5.50%, 02/01/35 - 06/01/41			222		238,270
Federal National Mortgage Association:
2.00%, 10/01/31 - 03/01/32			653		624,919
2.50%, 09/01/27 - 02/01/33			3,599		3,523,294
2.50%, 01/25/34(o)			708		691,713
3.00%, 04/01/28 - 03/01/47			10,412		10,276,591
3.00%, 01/25/34 - 01/25/49(o)			10,053		9,854,011
3.50%, 03/01/29 - 01/01/48			14,631		14,721,962
3.50%, 01/25/34 - 01/25/49(o)			8,014		8,023,014
4.00%, 08/01/31 - 08/01/48			20,580		21,152,962

28 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Mortgage-Backed Securities (continued)
4.00%, 01/25/49(o)	USD		3,561	$	3,629,994
4.50%, 02/01/25 - 07/01/48			5,806		6,079,279
4.50%, 01/25/49 - 02/25/49(o)			33,144		34,306,911
5.00%, 02/01/35 - 06/01/45			1,311		1,389,094
5.00%, 01/25/49(o)			12,955		13,569,350
5.50%, 02/01/35 - 03/01/40			649		695,901
5.50%, 01/25/49(o)			654		692,014
6.00%, 04/01/35 - 06/01/41			539		589,628
6.00%, 01/25/49(o)			172		184,714
6.50%, 05/01/40			148		166,829
Government National Mortgage Association:
3.00%, 02/15/45 - 12/20/46			6,513		6,428,029
3.00%, 01/15/49(o)			2,529		2,490,758
3.50%, 01/15/42 - 11/20/46			16,791		16,919,695
3.50%, 01/15/49(o)			1,600		1,609,875
4.00%, 04/20/39 - 10/20/46			791		816,472
4.00%, 01/15/49(o)			23,251		23,806,332
4.50%, 12/20/39 - 09/20/48			755		788,538
4.50%, 01/15/49(o)			8,752		9,056,098
5.00%, 12/15/38 - 07/20/44			201		213,139
5.00%, 01/15/49(o)			1,432		1,490,343
					237,402,574
Total U.S. Government Sponsored Agency Securities — 42.7% (Cost: $240,824,268)					241,243,008
U.S. Treasury Obligations — 14.4%
U.S. Treasury Bonds:
4.25%, 05/15/39			430		518,738
4.50%, 08/15/39			417		519,654
4.38%, 11/15/39			419		513,700
3.13%, 02/15/43			1,632		1,664,704
2.88%, 05/15/43 - 11/15/46			2,106		2,054,154
3.63%, 08/15/43			1,557		1,723,465
3.75%, 11/15/43			1,653		1,866,921
3.00%, 02/15/47 - 08/15/48			3,114		3,099,850
U.S. Treasury Notes:
1.25%, 08/31/19			4,183		4,145,255
1.00%, 10/15/19			4,183		4,130,222
1.63%, 06/30/20 - 10/31/23			7,481		7,318,097
2.63%, 08/31/20 - 05/15/21			10,166		10,188,701
1.13%, 06/30/21			2,259		2,186,377
2.25%, 07/31/21 - 02/15/27			7,971		7,852,608
2.13%, 09/30/21			2,929		2,901,197
1.88%, 04/30/22			2,929		2,872,937
2.75%, 08/31/23 - 08/31/25			7,900		7,985,026
2.00%, 04/30/24 - 11/15/26			7,797		7,546,642
3.00%, 10/31/25			11,000		11,284,884
2.88%, 08/15/28			885		898,690
Total U.S. Treasury Obligations — 14.4% (Cost: $81,068,788)					81,271,822
Total Long-Term Investments — 114.7% (Cost: $652,494,142)					647,880,846
Short-Term Securities — 7.7%
Borrowed Bond Agreements — 0.4%(p)
Deutsche Bank Securities, Inc., 2.75%, 01/02/19 (Purchased on 12/31/18 to be repurchased at USD 70,968, collateralized by U.S. Treasury Notes, 2.88%, due at 11/15/21, par and fair value of USD 70,000 and $70,780, respectively)			71		70,963

Security		Par (000)		Value
Borrowed Bond Agreements (continued)
Merrill Lynch, Pierce, Fenner & Smith Inc., 2.50%, 01/02/19 (Purchased on 12/31/18 to be repurchased at USD 871,561, collateralized by U.S. Treasury Notes, 3.13%, due at 11/15/28, par and fair value of USD 840,000 and $871,303, respectively)	USD		872	$	871,500
Merrill Lynch, Pierce, Fenner & Smith Inc., 2.85%, 01/02/19 (Purchased on 12/31/18 to be repurchased at USD 1,191,751, collateralized by U.S. Treasury Bonds, 3.38%, due at 11/15/48, par and fair value of USD 1,115,000 and $1,192,353, respectively)			1,192		1,191,656
Total Borrowed Bond Agreements — 0.4% (Cost: $2,134,119)					2,134,119
Commercial Paper — 0.2%(q)
AT&T, Inc., 2.97%, 03/07/19			580		576,740
General Motors Financial Co., Inc., 3.69%, 03/27/19			550		545,828
Total Commercial Paper — 0.2% (Cost: $1,122,223)					1,122,568
Foreign Government Obligations — 3.0%(q)
Egypt — 0.0%
Arab Republic of Egypt Treasury Bills:
18.48%, 03/05/19	EGP		3,650		197,575
19.90%, 08/27/19			1,500		74,211
					271,786
Japan — 3.0%
Japan Treasury Bills, (0.29)%, 01/21/19	JPY		1,846,600		16,848,917
Nigeria — 0.0%
Federal Republic of Nigeria Treasury Bills, 14.67%, 04/04/19	NGN		15,328		41,041
Total Foreign Government Obligations — 3.0% (Cost: $16,759,396)					17,161,744
		Shares
Money Market Funds — 4.1%(r)
BlackRock Liquidity Funds, T-Fund, Institutional Class, 2.32%(s)			22,894,841		22,894,841
JPMorgan US Treasury Plus Money Market Fund, Agency Class, 2.24%			28,761		28,761
Total Money Market Funds — 4.1% (Cost: $22,923,602)					22,923,602
Total Short-Term Securities — 7.7% (Cost: $42,939,340)					43,342,033
Total Options Purchased — 0.1% (Cost: $909,607)					975,983
Total Investments Before Options Written, Borrowed Bonds and TBA Sale Commitments — 122.5% (Cost: $696,343,089)					692,198,862
Total Options Written — 0.0% (Premium Received — $289,038)					(371,711	)

SCHEDULE OF INVESTMENTS 29

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Borrowed Bonds — (0.4)%
U.S. Treasury Obligations — (0.4)%
U.S. Treasury Bonds, 3.38%, 11/15/48	USD		1,115	$	(1,192,353	)
U.S. Treasury Notes:
2.88%, 11/15/21			70		(70,780	)
3.13%, 11/15/28			840		(871,303	)
Total Borrowed Bonds — (0.4)% (Proceeds: $2,087,831)					(2,134,436	)
TBA Sale Commitments — (12.5)%(o)
Mortgage-Backed Securities — (12.5)%
Federal Home Loan Mortgage Corp.:
3.50%, 01/15/34			669		(677,454	)
4.50%, 01/15/49			656		(679,020	)
Federal National Mortgage Association:
2.00%, 01/25/34			717		(686,205	)
3.00%, 01/25/49			1,137		(1,108,239	)
3.50%, 01/25/49 - 02/25/49			21,543		(21,528,986	)
4.00%, 01/25/34 - 01/25/49			10,410		(10,615,807	)
4.50%, 01/25/49			22,638		(23,441,384	)
Government National Mortgage Association:
3.00%, 01/15/49			890		(875,932	)
3.50%, 01/15/49 - 02/15/49			2,858		(2,874,182	)
4.00%, 01/15/49			7,783		(7,969,062	)
4.50%, 01/15/49			100		(103,475	)
Total TBA Sale Commitments — (12.5)% (Proceeds: $69,937,862)					(70,559,746	)
Total Investments Net of Options Written, Borrowed Bonds and TBA Sale Commitments — 109.6% (Cost: $624,028,358)					619,132,969
Liabilities in Excess of Other Assets — (9.6)%					(54,148,081	)
Net Assets — 100.0%				$	564,984,888

^(a)  Variable rate security. Security may be issued at a fixed coupon rate, which converts to a variable rate at a specified date. Rate shown is the rate in effect as of period end.

^(b)  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

^(c)  Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

^(d)  Variable or floating rate security, which interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.

^(e)  Step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate as of period end.

^(f)  Perpetual security with no stated maturity date.

^(g)  Zero-coupon bond.

^(h)  Variable rate security. Rate shown is the rate in effect as of period end.

⁽ⁱ⁾  Represents an unsettled loan commitment at period end. Certain details associated with this purchase are not known prior to the settlement date, including coupon rate.

^(j)  Variable rate security. Rate as of period end and maturity is the date the principal owed can be recovered through demand.

^(k)  When-issued security.

^(l)  Non-income producing security.

^(m)  Issuer filed for bankruptcy and/or is in default.

⁽ⁿ⁾  Other interests represent beneficial interests in liquidation trusts and other reorganizational or private entities.

^(o)  Represents or includes a TBA transaction.

^(p)  Certain agreements have no stated maturity and can be terminated by either party at any time.

^(q)  Rates are discount rates or a range of discount rates as of period end.

^(r)  Annualized 7-day yield as of period end.

^(s)  During the year ended December 31, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at 12/31/17		Net Activity		Shares Held at 12/31/18		Value at 12/31/18		Income		Net Realized Gain (Loss)		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds, T-Fund, Institutional Class		1,809,877		21,084,964		22,894,841	$	22,894,841	$	342,883	$	—	$	—

For Fund compliance purposes, the Fund’s industry classifications refer to one or more of the industry sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by the investment advisor. These definitions may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

30 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

Description	Number of Contracts		Expiration Date		Notional Amount (000)		Value/ Unrealized Appreciation (Depreciation)
Long Contracts
U.S. Treasury 10 Year Ultra Bond		170		03/20/19	$	22,113	$	605,421
U.S. Treasury Long Bond		31		03/20/19		4,526		49,195
U.S. Treasury Ultra Bond		153		03/20/19		24,580		1,278,319
U.S. Treasury 2 Year Note		209		03/29/19		44,373		272,917
U.S. Treasury 5 Year Note		477		03/29/19		54,706		698,163
								2,904,015
Short Contracts
Euro-Bund		51		03/07/19		9,556		(53,118	)
Euro-Buxl		6		03/07/19		1,242		(2,395	)
Japan 10 Year Bond		3		03/13/19		4,174		(19,760	)
U.S. Treasury 10 Year Note		409		03/20/19		49,904		(670,170	)
3 Month Eurodollar		167		12/14/20		40,719		(273,718	)
								(1,019,161	)
							$	1,884,854

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
BRL	2,345,967	USD	604,000	Citibank NA		01/03/19	$	1,293
BRL	206,760	USD	53,275	Goldman Sachs International		01/03/19		72
TWD	5,246,710	USD	170,680	BNP Paribas SA		01/03/19		17
USD	417,946	BRL	1,614,359	Goldman Sachs International		01/03/19		1,418
USD	85,200	ZAR	1,211,936	BNP Paribas SA		01/10/19		1,029
USD	57,500	COP	184,603,750	Royal Bank of Scotland		01/11/19		680
ARS	973,750	USD	25,000	BNP Paribas SA		01/16/19		372
ARS	3,293,950	USD	85,000	Citibank NA		01/16/19		828
ARS	2,994,900	USD	75,000	Deutsche Bank AG		01/16/19		3,036
ARS	598,950	USD	15,000	Royal Bank of Scotland		01/16/19		606
MXN	1,069,364	USD	53,275	Goldman Sachs International		01/16/19		1,035
USD	137,995	CLP	95,133,753	BNP Paribas SA		01/16/19		878
USD	140,000	RUB	9,437,400	Bank of America NA		01/16/19		4,807
USD	420,000	ZAR	6,039,697	BNP Paribas SA		01/16/19		867
IDR	4,729,335,000	USD	307,000	Barclays Bank plc		01/18/19		20,686
KRW	189,261,000	USD	170,000	Bank of America NA		02/07/19		118
USD	170,000	KRW	187,816,000	Morgan Stanley & Co. International plc		02/07/19		1,181
ARS	598,825	USD	14,207	BNP Paribas SA		03/07/19		441
ARS	1,416,100	USD	34,000	BNP Paribas SA		03/11/19		481
GBP	2,233,000	USD	2,835,528	Barclays Bank plc		03/20/19		21,250
USD	444,000	CHF	432,541	Citibank NA		03/20/19		752
USD	1,504,520	EUR	1,160,000	Deutsche Bank AG		12/13/19		135,003
USD	1,514,264	EUR	1,160,000	Deutsche Bank AG		02/25/20		136,327
JPY	154,610,000	USD	1,432,635	JPMorgan Chase Bank NA		03/16/20		31,719
USD	1,543,322	JPY	154,610,000	HSBC Bank plc		03/16/20		78,968
								443,864
BRL	163,201	USD	42,600	Goldman Sachs International		01/03/19		(492	)
USD	281,929	BRL	1,104,316	Goldman Sachs International		01/03/19		(3,001	)
USD	170,000	TWD	5,246,710	BNP Paribas SA		01/03/19		(697	)
ZAR	1,200,391	USD	85,200	BNP Paribas SA		01/10/19		(1,831	)
COP	181,757,500	USD	57,500	BNP Paribas SA		01/11/19		(1,556	)
CLP	130,984,015	USD	195,395	BNP Paribas SA		01/16/19		(6,607	)
CLP	75,342,912	USD	112,600	Deutsche Bank AG		01/16/19		(4,008	)
COP	183,575,075	USD	57,500	Goldman Sachs International		01/16/19		(1,011	)
RUB	9,304,400	USD	140,000	Bank of America NA		01/16/19		(6,712	)

SCHEDULE OF INVESTMENTS 31

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
USD	10,000	ARS	400,300	Goldman Sachs International		01/16/19	$	(430	)
USD	45,000	ARS	1,738,125	HSBC Bank plc		01/16/19		(289	)
USD	10,000	BRL	38,830	Deutsche Bank AG		01/16/19		(9	)
USD	232,741	IDR	3,368,535,952	BNP Paribas SA		01/16/19		(722	)
USD	250,000	KRW	281,527,500	Citibank NA		01/16/19		(2,891	)
USD	280,000	MXN	5,637,576	Citibank NA		01/16/19		(6,316	)
USD	213,100	MXN	4,334,722	JPMorgan Chase Bank NA		01/16/19		(7,048	)
ZAR	1,993,933	USD	140,000	Northern Trust Co.		01/16/19		(1,628	)
ZAR	3,951,920	USD	280,000	UBS AG		01/16/19		(5,751	)
USD	307,000	IDR	4,527,329,000	JPMorgan Chase Bank NA		01/18/19		(6,690	)
USD	3,359,978	JPY	375,258,000	Citibank NA		01/22/19		(69,214	)
USD	13,197,544	JPY	1,472,588,596	JPMorgan Chase Bank NA		01/22/19		(259,302	)
USD	310,427	COP	1,025,030,000	Goldman Sachs International		01/23/19		(4,870	)
USD	90,940	COP	295,920,000	HSBC Bank plc		01/23/19		(84	)
USD	41,682	COP	137,050,000	JPMorgan Chase Bank NA		01/23/19		(474	)
USD	363,581	COP	1,200,000,000	UBS AG		01/23/19		(5,536	)
USD	1,267,345	MXN	25,520,000	Citibank NA		01/23/19		(27,086	)
USD	164,432	ZAR	2,390,000	Bank of America NA		01/23/19		(1,271	)
BRL	1,617,493	USD	417,946	Goldman Sachs International		02/04/19		(1,438	)
USD	81,809	JPY	9,233,000	Citibank NA		02/05/19		(2,656	)
USD	1,849,559	JPY	208,571,312	Deutsche Bank AG		02/05/19		(58,487	)
USD	920,332	JPY	104,285,656	Nomura International plc		02/05/19		(33,691	)
USD	405,192	MXN	8,177,000	Goldman Sachs International		02/05/19		(8,632	)
USD	25,000	ARS	1,007,500	BNP Paribas SA		02/11/19		(337	)
USD	20,000	ARS	806,000	JPMorgan Chase Bank NA		02/11/19		(270	)
CAD	1,394,451	EUR	888,000	BNP Paribas SA		03/20/19		(746	)
CAD	1,209,845	USD	888,000	Toronto Dominion Bank		03/20/19		(216	)
USD	2,830,953	GBP	2,233,000	Morgan Stanley & Co. International plc		03/20/19		(25,826	)
TRY	338,191	USD	63,153	JPMorgan Chase Bank NA		06/19/19		(4,528	)
EUR	1,160,000	USD	1,419,283	JPMorgan Chase Bank NA		12/13/19		(49,766	)
EUR	1,160,000	USD	1,429,520	JPMorgan Chase Bank NA		02/25/20		(51,581	)
								(663,700	)
	Net Unrealized Depreciation						$	(219,836	)

OTC Barrier Options Purchased

Description

Type of Option

Counterparty

Expiration Date

Exercise Price

Barrier Price/Range

Notional Amount (000)

Value

Put

USD

Currency

Up and In

Deutsche Bank AG

01/07/19

BRL

3.60

BRL

4.00

USD

440

$

—

USD

Currency

Up and In

Deutsche Bank AG

02/07/19

BRL

3.50

BRL

4.00

USD

319

2

$

2

32 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

OTC Currency Options Purchased

Description	Counterparty	Expiration Date		Exercise Price			Notional Amount (000)			Value
Call
USD Currency	Morgan Stanley & Co. International plc		01/10/19		BRL	3.92		USD	170	$	881
USD Currency	Deutsche Bank AG		04/03/19		JPY	112.00		USD	2,842		16,299
											17,180
Put
USD Currency	Goldman Sachs International		01/08/19		BRL	3.60		USD	240		—
USD Currency	Morgan Stanley & Co. International plc		01/10/19		BRL	3.74		USD	170		91
USD Currency	HSBC Bank plc		01/31/19		KRW	1,110.00		USD	250		2,134
USD Currency	Goldman Sachs International		02/07/19		BRL	3.90		USD	170		3,427
USD Currency	HSBC Bank plc		02/07/19		KRW	1,115.00		USD	170		2,053
USD Currency	JPMorgan Chase Bank NA		02/21/19		ZAR	13.50		USD	138		618
USD Currency	Deutsche Bank AG		04/03/19		JPY	112.00		USD	2,842		95,460
											103,783
										$	120,963

OTC Interest Rate Swaptions Purchased

	Paid by the Fund				Received by the Fund
Description	Rate			Frequency	Rate			Frequency	Counterparty	Expiration Date		Exercise Rate			Notional Amount (000)			Value
Call
10-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.75	%	Semi-Annual	Citibank NA		04/24/19		2.75	%		USD	2,140	$	30,623
10-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.75	%	Semi-Annual	Citibank NA		04/24/19		2.75	%		USD	530		7,584
10-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.70	%	Semi-Annual	Barclays Bank plc		06/10/19		2.70	%		USD	2,174		31,685
10-Year Interest Rate Swap		3 month LIBOR		Quarterly		3.04	%	Semi-Annual	JPMorgan Chase Bank NA		04/27/38		3.04	%		USD	5,980		341,657
10-Year Interest Rate Swap		3 month LIBOR		Quarterly		3.04	%	Semi-Annual	JPMorgan Chase Bank NA		04/27/38		3.04	%		USD	1,547		88,385
																			499,934
Put
10-Year Interest Rate Swap		3.77	%	Semi-Annual		3 month LIBOR		Quarterly	Citibank NA		04/24/19		3.77	%		USD	1,335		268
10-Year Interest Rate Swap		3.04	%	Semi-Annual		3 month LIBOR		Quarterly	JPMorgan Chase Bank NA		04/27/38		3.04	%		USD	5,980		281,892
10-Year Interest Rate Swap		3.04	%	Semi-Annual		3 month LIBOR		Quarterly	JPMorgan Chase Bank NA		04/27/38		3.04	%		USD	1,547		72,924
																			355,084
																		$	855,018

OTC Currency Options Written

Description	Counterparty	Expiration Date		Exercise Price			Notional Amount (000)			Value
Call
USD Currency	Morgan Stanley & Co. International plc		01/10/19		BRL	3.90		USD	170	$	(1,171	)
USD Currency	Citibank NA		01/11/19		MXN	20.90		USD	170		(24	)
USD Currency	JPMorgan Chase Bank NA		02/07/19		KRW	1,140.00		USD	85		(276	)
USD Currency	Morgan Stanley & Co. International plc		04/03/19		JPY	112.00		USD	2,842		(16,228	)
											(17,699	)
Put
USD Currency	Morgan Stanley & Co. International plc		01/10/19		BRL	3.60		USD	170		(1	)
USD Currency	JPMorgan Chase Bank NA		02/07/19		KRW	1,085.00		USD	85		(221	)
USD Currency	HSBC Bank plc		02/07/19		KRW	1,085.00		USD	170		(442	)
USD Currency	Goldman Sachs International		02/07/19		BRL	3.75		USD	255		(1,346	)
USD Currency	Morgan Stanley & Co. International plc		04/03/19		JPY	112.00		USD	2,842		(95,642	)
											(97,652	)
										$	(115,351	)

SCHEDULE OF INVESTMENTS 33

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

OTC Interest Rate Swaptions Written

	Paid by the Fund				Received by the Fund
Description	Rate			Frequency	Rate			Frequency	Counterparty	Expiration Date		Exercise Rate			Notional Amount (000)			Value
Call
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.75	%	Semi-Annual	Citibank NA		10/16/20		2.75	%		USD	16,930	$	(183,504	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.75	%	Semi-Annual	JPMorgan Chase Bank NA		10/16/20		2.75	%		USD	4,380		(47,475	)
																			(230,979	)
Put
2-Year Interest Rate Swap		3.75	%	Semi-Annual		3 month LIBOR		Quarterly	Citibank NA		10/16/20		3.75	%		USD	16,930		(20,164	)
2-Year Interest Rate Swap		3.75	%	Semi-Annual		3 month LIBOR		Quarterly	JPMorgan Chase Bank NA		10/16/20		3.75	%		USD	4,380		(5,217	)
																			(25,381	)
																		$	(256,360	)

Centrally Cleared Credit Default Swaps — Sell Protection

Reference Obligation/Index

Financing Rate Received by the Fund

Payment Frequency

Termination Date

Credit Rating (a)

Notional Amount (000) (b)

Value

Upfront Premium Paid (Received)

Unrealized Appreciation (Depreciation)

CDX.NA.HY.31.V1

5.00

%

Quarterly

12/20/23

B+

USD

2,790

$

60,263

$

29,198

$

31,065

^(a)  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

^(b)  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

Centrally Cleared Inflation Swaps

Paid by the Fund

Received by the Fund

Notional Amount (000)

Value

Upfront Premium Paid (Received)

Unrealized Appreciation (Depreciation)

Reference

Frequency

Rate

Frequency

Termination Date

UK Retail Price Index All Items Monthly

At Termination

3.57%

At Termination

11/15/28

GBP

1,717

$8,078

$

(863

)

$

8,941

Centrally Cleared Interest Rate Swaps

Paid by the Fund		Received by the Fund					Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate	Frequency	Effective Date
7.36%	Monthly	28 day MXIBTIIE	Monthly		N/A			01/28/19	MXN	25,421	$	1,234		$	—		$	1,234
28 day MXIBTIIE	Monthly	8.21%	Monthly		N/A			10/07/20	MXN	22,534		(7,933	)		—			(7,933	)
28 day MXIBTIIE	Monthly	8.21%	Monthly		N/A			10/07/20	MXN	11,074		(3,910	)		—			(3,910	)
1.55%	Semi-Annual	6 month LIBOR	Semi-Annual		11/09/20	(a)		11/09/21	GBP	43,417		(118,541	)		4,415			(122,956	)
6 month EURIBOR	Semi-Annual	0.38%	Annual		11/09/20	(a)		11/09/21	EUR	23,911		81,202			(1,135	)		82,337
6 month EURIBOR	Semi-Annual	0.38%	Annual		11/09/20	(a)		11/09/21	EUR	23,911		79,823			(319	)		80,142
6 month EURIBOR	Semi-Annual	0.32%	Annual		11/16/20	(a)		11/16/21	EUR	24,169		64,532			—			64,532
1.42%	Semi-Annual	6 month LIBOR	Semi-Annual		11/16/20	(a)		11/16/21	GBP	22,067		(25,298	)		—			(25,298	)
1.34%	Semi-Annual	6 month LIBOR	Semi-Annual		12/10/20	(a)		12/10/21	GBP	11,155		427			(264	)		691
6 month EURIBOR	Semi-Annual	0.24%	Annual		12/14/20	(a)		12/14/21	EUR	12,220		18,170			363			17,807
7.11%	Monthly	28 day MXIBTIIE	Monthly		N/A			10/14/22	MXN	5,081		12,659			—			12,659
7.11%	Monthly	28 day MXIBTIIE	Monthly		N/A			10/14/22	MXN	3,855		9,571			—			9,571
1.67%	Semi-Annual	6 month LIBOR	Semi-Annual		11/08/21	(a)		11/08/22	GBP	11,012		(36,678	)		2,405			(39,083	)
1.66%	Semi-Annual	6 month LIBOR	Semi-Annual		11/08/21	(a)		11/08/22	GBP	11,011		(35,320	)		916			(36,236	)
1.54%	Semi-Annual	6 month LIBOR	Semi-Annual		11/15/21	(a)		11/15/22	GBP	11,140		(19,482	)		—			(19,482	)
28 day MXIBTIIE	Monthly	6.32%	Monthly		N/A			07/17/25	MXN	1,733		(10,525	)		—			(10,525	)
3 month LIBOR	Quarterly	2.13%	Semi-Annual		N/A			08/25/25	USD	60		(1,510	)		—			(1,510	)
2.27%	Semi-Annual	3 month LIBOR	Quarterly		N/A			09/11/25	USD	91		1,469			—			1,469
2.91%	Semi-Annual	3 month LIBOR	Quarterly		N/A			08/23/26	USD	125		(3,262	)		—			(3,262	)
6 month EURIBOR	Semi-Annual	0.82%	Annual		03/11/19	(a)		02/15/28	EUR	5,630		42,025			—			42,025
3.16%	Semi-Annual	3 month LIBOR	Quarterly		N/A			10/03/28	USD	152		(5,978	)		—			(5,978	)
1.58%	Semi-Annual	6 month LIBOR	Semi-Annual		N/A			11/21/28	GBP	2,295		(44,570	)		244			(44,814	)

34 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Paid by the Fund		Received by the Fund					Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)		Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate	Frequency	Effective Date
2.85%	Semi-Annual	3 month LIBOR	Quarterly		N/A			12/24/28	USD	107	$	(1,179	)	$	—	$	(1,179	)
3.23%	Semi-Annual	3 month LIBOR	Quarterly		04/26/19	(a)		04/26/29	USD	76		(3,314	)		—		(3,314	)
3 month LIBOR	Quarterly	3.35%	Semi-Annual		04/26/19	(a)		04/26/29	USD	216		11,619			—		11,619
3.26%	Semi-Annual	3 month LIBOR	Quarterly		04/26/19	(a)		04/26/29	USD	310		(14,387	)		—		(14,387	)
2.93%	Semi-Annual	3 month LIBOR	Quarterly		06/12/19	(a)		06/12/29	USD	674		(11,349	)		—		(11,349	)
											$	(20,505	)	$	6,625	$	(27,130	)

^(a)  Forward Swap.

OTC Credit Default Swaps — Buy Protection

Reference Obligation/Index	Financing Rate Paid by the Fund			Payment Frequency		Counterparty	Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
United Mexican States		1.00	%		Quarterly	JPMorgan Chase Bank NA		06/20/20	USD	135	$	(266	)	$	360		$	(626	)
United Mexican States		1.00	%		Quarterly	Bank of America NA		09/20/20	USD	135		(239	)		596			(835	)
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,574			5,348			226
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			5,053			495
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,596			5,196			400
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	233		11,144			10,249			895
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	232		11,097			10,205			892
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,596			5,097			499
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			5,053			495
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	137		6,574			6,278			296
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			5,053			495
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,596			5,097			499
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,596			5,238			358
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	117		5,596			5,039			557
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			5,152			396
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			4,996			552
Federative Republic of Brazil		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	116		5,548			5,021			527
Federative Republic of Brazil		1.00	%		Quarterly	Goldman Sachs International		12/20/23	USD	220		10,523			18,658			(8,135	)
Federative Republic of Brazil		1.00	%		Quarterly	Goldman Sachs International		12/20/23	USD	77		3,682			3,412			270
Federative Republic of Brazil		1.00	%		Quarterly	Goldman Sachs International		12/20/23	USD	130		6,218			11,025			(4,807	)
Federative Republic of Brazil		1.00	%		Quarterly	HSBC Bank plc		12/20/23	USD	1,002		47,945			85,235			(37,290	)
Republic of Colombia		1.00	%		Quarterly	Bank of America NA		12/20/23	USD	66		1,698			721			977
Republic of Colombia		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	111		2,857			2,123			734
Republic of Colombia		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	110		2,830			2,104			726
Republic of Colombia		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	116		2,989			1,965			1,024
Republic of Colombia		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	107		2,764			1,675			1,089
Republic of Colombia		1.00	%		Quarterly	Citibank NA		12/20/23	USD	109		2,805			2,084			721
Republic of Colombia		1.00	%		Quarterly	Citibank NA		12/20/23	USD	108		2,779			2,183			596
Republic of Colombia		1.00	%		Quarterly	Citibank NA		12/20/23	USD	108		2,779			2,018			761
Republic of Colombia		1.00	%		Quarterly	Citibank NA		12/20/23	USD	35		900			654			246
Republic of Colombia		1.00	%		Quarterly	Citibank NA		12/20/23	USD	108		2,779			2,136			643
Republic of Colombia		1.00	%		Quarterly	Deutsche Bank AG		12/20/23	USD	111		2,857			2,123			734
Republic of the Philippines		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	646		(4,219	)		(3,037	)		(1,182	)
Republic of the Philippines		1.00	%		Quarterly	Citibank NA		12/20/23	USD	400		(2,613	)		(2,145	)		(468	)
Republic of Turkey		1.00	%		Quarterly	Morgan Stanley & Co. International plc		12/20/23	USD	38		4,227			4,302			(75	)
United Mexican States		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	73		1,819			558			1,261
United Mexican States		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	220		5,480			1,681			3,799
United Mexican States		1.00	%		Quarterly	Barclays Bank plc		12/20/23	USD	147		3,661			1,156			2,505
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	109		2,715			2,411			304
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	109		2,715			2,411			304
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	73		1,818			586			1,232
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	73		1,818			586			1,232
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	73		1,819			586			1,233
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	53		1,320			507			813
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	73		1,819			554			1,265
United Mexican States		1.00	%		Quarterly	BNP Paribas SA		12/20/23	USD	89		2,217			1,969			248
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	71		1,768			527			1,241

SCHEDULE OF INVESTMENTS 35

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Reference Obligation/Index	Financing Rate Paid by the Fund			Payment Frequency		Counterparty	Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)				Unrealized Appreciation (Depreciation)
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	70	$	1,744		$	422			$	1,322
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	133		3,307			2,366				941
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	130		3,238			1,247				1,991
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	84		2,092			469				1,623
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	133		3,314			3,132				182
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	110		2,740			2,396				344
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	72		1,793			418				1,375
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	72		1,793			386				1,407
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	210		5,231			2,014				3,217
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	111		2,765			2,125				640
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	111		2,765			2,198				567
United Mexican States		1.00	%		Quarterly	Citibank NA		12/20/23	USD	111		2,765			2,515				250
United Mexican States		1.00	%		Quarterly	Deutsche Bank AG		12/20/23	USD	69		1,719			676				1,043
United Mexican States		1.00	%		Quarterly	Deutsche Bank AG		12/20/23	USD	69		1,719			676				1,043
United Mexican States		1.00	%		Quarterly	Morgan Stanley & Co. International plc		12/20/23	USD	48		1,196			494				702
United Mexican States		1.00	%		Quarterly	Morgan Stanley & Co. International plc		12/20/23	USD	700		17,436			13,440				3,996
United Mexican States		1.00	%		Quarterly	Morgan Stanley & Co. International plc		12/20/23	USD	70		1,744			579				1,165
CMBX.NA.9.A		2.00	%		Monthly	Citigroup Global Markets, Inc.		09/17/58	USD	60		2,415			1,111				1,304
CMBX.NA.9.A		2.00	%		Monthly	Credit Suisse International		09/17/58	USD	76		3,059			1,188				1,871
CMBX.NA.9.A		2.00	%		Monthly	Credit Suisse International		09/17/58	USD	100		4,025			1,704				2,321
CMBX.NA.9.A		2.00	%		Monthly	Credit Suisse International		09/17/58	USD	60		2,415			1,038				1,377
CMBX.NA.9.A		2.00	%		Monthly	Goldman Sachs International		09/17/58	USD	30		1,207			553				654
CMBX.NA.9.AAA		0.50	%		Monthly	Credit Suisse International		09/17/58	USD	150		549			1,775				(1,226	)
CMBX.NA.9.AAA		0.50	%		Monthly	Deutsche Bank AG		09/17/58	USD	120		440			1,437				(997	)
CMBX.NA.9.AAA		0.50	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	USD	90		329			1,066				(737	)
CMBX.NA.9.AAA		0.50	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	USD	100		367			1,183		��		(816	)
CMBX.NA.9.AAA		0.50	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	USD	230		843			2,933				(2,090	)
CMBX.NA.6.AAA		0.50	%		Monthly	Deutsche Bank AG		05/11/63	USD	230		(1,388	)		—				(1,388	)
CMBX.NA.6.AAA		0.50	%		Monthly	Deutsche Bank AG		05/11/63	USD	140		(845	)		(20	)			(825	)
CMBX.NA.6.AAA		0.50	%		Monthly	Deutsche Bank AG		05/11/63	USD	200		(1,207	)		(147	)			(1,060	)
CMBX.NA.6.BBB-		3.00	%		Monthly	JPMorgan Securities LLC		05/11/63	USD	30		4,823			2,846				1,977
											$	292,314		$	292,019			$	295

OTC Credit Default Swaps — Sell Protection

Reference Obligation/Index	Financing Rate Received by the Fund			Payment Frequency		Counterparty	Termination Date		Credit Rating (a)	Notional Amount (000) (b)		Value			Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
United Mexican States		1.00	%		Quarterly	Bank of America NA		06/20/20	BBB+	USD	135	$	265		$	(415	)	$	680
United Mexican States		1.00	%		Quarterly	JPMorgan Chase Bank NA		09/20/20	BBB+	USD	135		238			(520	)		758
CMBX.NA.3.AM		0.50	%		Monthly	Credit Suisse International		12/13/49	NR	USD	390		(51	)		(1,522	)		1,471
CMBX.NA.4.AM		0.50	%		Monthly	Deutsche Bank AG		02/17/51	NR	USD	95		(1	)		(19	)		18
CMBX.NA.8.A		2.00	%		Monthly	Goldman Sachs International		10/17/57	A	USD	60		(2,221	)		(5,871	)		3,650
CMBX.NA.8.A		2.00	%		Monthly	Goldman Sachs International		10/17/57	A	USD	60		(2,221	)		(3,241	)		1,020
CMBX.NA.9.BBB-		3.00	%		Monthly	Credit Suisse International		09/17/58	NR	USD	107		(12,940	)		(9,265	)		(3,675	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Deutsche Bank AG		09/17/58	NR	USD	80		(9,675	)		(8,477	)		(1,198	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Deutsche Bank AG		09/17/58	NR	USD	37		(4,475	)		(4,421	)		(54	)
CMBX.NA.9.BBB-		3.00	%		Monthly	JPMorgan Securities LLC		09/17/58	NR	USD	32		(3,870	)		(2,795	)		(1,075	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	NR	USD	45		(5,443	)		(4,584	)		(859	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	NR	USD	18		(2,177	)		(2,166	)		(11	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	NR	USD	63		(7,619	)		(6,099	)		(1,520	)
CMBX.NA.9.BBB-		3.00	%		Monthly	Morgan Stanley & Co. International plc		09/17/58	NR	USD	2		(242	)		(235	)		(7	)
CMBX.NA.10.A		2.00	%		Monthly	Deutsche Bank AG		11/17/59	A	USD	120		(5,070	)		(5,138	)		68
CMBX.NA.10.A		2.00	%		Monthly	Deutsche Bank AG		11/17/59	A	USD	60		(2,535	)		(2,615	)		80
CMBX.NA.10.BBB-		3.00	%		Monthly	JPMorgan Securities LLC		11/17/59	BBB-	USD	10		(1,145	)		(851	)		(294	)
CMBX.NA.6.BBB-		3.00	%		Monthly	Credit Suisse International		05/11/63	BBB	USD	30		(4,823	)		(2,353	)		(2,470	)
												$	(64,005	)	$	(60,587	)	$	(3,418	)

^(a)  Using S&P’s rating of the issuer or the underlying securities of the index, as applicable.

