BlackRock Variable Series Funds N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-03290

Name of Fund: BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund
BlackRock Basic Value V.I. Fund
BlackRock Capital Appreciation V.I. Fund
BlackRock Global Allocation V.I. Fund
BlackRock Global Opportunities V.I. Fund
BlackRock Government Income V.I. Fund
BlackRock High Income V.I. Fund
BlackRock International Value V.I. Fund
BlackRock Large Cap Core V.I. Fund
BlackRock Large Cap Growth V.I. Fund
BlackRock Large Cap Value V.I. Fund
BlackRock Money Market V.I. Fund
BlackRock S&P 500 Index V.I. Fund
BlackRock Total Return V.I. Fund
BlackRock Utilities and Telecommunications V.I. Fund
BlackRock Value Opportunities V.I. Fund

Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809

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

Registrant’s telephone number, including area code: (800) 456-4587

Date of fiscal year end: 12/31/2010

Date of reporting period: 06/30/2010

Item 1 — Report to Stockholders

BlackRock Variable

Series Funds, Inc.

Semi-Annual Report (Unaudited)
June 30, 2010

A Letter to Shareholders

Dear Shareholder

Although overall global economic and financial conditions have generally improved over the past year, the past several months have seen high levels of market volatility and diminishing investor confidence sparked by the sovereign debt crisis in Europe and mixed economic data that have raised concerns over the possibility that some economies could slide back into recession. Despite the uneven nature of recent market conditions, we continue to believe that the “Great Recession” likely ended at some point last summer, thanks primarily to massive fiscal and monetary stimulus, and that the global economy remains in recovery mode for most regions of the world. Regarding the US economy, we believe it is unlikely that the United States will experience a “double dip” recession, although we acknowledge that subpar growth is likely to persist for some time.

Global equity markets bottomed in early 2009 and since that time have moved unevenly higher as investors were lured back into the markets by depressed valuations, desire for higher yields and improvements in corporate earnings prospects. Volatility levels, however, have remained elevated— primarily as a result of uneven economic data and lingering deflation issues (especially in Europe). As the period drew to a close, equity markets had endured a significant correction that drove stock prices into negative territory on a year-to-date basis in almost every market. Over a 12-month basis, however, global equities posted positive returns thanks to improving corporate revenues and profits and a reasonably strong macro backdrop. From a geographic perspective, US equities have significantly outpaced their international counterparts over the past six and twelve months, as the domestic economic recovery has been more pronounced and as credit-related issues have held European markets down. Within the United States, smaller cap stocks have noticeably outperformed large caps.

In fixed income markets, yields have been moving unevenly over the past six and twelve months as improving economic conditions have been acting to push Treasury yields higher (and prices correspondingly lower), while concerns over ongoing deflation threats have acted as a counterweight. As the period drew to a close, however, Treasury yields fell sharply as investors flocked to the “safe haven” asset class in the face of escalating uncertainty. As a result, US Treasuries became one of the world’s best-performing asset classes on a six-month basis. High yield bonds have also continued to perform well, thanks in large part to ongoing high levels of investor demand. Meanwhile, municipal bonds performed in-line with their taxable counterparts on a 12-month basis, but slightly underperformed over the last six months as investors rotated to the relative safety of Treasuries.

Regarding cash investments, yields on money market securities remain near all-time lows (producing returns only marginally above zero percent), with the Federal Open Market Committee reiterating that economic circumstances are likely to necessitate an accommodative interest rate stance for an “extended period.”

Against this backdrop, the major market averages posted the following returns:

Total Returns as of June 30, 2010

	6-month			12-month
US equities (S&P 500 Index)		(6.65	)%		14.43	%
Small cap US equities (Russell 2000 Index)		(1.95	)		21.48
International equities (MSCI Europe, Australasia, Far East Index)		(13.23	)		5.92
3-month Treasury bill (BofA Merrill Lynch 3-Month Treasury Bill Index)		0.05			0.16
US Treasury securities (BofA Merrill Lynch 10-Year US Treasury Index)		9.36			8.20
Taxable fixed income (Barclays Capital US Aggregate Bond Index)		5.33			9.50
Tax-exempt fixed income (Barclays Capital Municipal Bond Index)		3.31			9.61
High yield bonds		4.45			26.66
(Barclays Capital US Corporate High Yield 2% Issuer Capped Index)

Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index.

Although conditions are certainly better than they were a couple of years ago, global financial markets continue to face high volatility and questions about the strength and sustainability of the recovery abound. Through periods of uncertainty, as ever, BlackRock’s full resources are dedicated to the management of our clients’ assets. For additional market perspective and investment insight, visit www.blackrock.com/shareholdermagazine, where you’ll find the most recent issue of our award-winning Shareholder^® magazine, as well as its quarterly companion newsletter, Shareholder Perspectives. As always, we thank you for entrusting BlackRock with your investments, and we look forward to your continued partnership in the months and years ahead.

Sincerely,

Rob Kapito

President, BlackRock Advisors, LLC

THIS PAGE NOT A PART OF YOUR FUND REPORT

BlackRock Balanced Capital V.I. Fund

Semi-Annual Report (Unaudited)

June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  Stocks underperformed bonds during the six-month period, as the Barclays Capital US Aggregate Bond Index gained 5.33% while the Russell 1000 Index returned (6.40)%. The Fund underperformed its blended benchmark (60% Russell 1000 Index/40% Barclays Capital US Aggregate Bond Index), which returned (1.63)%.

What factors influenced performance?

•  The Fund’s allocation between equity and fixed income detracted modestly from performance relative to the blended benchmark. The Fund was slightly overweight in equities, which underperformed bonds during the first half of 2010. Security selection and sector allocation in the equity segment of the portfolio further detracted from Fund results. Negative performance in the financials, energy, industrials and consumer staples sectors overshadowed positive results in health care. The largest individual detractors for the period were Seagate Technology Holdings, Harley-Davidson, Inc., Western Digital Corp. and Microsoft Corp. An underweight in Apple, Inc. also hindered performance.

•  Security selection and sector allocation in the fixed income segment of the Fund contributed positively to performance during the period. In particular, an allocation outside the index to non-agency mortgage-backed securities (MBS) proved advantageous, as did an overweight to commercial mortgage-backed securities, asset-backed securities and investment-grade agency MBS, as well as strategic yield curve positioning.

Describe recent portfolio activity.

•  In late January, we trimmed the Fund’s exposure to equities and then re-established some of that position in late June. Within the equity segment, exposure to the consumer discretionary and industrials sectors was increased, while exposure to the telecommunication services, energy and utilities sectors was reduced.

•  In the fixed income segment, exposure to government-owned and government-related assets was increased, while exposure to higher-risk, non-government assets was reduced.

Describe portfolio positioning at period end.

•  At the end of the period, the Fund was overweight in equities and underweight in fixed income relative to the blended benchmark. Compared to the Barclays Capital US Aggregate Bond Index, the fixed income segment remained underweight in government-related sectors in favor of non-government spread sectors. It held out-of-index allocations to non-agency MBS and non-US government bonds, and duration was slightly short relative to the benchmark. The equity segment maintained its pro-cyclical bias and capitalized on market weakness at the end of the period to increase that exposure. Relative to the Russell 1000 Index, the equity segment’s largest overweights at period-end were in the health care and consumer discretionary sectors, while the most significant underweights were in the financials and consumer staples sectors.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Total Return Based on a $10,000 Investment

							60% Russell
	BlackRock Balanced						1000 Index/40%
	Capital V.I.		Barclays Capital				Barclays Capital
	Fund(1)-Class I		US Aggregate		Russell 1000		US Aggregate
	Shares(2)		Bond Index(3)		Index(4)		Bond Index(5)
6/00		10000		10000		10000		10000
6/01		9043		11123		8505		9519
6/02		8384		12082		6984		8788
6/03		8365		13339		7050		9250
6/04		9532		13382		8424		10319
6/05		10075		14292		9091		11103
6/06		10898		14177		9917		11669
6/07		12868		15044		11943		13370
6/08		11753		16116		10467		12734
6/09		9219		17091		7673		10927
6/10		10380		18714		8842		12381

1	The Fund invests in a balanced portfolio of fixed income and equity securities.
2	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
3	This unmanaged market-weighted index is comprised of investment-grade corporate bonds rated BBB or better, mortgages and US Treasury and Government agency issues with at least one year to maturity.
4	This unmanaged index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.
5	The Fund compares its performance to that of a customized weighted index comprised of the returns of the Russell 1000 Index (60%) and Barclays Capital US Aggregate Bond Index (40%).

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns7			1 Year7			5 Years7			10 Years7
Class I Shares6		(3.45	)%		12.60	%		0.60	%		0.37	%
Barclays Capital US Aggregate Bond Index		5.33			9.50			5.54			6.47
Russell 1000 Index		(6.40	)		15.24			(0.56	)		(1.22	)
60% Russell 1000 Index/40% Barclays Capital US Aggregate Bond Index		(1.63	)		13.31			2.20			2.16

6	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
7	For a portion of the period, the Fund’s investment advisor waived a portion of its fees. Without such waiver, the Fund’s performance would have been lower.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Portfolio Composition	Long-Term Investments
Common Stocks		53	%
U.S. Government Sponsored Agency Securities		26
Corporate Bonds		8
Non-Agency Mortgage-Backed Securities		5
U.S. Treasury Obligations		3
Asset-Backed Securities		2
Taxable Municipal Bonds		1
Foreign Agency Obligations		1
Preferred Securities		1

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including swaps, swaptions, financial futures contracts foreign currency exchange contracts, as specified in Note 2 of the Notes to Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, credit, interest rate, foreign currency exchange rate and/or other risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance the yield and NAV. However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage through the issuance of short-term debt, or through other techniques, including entering into reverse repurchase agreements and dollar rolls. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage will be based on short-term interest rates, which normally will be lower than the income earned by the Fund on its longer-term portfolio investments. 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 will benefit from the incremental net income.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of the portfolio investments. Changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on Fund performance from leverage.

The use of leverage may enhance opportunities for increased returns to the Fund, but as described above, they also create risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Fund’s NAV, market price and dividend rate than a comparable portfolio without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Fund’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. 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 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 will incur expenses in connection with the use of leverage, all of which are borne by Fund shareholders and may reduce investment returns.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Including Interest Expense

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Account Value

Account Value

Expenses Paid

Account Value

Account Value

Expenses Paid

Annualized

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Expense Ratio

Class I

$

1,000

$

965.50

$

5.46

$

1,000

$

1,019.25

$

5.61

1.12%

1	Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

Excluding Interest Expense

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Account Value

Account Value

Expenses Paid

Account Value

Account Value

Expenses Paid

Annualized

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Expense Ratio

Class I

$

1,000

$

965.50

$

5.12

$

1,000

$

1,019.59

$

5.26

1.05%

1	Expenses are equal to the Fund’s annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by prorating the number of days in the most recent fiscal half year divided by 365.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares			Value
Aerospace & Defense — 2.8%
Honeywell International, Inc.		5,500		$	214,665
L-3 Communications Holdings, Inc.		2,400			170,016
Northrop Grumman Corp.		3,400			185,096
Raytheon Co.		4,400			212,916
					782,693
Airlines — 0.7%
Southwest Airlines Co.		17,400			193,314
Automobiles — 0.6%
Harley-Davidson, Inc.		7,800			173,394
Beverages — 0.8%
Dr. Pepper Snapple Group, Inc.		5,700			213,123
Biotechnology — 1.0%
Amgen, Inc. (a)		5,300			278,780
Chemicals — 0.2%
Albemarle Corp.		1,100			43,681
Commercial Banks — 0.1%
Wells Fargo & Co.		1,300			33,280
Communications Equipment — 0.6%
Cisco Systems, Inc. (a)		2,600			55,406
Tellabs, Inc.		18,300			116,937
					172,343
Computers & Peripherals — 3.2%
Apple, Inc. (a)		800			201,224
Dell, Inc. (a)		15,700			189,342
SanDisk Corp. (a)		4,300			180,901
Seagate Technology Holdings (a)		13,100			170,824
Western Digital Corp. (a)		5,100			153,816
					896,107
Construction & Engineering — 0.9%
Shaw Group, Inc. (a)		5,200			177,944
URS Corp. (a)		1,900			74,765
					252,709
Consumer Finance — 0.8%
Capital One Financial Corp.		5,400			217,620
Containers & Packaging — 0.5%
Crown Holdings, Inc. (a)		3,200			80,128
Sonoco Products Co.		2,300			70,104
					150,232
Diversified Financial Services — 1.4%
Bank of America Corp.		5,100			73,287
Citigroup, Inc. (a)		63,400			238,384
JPMorgan Chase & Co.		2,100			76,881
					388,552
Diversified Telecommunication Services — 1.3%
AT&T Inc.		2,500			60,475
Verizon Communications, Inc.		11,300	��		316,626
					377,101
Electric Utilities — 0.1%
Edison International		1,200			38,064
Electrical Equipment — 0.7%
Emerson Electric Co.		4,800			209,712
Energy Equipment & Services — 2.4%
Atwood Oceanics, Inc. (a)		2,000			51,040
Nabors Industries Ltd. (a)		9,000			158,580
National Oilwell Varco, Inc.		5,200			171,964
Rowan Cos., Inc. (a)		7,000			153,580
Tidewater, Inc.		3,900			151,008
					686,172
Food & Staples Retailing — 1.2%
Safeway, Inc.		6,500			127,790
Walgreen Co.		8,300			221,610
					349,400
Food Products — 0.8%
The Hershey Co.		900			43,137
Sara Lee Corp.		14,000			197,400
					240,537
Gas Utilities — 0.2%
Atmos Energy Corp.		1,900			51,376
Health Care Providers & Services — 8.2%
Aetna, Inc.		7,000			184,660
AmerisourceBergen Corp.		6,300			200,025
Cardinal Health, Inc.		6,000			201,660
Community Health Systems, Inc. (a)		4,700			158,907
Humana, Inc. (a)		4,000			182,680
Lincare Holdings, Inc.		5,700			185,307
McKesson Corp.		3,100			208,196
Medco Health Solutions, Inc. (a)		3,900			214,812
Omnicare, Inc.		6,700			158,790
Quest Diagnostics, Inc.		3,500			174,195
UnitedHealth Group, Inc.		8,500			241,400
WellPoint, Inc. (a)		4,000			195,720
					2,306,352
Household Durables — 0.6%
Whirlpool Corp.		1,900			166,858
Household Products — 0.4%
The Procter & Gamble Co.		1,800			107,964
IT Services — 1.0%
Hewitt Associates, Inc., Class A (a)		5,000			172,300
International Business Machines Corp.		800			98,784
					271,084
Independent Power Producers & Energy Traders — 0.3%
NRG Energy, Inc. (a)		3,700			78,477
Industrial Conglomerates — 0.4%
General Electric Co.		6,900			99,498
Insurance — 2.2%
Berkshire Hathaway, Inc. (a)		600			47,814
Genworth Financial, Inc., Class A (a)		12,400			162,068
Prudential Financial, Inc.		4,000			214,640
UnumProvident Corp.		8,500			184,450
					608,972

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ABS	Asset-Backed Security	LIBOR	London InterBank Offered Rate
EUR	Euro	RB	Revenue Bonds
GO	General Obligation Bonds	USD	US Dollar