^(b)  The maximum potential amount the Fund may pay should a negative credit event take place as defined under the terms of the agreement.

36 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

OTC Interest Rate Swaps

Paid by the Fund		Received by the Fund				Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)		Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate		Frequency	Counterparty
1 day BZDIOVER	At Termination		7.48%	At Termination	Bank of America NA		01/04/21	BRL	8,120	$	6,297		$	—	$	6,297
1 day BZDIOVER	At Termination		7.46%	At Termination	Bank of America NA		01/04/21	BRL	2,328		1,579			—		1,579
1 day BZDIOVER	At Termination		7.42%	At Termination	Credit Suisse International		01/04/21	BRL	4,058		1,898			—		1,898
1 day BZDIOVER	At Termination		7.43%	At Termination	JPMorgan Chase Bank NA		01/04/21	BRL	1,734		898			—		898
3.27%	Semi-Annual		3 month LIBOR	Quarterly	Deutsche Bank AG		05/16/21	USD	470		(7,414	)		—		(7,414	)
1 day BZDIOVER	At Termination		8.53%	At Termination	Citibank NA		01/02/23	BRL	4,610		5,630			—		5,630
5.73%	Monthly		28 day MXIBTIIE	Monthly	Bank of America NA		01/03/25	MXN	672		4,755			—		4,755
28 day MXIBTIIE	Monthly		6.43%	Monthly	Bank of America NA		06/06/25	MXN	541		(3,071	)		—		(3,071	)
28 day MXIBTIIE	Monthly		6.33%	Monthly	Citibank NA		06/09/25	MXN	271		(1,600	)		—		(1,600	)
28 day MXIBTIIE	Monthly		6.33%	Monthly	Citibank NA		07/17/25	MXN	864		(5,233	)		—		(5,233	)
6.31%	Monthly		28 day MXIBTIIE	Monthly	Deutsche Bank AG		08/11/25	MXN	3,395		20,957			—		20,957
28 day MXIBTIIE	Monthly		6.27%	Monthly	Bank of America NA		12/05/25	MXN	122		(793	)		—		(793	)
										$	23,903		$	—	$	23,903

OTC Currency Swaps

Paid by the Fund

Received by the Fund

Notional Amount (000)

Counterparty

Termination Date (a)

Value

Upfront Premium Paid (Received)

Unrealized Appreciation (Depreciation)

Rate

Frequency

Rate

Frequency

Delivered

Received

16.77 TRY

Annual

3 month LIBOR

Quarterly

TRY  338

USD  63

JPMorgan Chase Bank NA

06/19/24

$

(2,640

)

$

—

$

(2,640

)

^(a)  At termination date, the notional amount delivered will be exchanged for the notional amount received.

The following reference rates, and their values as of period end, are used for security descriptions:

Reference Index		Reference rate
1 day BZDIOVER	Overnight Brazil CETIP — Interbank Rate	0.25%
28 day MXIBTIIE	Mexico Interbank TIIE 28-Day	8.41%
3 month LIBOR	London Interbank Offered Rate	2.81%
6 month EURIBOR	Euro Interbank Offered Rate	(0.24%)

Balances Reported in the Statement of Assets and Liabilities for Centrally Cleared Swaps, OTC Swaps and Options Written

	Swap Premiums Paid		Swap Premiums Received			Unrealized Appreciation		Unrealized Depreciation			Value
Centrally Cleared Swaps(a)	$	37,541	$	(2,581	)	$	364,092	$	(351,216	)	$	—
OTC Swaps		297,368		(65,936	)		112,611		(94,471	)		—
Options Written		N/A		N/A			96,869		(179,542	)		(371,711	)

^(a)  Includes cumulative appreciation (depreciation) on centrally cleared swaps, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities and is net of any previously paid (received) swap premium amounts.

SCHEDULE OF INVESTMENTS 37

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Assets — Derivative Financial Instruments
Futures contracts
Net unrealized appreciation(a)	$	—	$	—	$	—	$	—	$	2,904,015	$	—	$	2,904,015
Forward foreign currency exchange contracts
Unrealized appreciation on forward foreign currency exchange contracts		—		—		—		443,864		—		—		443,864
Options purchased
Investments at value — unaffiliated(b)		—		—		—		120,965		855,018		—		975,983
Swaps — centrally cleared
Net unrealized appreciation(a)		—		31,065		—		—		324,086		8,941		364,092
Swaps — OTC
Unrealized appreciation on OTC swaps; Swap premiums paid		—		367,965		—		—		42,014		—		409,979
	$	—	$	399,030	$	—	$	564,829	$	4,125,133	$	8,941	$	5,097,933
Liabilities — Derivative Financial Instruments
Futures contracts
Net unrealized depreciation(a)	$	—	$	—	$	—	$	—	$	1,019,161	$	—	$	1,019,161
Forward foreign currency exchange contracts
Unrealized depreciation on forward foreign currency exchange contracts		—		—		—		663,700		—		—		663,700
Options written
Options written, at value		—		—		—		115,351		256,360		—		371,711
Swaps — centrally cleared
Net unrealized depreciation(a)		—		—		—		—		351,216		—		351,216
Swaps — OTC
Unrealized depreciation on OTC swaps; Swap premiums received		—		139,656		—		2,640		18,111		—		160,407
	$	—	$	139,656	$	—	$	781,691	$	1,644,848	$	—	$	2,566,195

^(a)  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

^(b)  Includes options purchased at value as reported in the Schedule of Investments.

For the year ended December 31, 2018, the effect of derivative financial instruments in the Statement of Operations were as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts			Total
Net Realized Gain (Loss) from:
Futures contracts	$	—	$	—	$	—	$	—		$	(1,362,137	)	$	—		$	(1,362,137	)
Forward foreign currency exchange contracts		—		—		—		989,237			—			—			989,237
Options purchased(a)		—		—		—		(842,787	)		(241,099	)		—			(1,083,886	)
Options written		—		25,453		—		497,807			746,531			—			1,269,791
Swaps		—		20,917		—		(13,484	)		(18,445	)		(27,368	)		(38,380	)
	$	—	$	46,370	$	—	$	630,773		$	(875,150	)	$	(27,368	)	$	(225,375	)
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	$	—	$	—	$	—	$	—		$	1,835,140		$	—		$	1,835,140
Forward foreign currency exchange contracts		—		—		—		(197,264	)		—			—			(197,264	)
Options purchased(b)		—		—		—		216,148			360,449			—			576,597
Options written		—		—		—		(168,738	)		(224,205	)		—			(392,943	)
Swaps		—		54,313		—		(2,640	)		178,277			38			229,988
	$	—	$	54,313	$	—	$	(152,494	)	$	2,149,661		$	38		$	2,051,518

^(a)  Options purchased are included in net realized gain (loss) from investments — unaffiliated.

^(b)  Options purchased are included in net change in unrealized appreciation (depreciation) on investments — unaffiliated.

38 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$	191,092,480
Average notional value of contracts — short	$	86,080,473
Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$	31,554,141
Average amounts sold — in USD	$	14,959,821
Options:
Average value of option contracts purchased	$	207,113
Average value of option contracts written	$	112,919
Average notional value of swaption contracts purchased	$	14,172,500
Average notional value of swaption contracts written	$	82,698,000
Credit default swaps:
Average notional value — buy protection	$	8,853,636
Average notional value — sell protection	$	2,382,048
Interest rate swaps:
Average notional value — pays fixed rate	$	41,597,330
Average notional value — receives fixed rate	$	36,365,434
Currency swaps:
Average notional value — pays	$	15,975
Average notional value — receives	$	15,788
Inflation Swaps:
Average notional value — receives fixed rate	$	1,542,577
Total return swaps:
Average notional value	$	3,590,000

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments — Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	332,672		$	185,685
Forward foreign currency exchange contracts		443,864			663,700
Options(a)		975,983			371,711
Swaps — Centrally cleared		13,862			—
Swaps — OTC(b)		409,979			160,407
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	2,176,360		$	1,381,503
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(346,534	)		(185,685	)
Total derivative assets and liabilities subject to an MNA	$	1,829,826		$	1,195,818

^(a)  Includes options purchased at value which is included in Investments at value – unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

^(b)  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums (paid/received) in the Statement of Assets and Liabilities.

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Received		Cash Collateral Received (b)			Net Amount of Derivative Assets (c)
Bank of America NA	$	20,530	$	(13,097	)	$	—	$	—		$	7,433
Barclays Bank plc		185,925		—			—		—			185,925
BNP Paribas SA		26,079		(16,715	)		—		—			9,364
Citibank NA		94,335		(94,335	)		—		—			—
Citigroup Global Markets, Inc.		2,415		—			—		—			2,415
Credit Suisse International		14,643		(14,643	)		—		—			—
Deutsche Bank AG		414,982		(96,277	)		—		—			318,705
Goldman Sachs International		45,194		(43,274	)		—		—			1,920
HSBC Bank plc		168,390		(38,105	)		—		—			130,285
JPMorgan Chase Bank NA		819,211		(436,634	)		—		(382,577	)		—
JPMorgan Securities LLC		4,823		(4,823	)		—		—			—
Morgan Stanley & Co. International plc		32,013		(32,013	)		—		—			—
Royal Bank of Scotland		1,286		—			—		—			1,286
	$	1,829,826	$	(789,916	)	$	—	$	(382,577	)	$	657,333

SCHEDULE OF INVESTMENTS 39

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Pledged		Cash Collateral Pledged		Net Amount of Derivative Liabilities (d)
Bank of America NA	$	13,097	$	(13,097	)	$	—	$	—	$	—
BNP Paribas SA		16,715		(16,715	)		—		—		—
Citibank NA		321,301		(94,335	)		—		—		226,966
Credit Suisse International		20,511		(14,643	)		—		—		5,868
Deutsche Bank AG		96,277		(96,277	)		—		—		—
Goldman Sachs International		43,274		(43,274	)		—		—		—
HSBC Bank plc		38,105		(38,105	)		—		—		—
JPMorgan Chase Bank NA		436,634		(436,634	)		—		—		—
JPMorgan Securities LLC		5,015		(4,823	)		—		—		192
Morgan Stanley & Co. International plc		158,067		(32,013	)		—		—		126,054
Nomura International plc		33,691		—			—		—		33,691
Northern Trust Co.		1,628		—			—		—		1,628
Toronto Dominion Bank		216		—			—		—		216
UBS AG		11,287		—			—		—		11,287
	$	1,195,818	$	(789,916	)	$	—	$	—	$	405,902

^(a)  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

^(b)  Excess of collateral pledged to the individual counterparty is not shown for financial reporting purposes.

^(c)  Net amount represents the net amount receivable from the counterparty in the event of default.

^(d)  Net amount represents the net amount payable due to the counterparty in the event of default.

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities	$	—	$	44,559,426	$	1,026,437	$	45,585,863
Corporate Bonds:
Aerospace & Defense		—		8,097,759		—		8,097,759
Air Freight & Logistics		—		947,645		—		947,645
Airlines		—		2,255,237		—		2,255,237
Auto Components		—		404,452		—		404,452
Automobiles		—		3,677,121		—		3,677,121
Banks		—		38,337,204		—		38,337,204
Beverages		—		3,046,880		—		3,046,880
Biotechnology		—		4,283,641		—		4,283,641
Building Products		—		278,323		—		278,323
Capital Markets		—		10,769,013		894,031		11,663,044
Chemicals		—		1,999,880		—		1,999,880
Commercial Services & Supplies		—		452,857		—		452,857
Communications Equipment		—		153,343		—		153,343
Consumer Finance		—		11,169,839		—		11,169,839
Containers & Packaging		—		236,838		—		236,838
Diversified Consumer Services		—		747,615		—		747,615
Diversified Financial Services		—		1,963,000		—		1,963,000
Diversified Telecommunication Services		—		6,030,786		—		6,030,786
Electric Utilities		—		13,860,412		—		13,860,412
Electrical Equipment		—		114,766		—		114,766
Electronic Equipment, Instruments & Components		—		619,514		—		619,514
Energy Equipment & Services		—		988,471		—		988,471
Entertainment		—		1,660,086		—		1,660,086
Equity Real Estate Investment Trusts (REITs)		—		1,520,590		—		1,520,590
Food & Staples Retailing		—		1,588,022		—		1,588,022
Food Products		—		2,984,608		—		2,984,608
Gas Utilities		—		352,846		—		352,846
Health Care Equipment & Supplies		—		4,371,868		—		4,371,868
Health Care Providers & Services		—		6,759,256		—		6,759,256

40 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

	Level 1			Level 2			Level 3		Total
Hotels, Restaurants & Leisure	$	—		$	1,120,237		$	—	$	1,120,237
Household Products		—			738,344			—		738,344
Industrial Conglomerates		—			65,260			—		65,260
Insurance		—			2,238,433			—		2,238,433
Internet & Direct Marketing Retail		—			214,380			—		214,380
IT Services		—			2,206,333			—		2,206,333
Life Sciences Tools & Services		—			939,219			—		939,219
Media		—			7,096,432			—		7,096,432
Metals & Mining		—			1,216,633			—		1,216,633
Multi-Utilities		—			620,827			—		620,827
Oil, Gas & Consumable Fuels		—			22,161,169			—		22,161,169
Paper & Forest Products		—			745,881			—		745,881
Pharmaceuticals		—			7,895,806			—		7,895,806
Road & Rail		—			3,585,033			—		3,585,033
Semiconductors & Semiconductor Equipment		—			6,171,995			—		6,171,995
Software		—			4,259,522			—		4,259,522
Specialty Retail		—			564,607			—		564,607
Technology Hardware, Storage & Peripherals		—			1,806,311			—		1,806,311
Thrifts & Mortgage Finance		—			318,760			—		318,760
Tobacco		—			2,035,504			—		2,035,504
Trading Companies & Distributors		—			306,023			—		306,023
Wireless Telecommunication Services		—			2,785,322			—		2,785,322
Floating Rate Loan Interests:
Banks		—			—			426,783		426,783
Construction Materials		—			126,225			—		126,225
Diversified Financial Services		—			—			1,481,314		1,481,314
Gas Utilities		—			125,583			—		125,583
Machinery		—			12,721			—		12,721
Thrifts & Mortgage Finance		—			—			1,557,132		1,557,132
Foreign Agency Obligations		—			487,027			—		487,027
Foreign Government Obligations		—			13,271,821			—		13,271,821
Municipal Bonds		—			36,983,654			—		36,983,654
Non-Agency Mortgage-Backed Securities		—			21,649,726			3,137,920		24,787,646
Other Interests		—			—			—		—
Capital Trusts		—			862,313			—		862,313
U.S. Government Sponsored Agency Securities		—			241,161,378			81,630		241,243,008
U.S. Treasury Obligations		—			81,271,822			—		81,271,822
Short-Term Securities:
Borrowed Bond Agreements		—			2,134,119			—		2,134,119
Commercial Paper		—			1,122,568			—		1,122,568
Foreign Government Obligations		—			17,161,744			—		17,161,744
Money Market Funds		22,923,602			—			—		22,923,602
Options Purchased:
Foreign currency exchange contracts		—			120,965			—		120,965
Interest rate contracts		—			855,018			—		855,018
Liabilities:
Borrowed Bonds		—			(2,134,436	)		—		(2,134,436	)
TBA Sale Commitments		—			(70,559,746	)		—		(70,559,746	)
	$	22,923,602		$	587,975,831		$	8,605,247	$	619,504,680
Derivative Financial Instruments(a)
Assets:
Credit contracts	$	—		$	101,662		$	—	$	101,662
Foreign currency exchange contracts		—			443,864			—		443,864
Interest rate contracts		2,904,015			366,100			—		3,270,115
Other contracts		—			8,941			—		8,941
Liabilities:
Credit contracts		—			(73,720	)		—		(73,720	)
Foreign currency exchange contracts		—			(781,691	)		—		(781,691	)
Interest rate contracts		(1,019,161	)		(625,687	)		—		(1,644,848	)
	$	1,884,854		$	(560,531	)	$	—	$	1,324,323

^(a)  Derivative financial instruments are swaps, futures contracts, forward foreign currency exchange contracts and options written. Swaps, futures contracts, and forward foreign currency exchange contracts are valued at the unrealized appreciation (depreciation) on the instrument and options written are shown at value.

During the year ended December 31, 2018, there were no transfers between Level 1 and Level 2.

SCHEDULE OF INVESTMENTS 41

Schedule of Investments  (continued) December 31, 2018 BlackRock Total Return V.I. Fund

A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the period in relation to net assets. The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

	Asset- Backed Securities			Corporate Bonds			Floating Rate Loan Interests			Non-Agency Mortgage- Backed Securities			U.S. Government Sponsored Agency Securities			Total
Investments:
Assets:
Opening Balance, as of December 31, 2017	$	2,576,403		$	1,000,000		$	1,599,976		$	2,319,947		$	—		$	7,496,326
Transfers into Level 3		113,721			—			—			811,030			—			924,751
Transfers out of Level 3(a)		(1,816,281	)		—			—			(899,366	)		—			(2,715,647	)
Other(b)		489,999			—			—			(489,999	)		—			—
Accrued discounts/premiums		5,679			—			1,145			3,228			160			10,212
Net realized gain (loss)		(18,394	)		—			9,949			(14,549	)		158			(22,836	)
Net change in unrealized appreciation (depreciation)(c)(d)		(29,677	)		—			3,516			(68,011	)		249			(93,923	)
Purchases		721,130			—			3,755,699			2,936,214			82,609			7,495,652
Sales		(1,016,143	)		(105,969	)		(1,905,056	)		(1,460,574	)		(1,546	)		(4,489,288	)
Closing Balance, as of December 31, 2018	$	1,026,437		$	894,031		$	3,465,229		$	3,137,920		$	81,630		$	8,605,247
Net change in unrealized appreciation (depreciation) on investments still held at December 31, 2018(d)	$	(29,546	)	$	—		$	(1,334	)	$	(60,380	)	$	249		$	(91,011	)

^(a)  As of December 31, 2017, the Fund used significant unobservable inputs in determining the value of certain investments. As of December 31, 2018, the Fund used observable inputs in determining the value of the same investments. As a result, the investments at beginning of the period value were transferred from Level 3 to Level 2 in the disclosure hierarchy.

^(b)  Certain Level 3 investments were re-classified between Asset-Backed Securities and Non-Agency Mortgage-Backed Securities.

^(c)  Included in the related net change in unrealized appreciation (depreciation) in the Statement of Operations.

^(d)  Any difference between net change in unrealized appreciation (depreciation) and net change in unrealized appreciation (depreciation) on investments still held at December 31, 2018 is generally due to investments no longer held or categorized as Level 3 at period end.

The Fund’s investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. Such valuations are based on unobservable inputs. A significant change in third party information could result in a significantly lower or higher value of such Level 3 investments.

See notes to financial statements.

42 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Statement of Assets and Liabilities

December 31, 2018

	BlackRock Total Return V.I. Fund
ASSETS
Investments at value — unaffiliated (cost — $673,448,248)	$	669,304,021
Investments at value — affiliated (cost — $22,894,841)		22,894,841
Cash pledged:
Futures contracts		1,198,050
Centrally cleared swaps		822,090
Foreign currency at value (cost — $6,157,739)		6,254,452
Receivables:
Investments sold		19,548,850
TBA sale commitments		69,937,862
Capital shares sold		768,780
Dividends — affiliated		53,911
Dividends — unaffiliated		12,590
Interest — unaffiliated		3,999,022
From the Manager		179,694
Variation margin on futures contracts		332,672
Variation margin on centrally cleared swaps		13,862
Swap premiums paid		297,368
Unrealized appreciation on:
Forward foreign currency exchange contracts		443,864
OTC swaps		112,611
Prepaid expenses		564
Other assets		5,262
Total assets		796,180,366
LIABILITIES
Bank overdraft		5,187
Cash received:
Collateral — OTC derivatives		620,000
Collateral — TBA commitments		270,000
Borrowed bonds at value (proceeds $2,087,831)		2,134,436
Options written at value (premium received $289,038)		371,711
TBA sale commitments at value (proceeds $69,937,862)		70,559,746
Payables:
Investments purchased		149,399,877
Capital shares redeemed		4,608,664
Income dividend distributions		1,182,020
Interest expense		8,555
Distribution fees		62,610
Variation margin on futures contracts		185,685
Board realignment and consolidation		179,694
Investment advisory fees		192,997
Directors’ and Officer’s fees		6,332
Other affiliates		1,053
Other accrued expenses		582,804
Swap premiums received		65,936
Unrealized depreciation on:
Forward foreign currency exchange contracts		663,700
OTC swaps		94,471
Total liabilities		231,195,478
NET ASSETS	$	564,984,888
NET ASSETS CONSIST OF
Paid-in capital	$	582,249,625
Accumulated loss		(17,264,737	)
NET ASSETS	$	564,984,888
NET ASSET VALUE
Class I — Based on net assets of $246,390,010 and 21,367,125 shares outstanding, 600 million shares authorized, $0.10 par value.	$	11.53
Class III — Based on net assets of $318,594,878 and 27,959,108 shares outstanding, 100 million shares authorized, $0.10 par value.	$	11.40

See notes to financial statements.

FINANCIAL STATEMENTS 43

Statement of Operations

Year Ended December 31, 2018

	BlackRock Total Return V.I. Fund
INVESTMENT INCOME
Dividends — affiliated	$	342,883
Dividends — unaffiliated		35,512
Interest — unaffiliated		15,295,507
Foreign taxes withheld		(54,938	)
Total investment income		15,618,964
EXPENSES
Investment advisory		1,964,361
Transfer agent — class specific		803,340
Distribution — class specific		731,260
Board realignment and consolidation		179,694
Reorganization		154,777
Accounting services		149,938
Professional		86,224
Printing		83,323
Custodian		79,002
Directors and Officer		22,496
Transfer agent		5,000
Registration		4,699
Miscellaneous		89,412
Total expenses excluding interest expense		4,353,526
Interest expense		148,905
Total expenses		4,502,431
Less:
Fees waived and/or reimbursed by the Manager		(324,405	)
Transfer agent fees waived and/or reimbursed — class specific		(628,125	)
Total expenses after fees waived and/or reimbursed		3,549,901
Net investment income		12,069,063
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments — unaffiliated		(12,403,147	)
Borrowed bonds		(20,488	)
Forward foreign currency exchange contracts		989,237
Foreign currency transactions		119,312
Futures contracts		(1,362,137	)
Options written		1,269,791
Swaps		(38,380	)
		(11,445,812	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(2,780,331	)
Borrowed bonds		(1,406	)
Forward foreign currency exchange contracts		(197,264	)
Foreign currency translations		85,017
Futures contracts		1,835,140
Options written		(392,943	)
Swaps		229,988
		(1,221,799	)
Net realized and unrealized loss		(12,667,611	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(598,548	)

See notes to financial statements.

44 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Statements of Changes in Net Assets

	BlackRock Total Return V.I. Fund
	Year Ended December 31,
	2018			2017
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income	$	12,069,063		$	8,577,067
Net realized gain (loss)		(11,445,812	)		186,051
Net change in unrealized appreciation (depreciation)		(1,221,799	)		3,365,524
Net increase (decrease) in net assets resulting from operations		(598,548	)		12,128,642
DISTRIBUTIONS TO SHAREHOLDERS(a)(b)
Class I		(4,558,310	)		(3,931,362	)
Class III		(7,248,839	)		(4,976,227	)
Decrease in net assets resulting from distributions to shareholders		(11,807,149	)		(8,907,589	)
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from capital share transactions		157,601,267			83,969,566
NET ASSETS(b)
Total increase in net assets		145,195,570			87,190,619
Beginning of year		419,789,318			332,598,699
End of year	$	564,984,888		$	419,789,318

^(a)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(b)  Prior year distribution character information and (distributions in excess of) net investment income has been modified or removed to conform with current year Regulation S-X presentation changes. Refer to Note 12 for this prior year information.

See notes to financial statements.

FINANCIAL STATEMENTS 45

Financial Highlights

(For a share outstanding throughout each period)

	BlackRock Total Return V.I. Fund
	Class I
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	11.91		$	11.79		$	11.71		$	11.93		$	11.51
Net investment income(a)		0.33			0.29			0.23			0.22			0.32
Net realized and unrealized gain (loss)		(0.39	)		0.13			0.09			(0.19	)		0.44
Net increase (decrease) from investment operations		(0.06	)		0.42			0.32			0.03			0.76
Distributions from net investment income(b)		(0.32	)		(0.30	)		(0.24	)		(0.25	)		(0.34	)
Net asset value, end of year	$	11.53		$	11.91		$	11.79		$	11.71		$	11.93
Total Return(c)
Based on net asset value		(0.46	)%		3.60	%(d)		2.76	%		0.26	%		6.66	%
Ratios to Average Net Assets(e)
Total expenses		0.85	%(f)		0.94	%		0.82	%		0.92	%		0.88	%
Total expenses after fees waived and/or reimbursed and paid indirectly		0.58	%(f)		0.74	%		0.62	%		0.74	%		0.69	%
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense		0.55	%		0.62	%		0.59	%		0.69	%		0.66	%
Net investment income		2.84	%		2.43	%		1.92	%		1.89	%		2.68	%
Supplemental Data
Net assets, end of year (000)	$	246,390		$	152,138		$	157,445		$	154,046		$	130,765
Portfolio turnover rate(g)		488	%		627	%		590	%		900	%		772	%

^(a)  Based on average shares outstanding.

^(b) Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Includes payment received from an affiliate, which impacted the Fund’s total return. Excluding the payment from an affiliate, the Fund’s total return is 3.51%.

^(e)  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Investments in underlying funds		0.01	%		—	%		0.01	%		0.01	%		—	%

^(f)  Includes reorganization costs associated with the Fund’s reorganization. Without these costs, total expenses and total expenses after fees waived and/or reimbursed would have been 0.82% and 0.57%, respectively.

^(g)  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Portfolio turnover rate (excluding MDRs)		310	%		389	%		396	%		625	%		560	%

See notes to financial statements.

46 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Financial Highlights  (continued)

(For a share outstanding throughout each period)

	BlackRock Total Return V.I. Fund (continued)
	Class III
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	11.76		$	11.65		$	11.57		$	11.79		$	11.38
Net investment income(a)		0.29			0.25			0.19			0.18			0.27
Net realized and unrealized gain (loss)		(0.37	)		0.12			0.10			(0.19	)		0.44
Net increase (decrease) from investment operations		(0.08	)		0.37			0.29			(0.01	)		0.71
Distributions from net investment income(b)		(0.28	)		(0.26	)		(0.21	)		(0.21	)		(0.30	)
Net asset value, end of year	$	11.40		$	11.76		$	11.65		$	11.57		$	11.79
Total Return(c)
Based on net asset value		(0.63	)%		3.21	%(d)		2.46	%		(0.08	)%		6.28	%
Ratios to Average Net Assets(e)
Total expenses		1.06	%(f)		1.16	%		1.01	%		1.06	%		1.11	%
Total expenses after fees waived and/or reimbursed and paid indirectly		0.89	%(f)		1.06	%		0.93	%		1.04	%		1.01	%
Total expenses after fees waived and/or reimbursed and paid indirectly and excluding interest expense		0.86	%		0.94	%		0.89	%		0.98	%		0.98	%
Net investment income		2.54	%		2.15	%		1.61	%		1.54	%		2.31	%
Supplemental Data
Net assets, end of year (000)	$	318,595		$	267,651		$	175,153		$	68,844		$	7,300
Portfolio turnover rate(g)		488	%		627	%		590	%		900	%		772	%

^(a)  Based on average shares outstanding.

^(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Includes payment received from an affiliate, which had no impact on the Fund’s total return.

^(e)  Excludes expenses incurred indirectly as a result of investments in underlying funds as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Investments in underlying funds		0.01	%		—	%		0.01	%		0.01	%		—	%

^(f)  Includes reorganization costs associated with the Fund’s reorganization. Without these costs, total expenses and total expenses after fees waived and/or reimbursed would have been 1.03% and 0.88%, respectively.

^(g)  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Portfolio turnover rate (excluding MDRs)		310	%		389	%		396	%		625	%		560	%

See notes to financial statements.

FINANCIAL HIGHLIGHTS 47

Notes to Financial Statements

1. ORGANIZATION

BlackRock Variable Series Funds II, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. The Company is organized as a Maryland corporation that is comprised of 3 separate portfolios. The funds offer shares to insurance companies for their separate accounts to fund benefits under certain variable annuity and variable life insurance contracts. The financial statements presented are for BlackRock Total Return V.I. Fund (the “Fund”). The Fund is classified as diversified. Class I and Class III Shares have identical voting, dividend, liquidation and other rights, except that only shares of the respective classes are entitled to vote on matters concerning only that class. In addition, Class III Shares bear certain expenses related to the distribution of such shares.

The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex of open-end funds referred to as the Equity-Bond Complex.

Reorganizations: The Board approved an Agreement and Plan of Reorganization with respect to the following Predecessor Fund, pursuant to which the Predecessor Fund reorganized into a newly created series (the “Acquiring Fund”) of BlackRock Variable Series Funds II, Inc., a newly organized Maryland corporation. The reorganization (the “Board Reorganization”) closed on September 17, 2018 and was not subject to approval by shareholders of the Predecessor Fund.

Predecessor Fund	Predecessor Fund’s Registrant		Acquiring Fund		Acquiring Fund’s Registrant
BlackRock Total Return V.I. Fund		BlackRock Variable Series Funds, Inc.		BlackRock Total Return V.I. Fund		BlackRock Variable Series Funds II, Inc.

The Board Reorganization was effected in connection with the proposed reconfiguration of the boards of directors/trustees of certain BlackRock-advised funds.

The Acquiring Fund has the same investment objective, strategies and policies, investment adviser, portfolio management team and service providers as the Predecessor Fund. The Predecessor Fund is the performance and accounting survivor of the Board Reorganization, meaning that the Acquiring Fund assumed the performance and financial history of the Predecessor Fund upon completion of the Board Reorganization. In addition, the Acquiring Fund is subject to the same contractual arrangements, including the same contractual fees and expenses, as those of the Predecessor Fund as of the date of the Board Reorganization. The Board Reorganization was tax-free, meaning that the Predecessor Fund’s shareholders became shareholders of the Acquiring Fund without realizing any gain or loss for federal income tax purposes.

As a result, the Acquiring Fund acquired all of the assets and assumed all of the liabilities of the Predecessor Fund in exchange for an equal aggregate value of newly-issued shares of the Acquiring Fund. Each shareholder of the Predecessor Fund received shares of the Acquiring Fund in an amount equal to the aggregate NAV of such shareholder’s Predecessor Fund shares, as determined at the close of business on September 14, 2018.