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Internet & Catalog Retail — 0.6%
Expedia, Inc.		9,800	$	184,044
Internet Software & Services — 0.8%
Google, Inc., Class A (a)		100		44,495
VeriSign, Inc. (a)		6,500		172,575
				217,070
Machinery — 1.9%
Eaton Corp.		3,000		196,320
Gardner Denver, Inc.		1,000		44,590
Lincoln Electric Holdings, Inc.		300		15,297
Parker Hannifin Corp.		3,500		194,110
Valmont Industries, Inc.		1,300		94,458
				544,775
Media — 0.3%
News Corp., Class A		7,700		92,092
Metals & Mining — 1.7%
Freeport-McMoRan Copper & Gold, Inc., Class B		3,800		224,694
Reliance Steel & Aluminum Co.		2,300		83,145
Titanium Metals Corp. (a)		9,700		170,623
				478,462
Multi-Utilities — 0.3%
Integrys Energy Group, Inc.		2,200		96,228
Multiline Retail — 2.8%
Big Lots, Inc. (a)		2,500		80,225
JCPenney Co., Inc.		7,200		154,656
Macy’s, Inc.		9,400		168,260
Nordstrom, Inc.		4,800		154,512
Target Corp.		4,700		231,099
				788,752
Oil, Gas & Consumable Fuels — 6.3%
Chevron Corp.		6,200		420,732
Cimarex Energy Co.		2,400		171,792
ConocoPhillips		5,900		289,631
Exxon Mobil Corp.		5,300		302,471
Marathon Oil Corp.		7,400		230,066
Whiting Petroleum Corp. (a)		2,100		164,682
Williams Cos., Inc.		10,400		190,112
				1,769,486
Paper & Forest Products — 0.9%
International Paper Co.		8,100		183,303
MeadWestvaco Corp.		3,200		71,040
				254,343
Personal Products — 0.6%
The Estée Lauder Cos., Inc., Class A		3,100		172,763
Pharmaceuticals — 2.1%
Bristol-Myers Squibb Co.		1,700		42,398
Eli Lilly & Co.		7,500		251,250
Endo Pharmaceuticals Holdings, Inc. (a)		8,200		178,924
Johnson & Johnson		1,700		100,402
Pfizer, Inc.		1,701		24,256
				597,230
Semiconductors & Semiconductor Equipment — 3.9%
Altera Corp.		8,000		198,480
Intel Corp.		18,000		350,100
Microchip Technology, Inc.		6,800		188,632
National Semiconductor Corp.		13,700		184,402
Xilinx, Inc.		7,500		189,450
				1,111,064
Software — 2.2%
CA, Inc.		9,200		169,280
Microsoft Corp.		19,700		453,297
				622,577
Specialty Retail — 3.8%
Advance Auto Parts, Inc.		3,800		190,684
The Gap, Inc.		10,200		198,492
Limited Brands, Inc.		7,700		169,939
Lowe’s Cos., Inc.		6,300		128,646
Ross Stores, Inc.		3,400		181,186
TJX Cos., Inc.		4,700		197,165
				1,066,112
Tobacco — 1.4%
Altria Group, Inc.		10,900		218,436
Lorillard, Inc.		2,400		172,752
				391,188
Wireless Telecommunication Services — 0.5%
NII Holdings, Inc. (a)		4,800		156,096
Total Common Stocks — 63.5%				17,929,677
Fixed Income Securities
	Par
Asset-Backed Securities	(000)
ACE Securities Corp., Series 2005-ASP1, Class M1, 1.03%, 9/25/35 (b)	USD	100		23,412
Bank of America Auto Trust, Series 2009-2A, Class A2, 1.16%, 2/15/12 (c)		61		60,970
Chase Issuance Trust, Series 2009-A7, Class A7, 0.80%, 9/17/12 (b)		110		110,073
Countrywide Asset-Backed Certificates (b):
Series 2004-5, Class A, 0.80%, 10/25/34		13		10,746
Series 2004-13, Class AF4, 4.58%, 1/25/33		33		32,140
Globaldrive BV, Series 2008-2, Class A, 4.00%, 10/20/16	EUR	31		38,929
Lehman XS Trust, Series 2005-5N, Class 3A2, 0.71%, 11/25/35 (b)	USD	34		11,071
Morgan Stanley ABS Capital I, Series 2005-HE1, Class A2MZ, 0.64%, 12/25/34 (b)		8		6,941
Morgan Stanley Home Equity Loans, Series 2007-2, Class A1, 0.45%, 4/25/37 (b)		58		54,132
New Century Home Equity Loan Trust, Series 2005-2, Class A2MZ, 0.61%, 6/25/35 (b)		21		19,185
SLM Student Loan Trust (b):
Series 2005-4, Class A2, 0.40%, 4/26/21		28		27,757
Series 2008-5, Class A2, 1.42%, 10/25/16		120		121,802
Series 2008-5, Class A4, 2.02%, 7/25/23		100		105,038
Structured Asset Investment Loan Trust (b):
Series 2003-BC6, Class M1, 1.10%, 7/25/33		119		95,634
Series 2003-BC7, Class M1, 1.47%, 7/25/33		97		76,331

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Asset-Backed Securities	(000)		Value
Structured Asset Investment Loan Trust (b) (concluded):
Series 2004-8, Class M4, 1.35%, 9/25/34	USD	22	$	3,049
Structured Asset Securities Corp., Series 2004-23XS, Class 2A1, 0.65%, 1/25/35 (b)		25		15,278
Total Asset-Backed Securities — 2.9%				812,488
Corporate Bonds
Aerospace & Defense — 0.0%
Honeywell International, Inc., 5.70%, 3/15/36		10		11,304
L-3 Communications Corp., Series B, 6.38%, 10/15/15		2		2,000
				13,304
Air Freight & Logistics — 0.0%
United Parcel Service, Inc., 6.20%, 1/15/38		5		6,011
Airlines — 0.0%
American Airlines, Inc., Series 2003-1, 3.86%, 1/09/12		14		13,988
Beverages — 0.3%
Anheuser-Busch InBev Worldwide, Inc., 3.00%, 10/15/12		77		79,044
Capital Markets — 1.3%
Ameriprise Financial, Inc., 5.30%, 3/15/20		10		10,447
The Bank of New York Mellon Corp., 4.30%, 5/15/14		55		59,072
The Goldman Sachs Group, Inc.:
5.25%, 10/15/13		35		36,894
5.38%, 3/15/20		50		49,406
6.00%, 6/15/20		20		20,623
Lehman Brothers Holdings, Inc., 6.75%, 12/28/17 (a)(d)		25		12
Morgan Stanley:
2.93%, 5/14/13 (b)		100		100,358
4.20%, 11/20/14		100		98,744
				375,556
Chemicals — 0.2%
CF Industries, Inc., 7.13%, 5/01/20		30		30,750
NOVA Chemicals Corp.:
6.50%, 1/15/12		5		5,000
3.65%, 11/15/13 (b)		10		9,175
				44,925
Commercial Banks — 0.6%
Corporacion Andina de Fomento, 6.88%, 3/15/12		50		54,006
Eksportfinans ASA:
1.88%, 4/02/13		42		42,344
3.00%, 11/17/14		50		51,491
5.50%, 5/25/16		25		28,413
				176,254
Computers & Peripherals — 0.1%
Seagate Technology International, 10.00%, 5/01/14 (c)		20		22,800
Consumer Finance — 0.1%
SLM Corp., 5.13%, 8/27/12		25		24,628
Containers & Packaging — 0.2%
Ball Corp.:
7.13%, 9/01/16	USD	10		10,462
7.38%, 9/01/19		10		10,400
Crown Americas LLC, 7.63%, 5/15/17 (c)		7		7,245
Owens-Brockway Glass Container, Inc., 7.38%, 5/15/16		30		31,275
				59,382
Diversified Financial Services — 0.5%
Bank of America Corp., 5.63%, 7/01/20		40		40,318
Citigroup, Inc., 6.00%, 12/13/13		40		41,964
GMAC, Inc., 8.00%, 3/15/20 (c)		30		29,325
General Electric Capital Corp., 6.15%, 8/07/37		25		25,363
				136,970
Diversified Telecommunication Services — 0.7%
AT&T, Inc., 6.50%, 9/01/37		52		57,676
GTE Corp., 6.84%, 4/15/18		50		56,539
New Communications Holdings, Inc., 8.25%, 4/15/17 (c)		30		30,112
Qwest Communications International, Inc.:
7.50%, 2/15/14		5		5,012
Series B, 7.50%, 2/15/14		5		5,013
Qwest Corp., 8.88%, 3/15/12		5		5,362
Telefonica Emisiones SAU, 4.95%, 1/15/15		25		26,189
				185,903
Electric Utilities — 0.2%
Florida Power & Light Co., 5.95%, 2/01/38		25		28,556
Massachusetts Electric Co., 5.90%, 11/15/39 (c)		15		16,417
Southern California Edison Co., 5.63%, 2/01/36		6		6,617
				51,590
Food Products — 0.3%
Kraft Foods, Inc.:
6.50%, 8/11/17		35		40,653
5.38%, 2/10/20		33		35,361
6.50%, 2/09/40		15		16,775
				92,789
Health Care Equipment & Supplies — 0.0%
Covidien International Finance SA, 2.80%, 6/15/15		10		10,099
Health Care Providers & Services — 0.3%
HCA, Inc.:
8.50%, 4/15/19		30		31,800
7.25%, 9/15/20		20		20,100
Tenet Healthcare Corp. (c):
9.00%, 5/01/15		10		10,575
8.88%, 7/01/19		20		21,200
				83,675
Household Durables — 0.2%
Centex Corp., 5.13%, 10/01/13		41		41,103
Pulte Homes, Inc., 5.20%, 2/15/15		10		9,400
				50,503
IT Services — 0.1%
Sabre Holdings Corp., 8.35%, 3/15/16		40		38,200

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Insurance — 0.7%
Hartford Life Global Funding Trusts, 0.72%, 6/16/14 (b)	USD	50	$	47,022
Lincoln National Corp., 7.00%, 6/15/40		10		10,532
Metropolitan Life Global Funding I (c):
2.50%, 1/11/13		85		85,964
5.13%, 6/10/14		25		27,158
Teachers Insurance & Annuity Association of America, 6.85%, 12/16/39 (c)		15		17,471
				188,147
Life Sciences Tools & Services — 0.1%
Life Technologies Corp., 6.00%, 3/01/20		15		16,244
Media — 1.2%
Clear Channel Worldwide Holdings, Inc. (c):
Series A, 9.25%, 12/15/17		7		6,965
Series B, 9.25%, 12/15/17		28		28,140
Comcast Corp., 6.45%, 3/15/37		23		24,870
Cox Communications, Inc., 7.13%, 10/01/12		30		33,333
DISH DBS Corp., 7.75%, 5/31/15		30		30,900
Discovery Communications LLC, 3.70%, 6/01/15		20		20,505
NBC Universal, Inc., 5.15%, 4/30/20 (c)		25		26,075
News America, Inc.:
6.40%, 12/15/35		40		43,533
6.75%, 1/09/38		85		93,355
Time Warner Cable, Inc., 5.85%, 5/01/17		20		21,959
				329,635
Metals & Mining — 0.1%
AngloGold Ashanti Holdings Plc, 5.38%, 4/15/20		10		10,153
Teck Resources Ltd., 10.75%, 5/15/19		25		30,632
				40,785
Multi-Utilities — 0.1%
Xcel Energy, Inc., 6.50%, 7/01/36		20		23,072
Multiline Retail — 0.1%
Dollar General Corp., 11.88%, 7/15/17 (e)		25		28,438
Oil, Gas & Consumable Fuels — 1.4%
BP Capital Markets Plc, 3.13%, 3/10/12		45		41,604
Canadian Natural Resources, Ltd., 6.50%, 2/15/37		20		22,342
Cenovus Energy, Inc., 6.75%, 11/15/39		20		22,962
Chevron Corp., 3.95%, 3/03/14		5		5,359
ConocoPhillips, 4.60%, 1/15/15		41		44,790
Consol Energy, Inc. (c):
8.00%, 4/01/17		11		11,358
8.25%, 4/01/20		14		14,595
Kinder Morgan Energy Partners LP, 5.30%, 9/15/20		8		8,274
MidAmerican Energy Holdings Co., 5.95%, 5/15/37		25		26,773
Motiva Enterprises LLC, 5.20%, 9/15/12 (c)		60		64,285
Nexen, Inc., 6.40%, 5/15/37		25		26,070
Petrobras International Finance Co.:
5.88%, 3/01/18	USD	5		5,146
5.75%, 1/20/20		44		44,310
Shell International Finance BV, 4.00%, 3/21/14		23		24,327
Tennessee Gas Pipeline Co., 7.00%, 10/15/28		5		5,284
Valero Energy Corp., 6.63%, 6/15/37		19		18,499
XTO Energy, Inc., 6.50%, 12/15/18		20		24,271
				410,249
Paper & Forest Products — 0.1%
Georgia-Pacific LLC, 8.25%, 5/01/16 (c)		24		25,590
Pharmaceuticals — 0.6%
Eli Lilly & Co.:
3.55%, 3/06/12		20		20,856
7.13%, 6/01/25		5		6,361
Merck & Co., Inc., 4.00%, 6/30/15		50		54,152
Pfizer, Inc., 5.35%, 3/15/15		42		47,585
Teva Pharmaceutical Finance LLC, 3.00%, 6/15/15		20		20,392
Wyeth, 6.00%, 2/15/36		10		11,232
				160,578
Road & Rail — 0.1%
Burlington Northern Santa Fe LLC, 5.75%, 5/01/40		19		20,096
Tobacco — 0.1%
Philip Morris International, Inc., 4.50%, 3/26/20		30		30,471
Wireless Telecommunication Services — 0.9%
CellCo.Partnership:
3.75%, 5/20/11		110		112,665
8.50%, 11/15/18		50		65,007
Cricket Communications, Inc., 7.75%, 5/15/16		25		25,500
Vodafone Group Plc, 4.15%, 6/10/14		41		43,021
				246,193
Total Corporate Bonds — 10.6%				2,985,119
Foreign Agency Obligations
Hellenic Republic Government Bond, 4.60%, 9/20/40	EUR	10		6,135
Japan Finance Corp., 2.00%, 6/24/11	USD	30		30,260
Landwirtschaftliche Rentenbank:
4.13%, 7/15/13		5		5,373
Series E, 5.25%, 7/02/12		15		16,193
Series E, 4.38%, 1/15/13		10		10,752
Series E, 4.00%, 2/02/15		10		10,759
Mexico Government International Bond, 6.38%, 1/16/13		15		16,448
Province of Ontario Canada:
4.10%, 6/16/14		35		37,639
Series 1, 1.88%, 11/19/12		40		40,467
Russian Foreign Bond Eurobond, 7.50%, 3/31/30		46		51,856

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Foreign Agency Obligations	(000)		Value
United Mexican States, Series A, 5.13%, 1/15/20	USD	20	$	20,800
Total Foreign Agency Obligations — 0.9%				246,682
					��
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations — 2.7%
Arkle Master Issuer Plc, Series 2010-1A, Class 2A, 1.53%, 5/17/60 (b)(c)		100		98,750
CitiMortgage Alternative Loan Trust, Series 2007-A8, Class A1, 6.00%, 10/25/37		81		63,289
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2006-0A5, Class 2A1, 0.55%, 4/25/46 (b)		16		8,649
Series 2006-0A5, Class 3A1, 0.55%, 4/25/46 (b)		34		19,562
Series 2007-J3, Class A10, 6.00%, 7/25/37		86		67,308
First Horizon Asset Securities, Inc., Series 2005-AR3, Class 3A1, 5.50%, 8/25/35 (b)		23		21,497
Impac Secured Assets CMN Owner Trust, Series 2004-3, Class 1A4, 0.75%, 11/25/34 (b)		12		10,105
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-3, Class 2A1, 5.61%, 4/25/37 (b)		107		79,431
Structured Asset Securities Corp., Series 2005-GEL2, Class A, 0.63%, 4/25/35 (b)		9		7,959
Thornburg Mortgage Securities Trust, Series 2006-5, Class A1, 0.47%, 10/25/46 (b)		71		69,390
WaMu Mortgage Pass-Through Certificates (b):
Series 2006-AR18, Class 1A1, 5.24%, 1/25/37		61		44,155
Series 2007-0A4, Class 1A, 1.21%, 5/25/47		20		11,731
Wells Fargo Mortgage-Backed Securities Trust (b):
Series 2006-AR2, Class 2A5, 4.90%, 3/25/36		166		139,427
Series 2006-AR3, Class A4, 5.60%, 3/25/36		106		91,594
Series 2006-AR12, Class 2A1, 6.00%, 9/25/36		25		22,560
				755,407
Commercial Mortgage-Backed Securities — 3.8%
Banc of America Commercial Mortgage, Inc., Series 2007-2, Class A2, 5.63%, 4/10/49 (b)		70		72,337
Commercial Mortgage Pass-Through Certificates, Series 2004-LB3A, Class A3, 5.09%, 7/10/37 (b)		40		40,954
GE Capital Commercial Mortgage Corp., Series 2001-2, Class A4, 6.29%, 8/11/33		164		169,668
GMAC Commercial Mortgage Securities, Inc., Series 2004-C3, Class AAB, 4.70%, 12/10/41		186		194,005
Greenwich Capital Commercial Funding Corp., Series 2004-GG1, Class A4, 4.76%, 6/10/36		124		125,547
JPMorgan Chase Commercial Mortgage Securities Corp., Class A4 (b):
Series 2006-CB15, 5.81%, 6/12/43	USD	250		259,415
Series 2006-LDP7, 5.87%, 4/15/45		115		122,550
RBSCF Trust, Series 2010-RR3, Class WBTA, 6.10%, 4/16/17 (b)(c)		50		52,414
Wachovia Bank Commercial Mortgage Trust, Series 2005-C21, Class A3, 5.38%, 10/15/44 (b)		40		40,205
				1,077,095
Total Non-Agency Mortgage-Backed Securities — 6.5%				1,832,502
Taxable Municipal Bonds
The Board of Trustees of The Leland Stanford Junior University, 4.25%, 5/01/16		15		16,303
Chicago Metropolitan Water Reclamation District-Greater Chicago Illinois, GO, Build America Bonds, 5.72%, 12/01/38		15		16,339
Dallas Area Rapid Transit, RB, Build America Bonds, 6.00%, 12/01/44		10		11,291
Metropolitan Transportation Authority, RB, Build America Bonds, 7.34%, 11/15/39		25		30,923
New York State Dormitory Authority, RB, Build America Bonds, 5.63%, 3/15/39		25		25,759
Port Authority of New York & New Jersey, RB, Consolidated, 159th Series, 6.04%, 12/01/29		15		16,528
State of California, GO:
Build America Bonds, 7.30%, 10/01/39		35		36,824
Build America Bonds, 7.35%, 11/01/39		20		21,045
Build America Bonds, Various Purpose, 7.50%, 4/01/34		10		10,670
Various Purpose, Series 3, 5.45%, 4/01/15		75		79,427
Total Taxable Municipal Bonds — 0.9%				265,109
U.S. Government Sponsored Agency Securities
Agency Obligations — 1.5%
Fannie Mae:
5.13%, 1/02/14		100		109,974
2.63%, 11/20/14		65		67,178
Freddie Mac, 1.13%, 12/15/11		180		181,421
Tennessee Valley Authority, 5.25%, 9/15/39		60		66,330
				424,903
Collateralized Mortgage Obligations — 0.2%
Fannie Mae Mortgage-Backed Securities, Series 2006-9, Class DA, 5.50%, 7/25/25		11		11,614

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
U.S. Government Sponsored Agency Securities	(000)		Value
Collateralized Mortgage Obligations (concluded)
Freddie Mac Mortgage-Backed Securities, Series 3068, Class VA, 5.50%, 10/15/16	USD	52	$	54,551
				66,165
Federal Deposit Insurance Corporation Guaranteed — 0.6%
Citigroup Funding, Inc., 1.88%, 10/22/12		100		102,102
General Electric Capital Corp.:
2.00%, 9/28/12		50		51,194
2.13%, 12/21/12		25		25,702
				178,998
Interest Only Collateralized Mortgage Obligations — 0.7%
Ginnie Mae Mortgage-Backed Securities (b):
Series 2006-69, Class SA, 6.46%, 12/20/36		35		4,051
Series 2007-9, Class BI, 6.35%, 3/20/37		72		8,324
Series 2007-27, Class S, 6.16%, 5/20/37		87		8,674
Series 2007-36, Class SA, 6.13%, 6/20/37		42		4,750
Series 2008-94, Class SA, 7.06%, 12/20/38		3		286
Series 2009-16, Class SL, 7.10%, 1/20/37		121		16,267
Series 2009-26, Class SC, 5.95%, 1/16/38		1		172
Series 2009-33, Class SK, 6.14%, 5/20/39		232		23,214
Series 2009-61, Class ES, 6.51%, 3/20/39		266		26,555
Series 2009-47, Class KS, 5.82%, 6/16/39		286		28,584
Series 2009-106, Class CM, 6.26%, 1/16/34		175		20,931
Series 2009-106, Class SL, 5.76%, 4/20/36		130		14,327
Series 2009-110, Class CS, 6.04%, 11/16/39		78		8,507
				164,642
Mortgage-Backed Securities — 28.5%
Fannie Mae Mortgage-Backed Securities:
4.00%, 4/01/25-8/15/40 (f)		603		615,853
4.49%, 11/01/35 (b)		85		88,777
4.50%, 7/15/40 (f)		1,800		1,864,796
4.83%, 8/01/38 (b)		72		76,897
5.00%, 8/15/25-8/15/40 (f)		1,294		1,371,456
5.50%, 7/15/25-7/15/40 (f)		956		1,028,160
6.00%, 12/01/31-7/15/40 (f)		1,107		1,204,550
6.50%, 8/15/40 (f)		100		109,234
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/25-6/01/25		568		590,558
4.50%, 4/01/40-8/01/40 (f)		485		501,829
5.00%, 6/01/36-7/15/40 (f)		122		128,866
5.50%, 7/15/25-6/01/40 (f)		195		209,669
6.00%, 6/01/35		40		43,269
Ginnie Mae Mortgage-Backed Securities (f):
5.00%, 8/15/40	USD	100		105,968
6.50%, 7/15/40		100		109,703
				8,049,585
Total U.S. Government Sponsored Agency Securities — 31.5%				8,884,293
U.S. Treasury Obligations
U.S. Treasury Notes:
3.50%, 5/15/20 (g)		405		423,857
8.75%, 5/15/20		40		59,781
8.13%, 5/15/21 (h)		80		116,650
3.50%, 2/15/39 (g)(h)(i)		215		199,715
4.25%, 5/15/40 (g)		200		216,250
Total U.S. Treasury Obligations — 3.6%				1,016,253
Total Fixed Income Securities — 56.9%				16,042,446
Preferred Securities
Capital Trusts
Capital Markets — 0.0%
Credit Suisse Guernsey Ltd., 5.86%, (b)(j)		5		4,413
Diversified Financial Services — 0.2%
JPMorgan Chase & Co., 7.90%, (b)(j)		50		51,536
Insurance — 0.5%
Chubb Corp., 6.38%, 3/29/67 (b)		25		24,000
Lincoln National Corp., 7.00%, 5/17/66 (b)		25		20,813
MetLife, Inc., 6.40%, 12/15/66		45		39,600
Progressive Corp., 6.70%, 6/15/67 (b)		35		32,725
The Travelers Cos., Inc., 6.25%, 3/15/67 (b)		25		23,459
				140,597
Total Preferred Securities — 0.7%				196,546
Total Long-Term Investments (Cost — $34,309,460) — 121.1%				34,168,669
Short-Term Securities	Shares
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (k)(l)		856,653		856,653
Total Short-Term Securities (Cost — $856,653) — 3.0%				856,653
Options Purchased	Contracts
Exchange-Traded Put Options — 0.0%
Eurodollar 1-Year Mid-Curve Options, Strike Price USD 97.25, expires 9/10/10		4		25

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Options Purchased	Contracts (m)		Value
Over-the-Counter Call Swaptions — 0.5%
Receive a fixed rate of 1.15% and pay a floating rate based on 3-month LIBOR, expires 9/03/10, Broker Deutsche Bank AG		1	$	3,281
Receive a fixed rate of 3.90% and pay a floating rate based on 3-month LIBOR, expires 11/16/10, Broker Goldman Sachs Bank USA		— (n)		6,817
Receive a fixed rate of 3.65% and pay a floating rate based on 3-month LIBOR, expires 5/05/11, Broker Credit Suisse International		— (n)		14,711
Receive a fixed rate of 5.86% and pay a floating rate based on 3-month LIBOR, expires 8/15/11, Broker JPMorgan Chase Bank NA		1		82,775
Receive a fixed rate of 4.39% and pay a floating rate based on 3-month LIBOR, expires 5/08/12, Broker Citibank NA		— (n)		8,401
Receive a fixed rate of 5.20% and pay a floating rate based on 3-month LIBOR, expires 4/28/15, Broker Citibank NA		— (n)		32,209
				148,194
Over-the-Counter Put Swaptions — 0.1%
Pay a fixed rate of 1.92% and receive a floating rate based on 3-month LIBOR, expires 9/02/10, Broker Morgan Stanley Capital Services, Inc.		1		12
Pay a fixed rate of 1.95% and receive a floating rate based on 3-month LIBOR, expires 9/18/10, Broker Citibank NA		1		1,152
Pay a fixed rate of 3.90% and receive a floating rate based on 3-month LIBOR, expires 11/16/10, Broker Goldman Sachs Bank USA		— (n)		423
Pay a fixed rate of 4.02% and receive a floating rate based on 3-month LIBOR, expires 5/05/11, Broker Credit Suisse International		— (n)		4,172
Pay a fixed rate of 5.86% and receive a floating rate based on 3-month LIBOR, expires 8/15/11, Broker JPMorgan Chase Bank NA		1		840
Pay a fixed rate of 4.39% and receive a floating rate based on 3-month LIBOR, expires 5/08/12, Broker Citibank NA		— (n)		2,799
Pay a fixed rate of 4.25% and receive a floating rate based on 3-month LIBOR, expires 4/28/15, Broker Citibank NA		— (n)		12,595
				21,993
Total Options Purchased (Cost — $129,427) — 0.6%				170,212
Total Investments Before TBA Sale Commitments and Outstanding Options Written (Cost — $35,295,540*) — 124.7%				35,195,534
	Par
TBA Sale Commitments (f)	(000)
Fannie Mae Mortgage-Backed Securities:
4.00%, 4/01/25-8/15/40	USD	300		(309,015	)
4.50%, 7/15/40		1,800		(1,865,531	)
5.00%, 8/15/25-8/15/40		1,100		(1,163,766	)
5.50%, 7/15/25-7/15/40		200		(214,688	)
6.00%, 12/01/31-7/15/40		700		(759,172	)
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/25-6/01/25	USD	500		(518,984	)
4.50%, 4/01/40-8/01/40		400		(414,250	)
Total TBA Sale Commitments (Proceeds — $5,203,832) — (18.6)%				(5,245,406	)
Options Written	Contracts
Exchange-Traded Call Options — (0.0)%
10-Year U.S. Treasury Bond Future, Strike Price USD 122.50, expires 8/27/10		2		(2,781	)
Exchange-Traded Put Options — (0.0)%
10-Year U.S. Treasury Bond Future, Strike Price USD 119.50, expires 8/27/10		2		(782	)
Over-the-Counter Call Options — (0.1)%
Euro-Schatz, Strike Price USD 109.50, expires 8/31/10, Broker Citigroup Global Markets		4		(1,102	)
Over-the-Counter Call Swaptions — (0.6)%
Pay a fixed rate of 4.12% and receive a floating rate based on 3-month LIBOR, expires 8/21/10, Broker Goldman Sachs Bank USA		— (m)(n)		(9,197	)
Pay a fixed rate of 4.13% and receive a floating rate based on 3-month LIBOR, expires 9/10/10, Broker Morgan Stanley Capital Services, Inc.		1(m)		(54,383	)
Pay a fixed rate of 5.40% and receive a floating rate based on 3-month LIBOR, expires 12/18/10, Broker UBS AG		1(m)		(38,387	)
Pay a fixed rate of 4.06% and receive a floating rate based on 3-month LIBOR, expires 5/12/11, Broker Royal Bank of Scotland Plc		— (m)(n)		(14,834	)
Pay a fixed rate of 4.06% and receive a floating rate based on 3-month LIBOR, expires 5/13/11, Broker BNP Paribas SA		— (m)(n)		(7,398	)
Pay a fixed rate of 4.05% and receive a floating rate based on 3-month LIBOR, expires 6/18/12, Broker Deutsche Bank AG		— (m)(n)		(6,473	)
Pay a fixed rate of 4.90% and receive a floating rate based on 3-month LIBOR, expires 3/04/13, Broker Deutsche Bank AG		— (m)(n)		(21,059	)
Pay a fixed rate of 4.92% and receive a floating rate based on 3-month LIBOR, expires 3/05/13, Broker Deutsche Bank AG		— (m)(n)		(10,675	)
Pay a fixed rate of 4.32% and receive a floating rate based on 3-month LIBOR, expires 5/28/13, Broker Royal Bank of Scotland Plc		— (m)(n)		(14,483	)
Pay a fixed rate of 4.89% and receive a floating rate based on 3-month LIBOR, expires 12/03/14, Broker Deutsche Bank AG		— (m)(n)		(9,343	)
Pay a fixed rate of 4.76% and receive a floating rate based on 3-month LIBOR, expires 5/30/17, Broker JPMorgan Chase Bank NA		— (m)(n)		(8,124	)
				(194,356	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued)