The Board Reorganization was accomplished by a tax-free exchange of shares of the Acquiring Fund in the following amounts and at the following conversion ratio:

Predecessor Fund	Shares Prior to Reorganization		Conversion Ratio		Shares Post-Reorganization
BlackRock Total Return V.I. Fund		38,673,771		1		38,673,771

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. However, the cost basis of the investments received from the Predecessor Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

Prior to the Board Reorganization, the Acquiring Fund had not yet commenced operations and had no assets or liabilities. The Predecessor Fund’s net assets, fair value and cost of investments and derivative financial instruments prior to the Reorganization were as follows:

Predecessor Fund	Net Assets		Fair Value of Investments		Cost of Investments
BlackRock Total Return V.I. Fund	$	441,417,729	$	456,367,844	$	464,343,573

Prior to the Board Reorganization’s effective date, the Predecessor Fund began to incur expenses in connection with the proposed realignment and consolidation of the boards of directors/trustees of certain BlackRock-advised funds. These expenses and liabilities have been assumed by the Acquiring Fund. The Manager has voluntarily agreed to reimburse certain funds for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

The Board of Trustees of State Farm Variable Product Trust and shareholders of the State Farm Fund approved the reorganization (the “State Farm Reorganization”) of the State Farm Fund (defined below) into the Fund. As a result, the Fund acquired substantially all of the assets and assumed substantially all of the liabilities of the State Farm Fund in exchange for an equal aggregate value of newly-issued Class I Shares of the Fund.

Each shareholder of the State Farm Fund received shares of the Fund in an amount equal to the aggregate net asset value (“NAV”) of such shareholder’s State Farm Fund shares, as determined at the close of business on October 26, 2018, less the costs of the State Farm Reorganization.

The State Farm Reorganization was accomplished by a tax-free exchange of shares of the Fund in the following amount and at the following conversion ratio:

State Farm Fund	Shares Prior to Reorganization		Conversion Ratio		Total Return V.I. Fund Share Class		Shares of Total Return V.I. Fund
State Farm Bond Fund, a series of State Farm Variable Product Trust		11,641,553		0.85469550		Class I		9,949,983

48 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

The State Farm Fund’s net assets and composition of net assets on October 26, 2018, the valuation date of the State Farm Reorganization were as follows:

State Farm Fund	Net Assets		Paid-In Capital		Accumulated Loss
State Farm Bond Fund, a series of State Farm Variable Product Trust	$	113,486,424	$	116,592,762	$	(3,106,338	)

For financial reporting purposes, assets received and shares issued by the Fund were recorded at fair value. However, the cost basis of the investments received from the State Farm Fund was carried forward to align ongoing reporting of the Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

The net assets of the Fund before the State Farm Reorganization were $440,042,333. The aggregate net assets of the Fund immediately after the acquisition amounted to $553,528,757. The State Farm Fund’s fair value and cost of investments prior to the State Farm Reorganization were as follows:

State Farm Fund	Fair Value of Investments		Cost of Investments
State Farm Bond Fund, a series of State Farm Variable Product Trust	$	102,795,581	$	105,908,727

The purpose of the transaction was to combine the assets of the State Farm Fund with the assets of the Fund. The State Farm Reorganization was a tax-free event and closed on October 29, 2018.

Assuming the acquisition had been completed on January 1, 2018, the beginning of the fiscal reporting period of the Fund, the pro forma results of operations for the year ended December 31, 2018, are as follows:

• Net investment income: $15,145,680

• Net realized and change in unrealized loss on investments: $(17,219,170)

• Net decrease in net assets resulting from operations: $(2,073,490)

Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Fund that have been included in the Fund’s Statement of Operations since October 29, 2018.

State Farm Reorganization costs incurred by the Fund in connection with the State Farm Reorganization were expensed by the Fund. The Manager reimbursed the Fund $131,200, which is included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on the ex-dividend date. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund is informed of the ex-dividend date. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Foreign Currency Translation: The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., dollar rolls, TBA sale commitments, futures contracts, forward foreign currency exchange contracts, options written and swaps) or certain borrowings (e.g., reverse repurchase agreements) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if

NOTESTO FINANCIAL STATEMENTS 49

Notes to Financial Statements  (continued)

required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions:Distributions from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit, non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update 2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management is currently evaluating the impact of this guidance to the Fund.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time) U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Equity investments traded on a recognized securities exchange are valued at the official closing price each day, if available. For equity investments traded on more than one exchange, the official closing price on the exchange where the stock is primarily traded is used. Equity investments traded on a recognized exchange for which there were no sales on that day may be valued at the last available bid (long positions) or ask (short positions) price.

• Fixed-income securities for which market quotations are readily available are generally valued using the last available bid prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-traded and over-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

• Municipal investments (including commitments to purchase such investments on a “when-issued” basis) are valued on the basis of prices provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments and information with respect to various relationships between investments.

• Investments in open-end U.S. mutual funds are valued at NAV each business day.

• Futures contracts traded on exchanges are valued at their last sale price.

50 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

• Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

• Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. OTC options and options on swaps (“swaptions”) are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

• Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments.

• To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement.

The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.

	Standard Inputs Generally Considered By Third Party Pricing Services
Market approach	(i)  recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers; (ii)   recapitalizations and other transactions across the capital structure; and (iii)  market multiples of comparable issuers.
Income approach	(i)  future cash flows discounted to present and adjusted as appropriate for liquidity, credit, and/or market risks; (ii)   quoted prices for similar investments or assets in active markets; and (iii)  other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.
Cost approach	(i)  audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company; (ii)   changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company; (iii)  relevant news and other public sources; and (iv)  known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.

Fair Value Hierarchy:Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs)

NOTESTO FINANCIAL STATEMENTS 51

Notes to Financial Statements  (continued)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. SECURITIES AND OTHER INVESTMENTS

Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, a fund may subsequently have to reinvest the proceeds at lower interest rates. If a fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.

Non-agency mortgage-backed securities are securities issued by non-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks. Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.

Collateralized Debt Obligations: Collateralized debt obligations (“CDOs”), including collateralized bond obligations (“CBOs”) and collateralized loan obligations (“CLOs”), are types of asset-backed securities. A CDO is an entity that is backed by a diversified pool of debt securities (CBOs) or syndicated bank loans (CLOs). The cash flows of the CDO can be split into multiple segments, called “tranches,” which will vary in risk profile and yield. The riskiest segment is the subordinated or “equity” tranche. This tranche bears the greatest risk of defaults from the underlying assets in the CDO and serves to protect the other, more senior, tranches from default in all but the most severe circumstances. Since it is shielded from defaults by the more junior tranches, a “senior” tranche will typically have higher credit ratings and lower yields than their underlying securities, and often receive investment grade ratings from one or more of the nationally recognized rating agencies. Despite the protection from the more junior tranches, senior tranches can experience substantial losses due to actual defaults, increased sensitivity to future defaults and the disappearance of one or more protecting tranches as a result of changes in the credit profile of the underlying pool of assets.

Inflation-Indexed Bonds: Inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) are fixed-income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the principal value of inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal. With regard to municipal inflation-indexed bonds and certain corporate inflation-indexed bonds, the inflation adjustment is typically reflected in the semi-annual coupon payment. As a result, the principal value of municipal inflation-indexed bonds and such corporate inflation-indexed bonds does not adjust according to the rate of inflation.

Multiple Class Pass-Through Securities:Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities, may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes.

52 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, a fund’s initial investment in the IOs may not fully recoup.

Stripped Mortgage-Backed Securities:Stripped mortgage-backed securities are typically issued by the U.S. Government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. Stripped mortgage-backed securities may be privately issued.

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

Capital Securities and Trust Preferred Securities: Capital securities, including trust preferred securities, are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics. In the case of trust preferred securities, an affiliated business trust of a corporation issues these securities, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured with either a fixed or adjustable coupon that can have either a perpetual or stated maturity date. For trust preferred securities, the issuing bank or corporation pays interest to the trust, which is then distributed to holders of these securities as a dividend. Dividends can be deferred without creating an event of default or acceleration, although maturity cannot take place unless all cumulative payment obligations have been met. The deferral of payments does not affect the purchase or sale of these securities in the open market. These securities generally are rated below that of the issuing company’s senior debt securities and are freely callable at the issuer’s option.

Preferred Stocks: Preferred stock has a preference over common stock in liquidation (and generally in receiving dividends as well), but is subordinated to the liabilities of the issuer in all respects. As a general rule, the market value of preferred stock with a fixed dividend rate and no conversion element varies inversely with interest rates and perceived credit risk, while the market price of convertible preferred stock generally also reflects some element of conversion value. Because preferred stock is junior to debt securities and other obligations of the issuer, deterioration in the credit quality of the issuer will cause greater changes in the value of a preferred stock than in a more senior debt security with similar stated yield characteristics. Unlike interest payments on debt securities, preferred stock dividends are payable only if declared by the issuer’s board of directors. Preferred stock also may be subject to optional or mandatory redemption provisions.

Floating Rate Loan Interests: Floating rate loan interests are typically issued to companies (the “borrower”) by banks, other financial institutions, or privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged or in bankruptcy proceedings. In addition, transactions in floating rate loan interests may settle on a delayed basis, which may result in proceeds from the sale not being readily available for a fund to make additional investments or meet its redemption obligations. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. Since the rates reset only periodically, changes in prevailing interest rates (and particularly sudden and significant changes) can be expected to cause some fluctuations in the NAV of a fund to the extent that it invests in floating rate loan interests. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. These investments are treated as investments in debt securities for purposes of a fund’s investment policies.

When a fund purchases a floating rate loan interest, it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, a fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by a fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. A fund may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.

Floating rate loan interests are usually freely callable at the borrower’s option. A fund may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in a fund having a contractual relationship only with the lender, not with the borrower. A fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, a fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower. A fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, a fund assumes the credit risk of both the borrower and the lender that is selling the Participation. A fund’s investment in loan participation interests involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, a fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in a fund having a direct contractual relationship with the borrower, and a fund may enforce compliance by the borrower with the terms of the loan agreement.

Forward Commitments and When-Issued Delayed Delivery Securities: The fund may purchase securities on a when-issued basis and may purchase or sell securities on a forward commitment basis. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The fund may purchase securities under such conditions with the intention of actually acquiring them, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the fund may be required to pay more at settlement than the security is worth. In addition, the fund is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. In the event of default by the counterparty, the fund’s maximum amount of loss is the unrealized appreciation of unsettled when-issued transactions.

NOTESTO FINANCIAL STATEMENTS 53

Notes to Financial Statements  (continued)

TBA Commitments: TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. When entering into TBA commitments, a fund may take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

In order to better define contractual rights and to secure rights that will help a fund mitigate its counterparty risk, TBA commitments may be entered into by a fund under Master Securities Forward Transaction Agreements (each, an “MSFTA”). An MSFTA typically contains, among other things, collateral posting terms and netting provisions in the event of default and/or termination event. The collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of the collateral currently pledged by a fund and the counterparty. Cash collateral that has been pledged to cover the obligations of a fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral for TBA commitments or cash received as collateral for TBA commitments, respectively. Non-cash collateral pledged by a fund, if any, is noted in the Schedule of Investments. Typically, a fund is permitted to sell, re-pledge or use the collateral it receives; however, the counterparty is not permitted to do so. To the extent amounts due to a fund are not fully collateralized, contractually or otherwise, a fund bears the risk of loss from counterparty non-performance.

Mortgage Dollar Roll Transactions: The fund may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (i.e., same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, a fund is not entitled to receive interest and principal payments on the securities sold. Mortgage dollar roll transactions are treated as purchases and sales and realizes gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that a fund is required to purchase may decline below the agreed upon repurchase price of those securities.

Borrowed Bond Agreements: Repurchase agreements may be referred to as borrowed bond agreements when entered into in connection with short sales of bonds. In a borrowed bond agreement, a fund borrows a bond from a counterparty in exchange for cash collateral. The agreement contains a commitment that the security and the cash will be returned to the counterparty and a fund at a mutually agreed upon date. Certain agreements have no stated maturity and can be terminated by either party at any time. Earnings on cash collateral and compensation to the lender of the bond are based on agreed upon rates between a fund and the counterparty. The value of the underlying cash collateral approximates the market value and accrued interest of the borrowed bond. To the extent that a borrowed bond transaction exceeds one business day, the value of the cash collateral in the possession of the counterparty is monitored on a daily basis to ensure the adequacy of the collateral. As the market value of the borrowed bond changes, the cash collateral is periodically increased or decreased with a frequency and in amounts prescribed in the borrowed bond agreement. A fund may also experience delays in gaining access to the collateral.

Reverse Repurchase Agreements: Reverse repurchase agreements are agreements with qualified third party broker dealers in which a fund sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. A fund receives cash from the sale to use for other investment purposes. During the term of the reverse repurchase agreement, a fund continues to receive the principal and interest payments on the securities sold. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. A fund may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Reverse repurchase agreements involve leverage risk. If a fund suffers a loss on its investment of the transaction proceeds from a reverse repurchase agreement, a fund would still be required to pay the full repurchase price. Further, a fund remains subject to the risk that the market value of the securities repurchased declines below the repurchase price. In such cases, a fund would be required to return a portion of the cash received from the transaction or provide additional securities to the counterparty.

Cash received in exchange for securities delivered plus accrued interest due to the counterparty is recorded as a liability in the Statement of Assets and Liabilities at face value including accrued interest. Due to the short-term nature of the reverse repurchase agreements, face value approximates fair value. Interest payments made by a fund to the counterparties are recorded as a component of interest expense in the Statement of Operations. In periods of increased demand for the security, a fund may receive a fee for the use of the security by the counterparty, which may result in interest income to a fund.

For the year ended December 31, 2018, the average amount of reverse repurchase agreements outstanding and the daily weighted average interest rate for the Fund were $10,185,960 and 1.58%, respectively.

Borrowed bond agreements are entered into by a fund under Master Repurchase Agreements (each, an “MRA”), which permit a fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due to or from a fund. With borrowed bond agreements, typically a fund and counterparty under an MRA are permitted to sell, re-pledge, or use the collateral associated with the transaction. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Pursuant to the terms of the MRA, a fund receives or posts securities and cash as collateral with a market value in excess of the repurchase price to be paid or received by a fund upon the maturity of the transaction. Upon a bankruptcy or insolvency of the MRA counterparty, a fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed.

54 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

As of period end, the following table is a summary of the Fund’s open borrowed bond agreements by counterparty which are subject to offset under an MRA on a net basis:

Counterparty	Borrowed Bond Agreements (a)		Borrowed Bond at  Value including Accrued Interest (b)			Exposure Due (to) / from Counterparty before Collateral			Non-cash Collateral Received		Cash Collateral Received		Fair Value of Non-cash Collateral Pledged Including Accrued Interest		Cash Collateral Pledged		Net Collateral (Received) / Pledged		Net Exposure Due (to) / from Counterparty  (c)
Deutsche Bank Securities, Inc.	$	70,963	$	(71,041	)	$	(78	)	$	—	$	—	$	—	$	—	$	—	$	(78	)
Merrill Lynch, Pierce, Fenner & Smith Inc.		2,063,156		(2,071,950	)		(8,794	)		—		—		—		—		—		(8,794	)
	$	2,134,119	$	(2,142,991	)	$	(8,872	)	$	—	$	—	$	—	$	—	$	—	$	(8,872	)

^(a)  Included in Investments at value — unaffiliated in the Statement of Assets and Liabilities.

^(b)  Includes accrued interest on borrowed bonds in the amount of $8,555 which is included in interest expense payable in the Statement of Assets and Liabilities.

^(c)  Net exposure represents the net receivable (payable) that would be due from/to the counterparty in the event of default.

In the event the counterparty of securities under an MRA files for bankruptcy or becomes insolvent, a fund’s use of the proceeds from the agreement may be restricted while the counterparty, or its trustee or receiver, determines whether or not to enforce a fund’s obligation to repurchase the securities.

Short Sale Transactions: In short sale transactions, a fund sells a security it does not hold in anticipation of a decline in the market price of that security. When a fund makes a short sale, it will borrow the security sold short (borrowed bond) and deliver the fixed-income security to the counterparty to which it sold the security short. An amount equal to the proceeds received by a fund is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the market value of the short sale. A fund is required to repay the counterparty interest on the security sold short, which, if applicable, is shown as interest expense in the Statement of Operations. A fund is exposed to market risk based on the amount, if any, that the market value of the security increases beyond the market value at which the position was sold. Thus, a short sale of a security involves the risk that instead of declining, the price of the security sold short will rise. The short sale of securities involves the possibility of an unlimited loss since there is an unlimited potential for the market price of the security sold short to increase. A gain is limited to the price at which a fund sold the security short. A realized gain or loss is recognized upon the termination of a short sale if the market price is either less than or greater than the proceeds originally received. There is no assurance that a fund will be able to close out a short position at a particular time or at an acceptable price.

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to, changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts on the Statement of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

Forward Foreign Currency Exchange Contracts: Forward foreign currency exchange contracts are entered into to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk).

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.

The contract is marked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed. Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign

NOTESTO FINANCIAL STATEMENTS 55

Notes to Financial Statements  (continued)

currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies. Cash amounts pledged for forward foreign currency exchange contracts are considered restricted and are included in cash pledged as collateral for OTC derivatives on the Statement of Assets and Liabilities.

Options:The Fund purchases and writes call and put options to increase or decrease its exposure to the risks of underlying instruments, including equity risk, interest rate risk and/or commodity price risk and/or, in the case of options written, to generate gains from options premiums.

A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised) the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period.

Premiums paid on options purchased and premiums received on options written, as well as the daily fluctuation in market value, are included in investments at value — unaffiliated and options written at value, respectively, in the Statement of Assets and Liabilities. When an instrument is purchased or sold through the exercise of an option, the premium is offset against the cost or proceeds of the underlying instrument. When an option expires, a realized gain or loss is recorded in the Statement of Operations to the extent of the premiums received or paid. When an option is closed or sold, a gain or loss is recorded in the Statement of Operations to the extent the cost of the closing transaction exceeds the premiums received or paid. When the Fund writes a call option, such option is typically “covered,” meaning that it holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation. These amounts, which are considered restricted, are included in cash pledged as collateral for options written on the Statement of Assets and Liabilities.

• Swaptions — The Fund purchases and writes options on swaps (“swaptions”) primarily to preserve a return or spread on a particular investment or portion of the Fund’s holdings, as a duration management technique or to protect against an increase in the price of securities it anticipates purchasing at a later date. The purchaser and writer of a swaption is buying or granting the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

• Foreign currency options — The Fund purchases and writes foreign currency options, foreign currency futures and options on foreign currency futures to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk). Foreign currency options give the purchaser the right to buy from or sell to the writer a foreign currency at any time before the expiration of the option.

• Barrier options — The Fund may purchase and write a variety of options with non-standard payout structures or other features (“barrier options”) that are generally traded OTC.

The Fund may invest in various types of barrier options, including down-and-out options, down-and-in options, double no-touch options, one-touch options, up-and-out options and up-and-in options. Down-and-out options expire worthless to the purchaser if the price of the underlying instrument falls below a specific barrier price level prior to the expiration date. Down-and-in options expire worthless to the purchaser unless the price of the underlying instrument falls below a specific barrier price level prior to the expiration date. Double no-touch options provide the purchaser an agreed-upon payout if the price of the underlying instrument does not reach or surpass predetermined barrier price levels prior to the option’s expiration date. One-touch options provide the purchaser an agreed-upon payout if the price of the underlying instrument reaches or surpasses predetermined barrier price levels prior to the expiration date. Up-and-out options expire worthless to the purchaser if the price of the underlying instrument increases beyond a predetermined barrier price level prior to the expiration date. Up-and-in options can only be exercised when the price of the underlying instrument increases beyond a predetermined barrier price level.

In purchasing and writing options, the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that it may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Fund purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

Swaps: Swap contracts are entered into to manage exposure to issuers, markets and securities. Such contracts are agreements between the Fund and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through the broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited is shown as cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Amounts pledged, which are considered restricted cash, are included in cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.

• Credit default swaps — Credit default swaps are entered into to manage exposure to the market or certain sectors of the market, to reduce risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which a fund is not otherwise exposed (credit risk).

56 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

The Fund may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Fund will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

• Interest rate swaps — Interest rate swaps are entered into to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate (interest rate risk).

Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating, in exchange for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. In more complex interest rate swaps, the notional principal amount may decline (or amortize) over time.

• Currency swaps — Currency swaps are entered into to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk).

Currency swaps are interest rate swaps in which one party pays a stream of interest payments, either fixed or floating, in exchange for another party’s stream of interest payments, either fixed or floating, based on the notional amounts of two different currencies. The notional amounts are typically determined based on the spot exchange rates at the inception of the trade. Currency swaps may also involve an exchange of notional amounts at the start, during and/or at expiration of the contract, either at the current spot rate or another specified rate.

• Forward swaps — The Fund enters into forward interest rate swaps and forward total return swaps. In a forward swap, the Fund and the counterparty agree to make periodic net payments beginning on a specified date or a net payment at termination.

• Inflation swaps — Inflation swaps are entered into to gain or reduce exposure to inflation (inflation risk). In an inflation swap, one party makes fixed interest payments on a notional principal amount in exchange for another party’s variable payments based on an inflation index, such as the Consumer Price Index.

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting the mark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the counterparty is not permitted to sell, re-pledge or use cash and non-cash collateral it receives. The Fund generally agrees not to use non-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Fund from its counterparties are not fully collateralized, it bears the risk of loss from counterparty non-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, it bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

6. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

NOTESTO FINANCIAL STATEMENTS 57

Notes to Financial Statements  (continued)

For such services, the Fund pays the Manager a monthly fee based on a percentage of the aggregate average daily net assets of the Fund and BlackRock High Yield V.I. Fund, a series of the Company, at the following annual rates:

Average Daily Net Assets	Investment Advisory Fees
First $250 Million		0.50	%
$250 Million — $500 Million		0.45
$500 Million — $750 Million		0.40
Greater than $750 Million		0.35

For the year ended December 31, 2018, the aggregate average daily net assets of the Fund and BlackRock High Yield V.I. Fund were approximately $925,048,876.

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.25% based upon the average daily net assets attributable to Class III.

BRIL and broker-dealers, pursuant to sub-agreements with BRIL, provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.

For the year ended December 31, 2018, the class specific distribution fees borne directly by Class III were $731,260.

Transfer Agent: On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping, sub-transfer agency and shareholder services to sub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations which is shown as transfer agent — class specific. For the year ended December 31, 2018, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

For the year ended December 31, 2018, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:

Class I		Class III		Total
$	334,544	$	468,796	$	803,340

Expense Limitations, Waivers and Reimbursements:With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount waived was $13,511.

The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through April 30, 2021. The contractual agreement may be terminated upon 90 days’ notice by a majority of the directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”), or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager pursuant to this arrangement.

For the year ended December 31, 2018, the Fund reimbursed the Manager $5,365 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Fund has begun to incur expenses in connection with the proposed realignment and consolidation of the boards of directors of certain BlackRock-advised funds. The Manager has voluntarily agreed to reimburse the Fund for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount reimbursed was $179,694.

The Manager has contractually agreed to reimburse transfer agent fees in order to limit such expenses to a percentage of average daily net assets as follows:

Class I	0.00	%
Class III	0.06

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2021 unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund.

These amounts waived and/or reimbursed are shown as transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations. For the year ended December 31, 2018, class specific waivers and/or reimbursements were as follows:

	Class I		Class III		Total
Transfer Agent Fees Waived and/or Reimbursed	$	334,544	$	293,581	$	628,125

58 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business and excluding distribution fees for Class III shares (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I	Class III
0.60%	1.50%

In addition, with respect to Class I shares, the Manager has contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses including interest expense, and excluding dividend expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business to 0.60% of average daily net assets through April 30, 2021.

Prior to October 29, 2018, the expense limitations as a percentage of average daily net assets was 1.25% for Class I and 1.50% for Class III.

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2021 unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager.

Interfund Lending: In accordance with an exemptive order (the “Order”) from the U.S. Securities and Exchange Commission (“SEC”), the Fund may participate in a joint lending and borrowing facility for temporary purposes (the “Interfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the Fund’s investment policies and restrictions. The Fund is currently permitted to borrow under the Interfund Lending Program.

A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets to any one borrowing fund through the Interfund Lending Program. A borrowing BlackRock fund may not borrow through the Interfund Lending Program or from any other source more than 33 1/3% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.

During the year ended December 31, 2018, the Fund did not participate in the Interfund Lending Program.

Directors and Officers: Certain directors and/or officers of the Company are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Directors and Officer in the Statement of Operations.

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the year ended December 31, 2018, the purchase and sale transactions and any net realized gains (losses) with affiliated funds in compliance with Rule 17a-7 under the 1940 Act were as follows:

Purchases	$	1,085,322
Sales		324,881
Net Realized Loss		(10,021	)

7. PURCHASES AND SALES

For the year ended December 31, 2018, purchases and sales of investments, including paydowns and mortgage dollar rolls and excluding short-term securities, were as follows:

	Purchases		Sales
Non-U.S Government Securities	$	2,148,263,526	$	2,069,648,029
U.S Government Securities		161,095,914		235,810,086

For the year ended December 31, 2018, purchases and sales related to mortgage dollar rolls were $840,805,240 and $841,351,296, respectively.

8. INCOME TAX INFORMATION

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2018. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of December 31, 2018, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

NOTESTO FINANCIAL STATEMENTS 59

Notes to Financial Statements  (continued)

The tax character of distributions paid was as follows:

	12/31/18		12/31/17
Ordinary income	$	11,807,149	$	8,907,589

As of period end, the tax components of accumulated loss were as follows:

Capital loss carryforward	$	(11,325,583	)
Net unrealized losses(a)		(5,939,154	)
	$	(17,264,737	)

^(a)  The difference between book-basis and tax-basis net unrealized losses was attributable primarily to the tax deferral of losses on wash sales and straddles, the realization for tax purposes of unrealized gains/losses on certain futures and foreign currency contracts, the accounting for swap agreements and the classification of investments.

As of December 31, 2018, the Fund had a capital loss carryforward, with no expiration date, available to offset future realized capital gains of $11,325,583.

As of December 31, 2018, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	696,510,197
Gross unrealized appreciation	$	8,510,030
Gross unrealized depreciation		(13,578,515	)
Net unrealized depreciation	$	(5,068,485	)

9. BANK BORROWINGS

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a 364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of (a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2019 unless extended or renewed. Prior to April 19, 2018, the aggregate commitment amount was $2.1 billion and the fee was 0.12% per annum. Participating Funds paid an upfront commitment fee of 0.02% on the total commitment amounts, in addition to administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the year ended December 31, 2018, the Fund did not borrow under the credit agreement.

10. PRINCIPAL RISKS

Many municipalities insure repayment of their bonds, which may reduce the potential for loss due to credit risk. The market value of these bonds may fluctuate for other reasons, including market perception of the value of such insurance, and there is no guarantee that the insurer will meet its obligation.

Inventories of municipal bonds held by brokers and dealers may decrease, which would lessen their ability to make a market in these securities. Such a reduction in market making capacity could potentially decrease the Fund’s ability to buy or sell bonds. As a result, the Fund may sell a security at a lower price, sell other securities to raise cash, or give up an investment opportunity, any of which could have a negative impact on performance. If the Fund needed to sell large blocks of bonds, those sales could further reduce the bonds’ prices and impact performance.

In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. The Fund’s prospectus provides details of the risks to which the Fund is subject.

The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed-income securities at market interest rates that are below the Fund portfolio’s current earnings rate.

Valuation Risk: The market values of equities, such as common stocks and preferred securities or equity related investments, such as futures and options, may decline due to general market conditions which are not specifically related to a particular company. They may also decline due to factors which affect a particular industry or industries. The Fund may invest in illiquid investments and may experience difficulty in selling those investments in a timely manner at the price that it believes the investments are worth. Prices may fluctuate widely over short or extended periods in response to company, market or economic news. Markets also tend to move in cycles, with periods of rising and falling prices. This volatility may cause the Fund’s NAV to experience significant increases or decreases over short periods of time. If there is a general decline in the securities and other markets, the NAV of the Fund may lose value, regardless of the individual results of the securities and other instruments in which the Fund invests.

60 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

A derivative contract may suffer a mark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund.

For OTC options purchased, the Fund bears the risk of loss in the amount of the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Options written by the Fund do not typically give rise to counterparty credit risk, as options written generally obligate the Fund, and not the counterparty, to perform. The Fund may be exposed to counterparty credit risk with respect to options written to the extent the Fund deposits collateral with its counterparty to a written option.

With exchange-traded futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk: The Fund invests a significant portion of its assets in fixed-income securities and/or uses derivatives tied to the fixed-income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

The Fund invests a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Investment percentages in these securities are presented in the Schedule of Investments. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

11. CAPITAL SHARE TRANSACTIONS

Transactions in capital shares for each class were as follows:

	Year Ended 12/31/2018						Year Ended 12/31/2017
	Shares			Amount			Shares			Amount
Class I
Shares sold		933,798		$	10,833,853			738,932		$	8,778,869
Shares issued in reinvestment of distributions		369,629			4,273,362			330,876			3,939,184
Shares issued in reorganization		9,949,983			113,486,424			—			—
Shares redeemed		(2,665,076	)		(30,779,754	)		(1,644,712	)		(19,574,644	)
Net increase (decrease)		8,588,334		$	97,813,885			(574,904	)	$	(6,856,591	)
Class III
Shares sold		6,390,408		$	73,352,056			7,912,809		$	93,125,910
Shares issued in reinvestment of distributions		616,305			7,043,445			409,818			4,824,507
Shares redeemed		(1,797,585	)		(20,608,119	)		(606,082	)		(7,124,260	)
Net increase		5,209,128		$	59,787,382			7,716,545		$	90,826,157
Total Net Increase		13,797,462		$	157,601,267			7,141,641		$	83,969,566

NOTESTO FINANCIAL STATEMENTS 61

Notes to Financial Statements  (continued)

12. REGULATION S-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. The Fund has adopted the amendments pertinent to Regulation S-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statement of Assets and Liabilities, Statements of Changes in Net Assets and Notes to the Financial Statements.

Prior year distribution information and undistributed (distributions in excess of) net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the Regulation S-X changes.

Distributions for the year ended December 31, 2017 were classified as follows:

Share Class	Net Investment Income
Class I		(3,931,362	)
Class III		(4,976,227	)

Distributions in excess of net investment income as of December 31, 2017 was $(437,435).

13. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

62 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders of BlackRock Total Return V.I. Fund and the Board of Directors of BlackRock Variable Series Funds II, Inc.:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of BlackRock Total Return V.I. Fund of BlackRock Variable Series Funds II, Inc. (the “Fund”), including the schedule of investments, as of December 31, 2018, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian, agent banks and brokers; when replies were not received from agent banks or brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more BlackRock investment companies since 1992.

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 63

Disclosure of Investment Advisory Agreement

The Board of Directors (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Variable Series Funds II, Inc. (the “Corporation”) met in person on May 8, 2018 (the “Organizational Meeting”) to consider the initial approval of the investment advisory agreement (the “Advisory Agreement” or the “Agreement”) between the Corporation, on behalf of BlackRock High Yield V.I. Fund (the “High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “U.S. Government Bond V.I. Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of the Corporation, and BlackRock Advisors, LLC (the “Manager” or “BlackRock”), each Fund’s investment advisor.

On September 17, 2018, each Fund acquired the assets, subject to the liabilities of BlackRock High Yield V.I. Fund (the “Predecessor High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Predecessor Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “Predecessor U.S. Government Bond V.I. Fund”) (each, a “Predecessor Fund,” and collectively, the “Predecessor Funds”), each a series of BlackRock Variable Series Funds, Inc. (the “Predecessor Corporation”), respectively, through a reorganization (the “Reorganization”). Each Fund has the same investment objectives, strategies and policies, portfolio management team and contractual arrangements, including the same contractual fees and expenses, as its respective Predecessor Fund. As a result of the Reorganization, each Fund adopted the performance and financial history of its respective Predecessor Fund. The Agreement is substantially similar to the advisory agreement (the “Predecessor Advisory Agreement” or the “Predecessor Agreement”) between the Predecessor Corporation, on behalf of each Predecessor Fund, and the Manager.

Activities and Composition of the Board

On the date of the Organizational Meeting, the Board consisted of eleven individuals, nine of whom were not “interested persons” of the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of each Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreement

Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Agreement. In connection with this deliberative process, the Board assessed, among other things, the nature, extent and quality of the services to be provided to each Fund (and those provided to each Predecessor Fund) by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management; accounting, administrative and shareholder services; oversight of each Fund’s (and each Predecessor Fund’s) service providers; marketing and promotional services; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements.

Board Considerations in Approving the Agreement

The Approval Process: At the Organizational Meeting, the Board reviewed materials relating to its consideration of the proposed Agreement. The Predecessor Agreement was most recently considered and approved by the board of directors of the Predecessor Corporation (the “Predecessor Board”) at in person meetings held on April 10, 2018 (the “April Meeting”) and May 8, 2018 (the “May Meeting”). The factors considered by the Board Members at the Organizational Meeting in connection with approval of the proposed Agreement were identical to the factors considered by them as members of the Predecessor Board at the April and May Meetings for the Predecessor Agreement. (Accordingly, references below to the “Board” mean both the Board and the Predecessor Board, and references below to the Board Members mean the members of both the Board and the Predecessor Board, unless the context requires otherwise.) These factors included, among other things: (a) the nature, extent and quality of the services to be provided by BlackRock (and those provided by BlackRock to each Predecessor Fund); (b) the investment performance of each Predecessor Fund as compared with a peer group of funds (“Performance Peers”) and other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with each Fund and each Predecessor Fund; (d) the sharing of potential economies of scale; (e) fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with each Fund and each Predecessor Fund; and (f) other factors deemed relevant by the Board Members.