Options Written	Contracts (m)		Value
Over-the-Counter Put Swaptions — (0.1)%
Receive a fixed rate of 4.12% and pay a floating rate based on 3-month LIBOR, expires 8/21/10, Broker Goldman Sachs Bank USA		— (n)	$	(15	)
Receive a fixed rate of 4.13% and pay a floating rate based on 3-month LIBOR, expires 9/18/10, Broker Morgan Stanley Capital Services, Inc.		1		(202	)
Receive a fixed rate of 2.10% and pay a floating rate based on 3-month LIBOR, expires 12/02/10, Broker Citibank NA		1		(303	)
Receive a fixed rate of 5.40% and pay a floating rate based on 3-month LIBOR, expires 12/18/10, Broker UBS AG		— (n)		(28	)
Receive a fixed rate of 4.06% and pay a floating rate based on 3-month LIBOR, expires 5/12/11, Broker Royal Bank of Scotland Plc		1		(2,712	)
Receive a fixed rate of 4.06% and pay a floating rate based on 3-month LIBOR, expires 5/13/11, Broker BNP Paribas SA		— (n)		(1,367	)
Receive a fixed rate of 4.05% and pay a floating rate based on 3-month LIBOR, expires 6/18/12, Broker Deutsche Bank AG		— (n)		(3,986	)
Receive a fixed rate of 4.90% and pay a floating rate based on 3-month LIBOR, expires 3/04/13, Broker Deutsche Bank AG		— (n)		(5,915	)
Receive a fixed rate of 4.92% and pay a floating rate based on 3-month LIBOR, expires 3/05/13, Broker Deutsche Bank AG		— (n)		(2,908	)
Receive a fixed rate of 4.32% and pay a floating rate based on 3-month LIBOR, expires 5/28/13, Broker Royal Bank of Scotland Plc		— (n)		(9,608	)
Receive a fixed rate of 4.89% and pay a floating rate based on 3-month LIBOR, expires 12/03/14, Broker Deutsche Bank AG		— (n)		(4,689	)
Receive a fixed rate of 4.76% and pay a floating rate based on 3-month LIBOR, expires 5/30/17, Broker JPMorgan Chase Bank NA		— (n)		(5,940	)
				(37,673	)
Total Options Written (Premiums Received — $212,128) — (0.8)%				(236,694	)
Total Investments, Net of TBA Sales Commitments and Outstanding Options Written — 105.3%				29,713,434
Liabilities in Excess of Other Assets — (5.3)%				(1,508,688	)
Net Assets — 100.0%			$	28,204,746

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost	$	35,573,956
Gross unrealized appreciation	$	1,571,376
Gross unrealized depreciation		(1,949,798	)
Net unrealized depreciation	$	(378,422	)

(a)	Non-income producing security.
(b)	Variable rate security. Rate shown is as of report date.
(c)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(d)	Issuer filed for bankruptcy and/or is in default of interest payments.
(e)	Represents a payment-in-kind security which may pay interest/dividends in additional face/shares.
(f)	Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:

				Unrealized
				Appreciation
Counterparty	Value			(Depreciation)
BNP Paribas	$	410,250		$	4,672
Bank of America NA	$	(103,641	)	$	(2,531	)
Citigroup Global Markets Inc.	$	213,000		$	1,117
Credit Suisse Securities (USA) LLC	$	(532,844	)	$	(3,953	)
Deutsche Bank AG	$	(315,234	)	$	406
Goldman Sachs Bank USA	$	16,492		$	(2,314	)
Greenwich Financial Services	$	(518,203	)	$	(3,469	)
JPMorgan Chase Bank NA	$	961,109		$	4,031
Morgan Stanley Capital Services, Inc.	$	(316,109	)	$	(5,668	)
Nomura Securities International Inc.	$	414,562		$	7,812
UBS Securities	$	10,875		$	(3,187	)
Wells Fargo Bank, NA	$	106,438		$	(187	)

(g)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.
(h)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(i)	Security, or a portion thereof, subject to treasury rolls.
(j)	Security is perpetual in nature and has no stated maturity date.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued)

(k)  Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares				Shares
	Held at				Held at
	December 31,		Net		June 30,
Affiliate	2009		Activity		2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		195,860		660,793		856,653	$	248

(l)	Represents the current yield as of report date.
(m)	One contract represents a notional amount of $1 million.
(n)	Notional amount is less than $1 million.

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Financial futures contracts purchased as of June 30, 2010 were as follows:

			Expiration	Notional	Unrealized
Contracts		Issue	Date	Value	Appreciation
	2	30-Year U.S. Treasury Bond	September 2010	$248,766	$	6,234

  •  Financial futures contracts sold as of June 30, 2010 were as follows:

					Unrealized
			Expiration	Notional	Appreciation
Contracts		Issue	Date	Value	(Depreciation)
	4	2-Year U.S. Treasury Bond	September 2010	$872,867	$	(2,445	)
	3	5-Year U.S. Treasury Bond	September 2010	$354,885		(170	)
	2	10-Year U.S. Treasury Bond	September 2010	$245,144		50
	2	30-Year U.S. Treasury Bond	September 2010	$259,887		(11,738	)
	1	Euro Dollar Futures	September 2010	$248,022		(341	)
	1	Euro Dollar Futures	June 2011	$246,009		(1,641	)
	1	Euro Dollar Futures	September 2011	$247,311		23
	1	Euro Dollar Futures	December 2011	$246,431		(344	)
	2	Euro Dollar Futures	March 2012	$487,406		(5,144	)
	1	Euro Dollar Futures	March 2013	$241,047		(2,966	)
					$	(24,716	)

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

Currency		Currency				Settlement		Unrealized
Purchased		Sold		Counterparty		Date		Appreciation
USD	48,318	EUR	38,500		BNP Paribas		7/14/10	$	1,235
USD	110,119	EUR	90,000		Citibank NA		8/16/10		35
EUR	200,000	USD	243,881		Citibank NA		8/16/10		749
								$	2,019

  •  Reverse repurchase agreements outstanding as of June 30, 2010 were as follows:

	Interest			Trade		Maturity		Net Closing		Face
Counterparty	Rate			Date		Date		Amount		Amount
Barclays Capital, Inc.		(0.10	)%		6/30/10		7/01/10	$	424,743	$	424,744
Barclays Capital, Inc.		(0.02	)%		6/30/10		7/01/10		306,144		306,144
Barclays Capital, Inc.		0.05	%		6/30/10		7/01/10		216,000		216,000
Barclays Capital, Inc.		0.09	%		6/30/10		7/01/10		172,975		172,975
Total								$	1,119,862	$	1,119,863

  •  Credit default swaps on traded indexes-sold protection outstanding as of June 30, 2010 were as follows:

Pay

Average

Notional

Fixed

Expiration

Credit

Amount

Unrealized

Issuer

Rate

Counterparty

Date

Rating1

(000)

Depreciation

Dow Jones CDX North America High Yield

5.00

%

Credit Suisse International

June 2015

B

$

240

$

(795

)

¹ Using Standard and Poor’s rating.

  •  Credit default swaps on single-name issues-buy protection outstanding as of June 30, 2010 were as follows:

	Pay					Notional		Unrealized
	Fixed				Expiration	Amount		Appreciation
Issuer	Rate			Counterparty	Date	(000)		(Depreciation)
Radio Shack Corp.		1.16	%	UBS AG	December 2010	$	60	$	70
Computer Sciences Corp.		0.88	%	Morgan Stanley Capital Services, Inc.	June 2011	$	60		(359	)
Wendy’s International, Inc.		2.90	%	JPMorgan Chase Bank NA	December 2011	$	20		(403	)
NOVA Chemicals Corp.		5.00	%	Citibank NA	March 2012	$	5		(46	)
Macy’s, Inc.		7.50	%	Morgan Stanley Capital Services, Inc.	June 2012	$	15		(1,763	)
Macy’s, Inc.		8.00	%	Morgan Stanley Capital Services, Inc.	June 2012	$	5		(636	)
Eastman Chemical Co.		0.68	%	Morgan Stanley Capital Services, Inc.	September 2013	$	55		(197	)
Centex Corp.		4.37	%	Deutsche Bank AG	December 2013	$	35		(3,547	)
Centex Corp.		4.40	%	JPMorgan Chase Bank NA	December 2013	$	20		(2,047	)
NOVA Chemicals Corp.		5.00	%	Goldman Sachs Bank USA	December 2013	$	10		(123	)
Seagate Technology Holdings		1.00	%	Credit Suisse International	June 2014	$	5		66
Seagate Technology Holdings		5.00	%	Morgan Stanley Capital Services, Inc.	June 2014	$	15		136
Macy’s, Inc.		1.00	%	Morgan Stanley Capital Services, Inc.	September 2014	$	5		(39	)
Pulte Homes, Inc.		3.00	%	JPMorgan Chase Bank NA	March 2015	$	10		(65	)
Sabre Holdings Corp.		5.00	%	JPMorgan Chase Bank NA	March 2016	$	40		(17,307	)
								$	(26,260	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued)

  •  Interest rate swaps outstanding as of June 30, 2010 were as follows:

					Notional		Unrealized
Fixed	Floating				Amount		Appreciation
Rate	Rate		Counterparty	Expiration	(000)		(Depreciation)
1.10% (a)		3-month LIBOR	Goldman Sachs International	March 2012	$	600	$	2,057
1.24% (b)		3-month LIBOR	JPMorgan Chase Bank NA	April 2012	$	900		(5,246	)
1.21% (a)		3-month LIBOR	Citibank NA	May 2012	$	1,000		5,232
1.21% (b)		3-month LIBOR	Goldman Sachs Bank USA	May 2012	$	200		(1,064	)
1.29% (b)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2012	$	200		(1,289	)
5.02% (a)		3-month LIBOR	Deutsche Bank AG	October 2012	$	500		44,662
1.72% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2013	$	300		3,465
2.85% (a)		3-month LIBOR	Credit Suisse International	July 2014	$	300		13,107
3.05% (b)		3-month LIBOR	Credit Suisse International	August 2014	$	600		(30,888	)
3.26% (a)		3-month LIBOR	JPMorgan Chase Bank NA	August 2014	$	100		5,967
2.79% (b)		3-month LIBOR	JPMorgan Chase Bank NA	November 2014	$	65		(2,551	)
2.69% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2015	$	600		19,936
2.75% (b)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2015	$	200		(7,212	)
2.68% (a)		3-month LIBOR	BNP Paribas SA	April 2015	$	300		9,460
2.65% (b)		3-month LIBOR	JPMorgan Chase Bank NA	April 2015	$	100		(3,016	)
2.72% (b)		3-month LIBOR	JPMorgan Chase Bank NA	April 2015	$	200		(6,733	)
2.73% (b)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2015	$	200		(6,854	)
2.49% (b)		3-month LIBOR	Credit Suisse International	May 2015	$	200		(4,509	)
2.62% (b)		3-month LIBOR	Credit Suisse International	May 2015	$	200		(5,727	)
2.23% (a)		3-month LIBOR	Deutsche Bank AG	May 2015	$	700		6,562
2.66% (b)		3-month LIBOR	Royal Bank of Scotland Plc	May 2015	$	300		(9,091	)
2.36% (b)		3-month LIBOR	Citibank NA	June 2015	$	200		(3,079	)
2.37% (a)		3-month LIBOR	JPMorgan Chase Bank NA	June 2015	$	1,000		15,478
2.34% (a)		3-month LIBOR	Deutsche Bank AG	June 2015	$	800		11,142
2.38% (a)		3-month LIBOR	BNP Paribas SA	June 2015	$	400		6,381
2.39% (a)		3-month LIBOR	Deutsche Bank AG	June 2015	$	100		1,634
2.22% (b)		3-month LIBOR	Goldman Sachs International	June 2015	$	1,000		(8,107	)
2.09% (a)		3-month LIBOR	Credit Suisse International	June 2015	$	100		175
3.68% (a)		3-month LIBOR	Deutsche Bank AG	August 2019	$	300		19,034
3.50% (a)		3-month LIBOR	Citibank NA	September 2019	$	100		4,773
3.47% (a)		3-month LIBOR	Royal Bank of Scotland Plc	September 2019	$	100		4,501
3.73% (b)		3-month LIBOR	Citibank NA	October 2019	$	200		(13,271	)
3.43% (b)		3-month LIBOR	Deutsche Bank AG	October 2019	$	100		(4,192	)
3.36% (a)		3-month LIBOR	Goldman Sachs International	October 2019	$	100		3,609
3.70% (a)		3-month LIBOR	Credit Suisse International	December 2019	$	300		18,868
3.89% (a)		3-month LIBOR	BNP Paribas SA	January 2020	$	100		7,867
3.93% (a)		3-month LIBOR	BNP Paribas SA	January 2020	$	100		8,250
3.89% (a)		3-month LIBOR	Credit Suisse International	January 2020	$	200		15,771
3.79% (a)		3-month LIBOR	BNP Paribas SA	February 2020	$	100		7,078
3.75% (a)		3-month LIBOR	Citibank NA	February 2020	$	100		6,660
3.71% (b)		3-month LIBOR	Deutsche Bank AG	February 2020	$	200		(12,593	)
4.87% (b)		3-month LIBOR	Deutsche Bank AG	February 2020	$	500		(59,904	)
3.75% (a)		3-month LIBOR	Royal Bank of Scotland Plc	February 2020	$	200		13,291
3.68% (a)		3-month LIBOR	BNP Paribas SA	March 2020	$	200		12,130
3.33% (a)		3-month LIBOR	Citibank NA	March 2020	$	400		30,883
3.77% (a)		3-month LIBOR	Citibank NA	March 2020	$	200		13,527
3.68% (b)		3-month LIBOR	Deutsche Bank AG	March 2020	$	100		(6,037	)
3.75% (b)		3-month LIBOR	Deutsche Bank AG	March 2020	$	200		(13,138	)
3.83% (b)		3-month LIBOR	JPMorgan Chase Bank NA	March 2020	$	100		(7,349	)
3.70% (b)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2020	$	200		(12,332	)
3.64% (b)		3-month LIBOR	Royal Bank of Scotland Plc	March 2020	$	200		(11,338	)
3.96% (b)		3-month LIBOR	BNP Paribas SA	April 2020	$	100		(8,418	)
4.05% (b)		3-month LIBOR	Credit Suisse International	April 2020	$	100		(9,188	)
3.80% (a)		3-month LIBOR	Deutsche Bank AG	April 2020	$	200		14,015
3.95% (b)		3-month LIBOR	JPMorgan Chase Bank NA	April 2020	$	200		(16,744	)
3.92% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2020	$	100		8,074
3.74% (a)		3-month LIBOR	Royal Bank of Scotland Plc	April 2020	$	100		6,497
3.60% (a)		3-month LIBOR	Credit Suisse International	May 2020	$	200		10,535
2.52% (c)		3-month LIBOR	Deutsche Bank AG	May 2020	$	100		1,133
3.28% (b)		3-month LIBOR	Deutsche Bank AG	May 2020	$	100		(2,409	)
3.39% (b)		3-month LIBOR	Deutsche Bank AG	May 2020	$	300		(10,307	)
3.48% (b)		3-month LIBOR	Deutsche Bank AG	May 2020	$	100		(4,209	)
4.88% (b)		3-month LIBOR	Deutsche Bank AG	May 2020	$	300		(35,970	)
3.57% (a)		3-month LIBOR	Goldman Sachs Bank USA	May 2020	$	100		5,040
3.57% (b)		3-month LIBOR	JPMorgan Chase Bank NA	May 2020	$	100		(4,951	)
3.64% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	100		5,643
3.73% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	200		12,725
3.25% (a)		3-month LIBOR	Royal Bank of Scotland Plc	May 2020	$	200		4,250
3.41% (b)		3-month LIBOR	BNP Paribas SA	June 2020	$	100		(3,533	)
3.80% (b)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	300		(9,989	)
4.80% (b)		3-month LIBOR	Citibank NA	June 2020	$	200		(21,118	)

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (continued)

• Interest rate swaps outstanding as of June 30, 2010 were as follows (concluded):
					Notional		Unrealized
Fixed	Floating				Amount		Appreciation
Rate	Rate		Counterparty	Expiration	(000)		(Depreciation)
3.39% (a)		3-month LIBOR	Credit Suisse International	June 2020	$	100	$	3,331
3.26% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	100		2,140
3.34% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	500		14,504
3.43% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	100		3,716
3.37% (b)		3-month LIBOR	Royal Bank of Scotland Plc	June 2020	$	100		(3,173	)
3.05% (a)		3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2020	$	100		294
3.46% (d)		3-month LIBOR	BNP Paribas SA	October 2020	$	100		(2,710	)
4.44% (b)		3-month LIBOR	Royal Bank of Scotland Plc	January 2040	$	100		(13,351	)
Total							$	21,807

^(a) Pays floating interest rate and receives fixed rate.