In determining whether to approve the Predecessor Agreement, the Board met with the relevant investment advisory personnel from BlackRock and considered all information it deemed reasonably necessary to evaluate the terms of the Predecessor Agreement. These meetings were considered by the Board in evaluating approval of the Agreement. The Board received materials in advance of the Organizational Meeting relating to its consideration of the Agreement, including, among other things, (a) fees and estimated expense ratios of each Fund and the fees and expense ratios of each Predecessor Fund in comparison to the fees and expense ratios of a peer group of funds as determined by Broadridge Financial Solutions, Inc. (“Broadridge”) (“Expense Peers”); (b) information regarding BlackRock’s economic outlook for each Predecessor Fund and its general investment outlook for the markets; (c) information regarding fees paid to service providers that are affiliates of BlackRock; and (d) information outlining the legal duties of the Board under the 1940 Act with respect to the consideration and approval of the Agreement. The Board also received information at prior Board meetings concerning compliance records and regulatory matters relating to BlackRock.

The Board also considered other matters it deemed important to the approval process, such as other payments to be made to BlackRock or its affiliates, securities lending and cash management, services related to the valuation and pricing of Fund portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

64 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement  (continued)

A. Nature, Extent and Quality of the Services to be Provided by BlackRock

The Board, including the Independent Board Members, considered the nature, extent and quality of services to be provided by BlackRock, including the investment advisory services to be provided to each Fund and those provided to each Predecessor Fund and the resulting performance of each Predecessor Fund. Throughout the year, the Board Members compared Predecessor Fund performance to the performance of a comparable group of mutual funds, a relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers, in connection with its evaluation of each Predecessor Fund. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing each Predecessor Fund’s performance and each Fund’s investment objective(s), strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board considered BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives that had been presented in connection with the Board’s evaluation of the Predecessor Agreement.

In addition to investment advisory services, the Board considered the quality of the administrative and other non-investment advisory services to be provided to each Fund (and those provided to each Predecessor Fund). The Board considered that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with certain administrative, shareholder and other services (in addition to any such services provided to each Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In particular, the Board noted that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of other service providers including, among others, each Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certain open-end funds; and (viii) performing administrative functions necessary for the operation of each Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing each Fund’s distribution partners, and shareholder call center and other services. The Board considered the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each Predecessor Fund and BlackRock

The Board, including the Independent Board Members, also reviewed and considered the performance history of each Predecessor Fund. In connection with its review of each Predecessor Fund performance history, the Board had been provided with reports independently prepared by Broadridge, which included a comprehensive analysis of each Predecessor Fund’s performance as of December 31, 2017. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with this review, the Board had received and reviewed information regarding the investment performance of each Predecessor Fund as compared to its Performance Peers.

In evaluating performance, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, the Board recognized that it is possible that long-term performance can be impacted by even one period of significant outperformance or underperformance, so that a single investment theme has the ability to affect long-term performance disproportionately.

The Board noted that for the one-, three- and five-year periods reported, the Predecessor High Yield V.I. Fund ranked in the second, third and first quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor High Yield V.I. Fund’s underperformance during the applicable period.

The Board noted that for the one-, three- and five-year periods reported, the Predecessor Total Return V.I. Fund ranked in the third, third, and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor Total Return V.I. Fund’s underperformance during the applicable periods.

The Board noted that for the one-, three- and five-year periods reported, the Predecessor U.S. Government Bond V.I. Fund ranked in the third, second and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor U.S. Government Bond V.I. Fund’s underperformance during the applicable period.

C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services to be Provided and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with each Fund and each Predecessor Fund

In connection with the initial approval of the Agreement, the Board, including the Independent Board Members, considered that each Fund’s proposed contractual management fee rate was identical to each Predecessor Fund’s contractual management fee rate. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also considered that each Fund’s estimated total net expense ratio was identical to each Predecessor Fund’s total expense ratio. The Board also considered the comparison of each Predecessor Fund’s actual and contractual management fee rate to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, including any 12b-1 or non 12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts and sub-advised mutual funds (including mutual funds sponsored by third parties) that had been presented in connection with its evaluation of the Predecessor Agreement.

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 65

Disclosure of Investment Advisory Agreement  (continued)

The Board considered BlackRock’s profitability methodology, including an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Predecessor Fund, which would be the same services to be provided to each Fund. The Board reviewed BlackRock’s estimated profitability with respect to each Predecessor Fund and other funds the Board currently oversees for the year ended December 31, 2017 compared to available aggregate estimated profitability data provided for the prior two years. The Board considered its review of, in connection with its review of the Predecessor Agreement, BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates, including BlackRock’s assumptions and methodology of allocating expenses in the estimated profitability analysis and the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. In connection with its review of the Predecessor Agreement, the Board reviewed BlackRock’s operating margin, in general, compared to that of certain other publicly-traded asset management firms and considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the estimated cost of the services to be provided to each Fund based on its review of the estimated cost of the services provided to each Predecessor Fund by BlackRock, and BlackRock’s and its affiliates’ estimated profits relating to the management and distribution of each Predecessor Fund and the other funds advised by BlackRock and its affiliates. As part of this analysis, the Board had reviewed BlackRock’s methodology in allocating its costs of managing the Predecessor Funds to each Predecessor Fund. The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board Members. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing each Fund and each Predecessor Fund in contrast to what is required of BlackRock with respect to other products with similar investment mandates across the open-end fund, exchange-traded fund, closed-end fund, sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that the Predecessor High Yield V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Predecessor High Yield V.I. Fund’s Expense Peers. The Board also noted that the High Yield V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the High Yield V.I. Fund, combined with the assets of Total Return V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the High Yield V.I. Fund’s total expenses as a percentage of the High Yield V.I. Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the High Yield V.I. Fund on a class-by-class basis.

The Board noted that the Predecessor Total Return V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to the Predecessor Total Return V.I. Fund’s Expense Peers. The Board also noted that the Total Return V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Total Return V.I. Fund, combined with the assets of High Yield V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the Total Return V.I. Fund’s total expenses as a percentage of the Total Return V.I. Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the Total Return V.I. Fund on a class-by-class basis.

The Board noted that the Predecessor U.S. Government Bond V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the first and fourth quartiles, respectively, relative to the Predecessor U.S. Government Bond V.I. Fund’s Expense Peers. The Board also noted that the U.S. Government Bond V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the U.S. Government Bond V.I. Fund increases above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the U.S. Government Bond V.I. Fund’s total expenses as a percentage of the U.S. Government Bond V.I. Fund’s average daily net assets on a class-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the U.S. Government Bond V.I. Fund on a class-by-class basis. In addition, the Board noted that BlackRock has voluntarily agreed to waive a portion of the advisory fee payable by the U.S. Government Bond V.I. Fund. After discussion between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver.

D. Economies of Scale

The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and expense caps had been approved by the Board. The Board also considered the extent to which each Predecessor Fund benefited from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable each Fund to more fully participate in these economies of scale. The Board considered each Predecessor Fund’s asset levels and, in light of those asset levels, whether the current fee schedule was appropriate for each Fund. In its consideration, the Board Members took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members

The Board, including the Independent Board Members, also took into account other potential ancillary or “fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with each Fund based on its review of the Predecessor Agreement, including both tangible and intangible benefits, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the

66 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement  (continued)

investment advisory community, and the engagement of BlackRock’s affiliates as service providers to each Fund (and each Predecessor Fund), including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also considered that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the Agreement, the Board also considered information regarding BlackRock’s brokerage and soft dollar practices and reports from BlackRock which included information on brokerage commissions and trade execution practices that it had received in consideration of the Predecessor Agreement.

The Board considered the competitive nature of the open-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of each Fund.

Conclusion

Following discussion, the Board, including the Independent Board Members, approved the Advisory Agreement between the Manager and the Corporation, on behalf of each Fund, for a two-year term beginning on the effective date of the Advisory Agreement. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its decision to approve the Agreement, the Board did not identify any single factor or group of factors as all-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 67

Glossary of Terms Used in this Report

Currency
ARS	Argentine Peso
BRL	Brazilian Real
CAD	Canadian Dollar
CHF	Swiss Franc
CLP	Chilean Peso
COP	Colombian Peso
EGP	Egyptian Pound
EUR	Euro
GBP	British Pound
IDR	Indonesian Rupiah
JPY	Japanese Yen
KRW	South Korean Won
MXN	Mexican Peso
NGN	Nigerian Naira
RUB	New Russian Ruble
TRY	Turkish Lira
TWD	New Taiwan Dollar
USD	United States Dollar
ZAR	South African Rand
Portfolio Abbreviations
ABS	Asset-Backed Security
BZDIOVER	Overnight Brazil CETIP — Interbank Rate
CDO	Collateralized Debt Obligation
CDX	Credit Default Swap Index
CETIP	Central of Custody and Financial Settlement of Securities
CLO	Collateralized Loan Obligation
CSMC	Credit Suisse Mortgage Capital
CWABS	Countrywide Asset-Backed Certificates
DAC	Designated Activity Company
EURIBOR	Euro Interbank Offered Rate
GO	General Obligation Bonds
LIBOR	London Interbank Offered Rate
MXIBTIIE	Mexico Interbank TIIE 28-Day
OTC	Over-the-counter
RB	Revenue Bonds
REMIC	Real Estate Mortgage Investment Conduit
S&P	Standard & Poor’s
TBA	To-be-announced
VRDN	Variable Rate Demand Notes

68 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

DECEMBER 31, 2018

ANNUAL REPORT

BlackRock Variable Series Funds II, Inc.

^Ø  BlackRock U.S. Government Bond V.I. Fund

Not FDIC Insured • May Lose Value • No Bank Guarantee

Fund Summary  as of December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

Investment Objective

BlackRock U.S. Government Bond V.I. Fund’s (the “Fund”) investment objective is to seek to maximize total return, consistent with income generation and prudent investment management.

Portfolio Management Commentary

How did the Fund perform?

For the12-month period ended December 31, 2018, the Fund underperformed its benchmark, the Bloomberg Barclays U.S. Government/Mortgage Index.

What factors influenced performance?

The largest detractors from performance relative to the benchmark included an allocation to Treasury inflation protected securities. Security selection within30-year agency mortgage-backed securities (“MBS”) and the Fund’s underweighting of15-year agency MBS also weighed on Fund returns.

Positive contributors to performance relative to the benchmark included the Fund’s stance with respect to U.S. interest rates. A below-benchmark stance with respect to duration (and corresponding interest rate sensitivity) aided returns as rates rose. In addition, the Fund’s positioning along the U.S. Treasury yield curve added to performance. Allocations to securitized sectors including commercial mortgage-backed securities (“CMBS”), agency collateralized mortgage obligations (“CMOs”) and senior floating rate collateralized loan obligations (“CLOs”) also contributed positively. These segments continued to benefit from favorable fundamentals around the U.S. consumer, housing and commercial real estate. The Fund’s strategies with respect to both global interest rates and currencies added to relative performance as well.

Describe recent portfolio activity.

During the12-month period, the Fund decreased its allocation to U.S. government securities, while adding exposures in agency MBS, primarily in pass-throughs with a smaller increase to CMOs. The Fund kept itsout-of-benchmark allocation to securitized assets roughly unchanged during the period, adding some exposures in CMBS while trimming exposures in CLOs. The Fund maintained an underweight stance with respect to duration, with the degree of underweight decreasing over the period.

The Fund held a small percentage of assets in derivatives including options and futures contracts as a means to manage risk to allocations in MBS and securitized assets. The use of derivatives had a positive impact on Fund performance for the period.

Describe portfolio positioning at period end.

At period end, the Fund was slightly underweight in agency MBS relative to the benchmark, with exposures continuing to favor higher coupons relative to lower coupons, given valuations that appeared attractive relative to the underlying fundamentals. The Fund continued to hold a core allocation to agency CMBS and CMOs for carry (incremental income), while pursuing an increased allocation to CMBS owing to attractive valuations versus low coupon MBS. The Fund was modestly short U.S. duration. Outside of the United States, the Fund was tactically short in thelong-end of the German yield curve in anticipation of a heavy January supply calendar. The Fund was also positioned with a short real rate position in the United Kingdom on the belief that the market was pricing an overly negative outcome from Brexit negotiations. Lastly, the Fund had a short position in the middle of the Japanese curve on the view that valuations were stretched in that segment.

The views expressed reflect the opinions of BlackRock as of the date of this report and are subject to change based on changes in market, economic or other conditions. These views are not intended to be a forecast of future events and are no guarantee of future results.

Portfolio Information

PORTFOLIO COMPOSITION

Asset Type	Percent of Total Investments (a)
U.S. Government Sponsored Agency Securities		62	%
U.S. Treasury Obligations		34
Asset-Backed Securities		2
Non-Agency Mortgage-Backed Securities		2
Foreign Government Obligations		—	(b)

^(a)  Total investments exclude short-term securities, options purchased, options written and TBA sale commitments.

^(b)  Representing less than 0.5% of the Fund’s total investments.

2 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Fund Summary  as of December 31, 2018 (continued) BlackRock U.S. Government Bond V.I. Fund

TOTAL RETURN BASED ON A $10,000 INVESTMENT

^(a)  Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance related fees and expenses. The returns for Class III Shares prior to July 15, 2013, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution and/or service(12b-1) fees applicable to Class III Shares.

^(b)  The Fund invests, under normal circumstances, at least 80% of its assets in fixed-income securities that are issued or guaranteed by the U.S. Government and its agencies. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of BlackRock U.S. Government Bond V.I. Fund (the “Predecessor Fund”), a series of BlackRock Variable Series Funds, Inc., through a tax-free reorganization (the “Reorganization”). The Predecessor Fund is the performance and accounting survivor of the Reorganization. The Fund’s total returns prior to October 1, 2011 are the returns of the Predecessor Fund when it followed a different investment objective and different investment strategies under the name “BlackRock Government Income V.I. Fund”.

^(c)  An index that measures debt issued by the U.S. Government, and its agencies, as well as mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae and Freddie Mac.

^(d)  An unmanaged index that includes the mortgage-backed pass-through securities of Ginnie Mae, Fannie Mae and Freddie Mac that meet certain maturity and liquidity criteria.

Performance Summary for the Period Ended December 31, 2018

	Standardized 30-Day Yields  (b)			Unsubsidized 30-Day Yields  (b)			6-Month Total Returns (c)			Average Annual Total Returns
										1 Year (c)			5 Years (c)			10 Years (c)
Class I(a)		2.44	%		2.13	%		1.29	%		0.29	%		1.87	%		2.14	%
Class III(a)		2.13			1.93			1.03			(0.01	)		1.54			1.86	(d)
Bloomberg Barclays U.S. Government/Mortgage Index		—			—			1.96			0.93			2.22			2.61
Bloomberg Barclays U.S. Mortgage-Backed Securities Index		—			—			1.96			0.99			2.53			3.11

^(a)  Average annual and cumulative total returns are based on changes in net asset value for the periods shown, and assume reinvestment of all distributions at net asset value on theex-dividend/payable date. Insurance-related fees and expenses are not reflected in these returns. On September 17, 2018, the Fund acquired all of the assets, subject to the liabilities, of the Predecessor Fund, a series of BlackRock Variable Series Funds, Inc., through the Reorganization. The Predecessor Fund is the performance and accounting survivor of the Reorganization. The Fund’s total returns prior to October 1, 2011 are the returns of the Predecessor Fund when it followed a different investment objective and different investment strategies under the name “BlackRock Government Income V.I. Fund”.

^(b)  The standardized30-day yield includes the effects of any waivers and/or reimbursements. The unsubsidized30-day yield excludes the effects of any waivers and/or reimbursements.

^(c)  For the portion of the period, the Fund’s investment adviser waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

^(d)  The returns for Class III Shares prior to July 15, 2013, the recommencement of operations of Class III Shares, are based upon the performance of the Fund’s Class I Shares.

The returns for Class III Shares, however, are adjusted to reflect the distribution and/or service(12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results. Performance results do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Performance results may include adjustments made for financial reporting purposes in accordance with U.S. generally accepted accounting principles.

Expense Example

	Actual								Hypothetical (a)
					Including Interest Expense and Fees		Excluding Interest Expense and Fees				Including Interest Expense and Fees				Excluding Interest Expense and Fees
	Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Expenses Paid During the Period (c)		Beginning Account Value (07/01/18)		Ending Account Value (12/31/18)		Expenses Paid During the Period (b)		Ending Account Value (12/31/18)		Expenses Paid During the Period (c)
Class I	$	1,000.00	$	1,012.90	$	7.15	$	4.21	$	1,000.00	$	1,018.10	$	7.17	$	1,021.02	$	4.23
Class III		1,000.00		1,010.30		8.51		5.78		1,000.00		1,016.74		8.54		1,019.46		5.80

^(a)  Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

^(b)  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (1.41% for Class I and 1.68% for Class III ), multiplied by the average account value over the period, multiplied by 184/365 (to reflect theone-half year period shown).

^(c)  For each class of the Fund, expenses are equal to the annualized expense ratio for the class (0.83% for Class I and 1.14% for Class III ), multiplied by the average account value over the period, multiplied by 184/365 (to reflect theone-half year period shown).

See “Disclosure of Expenses” on the following page for further information on how expenses were calculated.

FUND SUMMARY 3

Disclosure of Expenses

Shareholders of the Fund may incur the following charges: (a) transactional expenses, such as sales charges; and (b) operating expenses, including investment advisory fees, service and distribution fees, including12b-1 fees, acquired fund fees and expenses, and other fund expenses. The expense example shown on the previous page (which is based on a hypothetical investment of $1,000 invested on July 1, 2018 and held through December 31, 2018) is intended to assist shareholders both in calculating expenses based on an investment in the Fund and in comparing these expenses with similar costs of investing in other mutual funds.

The expense example provides information about actual account values and actual expenses. In order to estimate the expenses a shareholder paid during the period covered by this report, shareholders can divide their account value by $1,000 and then multiply the result by the number corresponding to their share class under the heading entitled “Expenses Paid During the Period.”

The expense example also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses. In order to assist shareholders in comparing the ongoing expenses of investing in the Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

The expenses shown in the expense example are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, if any. Therefore, the hypothetical examples are useful in comparing ongoing expenses only, and will not help shareholders determine the relative total expenses of owning different funds. If these transactional expenses were included, shareholder expenses would have been higher.

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance returns and net asset value (“NAV”). However, there is no guarantee that these objectives can be achieved in all interest rate environments.

The Fund may utilize leverage by entering into reverse repurchase agreements.

In general, the concept of leveraging is based on the premise that the financing cost of leverage, which is based on short-term interest rates, is normally lower than the income earned by the Fund on its longer-term portfolio investments purchased with the proceeds from leverage. To the extent that the total assets of the Fund (including the assets obtained from leverage) are invested in higher-yielding portfolio investments, the Fund’s shareholders benefit from the incremental net income.

The interest earned on securities purchased with the proceeds from leverage is distributed to Fund’s shareholders, and the value of these portfolio holdings is reflected in the Fund’s per share NAV. However, in order to benefit shareholders, the return on assets purchased with leverage proceeds must exceed the ongoing costs associated with the leverage. If interest and other ongoing costs of leverage exceed the Fund’s return on assets purchased with leverage proceeds, income to shareholders is lower than if the Fund had not used leverage.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can also influence the value of portfolio investments. As a result, changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on Fund’s performance from leverage. Changes in the direction of interest rates are difficult to predict accurately, and there is no assurance that the Fund’s leveraging strategy will be successful.

The use of leverage also generally causes greater changes in the Fund’s NAV and dividend rates than comparable portfolios without leverage. In a declining market, leverage is likely to cause a greater decline in the NAV of the Fund’s shares than if the Fund were not leveraged. In addition, the Fund may be required to sell portfolio securities at inopportune times or at distressed values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of the leverage instruments, which may cause the Fund to incur losses. The use of leverage may limit the Fund’s ability to invest in certain types of securities or use certain types of hedging strategies. The Fund incurs expenses in connection with the use of leverage, all of which are borne by the Fund’s shareholders and may reduce income.

Derivative Financial Instruments

The Fund may invest in various derivative financial instruments. These instruments are used to obtain exposure to a security, commodity, index, market, and/or other assets without owning or taking physical custody of securities, commodities and/or other referenced assets or to manage market, equity, credit, interest rate, foreign currency exchange rate, commodity and/or other risks. Derivative financial instruments may give rise to a form of economic leverage and involve risks, including the imperfect correlation between the value of a derivative financial instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the instrument. The Fund’s successful use of a derivative financial instrument depends on the investment adviser’s ability to predict pertinent market movements accurately, which cannot be assured. The use of these instruments may result in losses greater than if they had not been used, may limit the amount of appreciation the Fund can realize on an investment and/or may result in lower distributions paid to shareholders. The Fund’s investments in these instruments, if any, are discussed in detail in the Notes to Financial Statements.

4 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments December 31, 2018 BlackRock U.S. Government Bond V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Asset-Backed Securities — 2.6%(a)
Arbor Realty Commercial Real Estate Notes Ltd.,Series 2016-FL1A, Class A, (LIBOR USD 1 Month + 1.70%), 4.16%, 09/15/26(b)	USD		210	$	212,329
BSPRT Issuer Ltd., Series2017-FL1, Class A, (LIBOR USD 1 Month + 1.35%), 3.81%, 06/15/27(b)			43		43,466
Dryden XXVIII Senior Loan Fund, Series2013-28A, Class A1LR, (LIBOR USD 3 Month + 1.20%), 3.81%, 08/15/30(b)			700		693,240
Progress Residential Trust, Series 2017-SFR1, Class A, 2.77%, 08/17/34			100		97,786
RomarkWM-R Ltd., Series2018-1A, Class A1, (LIBOR USD 3 Month + 1.03%), 3.50%, 04/20/31(b)			500		491,693
Total Asset-Backed Securities — 2.6% (Cost: $1,553,111)					1,538,514
Foreign Government Obligations — 0.2%
Colombia — 0.1%
Republic of Colombia:
7.50%, 08/26/26	COP		75,000		24,309
7.00%, 06/30/32			54,000		16,371
					40,680
Mexico — 0.1%
United Mexican States, 8.50%, 11/18/38	MXN		10		48,918
Total Foreign Government Obligations — 0.2% (Cost: $88,357)					89,598
Non-Agency Mortgage-Backed Securities — 2.3%
Collateralized Mortgage Obligations — 0.5%
Seasoned Credit Risk Transfer Trust:
Series2018-2, Class MA, 3.50%, 11/25/57	USD		123		123,787
Series2018-3, Class MA, 3.50%, 08/25/57			156		156,298
					280,085
Commercial Mortgage-Backed Securities — 1.4%(a)
AREIT Trust, Series 2018-CRE1, Class A, 3.29%, 02/14/35(c)(d)			126		125,753
Commercial Mortgage Trust, Series 2017-PANW, Class A, 3.24%, 10/10/29			440		432,222
CSMC Trust, Series2016-MFF, Class A, 4.06%, 11/15/33(c)			69		69,507
LMREC, Inc., Series 2016-CRE2, Class A, 4.20%, 11/24/31(c)			94		93,949
RAIT Trust, Series2017-FL7, Class A, 3.41%, 06/15/37(c)			98		97,523
					818,954
Interest Only Commercial Mortgage-Backed Securities — 0.4%(c)
CFCRE Commercial Mortgage Trust, Series2016-C4, Class XA, 1.73%, 05/10/58			839		78,964
Core Industrial Trust(a):
Series 2015-TEXW, Class XA, 0.77%, 02/10/34			3,275		66,906
Series 2015-WEST, Class XA, 0.93%, 02/10/37			1,570		79,584
					225,454
TotalNon-Agency Mortgage-Backed Securities — 2.3% (Cost: $1,349,437)					1,324,493
U.S. Government Sponsored Agency Securities — 91.1%
Agency Obligations — 9.5%
Federal Home Loan Bank, 4.00%, 04/10/28			500		531,070

Security		Par (000)		Value
Agency Obligations (continued)
Federal Home Loan Bank Discount Notes, 2.39%, 01/25/19(e)	USD		5,000	$	4,992,395
					5,523,465
Collateralized Mortgage Obligations — 1.8%
Federal National Mortgage Association:
Series2011-8, Class ZA, 4.00%, 02/25/41			256		264,204
Series2017-69, Class HA, 3.00%, 06/25/46			609		605,415
Government National Mortgage Association Variable Rate Notes, Series2014-107, Class WX, 6.81%, 07/20/39(f)			161		178,635
					1,048,254
Commercial Mortgage-Backed Securities — 1.5%
Federal Home Loan Mortgage Corp.:
Series K076, Class A2, 3.90%, 06/25/51			150		156,490
Series K079, Class A2, 3.93%, 06/25/28			270		282,129
Federal Home Loan Mortgage Corp. Variable Rate Notes(f):
Series K082, Class A2, 3.92%, 09/25/28			45		46,976
Series K086, Class A2, 3.86%, 11/25/28			285		296,146
Federal National Mortgage Association ACES Variable Rate Notes, Series2018-M7, Class A2, 3.05%, 03/25/28(f)			60		58,374
					840,115
Interest Only Commercial Mortgage-Backed Securities — 2.5%
Federal Home Loan Mortgage Corp. Variable Rate Notes, Series 2015-K718, Class X2A, 0.10%, 02/25/48(a)(f)			21,990		53,203
Federal National Mortgage Association ACES Variable Rate Notes(f):
Series2015-M1, Class X2, 0.55%, 09/25/24			4,973		124,859
Series2016-M4, Class X2, 2.63%, 01/25/39			373		33,462
Government National Mortgage Association Variable Rate Notes:
Series2002-83, 0.00%, 10/16/42(f)			927		—
Series2003-17, 0.00%, 03/16/43(f)			2,153		—
Series2003-109, 0.00%, 11/16/43(f)			1,759		335
Series2016-22, 0.77%, 11/16/55(f)			2,586		138,134
Series2016-45, 1.01%, 02/16/58(f)			3,480		261,960
Series2016-113, (LIBOR USD 1 Month + 0.00%), 1.19%, 02/16/58(b)			1,525		138,495
Series2016-119, (LIBOR USD 1 Month + 0.00%), 1.12%, 04/16/58(b)			3,750		310,723
Series2017-30, 0.76%, 08/16/58(f)			757		49,143
Series2017-44, 0.70%, 04/17/51(f)			755		44,627
Series2017-53, 0.69%, 11/16/56(f)			2,039		120,811
Series2017-54, 0.65%, 12/16/58(f)			180		11,088
Series2017-61, 0.77%, 05/16/59(f)			511		38,120
Series2017-64, 0.72%, 11/16/57(f)			856		56,946
Series2017-72, 0.68%, 04/16/57(f)			1,334		85,062
					1,466,968
Mortgage-Backed Securities — 75.8%
Federal Home Loan Mortgage Corp.:
2.50%, 03/01/30 - 04/01/31			247		241,674
2.50%, 01/15/34(g)			183		178,618
3.00%, 09/01/27 - 12/01/46			584		577,608
3.00%, 01/15/34 - 01/15/49(g)			1,261		1,233,923
3.50%, 04/01/31 - 01/01/48			2,463		2,478,638
3.50%, 01/15/49(g)			15		14,991
4.00%, 01/15/34 - 01/15/49(g)			639		651,649
4.00%, 08/01/40 - 06/01/48			813		835,972
4.50%, 02/01/39 - 07/01/47			296		308,898
4.50%, 01/15/49(g)			358		370,563
5.00%, 10/01/41 - 11/01/41			194		205,849

SCHEDULE OF INVESTMENTS 5

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund (Percentages shown are based on Net Assets)

Security		Par (000)		Value
Mortgage-Backed Securities (continued)
Federal Home Loan Mortgage Corp.: (continued)
5.00%, 01/15/49(g)	USD		17	$	17,803
5.50%, 06/01/41			127		136,379
8.00%, 12/01/29 - 07/01/30			30		34,295
Federal National Mortgage Association:
2.00%, 10/01/31 - 03/01/32			140		134,136
2.50%, 04/01/30 - 02/01/33			808		789,849
3.00%, 04/01/29 - 03/01/47			5,157		5,091,478
3.00%, 01/25/34 - 01/25/49(g)			1,817		1,791,138
3.50%, 04/01/29 - 01/01/48			3,791		3,818,612
3.50%, 01/25/34 - 01/25/49(g)			1,040		1,041,024
4.00%, 01/01/26 - 04/01/48			4,225		4,345,091
4.00%, 01/25/49(g)			640		652,400
4.50%, 05/01/24 - 12/01/48			2,050		2,146,807
4.50%, 01/25/49 - 02/25/49(g)			2,331		2,412,504
5.00%, 09/01/35 - 08/01/41			260		274,007
5.00%, 01/25/49(g)			1,376		1,441,253
5.50%, 05/01/34 - 12/01/39			256		274,186
6.00%, 04/01/35 - 06/01/41			292		318,092
6.50%, 05/01/40			52		59,286
Government National Mortgage Association:
3.00%, 02/15/45 - 12/20/46			1,813		1,788,376
3.00%, 01/15/49(g)			347		341,707
3.50%, 01/15/42 - 10/20/46			3,238		3,263,624
3.50%, 01/15/49(g)			765		769,722
4.00%, 09/20/40 - 01/15/48			332		342,230
4.00%, 01/15/49(g)			2,665		2,728,198
4.50%, 12/20/39 - 02/15/42			1,329		1,392,387
4.50%, 01/15/49(g)			589		609,465
5.00%, 12/15/38 - 07/20/42			120		126,866
5.00%, 01/15/49(g)			145		150,908
5.50%, 01/15/34			641		694,908
					44,085,114
Total U.S. Government Sponsored Agency Securities — 91.1% (Cost: $53,259,879)					52,963,916
U.S. Treasury Obligations — 50.5%
U.S. Treasury Bonds:
4.25%, 05/15/39			203		244,893
4.50%, 08/15/39			197		245,496
4.38%, 11/15/39			198		242,751
3.13%, 02/15/43			771		786,450
2.88%, 05/15/43 - 11/15/46			994		969,529
3.63%, 08/15/43			736		814,689
3.75%, 11/15/43			781		882,073
3.00%, 02/15/47			140		139,606
3.00%, 08/15/48(h)			1,065		1,059,966
U.S. Treasury Inflation Linked Notes, 0.63%, 04/15/23			611		600,705
U.S. Treasury Notes:
1.25%, 08/31/19			1,976		1,958,170
1.00%, 10/15/19(h)			1,976		1,951,068
1.63%, 06/30/20 - 07/31/20(h)			2,470		2,435,796
2.63%, 08/31/20(h)			2,695		2,698,579
1.13%, 06/30/21			1,383		1,338,539
2.25%, 07/31/21 - 01/31/24(h)			2,470		2,448,189
2.75%, 09/15/21 - 08/31/25			1,315		1,327,659
2.13%, 09/30/21(h)			1,383		1,369,872
1.88%, 04/30/22(h)			1,383		1,356,529
1.63%, 10/31/23			1,087		1,043,308
2.00%, 04/30/24(h)			1,186		1,154,682
2.00%, 05/31/24 - 11/15/26			2,498		2,411,026
2.25%, 11/15/25 - 02/15/27			1,295		1,260,881
2.88%, 08/15/28			605		614,360
Total U.S. Treasury Obligations — 50.5% (Cost: $29,429,404)					29,354,816
Total Long-Term Investments — 146.7% (Cost: $85,680,188)					85,271,337

Security		Par (000)		Value
Short-Term Securities — 4.5%
Commercial Paper — 0.8%
Macquarie Bank Ltd., 3.27%, 10/11/19(e)	USD		500	$	488,013
Total Commercial Paper — 0.8% (Cost: $487,501)					488,013
		Shares
Money Market Funds — 3.7%(i)
BlackRock Liquidity Funds,T-Fund, Institutional Class, 2.32%(j)			2,138,766		2,138,766
JPMorgan US Treasury Plus Money Market Fund, Agency Class,
2.24%			7,779		7,779
Total Money Market Funds — 3.7% (Cost: $2,146,545)					2,146,545
Total Short-Term Securities — 4.5% (Cost: $2,634,046)					2,634,558
Total Options Purchased — 0.3% (Cost: $102,086)					148,554
Total Investments Before Options Written and TBA Sale Commitments — 151.5% (Cost: $88,416,320)					88,054,449
Total Options Written — (0.3)% (Premium Received — $56,571)					(139,790	)
		Par (000)
TBA Sale Commitments — (28.7)%(g)
Mortgage-Backed Securities — (28.7)%
Federal Home Loan Mortgage Corp.:
3.00%, 01/15/34 - 01/15/49	USD		36		(35,521	)
3.50%, 01/15/34 - 01/15/49			737		(738,493	)
4.50%, 01/15/49			115		(119,035	)
5.00%, 01/15/49			48		(50,268	)
Federal National Mortgage Association:
2.50%, 01/25/34			299		(291,705	)
3.00%, 01/25/49 - 02/25/49			2,110		(2,055,856	)
3.50%, 01/25/34 - 02/25/49			5,647		(5,647,918	)
4.00%, 01/25/34 - 01/25/49			2,530		(2,580,099	)
4.50%, 01/25/49			1,785		(1,848,347	)
6.00%, 01/25/49			160		(171,827	)
Government National Mortgage Association:
3.00%, 01/15/49 - 02/15/49			865		(851,590	)
3.50%, 01/15/49 - 02/15/49			1,582		(1,591,023	)
4.00%, 01/15/49			685		(701,376	)
Total TBA Sale Commitments — (28.7)% (Proceeds: $16,472,251)					(16,683,058	)
Total Investments Net of Options Written and TBA Sale Commitments — 122.5% (Cost: $71,887,498)					71,231,601
Liabilities in Excess of Other Assets — (22.5)%					(13,106,371	)
Net Assets — 100.0%				$	58,125,230

^(a)  Security exempt from registration pursuant to Rule 144A under the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration to qualified institutional investors.

^(b)  Variable rate security. Security may be issued at a fixed coupon rate, which converts to a variable rate at a specified date. Rate shown is the rate in effect as of period end.

6 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

^(c)  Variable or floating rate security, which interest rate adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. Rate shown is the rate in effect as of period end.

^(d)  Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.

^(e)  Rates are discount rates or a range of discount rates as of period end.

^(f)  Variable rate security. Rate shown is the rate in effect as of period end.