^(b) Pays fixed interest rate and receives floating rate.

^(c) Pays fixed interest amount and receives floating amount at expiration.

^(d) Pays floating interest amount and receives fixed amount at expiration.

  •  Total return swaps outstanding as of June 30, 2010 were as follows:

				Notional
Interest				Amount		Unrealized
Rate Receivable	Counterparty	Expiration		(000)		Appreciation
2.62%	Morgan Stanley Capital Services, Inc.		May 2020	$	200	$	4,085 (e	)

^(e) Based on the change in the since inception return on U.S. City Average All Items Consumer Price Index for All Urban Consumers as of June 30, 2010.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2			Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments:
Common Stocks	$	17,929,677		—			—	$	17,929,677
Asset-Backed Securities		—	$	750,147		$	62,341		812,488
Corporate Bonds		—		2,985,119			—		2,985,119
Foreign Agency Obligations		—		246,682			—		246,682
Non-Agency Mortgage-Backed Securities		—		1,681,338			151,164		1,832,502
Taxable Municipal Bonds		—		265,109			—		265,109
U.S. Government Sponsored Agency Securities		—		8,884,293			—		8,884,293
U.S. Treasury Obligations		—		1,016,253			—		1,016,253
Preferred Securities		—		196,546			—		196,546
Short-Term Securities:
Money Market Fund		856,653		—			—		856,653
Liabilities:
Investments in Securities:
Long-Term investments:
TBA Sale Commitments		—		(5,245,406	)		—		(5,245,406	)
Total	$	18,786,330	$	10,780,081		$	213,505	$	29,779,916

	Derivative Financial Instruments1
Valuation Inputs	Level 1			Level 2			Level 3		Total
Assets:
Credit contracts		—		$	272			—	$	272
Foreign currency exchange contracts		—			2,019			—		2,019
Interest rate contracts	$	6,332			573,584			—		579,916
Other contracts		—			4,085			—		4,085
Liabilities:
Credit contracts		—			(27,327	)		—		(27,327	)
Interest rate contracts		(28,352	)		(614,721	)		—		(643,073	)
Total	$	(22,020	)	$	(62,088	)		—	$	(84,108	)

¹ Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Swaps, financial futures contracts and foreign currency exchange contracts are shown at the unrealized appreciation/depreciation on the instrument and options are shown at value.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Schedule of Investments (concluded)

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

			Non-Agency
	Asset-Backed		Mortgage-Backed
	Securities		Securities		Total
Assets:
Balance, as of December 31, 2009	$	21,000		—	$	21,000
Accrued discounts/premiums		—		—		—
Net realized gain (loss)		—		—		—
Net change in unrealized appreciation/depreciation1		2,412		—		2,412
Purchases		—		—		—
Sales		—		—		—
Transfers in2		38,929	$	151,164		190,093
Transfers out2		—		—		—
Balance, as of June 30, 2010	$	62,341	$	151,164	$	213,505

¹ Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation on securities still held at June 30, 2010 was $(1,280).

The following table is a reconciliation of Level 3 derivative financial instruments for which significant unobservable inputs were used to determine fair value:

	Interest Rate
	Contracts
Liabilities:
Balance, as of December 31, 2009	$	(4,301	)
Accrued discounts/premiums		—
Net realized gain (loss)		(8,913	)
Net change in unrealized appreciation/depreciation		4,479
Purchases		—
Sales		8,735
Transfers in2		—
Transfers out2		—
Balance as of June 30, 2010		—

² The Fund’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$34,438,887)	$	34,338,881
Investments at value—affiliated (cost—$856,653)		856,653
Foreign currency at value (cost—$6,973)		7,040
Unrealized appreciation on swaps		407,754
Unrealized appreciation on foreign currency exchange contracts		2,019
TBA sale commitments receivable		5,203,832
Investments sold receivable		5,972,113
Interest receivable		84,900
Swaps receivable		67,064
Swap premiums paid		17,701
Dividends receivable		6,971
Options written receivable		1,473
Principal paydowns receivable		291
Prepaid expenses		24,825
Other assets		23,875
Total assets		47,015,392
Liabilities:
TBA sale commitments at value (proceeds—$5,203,832)		5,245,406
Reverse repurchase agreements		1,119,863
Options written at value (premiums received—$212,128)		236,694
Unrealized depreciation on swaps		408,917
Investments purchased payable		11,307,581
Bank overdraft.		93,750
Swap premiums received		88,746
Swaps payable		58,407
Investment advisory fees payable		13,291
Capital shares redeemed payable		1,686
Other affiliates payable		985
Margin variation payable		70
Officer’s and Directors’ fees payable		231
Other accrued expenses payable		34,070
Other liabilities		200,949
Total liabilities		18,810,646
Net Assets..	$	28,204,746
Net Assets Consist of:
Paid-in capital	$	34,958,787
Undistributed net investment income		345,041
Accumulated net realized loss		(6,939,221	)
Net unrealized appreciation/depreciation		(159,861	)
Net Assets	$	28,204,746
Net Asset Value:
Class I—Based on net assets of $28,204,746 and 2,584,208 shares outstanding, 100 million shares authorized, $0.10 par value	$	10.91

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Interest	$	272,941
Dividends		149,616
Dividends—affiliated		248
Total income		422,805
Expenses:
Investment advisory		84,292
Pricing		21,330
Professional		18,244
Custodian		13,370
Officer and Directors		8,658
Accounting services		5,164
Printing		2,803
Transfer agent		2,404
Miscellaneous		4,943
Total expenses excluding interest expense		161,208
Interest expense		10,575
Total expenses		171,783
Less fees waived by advisor		(114	)
Total expenses after fees waived		171,669
Net investment income		251,136
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		1,417,217
Financial futures contracts		(59,780	)
Options written		88,942
Swaps		(39,627	)
Foreign currency transactions		34,826
Borrowed bonds		(11,654	)
		1,429,924
Net change in unrealized appreciation/depreciation on:
Investments		(2,558,142	)
Financial futures contracts		(40,707	)
Options written		(82,393	)
Swaps		57,690
Foreign currency transactions		(10,946	)
		(2,634,498	)
Total realized and unrealized loss		(1,204,574	)
Net Decrease in Net Assets Resulting from Operations	$	(953,438	)

See Notes to Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	251,136		$	663,748
Net realized gain		1,429,924			207,124
Net change in unrealized appreciation/depreciation		(2,634,498	)		4,069,283
Net increase (decrease) in net assets resulting from operations		(953,438	)		4,940,155
Dividends to Shareholders From:
Net investment income		—			(674,974	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(2,339,771	)		(4,958,378	)
Net Assets:
Total decrease in net assets		(3,293,209	)		(693,197	)
Beginning of period		31,497,955			32,191,152
End of period	$	28,204,746		$	31,497,955
Undistributed net investment income	$	345,041		$	93,905

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009			2008			2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	11.30		$	9.79		$	14.16		$	13.76	$	12.21	$	11.95
Net investment income1		0.09			0.22			0.29			0.31		0.26		0.21
Net realized and unrealized gain (loss)		(0.48)			1.53			(4.35)			0.42		1.59		0.28
Net increase (decrease) from investment operations		(0.39)			1.75			(4.06)			0.73		1.85		0.49
Dividends from net investment income		—			(0.24)			(0.31)			(0.33)		(0.30)		(0.23)
Net asset value, end of period	$	10.91		$	11.30		$	9.79		$	14.16	$	13.76	$	12.21
Total Investment Return:2
Based on net asset value		(3.45)%	3		17.93%			(28.62)%			5.31%		15.14%		4.13%
Ratios to Average Net Assets:
Total expenses		1.12%	4		1.08%			0.92%			0.75%		0.78%		0.78%
Total expenses after fees waived		1.12%	4		1.07%			0.92%			0.75%		0.78%		0.78%
Total expenses after fees waived and excluding interest expense		1.05%	4		1.07%			0.90%			0.75%		0.78%		0.78%
Net investment income		1.64%	4		2.19%			2.37%			2.14%		2.03%		1.78%
Supplemental Data:
Net assets, end of period (000)	$	28,205		$	31,498		$	32,191		$	56,550	$	66,680	$	72,512
Portfolio turnover		335%	5		381%	6		344%	7		385%		112%		84%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.

⁴  Annualized.

⁵  Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 259%.

6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 263%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 260%.

See Notes to Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Balanced Capital V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Balanced Capital V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Fund’s Board of Directors (the “Board”). The Fund values its bond investments on the basis of last available bid prices or current market quotations 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, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. 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 and trades and values of the underlying reference instruments. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be value at amortized cost, which approximates fair value.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business 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. Over-the-counter (“OTC”) options and 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.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 23

price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 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 business on the NYSE, which follows the close of the local markets.

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 purchaser is not entitled to any of the interest earned prior to settlement. When purchasing a security on a delayed delivery basis, the Fund assume 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, which is shown on the Schedules of Investments, if any.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed and Mortgaged-Backed Securities: The Fund may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally 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 subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the 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.

The Fund may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by the Government National Mortgage Association (“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 the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and Federal National Mortgage Association (“Fannie Mae”), including Freddie Mac and Fannie Mae guaranteed Mortgage Pass-Through Certificates, which are solely the

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

obligations of Freddie Mac and Fannie Mae, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury.

Borrowed Bond Agreements: In a borrowed bond agreement, the Fund borrows securities from a third party, with the commitment that the securities will be returned to the lender on an agreed-upon date. Borrowed bond agreements are primarily entered into to enable the Fund to settle short bond positions. To support the borrowing, the Fund’s prime broker or third party broker takes possession of collateral of securities or cash that will be released upon termination of the borrowing. The value of the underlying collateral securities or cash approximates the market value of the borrowed bond transaction, including accrued interest. To the extent that borrowed bond transactions exceed one business day, the value of the collateral in the possession of the Fund’s prime broker or third party broker is marked to market on a daily basis to ensure the adequacy of the collateral. In the event of default by the counterparty and the value of noncash collateral increases, the Fund’s amount of loss is the unrealized gain of the collateral. Full realization of the collateral by the Fund may be limited if the value of an investment purchased with the cash collateral by the lender decreases. The Fund may also experience delays in gaining access to the collateral.

Multiple Class Pass-Through Securities: The Fund may invest in multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities. These multiple class securities may be issued by GNMA, US 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, and multiple class pass-through securities represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes (“PACs”) and targeted amortization classes (“TACs”). 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 pre-payments of principal, the Fund may not fully recoup its initial investment in IOs.

Stripped Mortgage-Backed Securities: The Fund may invest in stripped mortgage-backed securities 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. The Fund also may invest in stripped mortgage-backed securities that are privately issued.

Capital Trusts: These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. 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. Payments on these securities are treated as interest rather than dividends for federal income tax purposes. These securities can have a rating that is slightly below that of the issuing company’s senior debt securities.

TBA Commitments: The Fund may enter into TBA commitments pursuant to which it agrees to purchase or sell mortgage-backed securities for a fixed price, with payment and delivery at a scheduled future date beyond the customary settlement period for the mortgage-backed security. 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. The Fund generally enters into TBA transactions with the intent to take possession of or deliver out 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, which is in addition to the risk of decline in the value of the Fund’s other assets.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 25

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

Treasury Roll Transactions: A treasury roll transaction involves the sale of a Treasury security, with an agreement to repurchase the same security at an agreed upon price and date. Treasury rolls constitute a borrowing and the difference between the sale and repurchase price represents interest expense at an agreed upon rate. Whether such a transaction produces a positive impact on performance depends upon whether the income on the securities purchased with the proceeds received from the sale of the security exceeds the interest expense incurred by the Fund. For accounting purposes, treasury rolls are not considered purchases and sales and any gains or losses incurred on the treasury rolls will be deferred until the Treasury securities are disposed.

Treasury roll transactions involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon purchase price of those securities. If investment performance of securities purchased with proceeds from these transactions does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the treasury roll, the use of this technique will adversely impact the investment performance of the Fund.

Reverse Repurchase Agreements: The Fund may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Fund sell securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. 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. The 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 and also the risk that the market value of the securities that the Fund is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

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

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., dollar rolls, TBAs beyond normal settlement, financial futures contracts, foreign currency exchange contracts, swaps and written options), or certain borrowings (e.g., reverse repurchase agreements) the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, their exposure to certain risks such as credit risk, interest rate risk, foreign currency exchange rate risk or other risk (inflation risk). These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contracts. Options written by the Fund does not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. 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 value of the contract. Such receipts or payments are known as margin variation and are recognized by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 27

an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (equity risk and/or interest rate risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swap option is granting or buying the right to enter into a previously agreed upon interest rate swap agreement at any time before the expiration of the option.

The Fund also purchases or sells listed or OTC foreign currency options, foreign currency futures and related options on foreign currency futures as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies. When foreign currency is purchased or sold through an exercise of a foreign currency option, the related premium paid (or received) is added to (or deducted from) the basis of the foreign currency acquired or deducted from (or added to) the proceeds of the foreign currency sold. Such transactions may be effected with respect to hedges on non-US dollar denominated instruments owned by the Portfolio but not yet delivered, or committed or anticipated to be purchased by the Portfolio.

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 the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of an option written could result in the Fund purchasing or selling a security at a price different from the current market value.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Fund are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are received as assets and any upfront fees received are recorded as liabilities and are amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Fund will record a realized gain or loss 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 contracts is the premium received or paid. 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

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

be unfavorable changes in interest rates and/or market values associated with these transactions.

•  Credit default swaps—The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Fund [enters] into credit default agreements to provide a measure of protection against the default of an issuer (as buyer protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). 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 on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or 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 of an 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 of an 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 of an index.

•  Interest rate swaps—The Fund enters into interest rate swaps to gain or reduce exposure to or manage duration, the yield curve or interest rate risk by economically hedging the value of the fixed rate bonds which may decrease when interest rates rise (interest rate risk). Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating rate, for another party’s stream of interest payments, either fixed or floating, on the same principal amount for a specified period of time. Interest rate floors, which are a type of interest rate swap, are agreements in which one party agrees to make payments to the other party to the extent that interest rates fall below a specified rate or floor in return for a premium. In more complex swaps, the notional principal amount may decline (or amortize) over time.