^(g)  Represents or includes a TBA transaction.

^(h)  All or a portion of the securities has been pledged as collateral in connection with outstanding reverse repurchase agreements.

⁽ⁱ⁾  Annualized7-day yield as of period end.

^(j)  During the year ended December 31, 2018, investments in issuers considered to be an affiliate of the Fund for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

Affiliate	Shares Held at 12/31/17		Net Activity		Shares Held at 12/31/18		Value at 12/31/18		Income		Net Realized Gain (Loss) (a)		Change in Unrealized Appreciation (Depreciation)
BlackRock Liquidity Funds,T-Fund, Institutional Class		1,793,803		344,963		2,138,766	$	2,138,766	$	27,224	$	—	$	—

^(a)  Includes net capital gain distributions, if applicable.

Reverse Repurchase Agreements

Counterparty

Interest Rate

Trade Date

Maturity Date

Face Value

Face Value Including Accrued Interest

Type of Non-Cash Underlying Collateral

Remaining Contractual Maturity of the Agreements

BNP Paribas SA

3.12

%

12/31/18

01/02/19

$

2,721,950

$

2,722,186

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,218,019

1,218,127

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,156,350

1,156,453

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,225,737

1,225,846

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,358,797

1,358,918

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,386,458

1,386,581

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,956,240

1,956,414

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,376,085

1,376,207

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,067,663

1,067,758

U.S. Treasury Obligations

Overnight

Merrill Lynch, Pierce, Fenner & Smith, Inc.

3.20

12/31/18

01/02/19

1,080,206

1,080,302

U.S. Treasury Obligations

Overnight

$

14,547,505

$

14,548,792

Derivative Financial Instruments Outstanding as of Period End

Futures Contracts

Description	Number of Contracts		Expiration Date		Notional Amount (000)		Value/ Unrealized Appreciation (Depreciation)
Long Contracts
U.S. Treasury 10 Year Note		20		03/20/19	$	2,440	$	16,911
U.S. Treasury 10 Year Ultra Bond		2		03/20/19		260		1,761
U.S. Treasury Long Bond		5		03/20/19		730		15,267
U.S. Treasury 2 Year Note		51		03/29/19		10,828		55,759
U.S. Treasury 5 Year Note		45		03/29/19		5,161		34,916
								124,614
Short Contracts
Euro-Bund		6		03/07/19		1,124		(6,249	)
Euro-Buxl		1		03/07/19		207		927
U.S. Treasury Ultra Bond		1		03/20/19		161		(7,395	)
90-day Eurodollar		14		12/14/20		3,414		(14,196	)
								(26,913	)
							$	97,701

SCHEDULE OF INVESTMENTS 7

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

Forward Foreign Currency Exchange Contracts

Currency Purchased		Currency Sold		Counterparty	Settlement Date		Unrealized Appreciation (Depreciation)
BRL	81,565	USD	21,000	Citibank NA		01/03/19	$	45
USD	10,454	BRL	40,380	Goldman Sachs International		01/03/19		36
ARS	192,200	USD	5,000	Citibank NA		01/16/19		8
BRL	38,829	USD	10,000	Goldman Sachs International		01/16/19		9
USD	16,000	CLP	10,863,432	BNP Paribas SA		01/16/19		342
USD	10,000	RUB	674,100	Bank of America NA		01/16/19		343
USD	20,000	ZAR	287,605	BNP Paribas SA		01/16/19		41
IDR	323,505,000	USD	21,000	Barclays Bank plc		01/18/19		1,415
JPY	194,730,728	USD	1,740,847	HSBC Bank plc		01/22/19		38,646
GBP	232,000	USD	294,600	Barclays Bank plc		03/20/19		2,208
								43,093
USD	10,546	BRL	41,309	Goldman Sachs International		01/03/19		(112	)
CLP	10,705,920	USD	16,000	Deutsche Bank AG		01/16/19		(569	)
RUB	664,600	USD	10,000	Bank of America NA		01/16/19		(479	)
USD	10,000	KRW	11,261,100	Citibank NA		01/16/19		(116	)
USD	10,000	MXN	201,342	Citibank NA		01/16/19		(226	)
USD	400	MXN	8,136	JPMorgan Chase Bank NA		01/16/19		(13	)
ZAR	142,448	USD	10,000	HSBC Bank plc		01/16/19		(115	)
ZAR	141,140	USD	10,000	UBS AG		01/16/19		(205	)
USD	21,000	IDR	309,687,000	JPMorgan Chase Bank NA		01/18/19		(458	)
USD	1,745,204	JPY	194,730,728	JPMorgan Chase Bank NA		01/22/19		(34,289	)
USD	15,227	COP	50,280,000	Goldman Sachs International		01/23/19		(239	)
USD	2,141	COP	7,041,000	JPMorgan Chase Bank NA		01/23/19		(25	)
USD	4,704	COP	15,333,000	Nomura International plc		01/23/19		(12	)
USD	19,694	COP	65,000,000	UBS AG		01/23/19		(300	)
USD	48,115	MXN	970,000	Citibank NA		01/23/19		(1,086	)
BRL	40,458	USD	10,454	Goldman Sachs International		02/04/19		(36	)
USD	27,156	MXN	548,000	Standard Chartered Bank		02/05/19		(578	)
USD	294,125	GBP	232,000	Morgan Stanley & Co. International plc		03/20/19		(2,683	)
								(41,541	)
	Net Unrealized Appreciation						$	1,552

OTC Barrier Options Purchased

Description

Type of Option

Counterparty

Expiration Date

Exercise Price

Barrier Price/Range

Notional Amount (000)

Value

Put

USD

Currency

Up and In

Deutsche Bank AG

01/07/19

BRL

3.60

BRL

4.00

USD

40

$

—

USD

Currency

Up and In

Deutsche Bank AG

02/07/19

BRL

3.50

BRL

4.00

USD

29

—

$

—

OTC Interest Rate Swaptions Purchased

Description

Paid by the Fund

Received by the Fund

Counterparty

Expiration Date

Exercise Rate

Notional Amount (000)

Value

Rate

Frequency

Rate

Frequency

Call

10-Year Interest Rate Swap

3 month LIBOR

Quarterly

2.75

%

Semi-Annual

Citibank NA

04/24/19

2.75

%

USD

340

$

4,865

10-Year Interest Rate Swap

3 month LIBOR

Quarterly

2.75

Semi-Annual

Citibank NA

04/24/19

2.75

USD

80

1,145

2-Year Interest Rate Swap

3 month LIBOR

Quarterly

3.00

Semi-Annual

Barclays Bank plc

05/31/19

3.00

USD

5,800

50,117

10-Year Interest Rate Swap

3 month LIBOR

Quarterly

2.70

Semi-Annual

Barclays Bank plc

06/10/19

2.70

USD

186

2,711

10-Year Interest Rate Swap

3 month LIBOR

Quarterly

3.04

Semi-Annual

JPMorgan Chase Bank NA

04/27/38

3.04

USD

860

49,134

107,972

Put

10-Year Interest Rate Swap

3.77

%

Semi-Annual

3 month LIBOR

Quarterly

Citibank NA

04/24/19

3.77

USD

210

42

10-Year Interest Rate Swap

3.04

Semi-Annual

3 month LIBOR

Quarterly

JPMorgan Chase Bank NA

04/27/38

3.04

USD

860

40,540

40,582

$

148,554

8 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

OTC Interest Rate Swaptions Written

Description	Paid by the Fund				Received by the Fund				Counterparty	Expiration Date		Exercise Rate			Notional Amount (000)			Value
	Rate			Frequency	Rate			Frequency
Call
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.90	%	Semi-Annual	Bank of America NA		02/28/19		2.90	%		USD	2,900	$	(16,231	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.70		Semi-Annual	Citibank NA		03/05/19		2.70			USD	3,000		(8,620	)
5-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.71		Semi-Annual	Citibank NA		03/14/19		2.71			USD	1,700		(16,156	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.85		Semi-Annual	Barclays Bank plc		05/20/19		2.85			USD	2,900		(18,031	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.60		Semi-Annual	Barclays Bank plc		05/31/19		2.60			USD	5,800		(20,389	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.80		Semi-Annual	Barclays Bank plc		05/31/19		2.80			USD	5,800		(33,111	)
2-Year Interest Rate Swap		3 month LIBOR		Quarterly		2.75		Semi-Annual	Citibank NA		10/16/20		2.75			USD	2,250		(24,388	)
																			(136,926	)
Put
2-Year Interest Rate Swap		3.33	%	Semi-Annual		3 month LIBOR		Quarterly	Citibank NA		04/30/19		3.33			USD	2,900		(184	)
2-Year Interest Rate Swap		3.75		Semi-Annual		3 month LIBOR		Quarterly	Citibank NA		10/16/20		3.75			USD	2,250		(2,680	)
																			(2,864	)
																		$	(139,790	)

Centrally Cleared Inflation Swaps

Paid by the Fund

Received by the Fund

Termination Date

Notional Amount (000)

Value

Upfront Premium Paid (Received)

Unrealized Appreciation (Depreciation)

Reference

Frequency

Rate

Frequency

UK Retail Price Index All Items Monthly

At Termination

3.57%

At Termination

11/15/28

GBP

171

$

804

$

(86

)

$

890

Centrally Cleared Interest Rate Swaps

Paid by the Fund		Received by the Fund		Effective Date			Termination Date		Notional Amount (000)		Value			Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate	Frequency
7.36%	Monthly	28 day MXIBTIIE	Monthly		N/A			01/28/19	MXN	2,947	$	143		$	—		$	143
1 day Fed Funds	At Termination	1.47%	At Termination		N/A			03/20/19	USD	28,245		(66,630	)		(7,814	)		(58,816	)
1.47%	At Termination	1 day Fed Funds	At Termination		N/A			03/20/19	USD	28,245		66,630			—			66,630
28 day MXIBTIIE	Monthly	8.21%	Monthly		N/A			10/07/20	MXN	1,486		(523	)		—			(523	)
28 day MXIBTIIE	Monthly	8.21%	Monthly		N/A			10/07/20	MXN	730		(258	)		—			(258	)
3.11%	Semi-Annual	3 month LIBOR	Quarterly		N/A			10/23/20	USD	2,200		(19,719	)		—			(19,719	)
3.06%	Semi-Annual	3 month LIBOR	Quarterly		N/A			10/25/20	USD	2,200		(17,389	)		—			(17,389	)
1.37%	Semi-Annual	3 month LIBOR	Quarterly		N/A			11/30/20	USD	2,470		62,050			—			62,050
3 month LIBOR	Quarterly	1.37%	Semi-Annual		N/A			11/30/20	USD	1,350		(33,914	)		8,044			(41,958	)
6 month EURIBOR	Semi-Annual	0.38%	Annual		11/09/20	(a)		11/09/21	EUR	2,508		8,517			(119	)		8,636
6 month EURIBOR	Semi-Annual	0.38%	Annual		11/09/20	(a)		11/09/21	EUR	2,508		8,373			(34	)		8,407
1.55%	Semi-Annual	6 month LIBOR	Semi-Annual		11/09/20	(a)		11/09/21	GBP	4,554		(12,434	)		467			(12,901	)
1.42%	Semi-Annual	6 month LIBOR	Semi-Annual		11/16/20	(a)		11/16/21	GBP	2,311		(2,649	)		—			(2,649	)
6 month EURIBOR	Semi-Annual	0.32%	Annual		11/16/20	(a)		11/16/21	EUR	2,531		6,758			—			6,758
1.34%	Semi-Annual	6 month LIBOR	Semi-Annual		12/10/20	(a)		12/10/21	GBP	1,160		45			(28	)		73
6 month EURIBOR	Semi-Annual	0.24%	Annual		12/14/20	(a)		12/14/21	EUR	1,270		1,888			38			1,850
7.11%	Monthly	28 day MXIBTIIE	Monthly		N/A			10/14/22	MXN	424		1,055			—			1,055
7.11%	Monthly	28 day MXIBTIIE	Monthly		N/A			10/14/22	MXN	321		798			—			798
1.66%	Semi-Annual	6 month LIBOR	Semi-Annual		11/08/21	(a)		11/08/22	GBP	1,155		(3,705	)		96			(3,801	)
1.67%	Semi-Annual	6 month LIBOR	Semi-Annual		11/08/21	(a)		11/08/22	GBP	1,155		(3,847	)		252			(4,099	)
1.54%	Semi-Annual	6 month LIBOR	Semi-Annual		11/15/21	(a)		11/15/22	GBP	1,170		(2,046	)		—			(2,046	)
2.50%	Semi-Annual	3 month LIBOR	Quarterly		N/A			01/29/23	USD	1,035		(3,635	)		—			(3,635	)
3 month LIBOR	Quarterly	2.13%	Semi-Annual		N/A			08/25/25	USD	15		(378	)		—			(378	)
3.07%	Semi-Annual	3 month LIBOR	Quarterly		N/A			08/31/25	USD	4,230		(120,076	)		—			(120,076	)
3.04%	Semi-Annual	3 month LIBOR	Quarterly		N/A			08/31/25	USD	1,700		(45,004	)		—			(45,004	)
6 month EURIBOR	Semi-Annual	0.82%	Annual		03/11/19	(a)		02/15/28	EUR	670		5,001			—			5,001
1.58%	Semi-Annual	6 month LIBOR	Semi-Annual		N/A			11/21/28	GBP	231		(4,492	)		25			(4,517	)
2.85%	Semi-Annual	3 month LIBOR	Quarterly		N/A			12/21/28	USD	300		(3,166	)		—			(3,166	)
2.85%	Semi-Annual	3 month LIBOR	Quarterly		N/A			12/24/28	USD	13		(143	)		—			(143	)
3.23%	Semi-Annual	3 month LIBOR	Quarterly		04/26/19	(a)		04/26/29	USD	11		(480	)		—			(480	)
3.26%	Semi-Annual	3 month LIBOR	Quarterly		04/26/19	(a)		04/26/29	USD	50		(2,321	)		—			(2,321	)

SCHEDULE OF INVESTMENTS 9

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

Centrally Cleared Interest Rate Swaps (continued)

Paid by the Fund		Received by the Fund		Effective Date			Termination Date		Notional Amount (000)			Value			Upfront Premium Paid (Received)		Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate	Frequency
3 month LIBOR	Quarterly	3.35%	Semi-Annual		04/26/19	(a)		04/26/29		USD	34	$	1,829		$	—	$	1,829
2.93%	Semi-Annual	3 month LIBOR	Quarterly		06/12/19	(a)		06/12/29		USD	58		(977	)		—		(977	)
												$	(180,699	)	$	927	$	(181,626	)

^(a)  Forward Swaps.

OTC Credit Default Swaps — Buy Protection

Reference Obligation/Index	Financing Rate Paid by the Fund			Payment Frequency		Counterparty	Termination Date		Notional Amount (000)			Value				Upfront Premium Paid (Received)			Unrealized Appreciation (Depreciation)
Republic of Colombia		1.00	%		Quarterly	Barclays Bank plc		12/20/23		USD	5	$	128			$	96		$	32
Republic of Colombia		1.00			Quarterly	Barclays Bank plc		12/20/23		USD	6		154				115			39
Republic of Colombia		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	6		150				91			59
Republic of Colombia		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	5		140				92			48
Republic of Colombia		1.00			Quarterly	Citibank NA		12/20/23		USD	5		128				99			29
Republic of Colombia		1.00			Quarterly	Citibank NA		12/20/23		USD	6		155				115			40
Republic of Colombia		1.00			Quarterly	Citibank NA		12/20/23		USD	5		128				93			35
Republic of Colombia		1.00			Quarterly	Citibank NA		12/20/23		USD	2		51				37			14
Republic of Colombia		1.00			Quarterly	Citibank NA		12/20/23		USD	6		154		��		121			33
Republic of Colombia		1.00			Quarterly	Deutsche Bank AG		12/20/23		USD	5		128				96			32
Republic of the Philippines		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	43		(280	)			(202	)		(78	)
United Mexican States		1.00			Quarterly	Barclays Bank plc		12/20/23		USD	14		348				107			241
United Mexican States		1.00			Quarterly	Barclays Bank plc		12/20/23		USD	9		224				71			153
United Mexican States		1.00			Quarterly	Barclays Bank plc		12/20/23		USD	4		100				30			70
United Mexican States		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	5		125				111			14
United Mexican States		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	5		125				110			15
United Mexican States		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	4		99				32			67
United Mexican States		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	5		124				40			84
United Mexican States		1.00			Quarterly	BNP Paribas SA		12/20/23		USD	6		150				133			17
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	24		598				187			411
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	10		249				96			153
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	10		249				96			153
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	6		150				136			14
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	5		124				37			87
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	5		124				27			97
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	6		150				115			35
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	6		150				119			31
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	6		150				34			116
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	10		249				60			189
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	7		174				164			10
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	7		178				127			51
United Mexican States		1.00			Quarterly	Citibank NA		12/20/23		USD	6		150				131			19
United Mexican States		1.00			Quarterly	Deutsche Bank AG		12/20/23		USD	4		99				39			60
United Mexican States		1.00			Quarterly	Deutsche Bank AG		12/20/23		USD	4		100				39			61
United Mexican States		1.00			Quarterly	Goldman Sachs International		12/20/23		USD	37		922				340			582
												$	6,147			$	3,134		$	3,013

OTC Interest Rate Swaps

Paid by the Fund		Received by the Fund			Counterparty	Termination Date		Notional Amount (000)			Value			Upfront Premium Paid (Received)		Unrealized Appreciation (Depreciation)
Rate	Frequency	Rate		Frequency
1 day BZDIOVER	At Termination		8.53%	At Termination	Citibank NA		01/02/23		BRL	240	$	293		$	—	$	293
28 day MXIBTIIE	Monthly		6.32%	Monthly	Goldman Sachs International		08/06/25		MXN	640		(3,927	)		—		(3,927	)
6.31%	Monthly		28 day MXIBTIIE	Monthly	Deutsche Bank AG		08/11/25		MXN	810		5,001			—		5,001
											$	1,367		$	—	$	1,367

10 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

The following reference rates, and their values as of period end, are used for security descriptions:

Reference Index		Reference rate
1 day BZDIOVER	Overnight Brazil CETIP — Interbank Rate		0.25	%
1 day Fed Funds	1 day Fed Funds		2.40	%
28 day MXIBTIIE	Mexico Interbank TIIE28-Day		8.41	%
3 month LIBOR	London Interbank Offered Rate		2.81	%
6 month EURIBOR	Euro Interbank Offered Rate		(0.24	%)
6 month LIBOR	London Interbank Offered Rate		1.04	%

Balances Reported in the Statement of Assets and Liabilities for Centrally Cleared Swaps, OTC Swaps and Options Written

	Swap Premiums Paid		Swap Premiums Received			Unrealized Appreciation		Unrealized Depreciation			Value
Centrally Cleared Swaps(a)	$	8,922	$	(8,081	)	$	164,120	$	(344,856	)	$	—
OTC Swaps		3,336		(202	)		8,385		(4,005	)		—
Options Written		NA		NA			10,986		(94,205	)		(139,790	)

^(a)  Includes cumulative appreciation (depreciation) on centrally cleared swaps, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities and is net of any previously paid (received) swap premium amounts.

Derivative Financial Instruments Categorized by Risk Exposure

As of period end, the fair values of derivative financial instruments located in the Statement of Assets and Liabilities were as follows:

	Commodity Contracts		Credit Contracts		Equity Contracts		Foreign Currency Exchange Contracts		Interest Rate Contracts		Other Contracts		Total
Assets — Derivative Financial Instruments
Futures contracts
Net unrealized appreciation(a)	$	—	$	—	$	—	$	—	$	125,541	$	—	$	125,541
Forward foreign currency exchange contracts
Unrealized appreciation on forward foreign currency exchange contracts		—		—		—		43,093		—		—		43,093
Options purchased
Investments at value — unaffiliated(b)		—		—		—		—		148,554		—		148,554
Swaps — centrally cleared
Net unrealized appreciation(a)		—		—		—		—		163,230		890		164,120
Swaps — OTC
Unrealized appreciation on OTC swaps; Swap premiums paid		—		6,427		—		—		5,294		—		11,721
	$	—	$	6,427	$	—	$	43,093	$	442,619	$	890	$	493,029
Liabilities — Derivative Financial Instruments
Futures contracts
Net unrealized depreciation(a)	$	—	$	—	$	—	$	—	$	27,840	$	—	$	27,840
Forward foreign currency exchange contracts
Unrealized depreciation on forward foreign currency exchange contracts		—		—		—		41,541		—		—		41,541
Options written
Options written, at value		—		—		—		—		139,790		—		139,790
Swaps — centrally cleared
Net unrealized depreciation(a)		—		—		—		—		344,856		—		344,856
Swaps — OTC
Unrealized depreciation on OTC swaps; Swap premiums received		—		280		—		—		3,927		—		4,207
	$	—	$	280	$	—	$	41,541	$	516,413	$	—	$	558,234

^(a)  Includes cumulative appreciation (depreciation) on futures contracts and centrally cleared swaps, if any, as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.

^(b)  Includes options purchased at value as reported in the Schedule of Investments.

SCHEDULE OF INVESTMENTS 11

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

For the year ended December 31, 2018, the effect of derivative financial instruments in the Statement of Operations were as follows:

	Commodity Contracts		Credit Contracts			Equity Contracts		Foreign Currency Exchange Contracts			Interest Rate Contracts			Other Contracts			Total
Net Realized Gain (Loss) from:
Futures contracts	$	—	$	—		$	—	$	—		$	97,688		$	—		$	97,688
Forward foreign currency exchange contracts		—		—			—		134,547			—			—			134,547
Options purchased(a)		—		—			—		(22,196	)		109,602			—			87,406
Options written		—		—			—		2,738			66,368			—			69,106
Swaps		—		(2,601	)		—		—			(80,435	)		(2	)		(83,038	)
	$	—	$	(2,601	)	$	—	$	115,089		$	193,223		$	(2	)	$	305,709
Net Change in Unrealized Appreciation (Depreciation) on:
Futures contracts	$	—	$	—		$	—	$	—		$	108,133		$	(39	)	$	108,094
Forward foreign currency exchange contracts		—		—			—		(42,568	)		—			—			(42,568	)
Options purchased(b)		—		—			—		9,292			88,526			—			97,818
Options written		—		—			—		—			(106,247	)		—			(106,247	)
Swaps		—		5,978			—		—			(159,794	)		(1,264	)		(155,080	)
	$	—	$	5,978		$	—	$	(33,276	)	$	(69,382	)	$	(1,303	)	$	(97,983	)

^(a)  Options purchased are included in net realized gain (loss) from investments — unaffiliated.

^(b)  Options purchased are included in net change in unrealized appreciation (depreciation) on investments — unaffiliated.

Average Quarterly Balances of Outstanding Derivative Financial Instruments

Futures contracts:
Average notional value of contracts — long	$	23,200,004
Average notional value of contracts — short	$	12,932,789
Forward foreign currency exchange contracts:
Average amounts purchased — in USD	$	2,009,986
Average amounts sold — in USD	$	1,286,039
Options:
Average value of option contracts purchased	$	11,842
Average value of option contracts written	$	2,029
Average notional value of swaption contracts purchased	$	3,648,750
Average notional value of swaption contracts written	$	23,101,500
Credit default swaps:
Average notional value — buy protection	$	454,471
Interest rate swaps:
Average notional value — pays fixed rate	$	39,477,657
Average notional value — receives fixed rate	$	34,855,254
Inflation Swaps:
Average notional value — receives fixed rate	$	390,666

For more information about the Fund’s investment risks regarding derivative financial instruments, refer to the Notes to Financial Statements.

Derivative Financial Instruments — Offsetting as of Period End

The Fund’s derivative assets and liabilities (by type) were as follows:

	Assets			Liabilities
Derivative Financial Instruments:
Futures contracts	$	27,984		$	1,779
Forward foreign currency exchange contracts		43,093			41,541
Options(a)		148,554			139,790
Swaps — Centrally cleared		—			21,105
Swaps — OTC(b)		11,721			4,207
Total derivative assets and liabilities in the Statement of Assets and Liabilities	$	231,352		$	208,422
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”)		(27,984	)		(22,884	)
Total derivative assets and liabilities subject to an MNA	$	203,368		$	185,538

^(a)  Includes options purchased at value which is included in Investments at value — unaffiliated in the Statement of Assets and Liabilities and reported in the Schedule of Investments.

^(b)  Includes unrealized appreciation (depreciation) on OTC swaps and swap premiums (paid/received) in the Statement of Assets and Liabilities.

12 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

The following tables present the Fund’s derivative assets and liabilities by counterparty net of amounts available for offset under an MNA and net of the related collateral received and pledged by the Fund:

Counterparty	Derivative Assets Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Received		Cash Collateral Received		Net Amount of Derivative Assets  (b)
Bank of America NA	$	343	$	(343	)	$	—	$	—	$	—
Barclays Bank plc		57,405		(57,405	)		—		—		—
BNP Paribas SA		1,296		(280	)		—		—		1,016
Citibank NA		9,709		(9,709	)		—		—		—
Deutsche Bank AG		5,328		(569	)		—		—		4,759
Goldman Sachs International		967		(967	)		—		—		—
HSBC Bank plc		38,646		(115	)		—		—		38,531
JPMorgan Chase Bank NA		89,674		(34,785	)		—		—		54,889
	$	203,368	$	(104,173	)	$	—	$	—	$	99,195

Counterparty	Derivative Liabilities Subject to an MNA by Counterparty		Derivatives Available for Offset (a)			Non-cash Collateral Pledged		Cash Collateral Received		Net Amount of Derivative Liabilities  (c)
Bank of America NA	$	16,710	$	(343	)	$	—	$	—	$	16,367
Barclays Bank plc		71,531		(57,405	)		—		—		14,126
BNP Paribas SA		280		(280	)		—		—		—
Citibank NA		53,456		(9,709	)		—		—		43,747
Deutsche Bank AG		569		(569	)		—		—		—
Goldman Sachs International		4,314		(967	)		—		—		3,347
HSBC Bank plc		115		(115	)		—		—		—
JPMorgan Chase Bank NA		34,785		(34,785	)		—		—		—
Morgan Stanley & Co. International plc		2,683		—			—		—		2,683
Nomura International plc		12		—			—		—		12
Standard Chartered Bank		578		—			—		—		578
UBS AG		505		—			—		—		505
	$	185,538	$	(104,173	)	$	—	$	—	$	81,365

^(a)  The amount of derivatives available for offset is limited to the amount of derivative assets and/or liabilities that are subject to an MNA.

^(b)  Net amount represents the net amount receivable from the counterparty in the event of default.

^(c)  Net amount represents the net amount payable due to the counterparty in the event of default.

SCHEDULE OF INVESTMENTS 13

Schedule of Investments  (continued) December 31, 2018 BlackRock U.S. Government Bond V.I. Fund

Fair Value Hierarchy as of Period End

Various inputs are used in determining the fair value of investments and derivative financial instruments. For information about the Fund’s policy regarding valuation of investments and derivative financial instruments, refer to the Notes to Financial Statements.

The following table summarizes the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy:

	Level 1			Level 2			Level 3		Total
Assets:
Investments:
Long-Term Investments:
Asset-Backed Securities	$	—		$	1,538,514		$	—	$	1,538,514
Foreign Government Obligations		—			89,598			—		89,598
Non-Agency Mortgage-Backed Securities		—			1,198,740			125,753		1,324,493
U.S. Government Sponsored Agency Securities		—			52,963,916			—		52,963,916
U.S. Treasury Obligations		—			29,354,816			—		29,354,816
Short-Term Securities:
Commercial Paper		—			488,013			—		488,013
Money Market Funds		2,146,545			—			—		2,146,545
Options Purchased:
Interest rate contracts		—			148,554			—		148,554
Liabilities:
TBA Sale Commitments		—			(16,683,058	)		—		(16,683,058	)
	$	2,146,545		$	69,099,093		$	125,753	$	71,371,391
Derivative Financial Instruments(a)
Assets:
Credit contracts	$	—		$	3,091		$	—	$	3,091
Foreign currency exchange contracts		—			43,093			—		43,093
Interest rate contracts		125,541			168,524			—		294,065
Other contracts		—			890			—		890
Liabilities:
Credit contracts		—			(78	)		—		(78	)
Foreign currency exchange contracts		—			(41,541	)		—		(41,541	)
Interest rate contracts		(27,840	)		(488,573	)		—		(516,413	)
	$	97,701		$	(314,594	)	$	—	$	(216,893	)

^(a)  Derivative financial instruments are swaps, futures contracts, forward foreign currency exchange contracts and options written. Swaps, futures contracts forward foreign currency exchange contracts and options written are valued at the unrealized appreciation (depreciation) on the instrument and options written are shown at value.

The Fund may hold liabilities in which the fair value approximates the carrying amount or face value, including accrued interest, for financial statement purposes. As of year end, reverse repurchase agreements of $14,548,792 are categorized as level 2 within the disclosure hierarchy.

During the year ended December 31, 2018, there were no transfers between levels.

See notes to financial statements.

14 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Statement of Assets and Liabilities

December 31, 2018

	BlackRock U.S. Government Bond V.I. Fund
ASSETS
Investments at value — unaffiliated (cost — $86,277,554)	$	85,915,683
Investments at value — affiliated (cost — $2,138,766)		2,138,766
Cash		8,664
Cash pledged:
Futures contracts		110,710
Centrally cleared swaps		238,000
Foreign currency at value (cost — $150,018)		149,416
Receivables:
Investments sold		7,335,523
TBA sale commitments		16,472,251
Capital shares sold		134,197
Dividends — affiliated		1,593
Dividends — unaffiliated		9,228
Interest — unaffiliated		337,244
From the Manager		161,754
Variation margin on futures contracts		27,984
Swap premiums paid		3,336
Unrealized appreciation on:
Forward foreign currency exchange contracts		43,093
OTC swaps		8,385
Prepaid expenses		62
Other assets		3,982
Total assets		113,099,871
LIABILITIES
Options written at value (premium received $56,571)		139,790
TBA sale commitments at value (proceeds $16,472,251)		16,683,058
Reverse repurchase agreements at value		14,548,792
Payables:
Investments purchased		22,623,612
Capital shares redeemed		470,882
Income dividend distributions		110,220
Distribution fees		606
Variation margin on futures contracts		1,779
Variation margin on centrally cleared swaps		21,105
Board realignment and consolidation		161,754
Investment advisory fees		42,403
Directors’ and Officer’s fees		5,141
Other affiliates		158
Other accrued expenses		119,593
Swap premiums received		202
Unrealized depreciation on:
Forward foreign currency exchange contracts		41,541
OTC swaps		4,005
Total liabilities		54,974,641
NET ASSETS	$	58,125,230
NET ASSETS CONSIST OF
Paid-in capital	$	63,908,783
Accumulated loss		(5,783,553	)
NET ASSETS	$	58,125,230
NET ASSET VALUE
Class I — Based on net assets of $54,820,292 and 5,520,508 shares outstanding, 300 million shares authorized, $0.10 par value.	$	9.93
Class III — Based on net assets of $3,304,938 and 332,999 shares outstanding, 100 million shares authorized, $0.10 par value.	$	9.92

See notes to financial statements.

FINANCIAL STATEMENTS 15

Statement of Operations

Year Ended December 31, 2018

	BlackRock U.S. Government Bond V.I. Fund
INVESTMENT INCOME
Dividends — affiliated	$	27,224
Dividends — unaffiliated		333
Interest — unaffiliated		2,025,934
Foreign taxes withheld		(143	)
Total investment income		2,053,348
EXPENSES
Investment advisory		304,574
Board realignment and consolidation		161,754
Transfer agent — class specific		127,671
Accounting services		73,358
Professional		72,180
Custodian		34,552
Printing		27,300
Directors and Officer		17,934
Distribution — class specific		5,739
Transfer agent		5,000
Miscellaneous		27,981
Total expenses excluding interest expense		858,043
Interest expense		270,055
Total expenses		1,128,098
Less:
Fees waived and/or reimbursed by the Manager		(224,032	)
Transfer agent fees waived and/or reimbursed — class specific		(126,461	)
Total expenses after fees waived and/or reimbursed		777,605
Net investment income		1,275,743
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) from:
Investments — unaffiliated		(918,490	)
Forward foreign currency exchange contracts		134,547
Foreign currency transactions		15,213
Futures contracts		97,688
Options written		69,106
Swaps		(83,038	)
		(684,974	)
Net change in unrealized appreciation (depreciation) on:
Investments — unaffiliated		(340,138	)
Forward foreign currency exchange contracts		(42,568	)
Foreign currency translations		(970	)
Futures contracts		108,094
Options written		(106,247	)
Swaps		(155,080	)
		(536,909	)
Net realized and unrealized loss		(1,221,883	)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	53,860

See notes to financial statements.

16 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Statements of Changes in Net Assets

	BlackRock U.S. Government Bond V.I. Fund
	Year Ended December 31,
	2018			2017
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income	$	1,275,743		$	1,103,111
Net realized loss		(684,974	)		(1,238,264	)
Net change in unrealized appreciation (depreciation)		(536,909	)		1,196,592
Net increase in net assets resulting from operations		53,860			1,061,439
DISTRIBUTIONS TO SHAREHOLDERS(a)(b)
Class I		(1,272,977	)		(1,434,556	)
Class III		(44,457	)		(34,383	)
Decrease in net assets resulting from distributions to shareholders		(1,317,434	)		(1,468,939	)
CAPITAL SHARE TRANSACTIONS
Net decrease in net assets derived from capital share transactions		(7,496,000	)		(7,899,331	)
NET ASSETS(b)
Total decrease in net assets		(8,759,574	)		(8,306,831	)
Beginning of year		66,884,804			75,191,635
End of year	$	58,125,230		$	66,884,804

^(a)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(b)  Prior year distribution character information and undistributed net investment income has been modified or removed to conform with current year RegulationS-X presentation changes. Refer to Note 12 for this prior year information.

See notes to financial statements.