•  Total return swaps—The Fund enters into total return swaps to obtain exposure to a security or market without owning such security or investing directly in that market or to transfer the risk/return of one market (e.g., fixed income) to another market (e.g., equity) (equity risk and/or interest rate risk). Total return swaps are agreements in which one party commits to pay interest in exchange for the total return (coupons plus capital gains/losses) of an underlying instrument or index. To the extent the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Interest rate contracts	Net unrealized appreciation/depreciation*; Unrealized appreciation on swaps; Investments at value-unaffiliated**	$	579,916	Net unrealized appreciation/depreciation*; Unrealized depreciation on swaps; Options written at value	$	643,073
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts;		2,019
Credit contracts	Unrealized appreciation on swaps		272	Unrealized depreciation on swaps		27,327
Other contracts	Unrealized appreciation on swaps		4,085
Total		$	586,292		$	670,400

*	Includes cumulative appreciation/depreciation of financial futures contracts as reported in Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.
**	Includes options purchased at value as reported in the Schedule of Investments.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 29

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
Net Realized Gain (Loss) from
	Financial								Foreign
	Futures								Currency
	Contracts			Swaps			Options***		Transactions
Interest rate contracts	$	(59,780	)	$	3,447		$	52,180		—
Foreign currency exchange contracts		—			—			—	$	37,254
Credit contracts		—			(43,074	)	$	1,513		—
Total	$	(59,780	)	$	(39,627	)	$	53,693	$	37,254

Net Change in Unrealized Appreciation/Depreciation on
	Financial								Foreign
	Futures								Currency
	Contracts			Swaps		Options***			Transactions
Interest rate contracts	$	(40,707	)	$	15,436	$	(50,483	)		—
Foreign currency exchange contracts		—			—		—		$	(11,278	)
Credit contracts		—			38,169		—			—
Other contracts		—			4,085		—			—
Total	$	(40,707	)	$	57,690	$	(50,483	)	$	(11,278	)

***  Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Financial futures contracts:
Average number of contracts purchased		4
Average number of contracts sold		17
Average notional value of contracts purchased	$	468,318
Average notional value of contracts sold	$	3,352,352
Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		2
Average number of contracts-US dollars sold		2
Average US dollar amounts purchased	$	101,873
Average US dollar amounts sold	$	121,941
Options:
Average number of contracts purchased		12
Average number of contracts sold		13
Average notional value of contracts purchased	$	6,637,000
Average notional value of contracts sold	$	5,054,000
Credit default swaps:
Average number of contracts-buy protection		30
Average notional value-buy protection	$	772,500
Interest rate swaps:
Average number of contracts-pays fixed rate		26
Average number of contracts-receives fixed rate		25
Average notional value-pays fixed rate	$	5,540,000
Average notional value-receives fixed rate	$	6,250,000
Total return swaps:
Average number of contracts		1
Average notional value	$	100,000

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.55% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”) and BlackRock Financial Management, Inc. (“BFM”), both affiliates of the Manager. The Manager pays each sub-advisor for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $289 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective to July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions and excluding short-term securities and US government securities for the six months ended June 30, 2010, were $84,498,491 and $82,949,736, respectively.

Purchases and sales of US government securities for the six months ended June 30, 2010, were $23,711,346 and $24,386,308, respectively.

For the six months ended June 30, 2010, purchases and sales of mortgage dollar rolls were $24,394,438 and $24,435,973, respectively.

Transactions in options written for the six months ended June 30, 2010, were as follows:

	Calls						Puts
				Premiums						Premiums
	Contracts			Received			Contracts			Received
Outstanding options, beginning of period		2		$	137,380			14		$	149,709
Options written		9			105,987			5			106,505
Options closed		(1	)		(59,869	)		(9	)		(69,393	)
Options expired		(2	)		(77,380	)		(5	)		(80,811	)
Outstanding options, end of period		8		$	106,118			5		$	106,010

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

For the six months ended the Fund’s daily average amount of outstanding transactions considered as borrowings from reverse repurchase agreements and treasury rolls was approximately $2,775,000 and the daily weighted average interest rate was 0.77%.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2011	$	2,219,273
2016		679,294
2017		5,125,961
Total	$	8,024,528

7.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 31

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. Please see the Schedule of Investments for these securities. 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.

8.  Capital Share Transactions:

Transactions in capital shares were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		317		$	3,769
Shares redeemed		(202,899	)		(2,343,540	)
Net decrease		(202,582	)	$	(2,339,771	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		8,776		$	91,846
Shares issued to shareholders in reinvestment of dividends		60,368			674,974
Total issued		69,144			766,820
Shares redeemed		(569,940	)		(5,725,198	)
Net decrease		(500,796	)	$	(4,958,378	)

9.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to Shareholders of record on July 21, 2010 as follows:

	Dividend Per Share
Class I	$	0.041512

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Basic Value V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Basic Value V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund underperformed its benchmark, the Russell 1000 Value Index and the broad market S&P 500 Index. The following discussion of relative performance pertains to the Russell 1000 Value Index.

What factors influenced performance?

•  Stock selection in the energy and information technology (IT) sectors detracted from Fund performance during the period. The energy sector was pressured by the oil spill in the Gulf of Mexico, and our positions in Anadarko Petroleum Corp., Noble Corp. and Halliburton Co. had a negative impact on returns. Within IT, the Fund’s holdings in computers & peripherals and semiconductors & semiconductor equipment, such as LSI Corp., Hewlett-Packard Co. and Micron Technology Inc., did not produce the results we anticipated.

•  Also detracting from performance were the Fund’s aerospace & defense holdings and underweight positions in machinery and road & rail companies in the industrials sector; in financials, stock selection and underweights in commercial banks and real estate investment trusts; in health care, an overweight in pharmaceuticals; in materials, an overweight in metals & mining; and in the consumer staples sector, our positions in food product companies did not perform as anticipated.

•  Conversely, stock selection within telecommunication services (telecom) added to performance, led by the Fund’s position in Qwest Communications International, Inc. In utilities, the Fund benefited from stock selection and allocation decisions, in particular its underweight in electric utilities. In consumer discretionary, stock selection in the media and specialty retailers, including Viacom, Inc., Class B and Limited Brands Inc., added to performance. Lastly, holdings in The Travelers Cos., Inc., Lam Research Corp. and Xerox Corp., and our decision not to own Goldman Sachs Group, Inc., all contributed positively to performance.

Describe recent portfolio activity.

•  During the period, we increased the Fund’s exposure to financials, industrials and energy by adding to existing positions and we initiated new positions in Devon Energy Corp., Hess Corp., Marathon Oil Corp. and Occidental Petroleum Corp.

•  We reduced weightings in health care and consumer discretionary by trimming existing positions and selling CBS Corp., Gap Inc., Limited Brands, Inc., Time Warner, Inc. and Baxter International, Inc.

Describe Fund positioning at period end.

•  As of June 30, 2010, relative to the benchmark index, the Fund was overweight in IT, energy, industrials, telecom, consumer staples and materials and underweight in financials, healthcare, utilities and consumer discretionary.

•  For the remainder of 2010, we expect continued economic improvement, although not in a straight line. Despite strong cyclical tailwinds, some macroeconomic headwinds remain that warrant caution. Given this environment, Fund positioning at period end is more balanced. The Fund’s IT exposure gives it a cyclical posture, which is offset by more defensive positions in consumer staples. We favor a bias towards large-cap companies and globally exposed companies with the potential to benefit from the rapid growth of economies in emerging markets.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Total Return Based on a $10,000 Investment

1	The Fund invests primarily in equities that Fund management believes are undervalued.
2	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 May 25, 2004, the commencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.
3	This unmanaged index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (“NYSE”) issues), representing about 75% of NYSE market capitalization and 30% of NYSE issues.
4	This index is a subset of Russell 1000 Index that consists of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares5		(8.09	)%		14.49	%		0.08	%		3.29	%
Class II Shares5		(8.12	)		14.38			(0.05	)		3.13
Class III Shares5		(8.22	)		14.34			(0.16	)		3.03	6
S&P 500 Index		(6.65	)		14.43			(0.79	)		(1.59	)
Russell 1000 Value Index		(5.12	)		16.92			(1.64	)		2.38

5	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
6	The returns for Class III Shares prior to May 25, 2004, the commencement of operations of Class III Shares, are based upon performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Investment Criteria	Long-Term Investments
Above-Average Yield		33	%
Below-Average Price/Earnings Ratio		30
Low Price-to-Book Value		17
Price-to-Cash Flow		14
Special Situations		6

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	919.10	$	3.19	$	1,000	$	1,021.48	$	3.36		0.67	%
Class II	$	1,000	$	918.80	$	3.90	$	1,000	$	1,020.73	$	4.11		0.82	%
Class III	$	1,000	$	917.80	$	4.37	$	1,000	$	1,020.24	$	4.61		0.92	%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Above-Average Yield — 33.6%
Aerospace & Defense — 1.6%
Honeywell International, Inc.		173,600	$	6,775,608
Capital Markets — 1.2%
The Bank of New York Mellon Corp.		220,434		5,442,515
Chemicals — 1.5%
E.I. du Pont de Nemours & Co.		189,500		6,554,805
Commercial Banks — 0.6%
U.S. Bancorp		117,600		2,628,360
Diversified Financial Services — 3.4%
JPMorgan Chase & Co.		403,476		14,771,256
Diversified Telecommunication Services — 2.2%
AT&T, Inc.		177,895		4,303,280
Verizon Communications, Inc.		186,600		5,228,532
				9,531,812
Electric Utilities — 1.4%
The Southern Co.		189,300		6,299,904
Food Products — 1.6%
General Mills, Inc.		202,400		7,189,248
Industrial Conglomerates — 3.9%
General Electric Co.		666,600		9,612,372
Tyco International Ltd.		204,600		7,208,058
				16,820,430
Metals & Mining — 1.3%
Alcoa, Inc. (a)		572,400		5,758,344
Multi-Utilities — 1.4%
Dominion Resources, Inc.		161,400		6,252,636
Oil, Gas & Consumable Fuels — 5.7%
Chevron Corp.		77,400		5,252,364
Exxon Mobil Corp.		299,400		17,086,758
Marathon Oil Corp.		89,400		2,779,446
				25,118,568
Pharmaceuticals — 5.7%
Bristol-Myers Squibb Co.		62,200		1,551,268
Eli Lilly & Co.		139,700		4,679,950
Johnson & Johnson		59,700		3,525,882
Merck & Co., Inc.		236,181		8,259,250
Pfizer, Inc.		485,720		6,926,367
				24,942,717
Software — 2.1%
Microsoft Corp.		388,700		8,943,987
Total Above-Average Yield				147,030,190
Below-Average Price/Earnings Ratio — 31.0%
Aerospace & Defense — 1.3%
Northrop Grumman Corp.		103,300		5,623,652
Capital Markets — 1.8%
Morgan Stanley		328,200		7,617,522
Computers & Peripherals — 1.6%
Hewlett-Packard Co.		163,131		7,060,310
Diversified Financial Services — 4.3%
Bank of America Corp.		754,344		10,839,923
Citigroup, Inc. (b)		2,129,600		8,007,296
				18,847,219
Energy Equipment & Services — 1.6%
Noble Corp.		226,300		6,994,933
Food Products — 6.2%
Kraft Foods, Inc.		475,733		13,320,524
Unilever NV — ADR		508,500		13,892,220
				27,212,744
Insurance — 8.3%
ACE Ltd.		159,100		8,190,468
MetLife, Inc.		177,600		6,706,176
Prudential Financial, Inc.		87,800		4,711,348
The Travelers Cos., Inc.		340,208		16,755,244
				36,363,236
Media — 2.7%
Viacom, Inc., Class B		380,200		11,926,874
Metals & Mining — 0.8%
Nucor Corp.		91,400		3,498,792
Office Electronics — 1.0%
Xerox Corp.		540,500		4,345,620
Oil, Gas & Consumable Fuels — 1.4%
Devon Energy Corp.		102,900		6,268,668
Total Below-Average Price/Earnings Ratio				135,759,570
Low Price-to-Book Value — 17.9%
Aerospace & Defense — 2.0%
Raytheon Co.		179,200		8,671,488
Commercial Banks — 1.0%
Wells Fargo & Co.		176,600		4,520,960
Construction & Engineering — 1.6%
Fluor Corp.		170,600		7,250,500
Energy Equipment & Services — 3.2%
Halliburton Co.		568,500		13,956,675
Household Products — 2.8%
Kimberly-Clark Corp.		199,500		12,095,685
Insurance — 0.3%
Hartford Financial Services Group, Inc.		59,400		1,314,522
Machinery — 0.7%
Deere & Co.		54,400		3,028,992
Media — 1.4%
Walt Disney Co.		198,800		6,262,200
Metals & Mining — 0.5%
United States Steel Corp. (a)		53,700		2,070,135
Semiconductors & Semiconductor Equipment — 4.4%
LSI Corp. (b)		2,862,700		13,168,420
Lam Research Corp. (b)		155,900		5,933,554
				19,101,974
Total Low Price-to-Book Value				78,273,131

Portfolio Abbreviation

ADR American Depositary Receipts

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Price-to-Cash Flow — 14.1%
Diversified Telecommunication Services — 3.2%
Qwest Communications International, Inc.		2,650,700	$	13,916,175
Food & Staples Retailing — 1.2%
The Kroger Co.		266,300		5,243,447
Health Care Providers & Services — 1.4%
UnitedHealth Group, Inc.		221,900		6,301,960
IT Services — 0.8%
The Western Union Co.		225,900		3,368,169
Media — 3.1%
Comcast Corp., Special Class A		368,600		6,056,098
Time Warner, Inc.		259,233		7,494,426
				13,550,524
Oil, Gas & Consumable Fuels — 3.5%
Hess Corp.		115,300		5,804,202
Occidental Petroleum Corp.		25,600		1,975,040
Peabody Energy Corp.		187,700		7,344,701
				15,123,943
Wireless Telecommunication Services — 0.9%
Sprint Nextel Corp. (b)		911,200		3,863,488
Total Price-to-Cash Flow				61,367,706
Special Situations — 6.1%
Health Care Equipment & Supplies — 0.4%
Covidien Plc		45,700		1,836,226
IT Services — 3.9%
International Business Machines Corp.		136,310		16,831,559
Semiconductors & Semiconductor Equipment — 1.8%
Intel Corp.		402,100		7,820,845
Total Special Situations				26,488,630
Total Long-Term Investments (Cost — $453,308,253) — 102.7%				448,919,227
	Beneficial
	Interest
Short-Term Securities	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (c)(d)(e)	$	1,786		1,785,900
Total Short-Term Securities (Cost — $1,785,900) — 0.4%				1,785,900
Total Investments (Cost — $455,094,153*) — 103.1%				450,705,127
Liabilities in Excess of Other Assets — (3.1)%				(13,423,228	)
Net Assets — 100.0%			$	437,281,899

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost	$	476,470,007
Gross unrealized appreciation	$	17,232,723
Gross unrealized depreciation		(42,997,603	)
Net unrealized depreciation	$	(25,764,880	)

(a)	Security, or a portion of security, is on loan.
(b)	Non-income producing security.
(c)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/Beneficial					Shares/Beneficial
	Interest Held at					Interest Held at
	December 31,		Net			June 30,
Affiliate	2009		Activity			2010		Income
BlackRock Liquidity Funds, Tempfund, Institutional Class		—		—	*		—	$	1,793
BlackRock Liquidity Series, LLC Money Market Series	$	19,171,844	$	(17,385,944)		$	1,785,900	$	5,867

*  Represents net shares purchased/sold.