FINANCIAL STATEMENTS 17

Statement of Cash Flows

Year Ended December 31, 2018

	BlackRock U.S. Government Bond V.I. Fund
CASH PROVIDED BY OPERATING ACTIVITIES
Net increase in net assets resulting from operations	$	53,860
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Proceeds from sales of long-term investments and principal paydowns		542,404,398
Purchases of long-term investments		(539,931,755	)
Net purchases of short-term securities		(838,444	)
Amortization of premium and accretion of discount on investments		(17,386	)
Premiums received from options written		374,461
Premiums paid on closing options written		(312,256	)
Net realized (gain) loss on investments and options written		849,384
Net unrealized (appreciation) depreciation on investments, options written, forward foreign currency exchange contracts, foreign currency translations and swaps		484,801
(Increase) Decrease in Assets:
Receivables:
Dividends — affiliated		817
Dividends — unaffiliated		(3,206	)
From the Manager		(161,754	)
Interest — unaffiliated		(51,901	)
Variation margin on futures contracts		(27,984	)
Variation margin on centrally cleared swaps		3,621
Swap premiums paid		(3,218	)
Prepaid expenses		231
Other assets		11,671
Increase (Decrease) in Liabilities:
Payables:
Board realignment and consolidation		161,754
Directors’ and Officer’s fees		1,175
Distribution fees		260
Interest expense and fees		615
Investment advisory fees		(2,945	)
Other accrued expenses		(49,465	)
Other affiliates		(401	)
Variation margin on futures contracts		(952	)
Variation margin on centrally cleared swaps		21,105
Swap premiums received		(4,282	)
Net cash provided by operating activities		2,962,204
CASH USED FOR FINANCING ACTIVITIES
Cash dividends paid to shareholders		(356	)
Payments on redemption of capital shares		(14,591,773	)
Proceeds from issuance of capital shares		6,290,187
Net borrowing of reverse repurchase agreements		5,424,362
Net cash used for financing activities		(2,877,580	)
CASH IMPACT FROM FOREIGN EXCHANGE FLUCTUATIONS
Cash impact from foreign exchange fluctuations		(560	)
CASH AND FOREIGN CURRENCY
Net increase in restricted and unrestricted cash and foreign currency		84,064
Restricted and unrestricted cash and foreign currency at beginning of year		422,726
Restricted and unrestricted cash and foreign currency at end of year	$	506,790
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest expense	$	269,440
NON-CASH FINANCING ACTIVITIES
Capital shares issued in reinvestment of dividends and distributions paid to shareholders	$	1,293,092

	Year Ended December 31, 2018		Year Ended December 31, 2017
RECONCILIATION OF RESTRICTED AND UNRESTRICTED CASH AND FOREIGN CURRENCY TO THE STATEMENT OF ASSETS AND LIABILITIES
Cash	$	8,664	$	1,256
Cash Pledged:
Futures contracts		110,710		118,710
Centrally cleared swaps		238,000		167,000
Foreign currency at value		149,416		135,760
	$	506,790	$	422,726

See notes to financial statements.

18 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Financial Highlights

(For a share outstanding throughout each period)

	BlackRock U.S. Government Bond V.I. Fund
	Class I
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	10.12		$	10.18		$	10.23		$	10.39		$	10.04
Net investment income(a)		0.21			0.16			0.15			0.15			0.19
Net realized and unrealized gain (loss)		(0.18	)		(0.01	)		(0.01	)		(0.10	)		0.39
Net increase from investment operations		0.03			0.15			0.14			0.05			0.58
Distributions from net investment income(b)		(0.22	)		(0.21	)		(0.19	)		(0.21	)		(0.23	)
Net asset value, end of year	$	9.93		$	10.12		$	10.18		$	10.23		$	10.39
Total Return(c)
Based on net asset value		0.29	%		1.52	%		1.33	%		0.45	%		5.87	%
Ratios to Average Net Assets
Total expenses		1.85	%		1.31	%		1.02	%		0.96	%		0.89	%
Total expenses after fees waived and/or reimbursed		1.27	%		1.01	%		0.76	%		0.73	%	��	0.69	%
Total expenses after fees waived and/or reimbursed excluding interest expense		0.82	%		0.87	%		0.70	%		0.70	%		0.66	%
Net investment income		2.10	%		1.58	%		1.43	%		1.41	%		1.88	%
Supplemental Data
Net assets, end of year (000)	$	54,820		$	65,100		$	72,433		$	83,016		$	92,975
Portfolio turnover rate(d)		737	%		1,052	%		1,140	%		1,581	%		1,388	%

^(a)  Based on average shares outstanding.

^(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Portfolio turnover rate (excluding MDRs)		435	%		681	%		705	%		991	%		956	%

See notes to financial statements.

FINANCIAL HIGHLIGHTS 19

Financial Highlights  (continued)

(For a share outstanding throughout each period)

	BlackRock U.S. Government Bond V.I. Fund
	Class III
	Year Ended December 31,
	2018			2017			2016			2015			2014
Net asset value, beginning of year	$	10.11		$	10.18		$	10.22		$	10.39		$	10.04
Net investment income(a)		0.18			0.13			0.11			0.13			0.17
Net realized and unrealized gain (loss)		(0.18	)		(0.02	)		—			(0.12	)		0.38
Net increase from investment operations		0.00			0.11			0.11			0.01			0.55
Distributions from net investment income(b)		(0.19	)		(0.18	)		(0.15	)		(0.18	)		(0.20	)
Net asset value, end of year	$	9.92		$	10.11		$	10.18		$	10.22		$	10.39
Total Return(c)
Based on net asset value		(0.01	)%		1.10	%		1.08	%		0.08	%		5.56	%��
Ratios to Average Net Assets
Total expenses		2.03	%		1.45	%		1.27	%		1.11	%		1.09	%
Total expenses after fees waived and/or reimbursed		1.57	%		1.30	%		1.08	%		1.00	%		1.00	%
Total expenses after fees waived and/or reimbursed excluding interest expense		1.13	%		1.17	%		1.01	%		0.97	%		0.98	%
Net investment income		1.86	%		1.30	%		1.09	%		1.27	%		1.63	%
Supplemental Data
Net assets, end of year (000)	$	3,305		$	1,785		$	2,758		$	1,894		$	750
Portfolio turnover rate(d)		737	%		1,052	%		1,140	%		1,581	%		1,388	%

^(a)  Based on average shares outstanding.

^(b)  Distributions for annual periods determined in accordance with U.S. federal income tax regulations.

^(c)  Where applicable, excludes insurance-related fees and expenses and assumes the reinvestment of distributions.

^(d)  Includes mortgage dollar roll transactions (“MDRs”). Additional information regarding portfolio turnover rate is as follows:

	Year Ended December 31,
	2018			2017			2016			2015			2014
Portfolio turnover rate (excluding MDRs)		435	%		681	%		705	%		991	%		956	%

See notes to financial statements.

20 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements

1. ORGANIZATION

BlackRock Variable Series Funds II, Inc. (the “Company”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company. The Company is organized as a Maryland corporation that is comprised of 3 separate portfolios. The funds offer shares to insurance companies for their separate accounts to fund benefits under certain variable annuity and variable life insurance contracts. The financial statements presented are for BlackRock U.S. Government Bond V.I. Fund (the “Fund”). The Fund is classified as diversified. Class I and Class III Shares have identical voting, dividend, liquidation and other rights, except that only shares of the respective classes are entitled to vote on matters concerning only that class. In addition, Class III Shares bear certain expenses related to the distribution of such shares.

The Fund, together with certain other registered investment companies advised by BlackRock Advisors, LLC (the “Manager”) or its affiliates, is included in a complex ofopen-end funds referred to as the Equity-Bond Complex.

Reorganization:The Board of Directors of the Company (the “Board”) approved an Agreement and Plan of Reorganization with respect to the following Target Fund (“Target Fund”), pursuant to which the Target Fund reorganized into a newly created series (“Acquiring Fund”) of BlackRock Variable Series Funds II, Inc., a newly organized Maryland corporation. The reorganization (the “Reorganization”) closed on September 17, 2018 and was not subject to approval by shareholders of the Target Fund.

Target Fund	Target Fund’s Registrant	Acquiring Fund	Acquiring Fund’s Registrant
BlackRock U.S. Government Bond V.I. Fund	BlackRock Variable Series Funds, Inc.	BlackRock U.S. Government Bond V.I. Fund	BlackRock Variable Series Funds II, Inc.

The Reorganization was effected in connection with the reconfiguration of the boards of directors/trustees of certain BlackRock-advised funds.

The Acquiring Fund has the same investment objective, strategies and policies, investment adviser, portfolio management team and service providers as the Target Fund. The Target Fund is the performance and accounting survivor of the Reorganization, meaning that the Acquiring Fund assumed the performance and financial history of the Target Fund upon completion of the Reorganization. In addition the Acquiring Fund is subject to the same contractual arrangements, including the same contractual fees and expenses, as those of the Target Fund as of the date of the Reorganization. The Reorganization wastax-free, meaning that the Target Fund’s shareholders became shareholders of the Acquiring Fund without realizing any gain or loss for federal income tax purposes.

As a result, the Acquiring Fund acquired all of the assets and assumed all of the liabilities of the Target Fund in exchange for an equal aggregate value of newly-issued shares of the Acquiring Fund. Each shareholder of the Target Fund received shares of the Acquiring Fund in an amount equal to the aggregate net asset value (“NAV”) of such shareholder’s Target Fund shares, as determined at the close of business on September 14, 2018.

The Reorganization was accomplished by atax-free exchange of shares of the Acquiring Fund in the following amounts and at the following conversion ratio:

Target Fund	Shares Prior to Reorganization		Conversion Ratio		Shares Post- Reorganization
BlackRock U.S. Government Bond V.I. Fund		6,005,147		1		6,005,147

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value. However, the cost basis of the investments received from the Target Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized and unrealized gains and losses with amounts distributable to shareholders for tax purposes.

Prior to the Reorganization, the Acquiring Fund had not yet commenced operations and had no assets or liabilities. The Target Fund’s net assets, fair value and cost of investments and derivative financial instruments prior to the Reorganization was as follows:

Target Fund	Net Assets		Fair Value of Investments		Cost of Investments
BlackRock U.S. Government Bond V.I. Fund	$	59,091,365	$	54,373,999	$	55,763,268

Prior to the Reorganization’s effective date, the Target Fund began to incur expenses in connection with a realignment and consolidation of the boards of directors/trustees of certain BlackRock-advised funds. These expenses and liabilities have been assumed by the Acquiring Fund. The Manager has voluntarily agreed to reimburse certain funds for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations.

2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which may require management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates. The Fund is considered an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies. Below is a summary of significant accounting policies:

Investment Transactions and Income Recognition: For financial reporting purposes, investment transactions are recorded on the dates the transactions are entered into (the “trade dates”). Realized gains and losses on investment transactions are determined on the identified cost basis. Dividend income is recorded on theex-dividend date. Interest income, including amortization and accretion of premiums and discounts on debt securities, is recognized on an accrual basis. Income, expenses and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

NOTESTO FINANCIAL STATEMENTS 21

Notes to Financial Statements  (continued)

Foreign Currency Translation:The Fund’s books and records are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars using exchange rates determined as of the close of trading on the New York Stock Exchange (“NYSE”). Purchases and sales of investments are recorded at the rates of exchange prevailing on the respective dates of such transactions. Generally, when the U.S. dollar rises in value against a foreign currency, the investments denominated in that currency will lose value; the opposite effect occurs if the U.S. dollar falls in relative value.

The Fund does not isolate the portion of the results of operations arising as a result of changes in the exchange rates from the changes in the market prices of investments held or sold for financial reporting purposes. Accordingly, the effects of changes in exchange rates on investments are not segregated in the Statement of Operations from the effects of changes in market prices of those investments, but are included as a component of net realized and unrealized gain (loss) from investments. The Fund reports realized currency gains (losses) on foreign currency related transactions as components of net realized gain (loss) for financial reporting purposes, whereas such components are generally treated as ordinary income for U.S. federal income tax purposes.

Segregation and Collateralization: In cases where the Fund enters into certain investments (e.g., TBA sale commitments, futures contracts, forward foreign currency exchange contracts, options written and swaps), or certain borrowings (e.g., reverse repurchase transactions) that would be treated as “senior securities” for 1940 Act purposes, the Fund may segregate or designate on its books and records cash or liquid assets having a market value at least equal to the amount of its future obligations under such investments or borrowings. Doing so allows the investment or borrowing to be excluded from treatment as a “senior security.” Furthermore, if required by an exchange or counterparty agreement, the Fund may be required to deliver/deposit cash and/or securities to/with an exchange, or broker-dealer or custodian as collateral for certain investments or obligations.

Distributions: Distributions from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend date and made at least annually. The character and timing of distributions are determined in accordance with U.S. federal income tax regulations, which may differ from U.S. GAAP.

Recent Accounting Standards: In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update “Premium Amortization of Purchased Callable Debt Securities” which amends the amortization period for certain purchased callable debt securities. Under the new guidance, the premium amortization of purchased callable debt securities that have explicit,non-contingent call features and are callable at fixed prices will be amortized to the earliest call date. The guidance will be applied on a modified retrospective basis and is effective for fiscal years, and their interim periods, beginning after December 15, 2018. Management is currently evaluating the impact of this guidance to the Fund.

In August 2018, the Financial Accounting Standards Board issued Accounting Standards Update2018-13 “Changes to the Disclosure Requirements for Fair Value Measurement” which modifies disclosure requirements for fair value measurements. The guidance is effective for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. Management is currently evaluating the impact of this guidance to the Fund.

Indemnifications: In the normal course of business, the Fund enters into contracts that contain a variety of representations that provide general indemnification. The Fund’s maximum exposure under these arrangements is unknown because it involves future potential claims against the Fund, which cannot be predicted with any certainty.

Other:Expenses directly related to the Fund or its classes are charged to the Fund or the applicable class. Other operating expenses shared by several funds, including other funds managed by the Manager, are prorated among those funds on the basis of relative net assets or other appropriate methods. Expenses directly related to the Fund and other shared expenses prorated to the Fund are allocated daily to each class based on its relative net assets or other appropriate methods.

3. INVESTMENT VALUATION AND FAIR VALUE MEASUREMENTS

Investment Valuation Policies: The Fund’s investments are valued at fair value (also referred to as “market value” within the financial statements) as of the close of trading on the NYSE (generally 4:00 p.m., Eastern time). U.S. GAAP defines fair value as the price the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Fund determines the fair values of its financial instruments using various independent dealers or pricing services under policies approved by the Board. The BlackRock Global Valuation Methodologies Committee (the “Global Valuation Committee”) is the committee formed by management to develop global pricing policies and procedures and to oversee the pricing function for all financial instruments.

Fair Value Inputs and Methodologies: The following methods and inputs are used to establish the fair value of the Fund’s assets and liabilities:

• Fixed-income securities for which market quotations are readily available are generally valued using the last available bid prices or current market quotations provided by independent dealers or third party pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more independent brokers or dealers as obtained from a third party pricing service. Pricing services generally value fixed-income securities assuming orderly transactions of an institutional round lot size, but a fund may hold or transact in such securities in smaller, odd lot sizes. Odd lots may trade at lower prices than institutional round lots. The pricing services may use matrix pricing or valuation models that utilize certain inputs and assumptions to derive values, including transaction data (e.g., recent representative bids and offers), credit quality information, perceived market movements, news, and other relevant information. Certain fixed-income securities, including asset-backed and mortgage related securities may be valued based on valuation models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. The amortized cost method of valuation may be used with respect to debt obligations with sixty days or less remaining to maturity unless the Manager determines such method does not represent fair value.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of trading on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of trading on the NYSE that may not be reflected in the computation of the Fund’s net assets. Each business day, the Fund uses a pricing service to assist with the valuation of certain foreign exchange-traded equity securities and foreign exchange-tradedover-the-counter (“OTC”) options (the “Systematic Fair Value Price”). Using current market factors, the Systematic Fair Value Price is designed to value such foreign securities and foreign options at fair value as of the close of trading on the NYSE, which follows the close of the local markets.

22 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

• Investments inopen-end U.S. mutual funds are valued at NAV each business day.

• Futures contracts traded on exchanges are valued at their last sale price.

• Forward foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of trading on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

• Exchange-traded options are valued at the mean between the last bid and ask prices at the close of the options market in which the options trade. An exchange-traded option for which there is no mean price is valued at the last bid (long positions) or ask (short positions) price. If no bid or ask price is available, the prior day’s price will be used, unless it is determined that the prior day’s price no longer reflects the fair value of the option. OTC options and options on swaps (“swaptions”) are valued by an independent pricing service using a mathematical model, which incorporates a number of market data factors, such as the trades and prices of the underlying instruments.

• Swap agreements are valued utilizing quotes received daily by the Fund’s pricing service or through brokers, which are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments.

• To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services.

If events (e.g., a company announcement, market volatility or a natural disaster) occur that are expected to materially affect the value of such investments, or in the event that the application of these methods of valuation results in a price for an investment that is deemed not to be representative of the market value of such investment, or if a price is not available, the investment will be valued by the Global Valuation Committee, or its delegate, in accordance with a policy approved by the Board as reflecting fair value (“Fair Valued Investments”). The fair valuation approaches that may be used by the Global Valuation Committee will include market approach, income approach and cost approach. Valuation techniques such as discounted cash flow, use of market comparables and matrix pricing are types of valuation approaches and are typically used in determining fair value. When determining the price for Fair Valued Investments, the Global Valuation Committee, or its delegate, seeks to determine the price that the Fund might reasonably expect to receive or pay from the current sale or purchase of that asset or liability in anarm’s-length transaction. Fair value determinations shall be based upon all available factors that the Global Valuation Committee, or its delegate, deems relevant and consistent with the principles of fair value measurement.

The Global Valuation Committee, or its delegate, employs various methods for calibrating valuation approaches for investments where an active market does not exist, including regular due diligence of the Fund’s pricing vendors, regular reviews of key inputs and assumptions, transactional back-testing or disposition analysis to compare unrealized gains and losses to realized gains and losses, reviews of missing or stale prices and large movements in market values and reviews of any market related activity. The pricing of all Fair Valued Investments is subsequently reported to the Board or a committee thereof on a quarterly basis. As a result of the inherent uncertainty in valuation of these investments, the fair values may differ from the values that would have been used had an active market existed.

For investments in equity or debt issued by privately held companies or funds (“Private Company” or collectively, the “Private Companies”) and other Fair Valued Investments, the fair valuation approaches that are used by third party pricing services utilize one or a combination of, but not limited to, the following inputs.

	Standard Inputs Generally Considered By Third Party Pricing Services
Market approach	(i)  recent market transactions, including subsequent rounds of financing, in the underlying investment or comparable issuers; (ii)   recapitalizations and other transactions across the capital structure; and (iii)  market multiples of comparable issuers.
Income approach	(i)  future cash flows discounted to present and adjusted as appropriate for liquidity, credit and/or market risks; (ii)   quoted prices for similar investments or assets in active markets; and (iii)  other risk factors, such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks, recovery rates, liquidation amounts and/or default rates.
Cost approach.	(i)  audited or unaudited financial statements, investor communications and financial or operational metrics issued by the Private Company; (ii)   changes in the valuation of relevant indices or publicly traded companies comparable to the Private Company; (iii)  relevant news and other public sources; and (iv)  known secondary market transactions in the Private Company’s interests and merger or acquisition activity in companies comparable to the Private Company.

Investments in series of preferred stock issued by Private Companies are typically valued utilizing market approach in determining the enterprise value of the company. Such investments often contain rights and preferences that differ from other series of preferred and common stock of the same issuer. Valuation techniques such as an option pricing model (“OPM”), a probability weighted expected return model (“PWERM”) or a hybrid of those techniques are used in allocating enterprise value of the company, as deemed appropriate under the circumstances. The use of OPM and PWERM techniques involve a determination of the exit scenarios of the investment in order to appropriately allocate the enterprise value of the company among the various parts of its capital structure.

The Private Companies are not subject to the public company disclosure, timing, and reporting standards as other investments held by the Fund. Typically, the most recently available information by a Private Company is as of a date that is earlier than the date the Fund is calculating its NAV. This factor may result in a difference between the value of the investment and the price the Fund could receive upon the sale of the investment.

Fair Value Hierarchy: Various inputs are used in determining the fair value of investments and derivative financial instruments. These inputs to valuation techniques are categorized into a fair value hierarchy consisting of three broad levels for financial statement purposes as follows:

• Level 1 — Unadjusted price quotations in active markets/exchanges for identical assets or liabilities that the Fund has the ability to access

• Level 2 — Other observable inputs (including, but not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market–corroborated inputs)

NOTESTO FINANCIAL STATEMENTS 23

Notes to Financial Statements  (continued)

• Level 3 — Unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available (including the Fund’s own assumptions used in determining the fair value of investments and derivative financial instruments)

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the fair value hierarchy classification is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments classified within Level 3 have significant unobservable inputs used by the Global Valuation Committee in determining the price for Fair Valued Investments. Level 3 investments include equity or debt issued by Private Companies. There may not be a secondary market, and/or there are a limited number of investors. Level 3 investments may also be adjusted to reflect illiquidity and/ornon-transferability, with the amount of such discount estimated by the Global Valuation Committee in the absence of market information.

Changes in valuation techniques may result in transfers into or out of an assigned level within the hierarchy. In accordance with the Fund’s policy, transfers between different levels of the fair value hierarchy are deemed to have occurred as of the beginning of the reporting period. The categorization of a value determined for investments and derivative financial instruments is based on the pricing transparency of the investments and derivative financial instruments and is not necessarily an indication of the risks associated with investing in those securities.

4. SECURITIES AND OTHER INVESTMENTS

Asset-Backed and Mortgage-Backed Securities: Asset-backed securities are generally issued as pass-through certificates or as debt instruments. Asset-backed securities issued as pass-through certificates represent undivided fractional ownership interests in an underlying pool of assets. Asset-backed securities issued as debt instruments, which are also known as collateralized obligations, are typically issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. The yield characteristics of certain asset-backed securities may differ from traditional debt securities. One such major difference is that all or a principal part of the obligations may be prepaid at any time because the underlying assets (i.e., loans) may be prepaid at any time. As a result, a decrease in interest rates in the market may result in increases in the level of prepayments as borrowers, particularly mortgagors, refinance and repay their loans. An increased prepayment rate with respect to an asset-backed security will have the effect of shortening the maturity of the security. In addition, a fund may subsequently have to reinvest the proceeds at lower interest rates. If a fund has purchased such an asset-backed security at a premium, a faster than anticipated prepayment rate could result in a loss of principal to the extent of the premium paid.

For mortgage pass-through securities (the “Mortgage Assets”) there are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by Ginnie Mae are guaranteed as to the timely payment of principal and interest by Ginnie Mae and such guarantee is backed by the full faith and credit of the United States. However, mortgage-related securities issued by Freddie Mac and Fannie Mae, including Freddie Mac and Fannie Mae guaranteed mortgage pass-through certificates, which are solely the obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States, but are supported by the right of the issuer to borrow from the U.S. Treasury.

Non-agency mortgage-backed securities are securities issued bynon-governmental issuers and have no direct or indirect government guarantees of payment and are subject to various risks.Non-agency mortgage loans are obligations of the borrowers thereunder only and are not typically insured or guaranteed by any other person or entity. The ability of a borrower to repay a loan is dependent upon the income or assets of the borrower. A number of factors, including a general economic downturn, acts of God, terrorism, social unrest and civil disturbances, may impair a borrower’s ability to repay its loans.

Inflation-Indexed Bonds:Inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. If the index measuring inflation rises or falls, the principal value of inflation-indexed bonds (other than municipal inflation-indexed and certain corporate inflation-indexed bonds) will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal. With regard to municipal inflation-indexed bonds and certain corporate inflation-indexed bonds, the inflation adjustment is typically reflected in the semi-annual coupon payment. As a result, the principal value of municipal inflation-indexed bonds and such corporate inflation-indexed bonds does not adjust according to the rate of inflation.

Multiple Class Pass-Through Securities: Multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities, may be issued by Ginnie Mae, U.S. Government agencies or instrumentalities or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or Mortgage Assets. The payments on these are used to make payments on the CMOs or multiple pass-through securities. Multiple class pass-through securities represent direct ownership interests in the Mortgage Assets. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes and targeted amortization classes. IOs and POs are stripped mortgage-backed securities representing interests in a pool of mortgages, the cash flow from which has been separated into interest and principal components. IOs receive the interest portion of the cash flow while POs receive the principal portion. IOs and POs can be extremely volatile in response to changes in interest rates. As interest rates rise and fall, the value of IOs tends to move in the same direction as interest rates. POs perform best when prepayments on the underlying mortgages rise since this increases the rate at which the principal is returned and the yield to maturity on the PO. When payments on mortgages underlying a PO are slower than anticipated, the life of the PO is lengthened and the yield to maturity is reduced. If the underlying Mortgage Assets experience greater than anticipated prepayments of principal, a fund’s initial investment in the IOs may not fully recoup.

Stripped Mortgage-Backed Securities: Stripped mortgage-backed securities are typically issued by the U.S. Government, its agencies and instrumentalities. Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (IOs) and principal (POs) distributions on a pool of Mortgage Assets. Stripped mortgage-backed securities may be privately issued.

24 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

Zero-Coupon Bonds: Zero-coupon bonds are normally issued at a significant discount from face value and do not provide for periodic interest payments. These bonds may experience greater volatility in market value than other debt obligations of similar maturity which provide for regular interest payments.

TBA Commitments: TBA commitments are forward agreements for the purchase or sale of mortgage-backed securities for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate and mortgage terms. When entering into TBA commitments, a fund may take possession of or deliver the underlying mortgage-backed securities but can extend the settlement or roll the transaction. TBA commitments involve a risk of loss if the value of the security to be purchased or sold declines or increases, respectively, prior to settlement date.

In order to better define contractual rights and to secure rights that will help a fund mitigate its counterparty risk, TBA commitments may be entered into by a fund under Master Securities Forward Transaction Agreements (each, an “MSFTA”). An MSFTA typically contains, among other things, collateral posting terms and netting provisions in the event of default and/or termination event. The collateral requirements are typically calculated by netting themark-to-market amount for each transaction under such agreement and comparing that amount to the value of the collateral currently pledged by a fund and the counterparty. Cash collateral that has been pledged to cover the obligations of a fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral for TBA commitments or cash received as collateral for TBA commitments, respectively.Non-cash collateral pledged by a fund, if any, is noted in the Schedule of Investments. Typically, a fund is permitted to sell,re-pledge or use the collateral it receives; however, the counterparty is not permitted to do so. To the extent amounts due to a fund are not fully collateralized, contractually or otherwise, a fund bears the risk of loss from counterpartynon-performance.

Mortgage Dollar Roll Transactions: The fund may sell TBA mortgage-backed securities and simultaneously contract to repurchase substantially similar (i.e., same type, coupon and maturity) securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, a fund is not entitled to receive interest and principal payments on the securities sold. Mortgage dollar roll transactions are treated as purchases and sales and realizes gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that a fund is required to purchase may decline below the agreed upon repurchase price of those securities.

Reverse Repurchase Agreements: Reverse repurchase agreements are agreements with qualified third party broker-dealers in which a fund sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. A fund receives cash from the sale to use for other investment purposes. During the term of the reverse repurchase agreement, a fund continues to receive the principal and interest payments on the securities sold. Certain agreements have no stated maturity and can be terminated by either party at any time. Interest on the value of the reverse repurchase agreements issued and outstanding is based upon competitive market rates determined at the time of issuance. A fund may utilize reverse repurchase agreements when it is anticipated that the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. Reverse repurchase agreements involve leverage risk. If a fund suffers a loss on its investment of the transaction proceeds from a reverse repurchase agreement, a fund would still be required to pay the full repurchase price. Further, a fund remains subject to the risk that the market value of the securities repurchased declines below the repurchase price. In such cases, a fund would be required to return a portion of the cash received from the transaction or provide additional securities to the counterparty.

Cash received in exchange for securities delivered plus accrued interest due to the counterparty is recorded as a liability in the Statement of Assets and Liabilities at face value including accrued interest. Due to the short-term nature of the reverse repurchase agreements, face value approximates fair value. Interest payments made by a fund to the counterparties are recorded as a component of interest expense in the Statement of Operations. In periods of increased demand for the security, a fund may receive a fee for the use of the security by the counterparty, which may result in interest income to a fund.

For the year ended December 31, 2018, the average amount of reverse repurchase agreements outstanding and the daily weighted average interest rate for the Fund were $13,675,013 and 1.89%, respectively.

Reverse repurchase transactions are entered into by a fund under Master Repurchase Agreements (each, an “MRA”), which permit a fund, under certain circumstances, including an event of default (such as bankruptcy or insolvency), to offset payables and/or receivables under the MRA with collateral held and/or posted to the counterparty and create one single net payment due to or from a fund. With reverse repurchase transactions, typically a fund and the counterparty under the MRA are permitted to sell,re-pledge, or use the collateral associated with the transaction. Bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against such a right of offset in the event of the MRA counterparty’s bankruptcy or insolvency. Pursuant to the terms of the MRA, a fund receives or posts securities as collateral with a market value in excess of the repurchase price to be paid or received by a fund upon the maturity of the transaction. Upon a bankruptcy or insolvency of the MRA counterparty, a fund is considered an unsecured creditor with respect to excess collateral and, as such, the return of excess collateral may be delayed.

As of period end, the following table is a summary of the Fund’s open reverse repurchase agreements by counterparty which are subject to offset under an MRA on a net basis:

Reverse Repurchase Agreements

Counterparty	Reverse Repurchase Agreements			Fair Value of Non-cash Collateral Pledged Including Accrued Interest (a)		Cash Collateral Pledge/Received		Net Amount
BNP Paribas SA . . . . . . . . . . . . . . . . . . . . . . . . . . .	$	(2,722,186	)	$	2,722,186	$	—	$	—
Merrill Lynch, Pierce, Fenner & Smith Inc. . . . . . . . . .		(11,826,606	)		11,826,606		—		—
	$	(14,548,792	)	$	14,548,792	$	—	$	—

^(a)  Net collateral including accrued interest with a value of $14,562,745 has been pledged in connection with open reverse repurchase agreements. Excess of net collateral pledged to the individual counterparty is not shown for financial reporting purposes.

NOTESTO FINANCIAL STATEMENTS 25

Notes to Financial Statements  (continued)

In the event the counterparty of securities under an MRA files for bankruptcy or becomes insolvent, a fund’s use of the proceeds from the agreement may be restricted while the counterparty, or its trustee or receiver, determines whether or not to enforce a fund’s obligation to repurchase the securities.

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and/or to manage its exposure to certain risks such as credit risk, equity risk, interest rate risk, foreign currency exchange rate risk, commodity price risk or other risks (e.g., inflation risk). Derivative financial instruments categorized by risk exposure are included in the Schedule of Investments. These contracts may be transacted on an exchange or OTC.

Futures Contracts: Futures contracts are purchased or sold to gain exposure to, or manage exposure to changes in interest rates (interest rate risk) and changes in the value of equity securities (equity risk) or foreign currencies (foreign currency exchange rate risk).

Futures contracts are agreements between the Fund and a counterparty to buy or sell a specific quantity of an underlying instrument at a specified price and on a specified date. Depending on the terms of a contract, it is settled either through physical delivery of the underlying instrument on the settlement date or by payment of a cash amount on the settlement date. Upon entering into a futures contract, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on a contract’s size and risk profile. The initial margin deposit must then be maintained at an established level over the life of the contract. Amounts pledged, which are considered restricted, are included in cash pledged for futures contracts in the Statement of Assets and Liabilities.

Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited, if any, is shown as cash pledged for futures contracts in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and, if any, shown as variation margin receivable (or payable) on futures contracts in the Statement of Assets and Liabilities. When the contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the notional amount of the contract at the time it was opened and the notional amount at the time it was closed. The use of futures contracts involves the risk of an imperfect correlation in the movements in the price of futures contracts and interest, foreign currency exchange rates or underlying assets.

Forward Foreign Currency Exchange Contracts: Forward foreign currency exchange contracts are entered into to gain or reduce exposure, to foreign currencies (foreign currency exchange rate risk).

A forward foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a specified date. These contracts help to manage the overall exposure to the currencies in which some of the investments held by the Fund are denominated and in some cases, may be used to obtain exposure to a particular market.

The contract ismarked-to-market daily and the change in market value is recorded as unrealized appreciation (depreciation) in the Statement of Assets and Liabilities. When a contract is closed, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the value at the time it was opened and the value at the time it was closed.Non-deliverable forward foreign currency exchange contracts are settled with the counterparty in cash without the delivery of foreign currency. The use of forward foreign currency exchange contracts involves the risk that the value of a forward foreign currency exchange contract changes unfavorably due to movements in the value of the referenced foreign currencies. Cash amounts pledged for forward foreign currency exchange contracts are considered restricted and are included in cash pledged as collateral for OTC derivatives in the Statement of Assets and Liabilities.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to the risks of underlying instruments, including equity risk, interest rate risk and/or commodity price risk and/or, in the case of options written, to generate gains from options premiums.

A call option gives the purchaser (holder) of the option the right (but not the obligation) to buy, and obligates the seller (writer) to sell (when the option is exercised) the underlying instrument at the exercise or strike price at any time or at a specified time during the option period. A put option gives the holder the right to sell and obligates the writer to buy the underlying instrument at the exercise or strike price at any time or at a specified time during the option period.

Premiums paid on options purchased and premiums received on options written, as well as the daily fluctuation in market value, are included in investments at value — unaffiliated and options written at value, respectively, in the Statement of Assets and Liabilities. When an instrument is purchased or sold through the exercise of an option, the premium is offset against the cost or proceeds of the underlying instrument. When an option expires, a realized gain or loss is recorded in the Statement of Operations to the extent of the premiums received or paid. When an option is closed or sold, a gain or loss is recorded in the Statement of Operations to the extent the cost of the closing transaction exceeds the premiums received or paid. When the Fund writes a call option, such option is typically “covered,” meaning that it holds the underlying instrument subject to being called by the option counterparty. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation. These amounts, which are considered restricted, are included in Cash pledged: Collateral — option written on the Statement of Assets and Liabilities.

• Swaptions — The Fund purchases and writes options on swaps (“swaptions”) primarily to preserve a return or spread on a particular investment or portion of the Fund’s holdings, as a duration management technique or to protect against an increase in the price of securities it anticipates purchasing at a later date. The purchaser and writer of a swaption is buying or granting the right to enter into a previously agreed upon interest rate or credit default swap agreement (interest rate risk and/or credit risk) at any time before the expiration of the option.

• Interest rate caps — Interest rate caps are entered into to gain or reduce exposure to interest rates and interest rate risk. Caps are agreements whereby one party agrees to make payments to the other, in return for a premium, to the extent that interest rate indexes exceed a specified rate, or “cap.” The maximum potential amount of future payments that the Fund would be required to make under an interest rate cap would be the notional amount times the percentage increase in interest rates determined by the difference between the interest rate index current value and the value at the time the cap was entered into.

26 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

• Foreign currency options — The Fund purchases and writes foreign currency options, foreign currency futures and options on foreign currency futures to gain or reduce exposure to foreign currencies (foreign currency exchange rate risk). Foreign currency options give the purchaser the right to buy from or sell to the writer a foreign currency at any time before the expiration of the option.

• Barrier options — The Fund may purchase and write a variety of options withnon-standard payout structures or other features (“barrier options”) that are generally traded OTC.

The Fund may invest in various types of barrier options, includingdown-and-out options,down-and-in options, doubleno-touch options,one-touch options,up-and-out options andup-and-in options.Down-and-out options expire worthless to the purchaser if the price of the underlying instrument falls below a specific barrier price level prior to the expiration date.Down-and-in options expire worthless to the purchaser unless the price of the underlying instrument falls below a specific barrier price level prior to the expiration date. Doubleno-touch options provide the purchaser an agreed-upon payout if the price of the underlying instrument does not reach or surpass predetermined barrier price levels prior to the option’s expiration date.One-touch options provide the purchaser an agreed-upon payout if the price of the underlying instrument reaches or surpasses predetermined barrier price levels prior to the expiration date.Up-and-out options expire worthless to the purchaser if the price of the underlying instrument increases beyond a predetermined barrier price level prior to the expiration date.Up-and-in options can only be exercised when the price of the underlying instrument increases beyond a predetermined barrier price level.

In purchasing and writing options, the Fund bears the risk of an unfavorable change in the value of the underlying instrument or the risk that it may not be able to enter into a closing transaction due to an illiquid market. Exercise of a written option could result in the Fund purchasing or selling a security when it otherwise would not, or at a price different from the current market value.

Swaps: Swap contracts are entered into to manage exposure to issuers, markets and securities. Such contracts are agreements between the Fund and a counterparty to make periodic net payments on a specified notional amount or a net payment upon termination. Swap agreements are privately negotiated in the OTC market and may be entered into as a bilateral contract (“OTC swaps”) or centrally cleared (“centrally cleared swaps”).

For OTC swaps, any upfront premiums paid and any upfront fees received are shown as swap premiums paid and swap premiums received, respectively, in the Statement of Assets and Liabilities and amortized over the term of the contract. The daily fluctuation in market value is recorded as unrealized appreciation (depreciation) on OTC Swaps in the Statement of Assets and Liabilities. Payments received or paid are recorded in the Statement of Operations as realized gains or losses, respectively. When an OTC swap is terminated, a realized gain or loss is recorded in the Statement of Operations equal to the difference between the proceeds from (or cost of) the closing transaction and the Fund’s basis in the contract, if any. Generally, the basis of the contract is the premium received or paid.

In a centrally cleared swap, immediately following execution of the swap contract, the swap contract is novated to a central counterparty (the “CCP”) and the Fund’s counterparty on the swap agreement becomes the CCP. The Fund is required to interface with the CCP through the broker. Upon entering into a centrally cleared swap, the Fund is required to deposit initial margin with the broker in the form of cash or securities in an amount that varies depending on the size and risk profile of the particular swap. Securities deposited as initial margin are designated in the Schedule of Investments and cash deposited is shown as cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Amounts pledged, which are considered restricted cash, are included in cash pledged for centrally cleared swaps in the Statement of Assets and Liabilities. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in market value of the contract (“variation margin”). Variation margin is recorded as unrealized appreciation (depreciation) and shown as variation margin receivable (or payable) on centrally cleared swaps in the Statement of Assets and Liabilities. Payments received from (paid to) the counterparty, including at termination, are recorded as realized gains (losses) in the Statement of Operations.

• Credit default swaps — Credit default swaps are entered into to manage exposure to the market or certain sectors of the market, to reduce risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which a fund is not otherwise exposed (credit risk).

The Fund may either buy or sell (write) credit default swaps on single-name issuers (corporate or sovereign), a combination or basket of single-name issuers or traded indexes. Credit default swaps are agreements in which the protection buyer pays fixed periodic payments to the seller in consideration for a promise from the protection seller to make a specific payment should a negative credit event take place with respect to the referenced entity (e.g., bankruptcy, failure to pay, obligation acceleration, repudiation, moratorium or restructuring). As a buyer, if an underlying credit event occurs, the Fund will either (i) receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising the index, or (ii) receive a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index. As a seller (writer), if an underlying credit event occurs, the Fund will either pay the buyer an amount equal to the notional amount of the swap and take delivery of the referenced security or underlying securities comprising the index or pay a net settlement of cash equal to the notional amount of the swap less the recovery value of the security or underlying securities comprising the index.

• Interest rate swaps — Interest rate swaps are entered into to gain or reduce exposure to interest rates or to manage duration, the yield curve or interest rate (interest rate risk).

Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating, in exchange for another party’s stream of interest payments, either fixed or floating, on the same notional amount for a specified period of time. In more complex interest rate swaps, the notional principal amount may decline (or amortize) over time.

• Forward swaps — The Fund enters into forward interest rate swaps and forward total return swaps. In a forward swap, the Fund and the counterparty agree to make periodic net payments beginning on a specified date or a net payment at termination.

• Inflation swaps — Inflation swaps are entered into to gain or reduce exposure to inflation (inflation risk). In an inflation swap, one party makes fixed interest payments on a notional principal amount in exchange for another party’s variable payments based on an inflation index, such as the Consumer Price Index.

NOTESTO FINANCIAL STATEMENTS 27

Notes to Financial Statements  (continued)

Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the Statement of Assets and Liabilities. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreements, and that there may be unfavorable changes in interest rates and/or market values associated with these transactions.

Master Netting Arrangements: In order to define its contractual rights and to secure rights that will help it mitigate its counterparty risk, the Fund may enter into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs certain OTC derivatives and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, the Fund may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default including the bankruptcy or insolvency of the counterparty. Bankruptcy or insolvency laws of a particular jurisdiction may restrict or prohibit the right of offset in bankruptcy, insolvency or other events.

Collateral Requirements: For derivatives traded under an ISDA Master Agreement, the collateral requirements are typically calculated by netting themark-to-market amount for each transaction under such agreement and comparing that amount to the value of any collateral currently pledged by the Fund and the counterparty.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as cash pledged as collateral and cash received as collateral, respectively.Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a counterparty is subject to a certain minimum transfer amount threshold before a transfer is required, which is determined at the close of business of the Fund. Any additional required collateral is delivered to/pledged by the Fund on the next business day. Typically, the counterparty is not permitted to sell,re-pledge or use cash andnon-cash collateral it receives. The Fund generally agrees not to usenon-cash collateral that it receives but may, absent default or certain other circumstances defined in the underlying ISDA Master Agreement, be permitted to use cash collateral received. In such cases, interest may be paid pursuant to the collateral arrangement with the counterparty. To the extent amounts due to the Fund from its counterparties are not fully collateralized, it bears the risk of loss from counterpartynon-performance. Likewise, to the extent the Fund has delivered collateral to a counterparty and stands ready to perform under the terms of its agreement with such counterparty, it bears the risk of loss from a counterparty in the amount of the value of the collateral in the event the counterparty fails to return such collateral. Based on the terms of agreements, collateral may not be required for all derivative contracts.

For financial reporting purposes, the Fund does not offset derivative assets and derivative liabilities that are subject to netting arrangements, if any, in the Statement of Assets and Liabilities.

6. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory: The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with the Manager, the Fund’s investment adviser and an indirect, wholly-owned subsidiary of BlackRock, Inc. (“BlackRock”) to provide investment advisory and administrative services. The Manager is responsible for the management of the Fund’s portfolio and provides the personnel, facilities, equipment and certain other services necessary to the operations of the Fund.

For such services, the Fund pays the Manager a monthly fee at an annual rate equal to the following percentages of the average daily value of the Fund’s net assets:

Average Daily Net Assets	Investment Advisory Fees
First $1 Billion		0.50	%
$1 Billion — $3 Billion		0.47
$3 Billion — $5 Billion		0.45
$5 Billion — $10 Billion		0.44
Greater than $10 Billion		0.43

Distribution Fees: The Company, on behalf of the Fund, entered into a Distribution Agreement and a Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of the Manager. Pursuant to the Distribution Plan and in accordance with Rule12b-1 under the 1940 Act, the Fund pays BRIL ongoing distribution fees. The fees are accrued daily and paid monthly at an annual rate of 0.25% based upon the average daily net assets attributable to Class III.

BRIL and broker-dealers, pursuant tosub-agreements with BRIL, provide shareholder servicing and distribution services to the Fund. The ongoing service and/or distribution fee compensates BRIL and each broker-dealer for providing shareholder servicing and/or distribution related services to shareholders.

For the year ended December 31, 2018, the class specific distribution fees borne directly by Class III were $5,739.

Transfer Agent:On behalf of the Fund, the Manager entered into agreements with insurance companies and other financial intermediaries (“Service Organizations”), some of which may be affiliates. Pursuant to these agreements, the Service Organizations provide the Fund with administrative, networking, recordkeeping,sub-transfer agency and shareholder services tosub-accounts they service. For these services, the Service Organizations receive an annual fee per shareholder account, which will vary depending on share class and/or net assets of Fund shareholders serviced by the Service Organizations, which is shown as transfer agent — class specific. For the year ended December 31, 2018, the Fund did not pay any amounts to affiliates in return for these services.

In addition, the Fund pays the transfer agent, which is not an affiliate, a fee for the issuance, transfer and redemption of shares and the opening and maintenance of shareholder accounts, which is included in transfer agent in the Statement of Operations.

28 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

For the year ended December 31, 2018, the following table shows the class specific transfer agent fees borne directly by each share class of the Fund:

Class I		Class III	Total
$	124,329	$3,342	$	127,671

Expense Limitations, Waivers and Reimbursements: The Manager has voluntarily agreed to waive 0.10% of its investment advisory fee paid by the Fund. This voluntary waiver may be reduced or discontinued at any time without notice. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount waived was $60,914.

With respect to the Fund, the Manager voluntarily agreed to waive its investment advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds (the “affiliated money market fund waiver”). The amount of waivers and/or reimbursements of fees and expenses made pursuant to the expense limitation described below will be reduced by the amount of the affiliated money market fund waiver. This amount is included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount waived was $1,364.

The Manager has contractually agreed to waive its investment advisory fee with respect to any portion of the Fund’s assets invested in affiliated equity and fixed-income mutual funds and affiliated exchange-traded funds that have a contractual management fee through April 30, 2020. The contractual agreement may be terminated upon 90 days’ notice by a majority of the directors who are not “interested persons” of the Fund, as defined in the 1940 Act (“Independent Directors”), or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager pursuant to this arrangement.

For the year ended December 31, 2018, the Fund reimbursed the Manager $475 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Fund has begun to incur expenses in connection with a potential realignment and consolidation of the boards of directors of certain BlackRock-advised funds. The Manager has voluntarily agreed to reimburse the Funds for all or a portion of such expenses, which amounts are included in fees waived and/or reimbursed by the Manager in the Statement of Operations. For the year ended December 31, 2018, the amount waived and/or reimbursed was $161,754.

The Manager has contractually agreed to reimburse transfer agent fees in order to limit such expenses to a percentage of average daily net assets as follows:

Class I	0.00	%
Class III	0.06	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2020, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund.

These amounts waived and/or reimbursed are shown as transfer agent fees waived and/or reimbursed — class specific in the Statement of Operations. For the year ended December 31, 2018, class specific expense waivers and/or reimbursements were as follows:

	Class I		Class III		Total
Transfer Agent Fees Waived and/or Reimbursed	$	124,329	$	2,132	$	126,461

With respect to the Fund, the Manager contractually agreed to waive and/or reimburse fees or expenses in order to limit expenses, excluding interest expense, dividend expense, tax expense, acquired fund fees and expenses, and certain other fund expenses, which constitute extraordinary expenses not incurred in the ordinary course of the Fund’s business (“expense limitation”). The expense limitations as a percentage of average daily net assets are as follows:

Class I	Class III
1.25%		1.50	%

The Manager has agreed not to reduce or discontinue this contractual expense limitation through April 30, 2020, unless approved by the Board, including a majority of the Independent Directors, or by a vote of a majority of the outstanding voting securities of the Fund. For the year ended December 31, 2018, there were no fees waived and/or reimbursed by the Manager.

lnterfund Lending: In accordance with an exemptive order (the “Order”) from the U.S. Securities and Exchange Commission (“SEC”), the Fund may participate in a joint lending and borrowing facility for temporary purposes (the “lnterfund Lending Program”), subject to compliance with the terms and conditions of the Order, and to the extent permitted by the Fund’s investment policies and restrictions. The Fund is currently permitted to borrow under the lnterfund Lending Program.

A lending BlackRock fund may lend in aggregate up to 15% of its net assets, but may not lend more than 5% of its net assets, to any one borrowing fund through the lnterfund Lending Program. A borrowing BlackRock fund may not borrow through the lnterfund Lending Program or from any other source more than 33 ¹/₃% of its total assets (or any lower threshold provided for by the fund’s investment restrictions). If a borrowing BlackRock fund’s total outstanding borrowings exceed 10% of its total assets, each of its outstanding interfund loans will be subject to collateralization of at least 102% of the outstanding principal value of the loan. All interfund loans are for temporary or emergency purposes and the interest rate to be charged will be the average of the highest current overnight repurchase agreement rate available to a lending fund and the bank loan rate, as calculated according to a formula established by the Board.

During the year ended December 31, 2018, the Fund did not participate in the lnterfund Lending Program.

Directors and Officers: Certain directors and/or officers of the Company are directors and/or officers of BlackRock or its affiliates. The Fund reimburses the Manager for a portion of the compensation paid to the Company’s Chief Compliance Officer, which is included in Directors and Officer in the Statement of Operations.

NOTESTO FINANCIAL STATEMENTS 29

Notes to Financial Statements  (continued)

Other Transactions: The Fund may purchase securities from, or sell securities to, an affiliated fund provided the affiliation is due solely to having a common investment adviser, common officers, or common directors. For the year ended December 31, 2018, the purchase and sale transactions and any net realized gains (losses) with an affiliated fund in compliance with Rule17a-7 under the 1940 Act were as follows:

Purchases	$	20,232
Sales		—
Net Realized Gain (Loss)		—

7. PURCHASES AND SALES

For the year ended December 31, 2018, purchases and sales of investments, including paydowns and mortgage dollar rolls and excluding short-term securities, were as follows:

	Purchases		Sales
Non-U.S Government Securities	$	474,569,741	$	477,852,881
U.S Government Securities		55,355,034		62,447,625

For the year ended December 31, 2018, purchases and sales related to mortgage dollar rolls were $217,254,214 and $217,278,122, respectively.

8. INCOME TAX INFORMATION

It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies, and to distribute substantially all of its taxable income to its shareholders. Therefore, no U.S. federal income tax provision is required.

The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s U.S. federal tax returns generally remains open for each of the four years ended December 31, 2018. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction.

Management has analyzed tax laws and regulations and their application to the Fund as of December 31, 2018, inclusive of the open tax return years, and does not believe that there are any uncertain tax positions that require recognition of a tax liability in the Fund’s financial statements.

The tax character of distributions paid was as follows:

	12/31/2018		12/31/2017
Ordinary income	$	1,317,434	$	1,468,939

As of period end, the tax components of accumulated loss were as follows:

Undistributed ordinary income	$	265,185
Capital loss carryforward		(5,226,507	)
Net unrealized losses(a)		(822,231	)
	$	(5,783,553	)

^(a)  The difference between book-basis and tax-basis net unrealized losses was attributable primarily to the tax deferral of losses on wash sales and straddles, the realization for tax purposes of unrealized gains/losses on certain futures and foreign currency contracts and the accounting for swap agreements.

As of December 31, 2018, the Fund had non-expiring capital loss carryforwards available to offset future realized capital gains of $5,226,507.

As of December 31, 2018, gross unrealized appreciation and depreciation for investments and derivatives based on cost for U.S. federal income tax purposes were as follows:

Tax cost	$	88,435,125
Gross unrealized appreciation	$	848,154
Gross unrealized depreciation		(1,672,377	)
Net unrealized depreciation	$	(824,223	)

9. BANK BORROWINGS

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates (“Participating Funds”), is a party to a364-day, $2.25 billion credit agreement with a group of lenders. Under this agreement, the Fund may borrow to fund shareholder redemptions. Excluding commitments designated for certain individual funds, the Participating Funds, including the Fund, can borrow up to an aggregate commitment amount of $1.75 billion at any time outstanding, subject to asset coverage and other limitations as specified in the agreement. The credit agreement has the following terms: a fee of 0.10% per annum on unused commitment amounts and interest at a rate equal to the higher of(a) one-month LIBOR (but, in any event, not less than 0.00%) on the date the loan is made plus 0.80% per annum or (b) the Fed Funds rate (but, in any event, not less than 0.00%) in effect from time to time plus 0.80% per annum on amounts borrowed. The agreement expires in April 2019

30 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Notes to Financial Statements  (continued)

unless extended or renewed. Prior to April 19, 2018, the aggregate commitment amount was $2.1 billion and the fee was 0.12% per annum. Participating Funds paid an upfront commitment fee of 0.02% on the total commitment amounts, in addition to administration, legal and arrangement fees, which are included in miscellaneous expenses in the Statement of Operations. These fees were allocated among such funds based upon portions of the aggregate commitment available to them and relative net assets of Participating Funds. During the year ended December 31, 2018, the Fund did not borrow under the credit agreement.

10. PRINCIPAL RISKS

In the normal course of business, the Fund invests in securities or other instruments and may enter into certain transactions, and such activities subject the Fund to various risks, including among others, fluctuations in the market (market risk) or failure of an issuer to meet all of its obligations. The value of securities or other instruments may also be affected by various factors, including, without limitation: (i) the general economy; (ii) the overall market as well as local, regional or global political and/or social instability; (iii) regulation, taxation or international tax treaties between various countries; or (iv) currency, interest rate and price fluctuations. The Fund’s prospectus provides details of the risks to which the Fund is subject.

The Fund may be exposed to prepayment risk, which is the risk that borrowers may exercise their option to prepay principal earlier than scheduled during periods of declining interest rates, which would force the Fund to reinvest in lower yielding securities. The Fund may also be exposed to reinvestment risk, which is the risk that income from the Fund’s portfolio will decline if the Fund invests the proceeds from matured, traded or called fixed income securities at market interest rates that are below the Fund portfolio’s current earnings rate.

Valuation Risk: The price the Fund could receive upon the sale of any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued using a fair valuation technique or a price provided by an independent pricing service. Changes to significant unobservable inputs and assumptions (i.e., publicly traded company multiples, growth rate, time to exit) due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Fund’s results of operations. As a result, the price received upon the sale of an investment may be less than the value ascribed by the Fund, and the Fund could realize a greater than expected loss or lesser than expected gain upon the sale of the investment. The Fund’s ability to value its investments may also be impacted by technological issues and/or errors by pricing services or other third party service providers.

Counterparty Credit Risk: The Fund may be exposed to counterparty credit risk, or the risk that an entity may fail to or be unable to perform on its commitments related to unsettled or open transactions. The Fund manages counterparty credit risk by entering into transactions only with counterparties that the Manager believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Fund to market, issuer and counterparty credit risks, consist principally of financial instruments and receivables due from counterparties. The extent of the Fund’s exposure to market, issuer and counterparty credit risks with respect to these financial assets is approximately their value recorded in the Statement of Assets and Liabilities, less any collateral held by the Fund.

A derivative contract may suffer amark-to-market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

The Fund’s risk of loss from counterparty credit risk on OTC derivatives is generally limited to the aggregate unrealized gain less the value of any collateral held by the Fund.

For OTC options purchased, the Fund bears the risk of loss of the amount in the premiums paid plus the positive change in market values net of any collateral held by the Fund should the counterparty fail to perform under the contracts. Options written by the Fund do not typically give rise to counterparty credit risk, as options written generally obligate the Fund, and not the counterparty, to perform. The Fund may be exposed to counterparty credit risk with respect to options written to the extent the Fund deposits collateral with its counterparty to a written option.

With exchange-traded options purchased and futures and centrally cleared swaps, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency). Additionally, credit risk exists in exchange-traded futures and centrally cleared swaps with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Concentration Risk: The Fund invests a significant portion of its assets in fixed income securities and/or uses derivatives tied to the fixed income markets. Changes in market interest rates or economic conditions may affect the value and/or liquidity of such investments. Interest rate risk is the risk that prices of bonds and other fixed income securities will increase as interest rates fall and decrease as interest rates rise. The Fund may be subject to a greater risk of rising interest rates due to the current period of historically low rates. The Federal Reserve has begun to raise the Federal Funds rate, and each increase results in more pronounced interest rate risk in the current market environment.

The Fund invests a significant portion of its assets in securities backed by commercial or residential mortgage loans or in issuers that hold mortgage and other asset-backed securities. Investment percentages in these securities are presented in the Schedule of Investments. Changes in economic conditions, including delinquencies and/or defaults on assets underlying these securities, can affect the value, income and/or liquidity of such positions.

NOTESTO FINANCIAL STATEMENTS 31

Notes to Financial Statements  (continued)

11. CAPITAL SHARE TRANSACTIONS

Transactions in capital shares for each class were as follows:

	Year Ended 12/31/2018						Year Ended 12/31/2017
	Shares			Amount			Shares			Amount
Class I
Shares sold		227,543		$	2,244,550			191,307		$	1,952,213
Shares issued in reinvestment of distributions		126,644			1,252,195			143,198			1,460,104
Shares redeemed		(1,268,374	)		(12,548,771	)		(1,014,221	)		(10,349,406	)
Net decrease		(914,187	)	$	(9,052,026	)		(679,716	)	$	(6,937,089	)
Class III
Shares sold		407,411		$	4,028,833			98,593		$	1,004,254
Shares issued in reinvestment of distributions		4,147			40,897			3,378			34,390
Shares redeemed		(255,082	)		(2,513,704	)		(196,442	)		(2,000,886	)
Net increase (decrease)		156,476		$	1,556,026			(94,471	)	$	(962,242	)
Total Net Decrease		(757,711	)	$	(7,496,000	)		(774,187	)	$	(7,899,331	)

As of December 31, 2018, BlackRock HoldCo 2, Inc., an affiliate of the Fund, owned 1,963 Class III Shares of BlackRock U.S. Government Bond V.I. Fund.

12. REGULATIONS-X AMENDMENTS

On August 17, 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act ReleaseNo. 33-10532, Disclosure Update and Simplification. The Fund has adopted the amendments pertinent to RegulationS-X in this shareholder report. The amendments impacted certain disclosure presentation on the Statement of Assets and Liabilities, Statements of Changes in Net Assets and Notes to the Financial Statements.

Prior year distribution information and undistributed net investment income in the Statements of Changes in Net Assets has been modified to conform to the current year presentation in accordance with the RegulationS-X changes.

Distributions for the year ended December 31, 2017 were classified as follows:

Share Class	Net Investment Income
Class I		(1,434,556	)
Class III		(34,383	)

Undistributed net investment income as of December 31, 2017 was $108,200.

13. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and has determined that there were no subsequent events requiring adjustment or additional disclosure in the financial statements.

32 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Report of Independent Registered Public Accounting Firm

To the Shareholders of BlackRock U.S. Government Bond V.I. Fund and the Board of Directors of BlackRock Variable Series Funds II, Inc.:

Opinion on the Financial Statements and Financial Highlights

We have audited the accompanying statement of assets and liabilities of BlackRock U.S. Government Bond V.I. Fund of BlackRock Variable Series Funds II, Inc. (the “Fund”), including the schedule of investments, as of December 31, 2018, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of December 31, 2018, and the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

Deloitte & Touche LLP

Boston, Massachusetts

February 15, 2019

We have served as the auditor of one or more BlackRock investment companies since 1992.

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 33

Disclosure of Investment Advisory Agreement

The Board of Directors (the “Board,” the members of which are referred to as “Board Members”) of BlackRock Variable Series Funds II, Inc. (the “Corporation”) met in person on May 8, 2018 (the “Organizational Meeting”) to consider the initial approval of the investment advisory agreement (the “Advisory Agreement” or the “Agreement”) between the Corporation, on behalf of BlackRock High Yield V.I. Fund (the “High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “U.S. Government Bond V.I. Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of the Corporation, and BlackRock Advisors, LLC (the “Manager” or “BlackRock”), each Fund’s investment advisor.

On September 17, 2018, each Fund acquired the assets, subject to the liabilities of BlackRock High Yield V.I. Fund (the “Predecessor High Yield V.I. Fund”), BlackRock Total Return V.I. Fund (the “Predecessor Total Return V.I. Fund”) and BlackRock U.S. Government Bond V.I. Fund (the “Predecessor U.S. Government Bond V.I. Fund”) (each, a “Predecessor Fund,” and collectively, the “Predecessor Funds”), each a series of BlackRock Variable Series Funds, Inc. (the “Predecessor Corporation”), respectively, through a reorganization (the “Reorganization”). Each Fund has the same investment objectives, strategies and policies, portfolio management team and contractual arrangements, including the same contractual fees and expenses, as its respective Predecessor Fund. As a result of the Reorganization, each Fund adopted the performance and financial history of its respective Predecessor Fund. The Agreement is substantially similar to the advisory agreement (the “Predecessor Advisory Agreement” or the “Predecessor Agreement”) between the Predecessor Corporation, on behalf of each Predecessor Fund, and the Manager.

Activities and Composition of the Board

On the date of the Organizational Meeting, the Board consisted of eleven individuals, nine of whom were not “interested persons” of the Corporation as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Board Members”). The Board Members are responsible for the oversight of the operations of each Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Board Members have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Board Member. The Board has established five standing committees: an Audit Committee, a Governance and Nominating Committee, a Compliance Committee, a Performance Oversight Committee and an Executive Committee, each of which is chaired by an Independent Board Member and composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member).

The Agreement

Pursuant to the 1940 Act, the Board is required to consider the initial approval of the Agreement. In connection with this deliberative process, the Board assessed, among other things, the nature, extent and quality of the services to be provided to each Fund (and those provided to each Predecessor Fund) by BlackRock, BlackRock’s personnel and affiliates, including (as applicable): investment management; accounting, administrative and shareholder services; oversight of each Fund’s (and each Predecessor Fund’s) service providers; marketing and promotional services; risk management and oversight; legal and compliance services; and ability to meet applicable legal and regulatory requirements.

Board Considerations in Approving the Agreement

The Approval Process: At the Organizational Meeting, the Board reviewed materials relating to its consideration of the proposed Agreement. The Predecessor Agreement was most recently considered and approved by the board of directors of the Predecessor Corporation (the “Predecessor Board”) at in person meetings held on April 10, 2018 (the “April Meeting”) and May 8, 2018 (the “May Meeting”). The factors considered by the Board Members at the Organizational Meeting in connection with approval of the proposed Agreement were identical to the factors considered by them as members of the Predecessor Board at the April and May Meetings for the Predecessor Agreement. (Accordingly, references below to the “Board” mean both the Board and the Predecessor Board, and references below to the Board Members mean the members of both the Board and the Predecessor Board, unless the context requires otherwise.) These factors included, among other things: (a) the nature, extent and quality of the services to be provided by BlackRock (and those provided by BlackRock to each Predecessor Fund); (b) the investment performance of each Predecessor Fund as compared with a peer group of funds (“Performance Peers”) and other metrics, as applicable; (c) the advisory fee and the estimated cost of the services and estimated profits realized by BlackRock and its affiliates from their relationship with each Fund and each Predecessor Fund; (d) the sharing of potential economies of scale;(e) fall-out benefits to BlackRock and its affiliates as a result of BlackRock’s relationship with each Fund and each Predecessor Fund; and (f) other factors deemed relevant by the Board Members.

In determining whether to approve the Predecessor Agreement, the Board met with the relevant investment advisory personnel from BlackRock and considered all information it deemed reasonably necessary to evaluate the terms of the Predecessor Agreement. These meetings were considered by the Board in evaluating approval of the Agreement. The Board received materials in advance of the Organizational Meeting relating to its consideration of the Agreement, including, among other things, (a) fees and estimated expense ratios of each Fund and the fees and expense ratios of each Predecessor Fund in comparison to the fees and expense ratios of a peer group of funds as determined by Broadridge Financial Solutions, Inc. (“Broadridge”) (“Expense Peers”); (b) information regarding BlackRock’s economic outlook for each Predecessor Fund and its general investment outlook for the markets; (c) information regarding fees paid to service providers that are affiliates of BlackRock; and (d) information outlining the legal duties of the Board under the 1940 Act with respect to the consideration and approval of the Agreement. The Board also received information at prior Board meetings concerning compliance records and regulatory matters relating to BlackRock.

The Board also considered other matters it deemed important to the approval process, such as other payments to be made to BlackRock or its affiliates, securities lending and cash management, services related to the valuation and pricing of Fund portfolio holdings, and advice from independent legal counsel with respect to the review process and materials submitted for the Board’s review. The Board noted the willingness of BlackRock personnel to engage in open, candid discussions with the Board. The Board did not identify any particular information as determinative, and each Board Member may have attributed different weights to the various items considered.

A. Nature, Extent and Quality of the Services to be Provided by BlackRock: The Board, including the Independent Board Members, considered the nature, extent and quality of services to be provided by BlackRock, including the investment advisory services to be provided to each Fund and those provided to each Predecessor Fund and the resulting performance of each Predecessor Fund. Throughout the year, the Board Members compared Predecessor Fund performance to the performance of a

34 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement  (continued)

comparable group of mutual funds, a relevant benchmark, and performance metrics, as applicable. The Board met with BlackRock’s senior management personnel responsible for investment activities, including the senior investment officers, in connection with its evaluation of each Predecessor Fund. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing each Predecessor Fund’s performance and each Fund’s investment objective(s), strategies and outlook.

The Board considered, among other factors, with respect to BlackRock: the number, education and experience of investment personnel generally and each Fund’s portfolio management team; BlackRock’s research capabilities; investments by portfolio managers in the funds they manage; portfolio trading capabilities; use of technology; commitment to compliance; credit analysis capabilities; risk analysis and oversight capabilities; and the approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also considered BlackRock’s overall risk management program, including the continued efforts of BlackRock and its affiliates to address cybersecurity risks and the role of BlackRock’s Risk & Quantitative Analysis Group. The Board considered BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent and create performance incentives that had been presented in connection with the Board’s evaluation of the Predecessor Agreement.

In addition to investment advisory services, the Board considered the quality of the administrative and othernon-investment advisory services to be provided to each Fund (and those provided to each Predecessor Fund). The Board considered that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with certain administrative, shareholder and other services (in addition to any such services provided to each Fund by third parties) and officers and other personnel as are necessary for the operations of each Fund. In particular, the Board noted that BlackRock and its affiliates will provide each Fund (and provided each Predecessor Fund) with administrative services including, among others: (i) responsibility for disclosure documents, such as the prospectus, the summary prospectus (as applicable), the statement of additional information and periodic shareholder reports; (ii) oversight of daily accounting and pricing; (iii) responsibility for periodic filings with regulators; (iv) overseeing and coordinating the activities of other service providers including, among others, each Fund’s custodian, fund accountant, transfer agent, and auditor; (v) organizing Board meetings and preparing the materials for such Board meetings; (vi) providing legal and compliance support; (vii) furnishing analytical and other support to assist the Board in its consideration of strategic issues such as the merger, consolidation or repurposing of certainopen-end funds; and (viii) performing administrative functions necessary for the operation of each Fund, such as tax reporting, expense management, fulfilling regulatory filing requirements, overseeing each Fund’s distribution partners, and shareholder call center and other services. The Board considered the structure and duties of BlackRock’s fund administration, shareholder services, and legal & compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B. The Investment Performance of each Predecessor Fund and BlackRock: The Board, including the Independent Board Members, also reviewed and considered the performance history of each Predecessor Fund. In connection with its review of each Predecessor Fund performance history, the Board had been provided with reports independently prepared by Broadridge, which included a comprehensive analysis of each Predecessor Fund’s performance as of December 31, 2017. Broadridge ranks funds in quartiles, ranging from first to fourth, where first is the most desirable quartile position and fourth is the least desirable. In connection with this review, the Board had received and reviewed information regarding the investment performance of each Predecessor Fund as compared to its Performance Peers.

In evaluating performance, the Board recognized that the performance data reflects a snapshot of a period as of a particular date and that selecting a different performance period could produce significantly different results. Further, the Board recognized that it is possible that long-term performance can be impacted by even one period of significant outperformance or underperformance, so that a single investment theme has the ability to affect long-term performance disproportionately.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor High Yield V.I. Fund ranked in the second, third and first quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor High Yield V.I. Fund’s underperformance during the applicable period.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor Total Return V.I. Fund ranked in the third, third, and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor Total Return V.I. Fund’s underperformance during the applicable periods.

The Board noted that for theone-, three- and five-year periods reported, the Predecessor U.S. Government Bond V.I. Fund ranked in the third, second and second quartiles, respectively, against its Performance Peers. The Board and BlackRock reviewed the Predecessor U.S. Government Bond V.I. Fund’s underperformance during the applicable period.