(d)	Represents the current yield as of report date.
(e)	Security was purchased with the cash collateral from loaned securities.

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Schedule of Investments (concluded)

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	448,919,227		—		—	$	448,919,227
Short-Term Securities		—	$	1,785,900		—		1,785,900
Total	$	448,919,227	$	1,785,900		—	$	450,705,127

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned of $1,712,014) (cost—$453,308,253)	$	448,919,227
Investments at value—affiliated (cost—$1,785,900)		1,785,900
Capital shares sold receivable		2,506,272
Investments sold receivable		2,322,852
Dividends receivable		623,840
Dividends receivable—affiliated		644
Securities lending income receivable—affiliated		398
Prepaid expenses		53,751
Total assets		456,212,884
Liabilities:
Collateral on securities loaned, at value		1,785,900
Capital shares redeemed payable		15,118,787
Investments purchased payable		928,333
Bank overdraft.		795,461
Investment advisory payable		234,453
Distribution fees payable		5,824
Other affiliates payable		3,254
Officer’s and Directors’ fees payable		739
Other accrued expenses payable		58,234
Total liabilities		18,930,985
Net Assets	$	437,281,899
Net Assets Consist of:
Paid-in capital	$	568,444,507
Undistributed net investment income		4,725,945
Accumulated net realized loss		(131,499,527	)
Net unrealized appreciation/depreciation		(4,389,026	)
Net Assets	$	437,281,899
Net Asset Value:
Class I—Based on net assets of $407,074,886 and 41,203,000 shares outstanding, 300 million shares authorized, $0.10 par value	$	9.88
Class II—Based on net assets of $8,017,439 and 814,228 shares outstanding, 100 million shares authorized, $0.10 par value	$	9.85
Class III—Based on net assets of $22,189,574 and 2,258,195 shares outstanding, 100 million shares authorized, $0.10 par value	$	9.83

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	5,736,175
Foreign taxes withheld		(42,157	)
Securities lending—affiliated		5,867
Dividends—affiliated		1,793
Total income		5,701,678
Expenses:
Investment advisory		1,524,300
Accounting services		72,225
Distribution—Class II		6,917
Distribution—Class III		30,383
Printing		32,304
Professional		31,416
Custodian		18,076
Officer and Directors		14,671
Transfer agent—Class I		2,363
Transfer agent—Class II		46
Transfer agent—Class III		121
Miscellaneous		13,377
Total expenses		1,746,199
Less fees waived by advisor		(1,003	)
Total expenses after fees waived		1,745,196
Net investment income		3,956,482
Realized and Unrealized Gain (Loss):
Net realized gain from investments		9,667,707
Net change in unrealized appreciation/depreciation on investments		(53,109,125	)
Total realized and unrealized loss		(43,441,418	)
Net Decrease in Net Assets Resulting from Operations	$	(39,484,936	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	3,956,482		$	9,269,517
Net realized gain (loss)		9,667,707			(64,422,956	)
Net change in unrealized appreciation/depreciation		(53,109,125	)		174,839,099
Net increase (decrease) in net assets resulting from operations		(39,484,936	)		119,685,660
Dividends to Shareholders From:
Net investment income:
Class I		—			(8,695,626	)
Class II		—			(165,340	)
Class III		—			(363,058	)
Decrease in net assets resulting from dividends to shareholders		—			(9,224,024	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(41,582,411	)		(8,390,148	)
Net Assets:
Total increase (decrease) in net assets		(81,067,347	)		102,071,488
Beginning of period		518,349,246			416,277,758
End of period	$	437,281,899		$	518,349,246
Undistributed net investment income	$	4,725,945		$	769,463

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	10.75		$	8.35	$	13.86	$	15.91	$	14.77	$	15.70
Net investment income1		0.09			0.20		0.24		0.23		0.24		0.19
Net realized and unrealized gain (loss)		(0.96)			2.40		(5.34)		0.07		2.97		0.27
Net increase (decrease) from investment operations		(0.87)			2.60		(5.10)		0.30		3.21		0.46
Dividends and distributions from:
Net investment income		—			(0.20)		(0.28)		(0.25)		(0.27)		(0.22)
Net realized gain		—			—		(0.13)		(2.10)		(1.80)		(1.17)
Total dividends and distributions		—			(0.20)		(0.41)		(2.35)		(2.07)		(1.39)
Net asset value, end of period	$	9.88		$	10.75	$	8.35	$	13.86	$	15.91	$	14.77
Total Investment Return:2
Based on net asset value		(8.09)%	3		31.14%		(36.77)%		1.82%		21.86%		2.94%
Ratios to Average Net Assets:
Total expenses		0.67%	4		0.68%		0.68%		0.67%		0.67%		0.67%
Total expenses after fees waived		0.67%	4		0.68%		0.68%		0.67%		0.67%		0.67%
Net investment income		1.57%	4		2.17%		2.08%		1.37%		1.53%		1.23%
Supplemental Data:
Net assets, end of period (000)	$	407,075		$	486,440	$	391,301	$	810,621	$	969,759	$	1,024,308
Portfolio turnover		31%			43%		49%		37%		25%		37%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Financial Highlights (continued)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	10.72		$	8.33	$	13.81	$	15.86	$	14.73	$	15.66
Net investment income1		0.08			0.18		0.22		0.20		0.22		0.16
Net realized and unrealized gain (loss)		(0.95)			2.39		(5.32)		0.07		2.96		0.27
Net increase (decrease) from investment operations		(0.87)			2.57		(5.10)		0.27		3.18		0.43
Dividends and distributions from:
Net investment income		—			(0.18)		(0.25)		(0.22)		(0.25)		(0.19)
Net realized gain		—			—		(0.13)		(2.10)		(1.80)		(1.17)
Total dividends and distributions		—			(0.18)		(0.38)		(2.32)		(2.05)		(1.36)
Net asset value, end of period	$	9.85		$	10.72	$	8.33	$	13.81	$	15.86	$	14.73
Total Investment Return:2
Based on net asset value		(8.12)%	3		30.91%		(36.83)%		1.64%		21.67%		2.78%
Ratios to Average Net Assets:
Total expenses		0.82%	4		0.84%		0.83%		0.82%		0.82%		0.82%
Total expenses after fees waived		0.82%	4		0.84%		0.83%		0.82%		0.82%		0.82%
Net investment income		1.42%	4		2.03%		1.92%		1.22%		1.38%		1.08%
Supplemental Data:
Net assets, end of period (000)	$	8,017		$	9,611	$	9,192	$	20,427	$	28,254	$	30,552
Portfolio turnover		31%			43%		49%		37%		25%		37%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Financial Highlights (concluded)

	Class III
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	10.71		$	8.32	$	13.80	$	15.86	$	14.74	$	15.69
Net investment income1		0.07			0.17		0.21		0.18		0.20		0.15
Net realized and unrealized gain (loss)		(0.95)			2.40		(5.30)		0.08		2.97		0.26
Net increase (decrease) from investment operations		(0.88)			2.57		(5.09)		0.26		3.17		0.41
Dividends and distributions from:
Net investment income		—			(0.18)		(0.26)		(0.22)		(0.25)		(0.19)
Net realized gain		—			—		(0.13)		(2.10)		(1.80)		(1.17)
Total dividends and distributions		—			(0.18)		(0.39)		(2.32)		(2.05)		(1.36)
Net asset value, end of period	$	9.83		$	10.71	$	8.32	$	13.80	$	15.86	$	14.74
Total Investment Return:2
Based on net asset value		(8.22)%	3		30.87%		(36.91)%		1.53%		21.59%		2.62%
Ratios to Average Net Assets:
Total expenses		0.92%	4		0.93%		0.93%		0.92%		0.92%		0.92%
Total expenses after fees waived		0.92%	4		0.93%		0.93%		0.92%		0.92%		0.92%
Net investment income		1.34%	4		1.91%		1.87%		1.12%		1.30%		0.98%
Supplemental Data:
Net assets, end of period (000)	$	22,190		$	22,298	$	15,784	$	23,265	$	17,042	$	6,211
Portfolio turnover		31%			43%		49%		37%		25%		37%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Basic Value V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Basic Value V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I, Class II and Class III Shares have equal 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 II and Class III Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.60% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II and Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $4,930 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments,

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% and 0.25% based upon the average daily net assets attributable to Class II and Class III.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown on the Statement of Assets and Liabilities as securities loaned and collateral on securities loaned, at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $1,431 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $156,568,634 and $171,134,427, respectively.

4.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

	��
Expires December 31,
2016		$	29,000,868
2017			90,790,512
Total		$	119,791,380

6.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that they believe 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		872,609		$	9,354,630
Shares redeemed		(4,907,817	)		(52,044,609	)
Net decrease		(4,035,208	)	$	(42,689,979	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		4,886,061		$	47,505,303
Shares issued to shareholders in reinvestment of dividends		810,927			8,695,626
Total issued		5,696,988			56,200,929
Shares redeemed		(7,327,219	)		(64,384,209	)
Net decrease		(1,630,231	)	$	(8,183,280	)

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		4,951		$	51,178
Shares redeemed		(86,838	)		(936,994	)
Net decrease		(81,887	)	$	(885,816	)

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		5,752		$	45,785
Shares issued to shareholders in reinvestment of dividends		15,493			165,340
Total issued		21,245			211,125
Shares redeemed		(228,790	)		(2,061,624	)
Net decrease		(207,545	)	$	(1,850,499	)

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		601,000		$	6,624,307
Shares redeemed		(425,181	)		(4,630,923	)
Net increase		175,819		$	1,993,384

Class III Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		631,063		$	5,595,576
Shares issued to shareholders in reinvestment of dividends		34,020			363,058
Total issued		665,083			5,958,634
Shares redeemed		(480,043	)		(4,315,003	)
Net increase		185,040		$	1,643,631

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to Common Shareholders of record on July 21, 2010 as follows:

	Dividend
	Per Share
Class I	$	0.01741
Class II	$	0.01741
Class III	$	0.01741

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Capital Appreciation V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Capital Appreciation V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  During the period, the Fund’s name was changed from the BlackRock Fundamental Growth V.I. Fund to the BlackRock Capital Appreciation V.I. Fund.

•  For the six-month period ended June 30, 2010, the Fund underperformed its benchmark index, the Russell 1000 Growth Index.

What factors influenced performance?

•  Stock selection in the financials sector negatively affected Fund performance during the period. The financial regulatory reform debate, which gathered momentum during the second quarter of 2010, adversely impacted select holdings (notably, Moody’s Corp. and JPMorgan Chase & Co.).

•  The Fund’s investment in the consumer staples sector also detracted from performance. Stock selection in the tobacco and beverages industries disappointed, with Philip Morris International, Inc. and The Coca-Cola Co. posting notable declines.

•  Conversely, sector allocation benefited performance during the period, as the Fund held overweights in the two top-performing major sectors—industrials and consumer discretionary—and underweights in the poor-performing materials and utilities sectors.

•  The Fund also generated outperformance from stock selection in the industrials sector, where we built a significant investment in transportation-related companies. Each of these companies, including truck engine manufacturer Cummins Inc. and Delta Air Lines, Inc., appreciated during the period as they continue to experience strong industry growth cycles.

•  In addition, stock selection in the computer hardware, software and internet software & services industries generated outperformance in the information technology (IT) sector.

Describe recent portfolio activity.

•  During the six-month period, we continued to position the Fund more opportunistically, with increases in the consumer discretionary and industrials sectors coming at the expense of the health care and consumer staples sectors.

Describe Fund positioning at period end.

•  At the end of June, the annual reconstitution of the Russell 1000 Growth Index resulted in significant changes to the Index sector weightings. At period-end, the Fund held notable overweight positions in the health care and IT sectors, and was underweight in energy and materials.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Capital		BlackRock Capital
	Appreciation V.I.		Appreciation V.I.
	Fund(2)-Class I		Fund(2)-Class III		S&P 500		Russell 1000
	Shares(1)		Shares(1)		Index(3)		Growth Index(4)
6/00		10000		10000		10000		10000
6/01		7731		7711		8517		6383
6/02		6167		6136		6985		4692
6/03		5837		5793		7002		4830
6/04		7101		7031		8341		5693
6/05		7333		7242		8868		5789
6/06		7997		7877		9633		6143
6/07		8862		8708		11617		7313
6/08		8931		8754		10093		6878
6/09		6600		6453		7447		5192
6/10		7567		7381		8521		5900

1	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 June 15, 2010, 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 (12b-1) fees applicable to Class III Shares.
2	The Fund invests primarily in equity securities with a particular emphasis on companies that have exhibited above-average rates of growth earnings over the long term.
3	This unmanaged Index covers 500 industrial, utility, transportation and financial companies of the U.S. markets (mostly New York Stock Exchange (“NYSE”) issues), representing about 75% of NYSE market capitalization and 30% of NYSE issues.
4	This unmanaged broad-based Index is a subset of the Russell 1000 Index consisting of those Russell 1000 securities with a greater-than-average growth orientation.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares5		(7.92	)%		14.66	%		0.63	%		(2.75	)%
Class III Shares5,6		(8.02	)		14.39			0.38			(2.99	)
S&P 500 Index		(6.65	)		14.43			(0.79	)		(1.59	)
Russell 1000 Growth Index		(7.65	)		13.62			0.38			(5.14	)

5	Average annual and cumulative total investment returns are based on changes in net asset value for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
6	The returns for Class III Shares prior to June 15, 2010, 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 (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Information Technology		35	%
Consumer Discretionary		15
Industrials		15
Health Care		14
Consumer Staples		9
Energy		4
Financials		4
Materials		3
Telecommunication Services		1

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	920.80	$	3.57	$	1,000	$	1,021.08	$	3.76		0.75%
Class III	$	1,000	$	919.80	$	0.40	$	1,000	$	1,020.04	$	0.43		0.96%