C. Consideration of the Advisory/Management Fees and the Estimated Cost of the Services to be Provided and Estimated Profits Realized by BlackRock and its Affiliates from their Relationship with each Fund and each Predecessor Fund: In connection with the initial approval of the Agreement, the Board, including the Independent Board Members, considered that each Fund’s proposed contractual management fee rate was identical to each Predecessor Fund’s contractual management fee rate. The contractual management fee rate represents a combination of the advisory fee and any administrative fees, before taking into account any reimbursements or fee waivers. The Board also considered that each Fund’s estimated total net expense ratio was identical to each Predecessor Fund’s total expense ratio. The Board also considered the comparison of each Predecessor Fund’s actual and contractual management fee rate to those of its Expense Peers. The total expense ratio represents a fund’s total net operating expenses, including any12b-1 or non12b-1 service fees. The total expense ratio gives effect to any expense reimbursements or fee waivers that benefit a fund, and the actual management fee rate gives effect to any management fee reimbursements or waivers that benefit a fund. The Board considered the services provided and the fees charged by BlackRock and its affiliates to other types of clients with similar investment mandates, as applicable, including institutional accounts andsub-advised mutual funds (including mutual funds sponsored by third parties) that had been presented in connection with its evaluation of the Predecessor Agreement.

The Board considered BlackRock’s profitability methodology, including an estimated profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Predecessor Fund, which would be the same services to be provided to each Fund. The Board reviewed BlackRock’s estimated profitability with respect to each Predecessor Fund and other funds the Board currently oversees for the year ended December 31, 2017 compared to available aggregate estimated profitability data provided for the prior two years. The Board considered its review of, in connection with its review of the Predecessor Agreement, BlackRock’s estimated profitability with respect to certain other U.S. fund complexes managed by the Manager and/or its affiliates, including BlackRock’s assumptions and methodology

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 35

Disclosure of Investment Advisory Agreement  (continued)

of allocating expenses in the estimated profitability analysis and the inherent limitations in allocating costs among various advisory products. The Board recognized that profitability may be affected by numerous factors including, among other things, fee waivers and expense reimbursements by the Manager, the types of funds managed, precision of expense allocations and business mix. As a result, calculating and comparing profitability at individual fund levels is difficult.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. In connection with its review of the Predecessor Agreement, the Board reviewed BlackRock’s operating margin, in general, compared to that of certain other publicly-traded asset management firms and considered the differences between BlackRock and these other firms, including the contribution of technology at BlackRock, BlackRock’s expense management, and the relative product mix.

In addition, the Board considered the estimated cost of the services to be provided to each Fund based on its review of the estimated cost of the services provided to each Predecessor Fund by BlackRock, and BlackRock’s and its affiliates’ estimated profits relating to the management and distribution of each Predecessor Fund and the other funds advised by BlackRock and its affiliates. As part of this analysis, the Board had reviewed BlackRock’s methodology in allocating its costs of managing the Predecessor Funds to each Predecessor Fund. The Board considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreement and to continue to provide the high quality of services that is expected by the Board Members. The Board further considered factors including but not limited to BlackRock’s commitment of time, assumption of risk, and liability profile in servicing each Fund and each Predecessor Fund in contrast to what is required of BlackRock with respect to other products with similar investment mandates across theopen-end fund, exchange-traded fund,closed-end fund,sub-advised mutual fund, separately managed account, collective investment trust, and institutional separate account product channels, as applicable.

The Board noted that the Predecessor High Yield V.I. Fund’s contractual management fee rate ranked in the first quartile, and that the actual management fee rate and total expense ratio each ranked in the first quartile, relative to the Predecessor High Yield V.I. Fund’s Expense Peers. The Board also noted that the High Yield V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the High Yield V.I. Fund, combined with the assets of Total Return V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the High Yield V.I. Fund’s total expenses as a percentage of the High Yield V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the High Yield V.I. Fund on aclass-by-class basis.

The Board noted that the Predecessor Total Return V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the third and first quartiles, respectively, relative to the Predecessor Total Return V.I. Fund’s Expense Peers. The Board also noted that the Total Return V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the Total Return V.I. Fund, combined with the assets of High Yield V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the Total Return V.I. Fund’s total expenses as a percentage of the Total Return V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the Total Return V.I. Fund on aclass-by-class basis.

The Board noted that the Predecessor U.S. Government Bond V.I. Fund’s contractual management fee rate ranked in the second quartile, and that the actual management fee rate and total expense ratio ranked in the first and fourth quartiles, respectively, relative to the Predecessor U.S. Government Bond V.I. Fund’s Expense Peers. The Board also noted that the U.S. Government Bond V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the U.S. Government Bond V.I. Fund increases above certain contractually specified levels. The Board further noted that BlackRock and the Board have contractually agreed to a cap on the U.S. Government Bond V.I. Fund’s total expenses as a percentage of the U.S. Government Bond V.I. Fund’s average daily net assets on aclass-by-class basis. Additionally, the Board noted that BlackRock and the Board have contractually agreed to a cap on certain operational and recordkeeping fees for the U.S. Government Bond V.I. Fund on aclass-by-class basis. In addition, the Board noted that BlackRock has voluntarily agreed to waive a portion of the advisory fee payable by the U.S. Government Bond V.I. Fund. After discussion between the Board, including the Independent Board Members, and BlackRock, the Board and BlackRock agreed to a continuation of the voluntary advisory fee waiver.

D. Economies of Scale: The Board, including the Independent Board Members, considered the extent to which economies of scale might be realized as the assets of each Fund increase, including the existence of fee waivers and/or expense caps, as applicable, noting that any contractual fee waivers and expense caps had been approved by the Board. The Board also considered the extent to which each Predecessor Fund benefited from such economies in a variety of ways, and whether there should be changes in the advisory fee rate or breakpoint structure in order to enable each Fund to more fully participate in these economies of scale. The Board considered each Predecessor Fund’s asset levels and, in light of those asset levels, whether the current fee schedule was appropriate for each Fund. In its consideration, the Board Members took into account the existence of any expense caps and further considered the continuation and/or implementation, as applicable, of such caps.

E. Other Factors Deemed Relevant by the Board Members: The Board, including the Independent Board Members, also took into account other potential ancillary or“fall-out” benefits that BlackRock or its affiliates may derive from BlackRock’s respective relationships with each Fund based on its review of the Predecessor Agreement, including both tangible and intangible benefits, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios and risk management personnel, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates as service providers to each Fund (and each Predecessor Fund), including for administrative, distribution, securities lending and cash management services. The Board also considered BlackRock’s overall operations and its efforts to expand the scale of, and improve the quality of, its operations. The Board also considered that, subject to applicable law, BlackRock may use and benefit from third party research obtained by soft dollars generated by certain registered fund transactions to assist in managing all or a number of its other client accounts.

In connection with its consideration of the Agreement, the Board also considered information regarding BlackRock’s brokerage and soft dollar practices and reports from BlackRock which included information on brokerage commissions and trade execution practices that it had received in consideration of the Predecessor Agreement.

36 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Disclosure of Investment Advisory Agreement  (continued)

The Board considered the competitive nature of theopen-end fund marketplace, and that shareholders are able to redeem their Fund shares if they believe that each Fund’s fees and expenses are too high or if they are dissatisfied with the performance of each Fund.

Conclusion

Following discussion, the Board, including the Independent Board Members, approved the Advisory Agreement between the Manager and the Corporation, on behalf of each Fund, for atwo-year term beginning on the effective date of the Advisory Agreement. Based upon its evaluation of all of the aforementioned factors in their totality, as well as other information, the Board, including the Independent Board Members, was satisfied that the terms of the Agreement were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at its decision to approve the Agreement, the Board did not identify any single factor or group of factors asall-important or controlling, but considered all factors together, and different Board Members may have attributed different weights to the various factors considered. The Independent Board Members were also assisted by the advice of independent legal counsel in making this determination.

DISCLOSUREOF INVESTMENT ADVISORY AGREEMENT 37

Glossary of Terms Used in this Report

Currency
ARS	Argentine Peso
BRL	Brazilian Real
CLP	Chilean Peso
COP	Colombian Peso
EUR	Euro
GBP	British Pound
IDR	Indonesian Rupiah
JPY	Japanese Yen
KRW	South Korean Won
MXN	Mexican Peso
RUB	New Russian Ruble
USD	United States Dollar
ZAR	South African Rand
Portfolio Abbreviations
BZDIOVER	Overnight Brazil CETIP — Interbank Rate
CSMC	Credit Suisse Mortgage Capital
EURIBOR	Euro Interbank Offered Rate
LIBOR	London Interbank Offered Rate
MXIBTIIE	Mexico Interbank TIIE28-Day
OTC	Over-The-Counter
TBA	To-be-announced

38 2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Director and Officer Information

Independent Directors (a)
Name Year of Birth (b)	Position(s) Held (Length of Service) (c)	Principal Occupation(s) During Past Five Years	Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Company and Other Investment Company Directorships Held During Past Five Years
Robert M. Hernandez 1944	Chair of the Board and Director (Since 2007)	Director, Vice Chairman and Chief Financial Officer of USX Corporation (energy and steel business) from 1991 to 2001; Director andnon-executive Chairman, RTI International Metals, Inc. from 1990 to 2015; Director, TE Connectivity (electronics) from 2006 to 2012.	32 RICs consisting of 95 Portfolios	Chubb Limited (insurance company); Eastman Chemical Company
James H. Bodurtha 1944	Director (Since 2007)	Director, The China Business Group, Inc. (consulting and investing firm) from 1996 to 2013 and Executive Vice President thereof from 1996 to 2003; Chairman of the Board, Berkshire Holding Corporation since 1980; Director, ICI Mutual since 2010.	32 RICs consisting of 95 Portfolios	None
Bruce R. Bond 1946	Director (Since 2007)	Board Member, Amsphere Limited (software) since 2018; Trustee and Member of the Governance Committee, State Street Research Mutual Funds from 1997 to 2005; Board Member of Governance, Audit and Finance Committee, Avaya Inc. (computer equipment) from 2003 to 2007.	32 RICs consisting of 95 Portfolios	None
Honorable Stuart E. Eizenstat 1943	Director (Since 2007)	Senior Counsel of Covington and Burling LLP (law firm) since 2016; Head of International Practice thereof since 2001, and Partner thereof from 2001 to 2016; Advisory Board Member, OCP S.A. (phosphates) since 2010; International Advisory Board Member, The Coca-Cola Company from 2002 to 2011; Advisory Board Member, Veracity Worldwide, LLC (risk management) from 2007 to 2012; Member of the International Advisory Board, GML Ltd. (energy) since 2003; Board of Directors, Ferroglobe (silicon metals) since 2016.	32 RICs consisting of 95 Portfolios	Alcatel-Lucent (telecommunications); Global Specialty Metallurgical; UPS Corporation (delivery service)
Henry Gabbay 1947	Director (Since 2007)	Board Member, Equity-Liquidity andClosed-End Fund Boards from 2007 through 2014; Consultant, BlackRock, Inc. from 2007 to 2008; Managing Director, BlackRock, Inc. from 1989 to 2007; Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; President of BlackRock Funds and BlackRock Allocation Target Shares (formerly, BlackRock Bond Allocation Target Shares) from 2005 to 2007 and Treasurer of certainclosed-end funds in the BlackRock fund complex from 1989 to 2006.	32 RICs consisting of 95 Portfolios	None
Lena G. Goldberg 1949	Director (Since 2016)	Senior Lecturer, Harvard Business School since 2008; Director, Charles Stark Draper Laboratory, Inc. since 2013; FMR LLC/Fidelity Investments (financial services) from 1996 to 2008, serving in various senior roles including Executive Vice President — Strategic Corporate Initiatives and Executive Vice President and General Counsel; Partner, Sullivan & Worcester LLP from 1985 to 1996 and Associate thereof from 1979 to 1985.	32 RICs consisting of 95 Portfolios	None

DIRECTORAND OFFICER INFORMATION

Director and Officer Information  (continued)

Independent Directors (a)(continued)
Name Year of Birth (b)	Position(s) Held (Length of Service) (c)	Principal Occupation(s) During Past Five Years	Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Company and Other Investment Company Directorships Held During Past Five Years
Henry R. Keizer 1956	Director (Since 2016)	Director, Park Indemnity Ltd. (captive insurer) since 2010; Director, MUFG Americas Holdings Corporation and MUFG Union Bank, N.A. (financial and bank holding company) from 2014 to 2016; Director, American Institute of Certified Public Accountants from 2009 to 2011; Director, KPMG LLP (audit, tax and advisory services) from 2004 to 2005 and 2010 to 2012; Director, KPMG International in 2012, Deputy Chairman and Chief Operating Officer thereof from 2010 to 2012 and U.S. Vice Chairman of Audit thereof from 2005 to 2010; Global Head of Audit, KPMGI (consortium of KPMG firms) from 2006 to 2010; Director, YMCA of Greater New York from 2006 to 2010.	32 RICs consisting of 95 Portfolios	Hertz Global Holdings (car rental); Montpelier Re Holdings, Ltd. (publicly held property and casual reinsurance) from 2013 until 2015; Sealed Air Corp. (packaging); WABCO (commercial vehicle safety systems)
John F O’Brien 1943	Director (Since 2007)	Trustee, Woods Hole Oceanographic Institute since 2003 and Chairman thereof from 2009 to 2015;Co-Founder and Managing Director, Board Leaders LLC (director education) since 2005.	32 RICs consisting of 95 Portfolios	Cabot Corporation (chemicals); LKQ Corporation (auto parts manufacturing); TJX Companies, Inc. (retailer)
Donald C. Opatrny 1952	Director (Since 2015)	Trustee, Vice Chair, Member of the Executive Committee and Chair of the Investment Committee, Cornell University since 2004; President, Trustee and Member of the Investment Committee, The Aldrich Contemporary Art Museum from 2007 to 2014; Member of the Board and Investment Committee, University School from 2007 to 2018; Member of the Investment Committee, Mellon Foundation from 2009 to 2015; Trustee, Artstor (a Mellon Foundation affiliate) from 2010 to 2015; President and Trustee, the Center for the Arts, Jackson Hole from 2011 to 2018; Director, Athena Capital Advisors LLC (investment management firm) since 2013; Trustee and Chair of the Investment Committee, Community Foundation of Jackson Hole since 2014; Member of Affordable Housing Supply Board of Jackson, Wyoming since 2017; Member, Investment Funds Committee, State of Wyoming since 2017; Trustee, Phoenix Art Museum since 2018.	32 RICs consisting of 95 Portfolios	None
Interested Directors (a)(d)
Name Year of Birth (b)	Position(s) Held (Length of Service) (c)	Principal Occupation(s) During Past Five Years	Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Company and Other Investment Company Directorships Held During Past Five Years
Robert Fairbairn 1965	Director (Since 2015)	Senior Managing Director of BlackRock, Inc. since 2010; oversees BlackRock’s Strategic Partner Program and Strategic Product Management Group; Member of BlackRock’s Global Executive and Global Operating Committees;Co-Chair of BlackRock’s Human Capital Committee; Member of the Board of Managers of BlackRock Investments, LLC since 2011; Global Head of BlackRock’s Retail and iShares® businesses from 2012 to 2016.	127 RICs consisting of 304 Portfolios	None

2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Director and Officer Information  (continued)

Interested Directors (a)(d)(continued)
Name Year of Birth (b)	Position(s) Held (Length of Service) (c)	Principal Occupation(s) During Past Five Years	Number of BlackRock-Advised Registered Investment Companies (“RICs”) Consisting of Investment Portfolios (“Portfolios”) Overseen	Public Company and Other Investment Company Directorships Held During Past Five Years
John M. Perlowski 1964	Director (Since 2015) and President and Chief Executive Officer (Since 2010)	Managing Director of BlackRock, Inc. since 2009; Head of BlackRock Global Accounting and Product Services since 2009; Advisory Director of Family Resource Network (charitable foundation) since 2009.	127 RICs consisting of 304 Portfolios	None
(a) The address of each Director is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.
(b) Each Independent Director holds office until his or her successor is duly elected and qualifies or until his or her earlier death, resignation, retirement or removal as provided by the Company’sby-laws or charter or statute, or until December 31 of the year in which he or she turns 75. The Board may determine to extend the terms of Independent Directors on acase-by-case basis, as appropriate. Interested Directors serve until their successor is duly elected and qualifies or until their earlier death, resignation, retirement or removal as provided by the Company’sby-laws or statute, or until December 31 of the year in which they turn 72.
(c) Following the combination of Merrill Lynch Investment Managers, L.P. (“MLIM”) and BlackRock, Inc. in September 2006, the various legacy MLIM and legacy BlackRock fund boards were realigned and consolidated into three new fund boards in 2007. As a result, although the chart shows certain Independent Directors as joining the Company’s board in 2007, those Directors first became members of the boards of other legacy MLIM or legacy BlackRock funds as follows: James H. Bodurtha, 1995; Bruce R. Bond, 2005; Honorable Stuart E. Eizenstat, 2001; Robert M. Hernandez, 1996; and John F. O’Brien, 2005. For BlackRock Total Return V.I. Fund, BlackRock High Yield V.I Fund, and BlackRock U.S. Government Bond V.I Fund, Length of Service includes service as director of the Predecessor/Target Funds.
(d) Mr. Fairbairn and Mr. Perlowski are both “interested persons,” as defined in the 1940 Act, of the Company based on their positions with BlackRock, Inc. and its affiliates. Mr. Fairbairn and Mr. Perlowski are also board members of the BlackRockClosed-End Complex and the BlackRock Equity-Liquidity Complex.

DIRECTORAND OFFICER INFORMATION

Director and Officer Information  (continued)

Officers Who Are Not Directors (a)
Name Year of Birth (b)	Position(s) Held (Length of Service)	Principal Occupation(s) During Past Five Years
Jennifer McGovern 1977	Vice President (Since 2014)	Managing Director of BlackRock, Inc. since 2016; Director of BlackRock, Inc. from 2011 to 2015; Head of Product Structure and Oversight for BlackRock’s U.S. Wealth Advisory Group since 2013.
Neal J. Andrews 1966	Chief Financial Officer (Since 2007)	Managing Director of BlackRock, Inc. since 2006.
Jay M. Fife 1970	Treasurer (Since 2007)	Managing Director of BlackRock, Inc. since 2007.
Charles Park 1967	Chief Compliance Officer (Since 2014)	Anti-Money Laundering Compliance Officer for the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and theClosed-End Complex from 2014 to 2015; Chief Compliance Officer of BlackRock Advisors, LLC and the BlackRock-advised Funds in the Equity-Bond Complex, the Equity-Liquidity Complex and theClosed-End Complex since 2014; Principal of and Chief Compliance Officer for iShares® Delaware Trust Sponsor LLC since 2012 and BlackRock Fund Advisors (“BFA”) since 2006; Chief Compliance Officer for theBFA-advised iShares® exchange traded funds since 2006; Chief Compliance Officer for BlackRock Asset Management International Inc. since 2012.
John MacKessy 1972	Anti-Money Laundering Compliance Officer (Since 2018)	Director of BlackRock, Inc. since 2017; Global Head of Anti-Money Laundering at BlackRock, Inc. since 2017; Director of AML Monitoring and Investigations Group of Citibank from 2015 to 2017; Global Anti-Money Laundering and Economic Sanctions Officer for MasterCard from 2011 to 2015.
Benjamin Archibald 1975	Secretary (Since 2012)	Managing Director of BlackRock, Inc. since 2014; Director of BlackRock, Inc. from 2010 to 2013; Secretary of the iShares® exchange traded funds since 2015; Secretary of the BlackRock-advised mutual funds since 2012.
(a) The address of each Officer is c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055.
(b) Officers of the Company serve at the pleasure of the Board.

Further information about the Company’s Directors and Officers is available in the Company’s Statement of Additional Information, which can be obtained without charge by calling(800)-441-7762.

At a special meeting of shareholders held on November 21, 2018, each Fund’s shareholders elected Directors who took office on January 1, 2019. For BlackRock Variable Series Funds, Inc., the newly elected Directors include seven former Directors and eight individuals who served as directors/trustees of the funds in the BlackRock Equity-Liquidity Complex. For BlackRock Variable Series Funds II, Inc., the newly elected Directors include three former Directors and eight individuals who served as directors/trustees of the funds in the BlackRockClosed-End Complex. Information regarding the individuals who began serving as Directors effective January 1, 2019 can be found in the proxy statement for the special meeting of shareholders, which is available on the SEC’s EDGAR Database at http://www.sec.gov.

Investment Adviser and Administrator

BlackRock Advisors, LLC

Wilmington, DE 19809

Accounting Agent

JPMorgan Chase Bank, N.A.

New York, NY 10179

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Custodians

JPMorgan Chase Bank, N.A.^(c)

New York, NY 10179

Brown Brothers Harriman & Co.^(d)

Boston, MA 02109

Sub-Advisers

BlackRock International Limited^(a)

Edinburgh, Scotland EH3 8BL

BlackRock Asset Management

North Asia Limited^(b)

Hong Kong

BlackRock (Singapore) Limited^(b)

079912 Singapore

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Boston, MA 02116

Distributor

BlackRock Investments, LLC

New York, NY 10022

Legal Counsel

Willkie Farr & Gallagher LLP

New York, NY 10019

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

^(a)  For BlackRock International V.I. Fund and BlackRock Managed Volatility V.I Fund.

^(b)  For BlackRock Managed Volatility V.I. Fund.

^(c)  For all Funds except BlackRock Global Allocation V.I. Fund, BlackRock International V.I. Fund and BlackRock Large Cap Focus Growth V.I. Fund.

^(d)  For BlackRock Global Allocation V.I. Fund, BlackRock International V.I. Fund and BlackRock Large Cap Focus Growth V.I. Fund.

2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

Additional Information

Proxy Results

BlackRock Variable Series Funds, Inc.

A Special Meeting of Shareholders was held on November 21, 2018 for shareholders of record on September 24, 2018, to elect a Board of Directors of the Funds. The newly elected Directors took office effective January 1, 2019.

Shareholders approved the Directors* of BlackRock Variable Series Funds, Inc. with voting results as follows:

	Votes For		Votes Against		Votes Abstained
Bruce R. Bond		853,415,418		20,821,487		54,328,090
Susan J. Carter		859,039,119		17,819,914		51,705,962
Collette Chilton		856,423,656		20,742,083		51,399,256
Neil A. Cotty		852,591,474		20,690,305		55,283,216
Robert Fairbairn		852,542,660		20,795,311		55,227,025
Lena G. Goldberg		854,847,802		21,644,125		52,073,069
Robert M. Hernandez		850,400,415		23,756,329		54,408,250
Henry R. Keizer		852,907,817		20,662,329		54,994,850
Cynthia A. Montgomery		858,485,209		18,681,453		51,398,333
Donald C. Opatrny		852,092,270		20,950,922		55,521,803
John M. Perlowski		853,364,573		20,553,365		54,647,057
Joseph P. Platt		852,037,460		22,003,638		54,523,898
Mark Stalnecker		853,005,625		20,799,654		54,759,717
Kenneth L. Urish		851,983,013		21,087,065		55,494,917
Claire A. Walton		858,718,970		18,461,950		51,384,075

* Denotes Company-wide proposal and voting results.

The above Directors, referred to as the BlackRock Multi-Asset Board, have also been elected to serve as directors for other BlackRock-advised equity, multi-asset, index and money market funds.

BlackRock Variable Series Funds II, Inc.

A Special Meeting of Shareholders was held on November 21, 2018 for shareholders of record on September 24, 2018, to elect a Board of Directors of the Funds. The newly elected Directors took office effective January 1, 2019.

Shareholders approved the Directors* of BlackRock Variable Series Funds II, Inc. with voting results as follows:

	Votes For		Votes Against		Votes Abstained
Michael J. Castellano		59,887,070		1,387,922		4,893,829
Richard E. Cavanagh		59,649,768		1,455,828		5,063,225
Cynthia L. Egan		59,918,319		1,345,231		4,905,271
Frank J. Fabozzi		59,851,485		1,328,783		4,988,553
Robert Fairbairn		59,950,088		1,221,911		4,996,822
Henry Gabbay		59,979,137		1,094,954		5,094,730
R. Glenn Hubbard		60,054,180		1,149,136		4,965,505
W. Carl Kester		59,878,572		1,214,536		5,075,713
Catherine A. Lynch		60,029,677		1,220,289		4,918,855
John M. Perlowski		60,044,864		1,136,151		4,987,806
Karen P. Robards		60,316,551		1,000,326		4,851,944

* Denotes Company-wide proposal and voting results.

The above Directors, referred to as the BlackRock Fixed-Income Board, have also been elected to serve as directors for other BlackRock-advised non-index fixed-income mutual funds and all of the BlackRock-advised closed-end funds.

General Information

Householding

The Funds will mail only one copy of shareholder documents, including prospectuses, annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called “householding” and is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please call the Funds at (800)441-7762.

ADDITIONAL INFORMATION

Additional Information  (continued)

Availability of Quarterly Schedule of Investments

The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on FormN-Q. The Funds’ FormsN-Q are available on the SEC’s website at http://www.sec.gov. The Funds’ FormsN-Q may also be obtained upon request and without charge by calling (800)441-7762.

Availability of Proxy Voting Policies and Procedures

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request and without charge (1) by calling (800)441-7762; (2) athttp://www.blackrock.com/prospectus/insurance; and (3) on the SEC’s website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in the Funds’ portfolios during the most recent12-month period ended June 30 is available upon request and without charge (1) athttp://www.blackrock.com/prospectus/insurance or by calling (800)441-7762 and (2) on the SEC’s website at http://www.sec.gov.

BlackRock’s Mutual Fund Family

BlackRock offers a diverse lineup ofopen-end mutual funds crossing all investment styles and managed by experts in equity, fixed-income andtax-exempt investing. Visithttp://www.blackrock.com for more information.

Shareholder Privileges

Account Information

Call us at (800)441-7762 from 8:00 AM to 6:00 PM ET on any business day to get information about your account balances, recent transactions and share prices. You can also reach us on the Web athttp://www.blackrock.com.

Automatic Investment Plans

Investor Class shareholders who want to invest regularly can arrange to have $50 or more automatically deducted from their checking or savings account and invested in any of the BlackRock funds.

Systematic Withdrawal Plans

Investor Class shareholders can establish a systematic withdrawal plan and receive periodic payments of $50 or more from their BlackRock funds, as long as their account balance is at least $10,000.

Retirement Plans

Shareholders may make investments in conjunction with Traditional, Rollover, Roth, Coverdell, Simple IRAs, SEP IRAs and 403(b) Plans.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safe-guarding theirnon-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties.

If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations.

BlackRock obtains or verifies personalnon-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites.

BlackRock does not sell or disclose tonon-affiliated third parties anynon-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. Thesenon-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose.

We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access tonon-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect thenon-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

2018 BLACKROCK ANNUAL REPORTTO SHAREHOLDERS

This report is only for distribution to shareholders of the Funds of BlackRock Variable Series Funds, Inc. Past performance results shown in this report should not be considered a representation of future performance. Investment return and principal value of non-money market fund shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. An investment in the BlackRock Government Money Market V.I. Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in money market funds. Statements and other information herein are as dated and are subject to change.

VS-12/18-AR

Item 2 – Code of Ethics – The registrant (or the “Fund”) has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. During the period covered by this report, the code of ethics was amended to update certain information and to make othernon-material changes. During the period covered by this report, there have been no waivers granted under the code of ethics. The registrant undertakes to provide a copy of the code of ethics to any person upon request, without charge, who calls1-800-441-7762.

Item 3 – Audit Committee Financial Expert – The registrant’s board of directors (the “board of directors”), has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent:   Robert M. Hernandez Henry R. Keizer Bruce R. Bond   Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an “expert” for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification.

Item 4 – Principal Accountant Fees and Services

The following table presents fees billed by Deloitte & Touche LLP (“D&T”) in each of the last two fiscal years for the services rendered to the Fund:

	(a) Audit Fees		(b) Audit-Related Fees1		(c) Tax Fees2		(d) All Other Fees
Entity Name	Current     Fiscal Year     End	Previous     Fiscal Year     End	Current     Fiscal Year     End	Previous     Fiscal Year     End	Current     Fiscal Year     End	Previous     Fiscal Year     End	Current     Fiscal Year     End	Previous     Fiscal Year     End
BlackRock High Yield V.I. Fund	$39,984	$39,959	$0	$0	$14,000	$14,025	$0	$0
BlackRock Total Return V.I. Fund	$50,898	$50,924	$0	$0	$15,400	$15,402	$0	$0
BlackRock U.S. Government Bond V.I. Fund	$38,352	$38,352	$0	$0	$15,400	$15,402	$0	$0

The following table presents fees billed by D&T that were required to be approved by the registrant’s audit committee (the “Committee”) for services that relate directly to the operations or financial reporting of the Fund and that are rendered on behalf of BlackRock Advisors, LLC (the “Investment Adviser” or “BlackRock”) and entities controlling, controlled by, or under common control with BlackRock (not including anysub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser) that provide ongoing services to the Fund (“Affiliated Service Providers”):

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	Current Fiscal Year End	Previous Fiscal Year End
(b) Audit-Related Fees1	$0	$0
(c) Tax Fees2	$0	$0
(d) All Other Fees3	$2,274,000	$2,129,000

¹ The nature of the services includes assurance and related services reasonably related to the performance of the audit or review of financial statements not included in Audit Fees, including accounting consultations, agreed-upon procedure reports, attestation reports, comfort letters,out-of-pocket expenses and internal control reviews not required by regulators.

² The nature of the services includes tax compliance and/or tax preparation, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews, taxable income and tax distribution calculations.

³Non-audit fees of $2,274,000 and $2,129,000 for the current fiscal year and previous fiscal year, respectively, were paid to the Fund’s principal accountant in their entirety by BlackRock, in connection with services provided to the Affiliated Service Providers of the Fund and of certain other funds sponsored and advised by BlackRock or its affiliates for a service organization review and an accounting research tool subscription. These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis.

(e)(1) Audit CommitteePre-Approval Policies and Procedures:

The Committee has adopted policies and procedures with regard to thepre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specificpre-approval by the Committee. The Committee also must approve othernon-audit services provided to the registrant and thosenon-audit services provided to the Investment Adviser and Affiliated Service Providers that relate directly to the operations and the financial reporting of the registrant. Certain of thesenon-audit services that the Committee believes are (a) consistent with the SEC’s auditor independence rules and (b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specificcase-by-case basis (“generalpre-approval”). The term of any generalpre-approval is 12 months from the date of thepre-approval, unless the Committee provides for a different period. Tax or othernon-audit services provided to the registrant which have a direct impact on the operations or financial reporting of the registrant will only be deemedpre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 per project. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels.

Any proposed services exceeding thepre-approved cost levels will require specificpre-approval by the Committee, as will any other services not subject to generalpre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to generalpre-approval at the next regularly scheduledin-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to the Committee Chairman the authority to approve the provision of and fees for any specific engagement of permittednon-audit services, including services exceedingpre-approved cost levels.

(e)(2) None of the services described in each of Items 4(b) through (d) were approved by the Committee pursuant to the de minimis exception in paragraph (c)(7)(i)(C) of Rule2-01 of RegulationS-X.

(f) Not Applicable

(g) The aggregatenon-audit fees, defined as the sum of the fees shown under “Audit-Related Fees,” “Tax Fees” and “All Other Fees,” paid to the accountant for services rendered by the accountant to the registrant, the Investment Adviser and the Affiliated Service Providers were:

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Entity Name	Current Fiscal Year End	Previous Fiscal Year End
BlackRock High Yield V.I. Fund	$14,000	$14,025
BlackRock Total Return V.I. Fund	$15,400	$15,402
BlackRock U.S. Government Bond V.I. Fund	$15,400	$15,402

Additionally, the amounts billed by D&T in connection with services provided to the Affiliated Service Providers of the Fund and of other funds sponsored and advised by BlackRock or its affiliates during the current and previous fiscal years for a service organization review and an accounting research tool subscription were:

Current Fiscal Year End	Previous Fiscal Year End
$2,274,000	$2,129,000

These amounts represent aggregate fees paid by BlackRock and were not allocated on a per fund basis. (h) The Committee has considered and determined that the provision ofnon-audit services that were rendered to the Investment Adviser and the Affiliated Service Providers that were notpre-approved pursuant to paragraph (c)(7)(ii) of Rule2-01 of RegulationS-X is compatible with maintaining the principal accountant’s independence.

Item 5 –

Audit Committee of Listed Registrants – Not Applicable

Item 6 –	Investments (a) The registrant’s Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this Form. (b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing.
Item 7 –	Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies – Not Applicable
Item 8 –	Portfolio Managers ofClosed-End Management Investment Companies – Not Applicable
Item 9 –	Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers – Not Applicable

Item 10 –	Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.
Item 11 –	Controls and Procedures

(a) The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined

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	in Rule30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended.
	(b) There were no changes in the registrant’s internal control over financial reporting (as defined inRule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12 –	Disclosure of Securities Lending Activities forClosed-End Management Investment Companies – Not Applicable to the registrant.
Item 13 –	Exhibits attached hereto
	(a)(1) Code of Ethics – See Item 2
	(a)(2) Certifications – Attached hereto
	(a)(3) Not Applicable
	(a)(4) Not Applicable
	(b) Certifications – Attached hereto

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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BlackRock Variable Series Funds II, Inc.
By:	/s/ John M. Perlowski
	John M. Perlowski
	Chief Executive Officer (principal executive officer) of
	BlackRock Variable Series Funds II, Inc.
Date: February 28, 2019

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ John M. Perlowski
	John M. Perlowski
	Chief Executive Officer (principal executive officer) of
	BlackRock Variable Series Funds II, Inc.
Date: February 28, 2019
By:	/s/ Neal J. Andrews
	Neal J. Andrews
	Chief Financial Officer (principal financial officer) of
	BlackRock Variable Series Funds II, Inc.
Date: February 28, 2019

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