1	For each class of the Fund, expenses are equal to the Fund’s annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown) for Class I and multiplied by 16/365 (to reflect the actual days in the period) for Class III.
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Air Freight & Logistics — 2.0%
United Parcel Service, Inc., Class B		61,700	$	3,510,113
Airlines — 2.7%
Delta Air Lines, Inc. (a)		295,600		3,473,300
UAL Corp. (a)(b)		61,500		1,264,440
				4,737,740
Beverages — 2.4%
The Coca-Cola Co.		82,700		4,144,924
Biotechnology — 1.0%
Amgen, Inc. (a)		34,100		1,793,660
Building Products — 0.4%
Masco Corp.		64,500		694,020
Chemicals — 0.8%
Ecolab, Inc.		32,300		1,450,593
Commercial Banks — 1.4%
Wells Fargo & Co.		95,700		2,449,920
Communications Equipment — 3.1%
Cisco Systems, Inc. (a)		155,000		3,303,050
F5 Networks, Inc. (a)		30,400		2,084,528
				5,387,578
Computers & Peripherals — 11.8%
Apple, Inc. (a)		44,300		11,142,779
Hewlett-Packard Co.		110,600		4,786,768
NetApp, Inc. (a)		93,200		3,477,292
Seagate Technology Holdings (a)		99,700		1,300,088
				20,706,927
Consumer Finance — 0.5%
American Express Co.		22,600		897,220
Diversified Financial Services — 2.2%
JPMorgan Chase & Co.		41,800		1,530,298
Moody’s Corp. (b)		121,800		2,426,256
				3,956,554
Energy Equipment & Services — 1.4%
Schlumberger Ltd.		45,800		2,534,572
Food & Staples Retailing — 3.1%
Wal-Mart Stores, Inc.		74,800		3,595,636
Whole Foods Market, Inc. (a)		51,500		1,855,030
				5,450,666
Health Care Equipment & Supplies — 1.5%
Zimmer Holdings, Inc. (a)		48,700		2,632,235
Health Care Providers & Services — 3.4%
Express Scripts, Inc. (a)		80,100		3,766,302
Lincare Holdings, Inc.		70,500		2,291,955
				6,058,257
Health Care Technology — 1.3%
Cerner Corp. (a)(b)		29,200		2,215,988
Hotels, Restaurants & Leisure — 5.0%
Ctrip.com International Ltd. — ADR (a)		38,400		1,442,304
Darden Restaurants, Inc.		34,900		1,355,865
Las Vegas Sands Corp. (a)		106,800		2,364,552
Starbucks Corp.		89,700		2,179,710
Starwood Hotels & Resorts Worldwide, Inc.		36,000		1,491,480
				8,833,911
Household Durables — 0.7%
Whirlpool Corp.		14,100		1,238,262
Household Products — 2.6%
The Procter & Gamble Co.		76,100		4,564,478
IT Services — 0.7%
Cognizant Technology Solutions Corp. (a)		25,600		1,281,536
Internet & Catalog Retail — 3.3%
Amazon.com, Inc. (a)		38,700		4,228,362
NetFlix, Inc. (a)		14,800		1,608,020
				5,836,382
Internet Software & Services — 3.4%
Baidu.com, Inc. — ADR (a)		34,600		2,355,568
Google, Inc., Class A (a)		8,300		3,693,085
				6,048,653
Life Sciences Tools & Services — 3.8%
Covance, Inc. (a)		60,000		3,079,200
Illumina, Inc. (a)		40,100		1,745,553
Life Technologies Corp. (a)		37,800		1,786,050
				6,610,803
Machinery — 8.3%
Cummins, Inc.		42,700		2,781,051
Danaher Corp.		126,800		4,706,816
Joy Global, Inc.		68,600		3,436,174
PACCAR, Inc.		92,100		3,672,027
				14,596,068
Media — 2.0%
CBS Corp., Class B		159,200		2,058,456
Comcast Corp., Class A		83,800		1,455,606
				3,514,062
Metals & Mining — 1.6%
Agnico-Eagle Mines Ltd.		13,000		790,140
Freeport-McMoRan Copper & Gold, Inc., Class B		15,300		904,689
United States Steel Corp. (b)		29,800		1,148,790
				2,843,619
Multiline Retail — 1.8%
Kohl’s Corp. (a)		65,100		3,092,250
Oil, Gas & Consumable Fuels — 2.9%
EOG Resources, Inc.		37,700		3,708,549
Massey Energy Co.		53,100		1,452,285
				5,160,834
Personal Products — 1.2%
Avon Products, Inc.		80,900		2,143,850
Pharmaceuticals — 3.2%
Abbott Laboratories		81,200		3,798,536
Teva Pharmaceutical Industries Ltd. — ADR		34,400		1,788,456
				5,586,992
Professional Services — 0.9%
Manpower, Inc.		37,600		1,623,568

Portfolio Abbreviations

ADR American Depositary Receipts

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Schedule of Investments (concluded) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Semiconductors & Semiconductor Equipment — 5.6%
Altera Corp.		71,000	$	1,761,510
Broadcom Corp., Class A		60,700		2,001,279
Cree, Inc. (a)		19,300		1,158,579
Intel Corp.		44,900		873,305
Lam Research Corp. (a)		51,100		1,944,866
Micron Technology, Inc. (a)		256,200		2,175,138
				9,914,677
Software — 9.7%
Check Point Software Technologies Ltd. (a)		85,100		2,508,748
Microsoft Corp.		351,100		8,078,811
Oracle Corp.		78,200		1,678,172
Salesforce.com, Inc. (a)		43,400		3,724,588
VMware, Inc. (a)		18,700		1,170,433
				17,160,752
Specialty Retail — 2.0%
CarMax, Inc. (a)		60,500		1,203,950
Home Depot, Inc.		79,600		2,234,372
				3,438,322
Wireless Telecommunication Services — 0.7%
NII Holdings, Inc. (a)		36,100		1,173,972
Total Long-Term Investments (Cost — $156,782,943) — 98.4%				173,283,958
Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (c)(d)		987,028	$	987,028
	Beneficial
	Interest
	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (c)(d)(e)	$	6,333		6,332,500
Total Short-Term Securities (Cost — $7,319,528) — 4.2%				7,319,528
Total Investments (Cost — $164,102,471*) — 102.6%				180,603,486
Liabilities in Excess of Other Assets — (2.6)%				(4,572,935	)
Net Assets — 100.0%			$	176,030,551

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	167,508,812
Gross unrealized appreciation	$	19,279,497
Gross unrealized depreciation		(6,184,823	)
Net unrealized appreciation	$	13,094,674

(a)	Non-income producing security.
(b)	Security, or a portion of security, is on loan.
(c)	Investments in companies considered to be an affiliate of the Fund, during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/Beneficial				Shares/Beneficial
	Interest Held at				Interest Held at
	December 31,		Net		June 30,
Affiliate	2009		Activity		2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class	$	9,761,409		(8,774,381)		987,028	$	591
BlackRock Liquidity Series, LLC Money Market Series	$	9,839,750	$	(3,507,250)	$	6,332,500	$	8,733

(d)	Represents the current yield as of report date.
(e)	Security was purchased with the cash collateral from loaned securities.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	173,283,958		—		—	$	173,283,958
Short-Term Securities		987,028	$	6,332,500		—		7,319,528
Total	$	174,270,986	$	6,332,500		—	$	180,603,486

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned of $6,185,470) (cost—$156,782,943)	$	173,283,958
Investments at value—affiliated (cost—$7,319,528)		7,319,528
Capital shares sold receivable		1,885,114
Dividends receivable		83,489
Prepaid expenses		23,101
Securities lending income receivable—affiliated		1,106
Total assets		182,596,296
Liabilities:
Collateral on securities loaned at value		6,332,500
Investment advisory fees payable		99,774
Capital shares redeemed payable		96,823
Other affiliates payable		1,744
Officer’s and Directors’ fees payable		544
Distribution fees payable		2
Other accrued expenses payable		34,358
Total liabilities		6,565,745
Net Assets	$	176,030,551
Net Assets Consist of:
Paid-in capital	$	182,990,330
Undistributed net investment income		215,905
Accumulated net realized loss		(23,677,812	)
Net unrealized appreciation/depreciation		16,502,128
Net Assets	$	176,030,551
Net Asset Value:
Class I—Based on net assets of $175,985,493 and 26,562,628 shares outstanding, 100 million shares authorized, $0.10 par value	$	6.63
Class III—Based on net assets of $45,058 and 6,797 shares outstanding, 100 million shares authorized, $0.10 par value	$	6.63

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	934,339
Foreign taxes withheld		(1,671	)
Securities lending—affiliated		8,733
Dividends—affiliated		591
Total income		941,992
Expenses:
Investment advisory		634,040
Professional		21,564
Accounting services		26,016
Custodian		12,012
Printing		12,803
Officer and Directors		10,974
Transfer agent—Class I		2,507
Registration		1,375
Distribution—Class III		2
Miscellaneous		7,427
Total expenses		728,720
Less fees waived by advisor		(346	)
Total expenses after fees waived		728,374
Net investment income		213,618
Realized and Unrealized Gain (Loss):
Net realized gain from investments		5,697,969
Net change in unrealized appreciation/depreciation on:
Investments		(21,093,096	)
Foreign currency transactions		(376	)
		(21,093,472	)
Total realized and unrealized loss		(15,395,503	)
Net Decrease in Net Assets Resulting from Operations	$	(15,181,885	)

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	213,618		$	647,317
Net realized gain		5,697,969			5,703,278
Net change in unrealized appreciation/depreciation		(21,093,472	)		47,227,326
Net increase (decrease) in net assets resulting from operations		(15,181,885	)		53,577,921
Dividends to Shareholders From:
Net investment income:
Class I		—			(653,454	)
Decrease in net assets resulting from dividends to shareholders		—			(653,454	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		(11,351,796	)		57,703,679
Net Assets:
Total increase (decrease) in net assets		(26,533,681	)		110,628,146
Beginning of period		202,564,232			91,936,086
End of period	$	176,030,551		$	202,564,232
Undistributed net investment income	$	215,905		$	2,287

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	7.20		$	5.31	$	8.75	$	8.22	$	7.91	$	7.40
Net investment income1		0.01			0.03		0.03		0.02		0.05		0.04
Net realized and unrealized gain (loss)		(0.58)			1.88		(3.43)		1.56		0.31		0.51
Net increase (decrease) from investment operations		(0.57)			1.91		(3.40)		1.58		0.36		0.55
Dividends and distributions from:
Net investment income		—			(0.02)		(0.03)		(0.04)		(0.05)		(0.04)
Net realized gain		—			—		(0.01)		(1.01)		—		—
Total dividends and distributions		—			(0.02)		(0.04)		(1.05)		(0.05)		(0.04)
Net asset value, end of period	$	6.63		$	7.20	$	5.31	$	8.75	$	8.22	$	7.91
Total Investment Return:2
Based on net asset value		(7.92)%	3		36.01%		(38.84)%		19.08%		4.54%		7.49%
Ratios to Average Net Assets:
Total expenses		0.75%	4		0.78%		0.77%		0.79%		0.75%		0.76%
Total expenses after fees waived		0.75%	4		0.78%		0.77%		0.79%		0.75%		0.76%
Net investment income		0.22%	4		0.42%		0.40%		0.29%		0.58%		0.56%
Supplemental Data:
Net assets, end of period (000)	$	175,985		$	202,564	$	91,936	$	159,288	$	114,681	$	178,692
Portfolio turnover		34%			102%		141%		102%		69%		82%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Financial Highlights (concluded)

	Class III
	Period
	June 15, 20101			For the Year Ended
	to June 30, 2010			December 31,
	(Unaudited)			20072			2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	7.11		$	8.22		$	7.92	$	7.40
Net investment income (loss)3		—	4		0.01			0.05		0.04
Net realized and unrealized gain (loss)		(0.48)			1.55			0.30		0.52
Net increase (decrease) from investment operations		(0.48)			1.56			0.35		0.56
Dividends and distributions from:
Net investment income		—			(0.02)			(0.05)		(0.04)
Net realized gain		—			(1.01)			—		—
Total dividends and distributions		—			(1.03)			(0.05)		(0.04)
Net asset value, end of period	$	6.63		$	8.75		$	8.22	$	7.92
Total Investment Return:5
Based on net asset value		(6.75)%	6		18.84%			4.41%		7.63%
Ratios to Average Net Assets:
Total expenses		0.96%	7		1.01%			0.76%		0.76%
Total expenses after fees waived		0.96%	7		1.01%			0.76%		0.76%
Net investment income (loss)		(0.84)%	7		0.06%			0.57%		0.58%
Supplemental Data:
Net assets, end of period (000)	$	45			—	2	$	1	$	1
Portfolio turnover		34%			102%			69%		82%

1	Recommencement of operations.
2	There were no Class III shares outstanding as of December 31, 2007 and during the years ended December 31, 2008 and December 31, 2009.
3	Based on average shares outstanding.
4	Amount is less than $(0.01) per share.
5	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
6	Aggregate total investment return.
7	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Capital Appreciation V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Capital Appreciation V.I. Fund (“the Fund”) (formerly BlackRock Fundamental Growth V.I. Fund), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I and Class III Shares have equal 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. All Class III Shares were redeemed on December 31, 2007. Effective June 15, 2010, the Fund reissued Class III Shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (the “SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments,

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Under the applicable foreign tax laws a withholding tax at various rates may be imposed on capital gains, dividends and interest.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.65% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding interest, taxes, brokerage fees and commissions, distribution fees imposed on Class III shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $1,861 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. 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 of Class III.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $2,178 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $65,054,607 and $78,754,970, respectively.

4.  Borrowings:

The Company on behalf of the Fund, along with certain other funds managed by the Manager and

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2016	$	3,900,003
2017		22,069,437
Total	$	25,969,440

6.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a significant portion of its assets in securities in the information technology sector. Changes in economic conditions affecting the information technology sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		649,429		$	4,513,529
Shares redeemed		(2,201,601	)		(15,912,619	)
Net decrease		(1,552,172	)	$	(11,399,090	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		16,491,442		$	93,098,814
Shares issued to shareholders in reinvestment of dividends		89,958			653,454
Total issued		16,581,400			93,752,268
Shares redeemed		(5,789,264	)		(36,048,589	)
Net increase		10,792,136		$	57,703,679

Class III Shares
Period June 14, 20101 to June 30, 2010	Shares			Amount
Shares sold		6,810		$	47,387
Shares redeemed		(13	)		(93	)
Net increase		6,797		$	47,294

¹ Recommencement of operations.

There were no Class III Shares issued or outstanding for the year ended December 31, 2009.

8.  Subsequent Events:

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to shareholders of record on July 21, 2010 as follows:

	Dividends
	Per Share
Class I	$	0.000087
Class III	$	0.000087

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Global Allocation V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Global Allocation V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  The Fund underperformed its Reference Benchmark for the six-month period, but outperformed the Financial Times Stock Exchange (FTSE) World Index. The Fund invests in both equities and bonds; therefore, the Reference Benchmark provides a truer representation of the Fund’s composition and a more comparable means for measurement. The following discussion of relative performance pertains to the Reference Benchmark.

What factors influenced performance?

•  Detracting moderately from the Fund’s relative performance was stock selection in Japan and the United Kingdom, as well as overweight allocations and stock selection in Germany and Brazil. From a sector perspective, underweight allocations and stock selection in the consumer discretionary and industrials sectors detracted from performance, as did an overweight allocation and stock selection in energy and an underweight allocation to consumer staples.

•  Contributing favorably to the Fund’s relative performance was its overweight and stock selection in Canada and Singapore, as well as overweights in India and Malaysia. The Fund also benefited from stock selection in Taiwan and underweight allocations to Spain and Italy. From a sector perspective, the Fund’s stock selection in materials and health care was beneficial to returns, as were its underweight allocations and stock selection in financials and utilities. In addition, an overweight allocation and stock selection in telecommunication services (telecom) was additive.

Describe recent portfolio activity.

•  During the six-month period, the Fund’s overall equity allocation remained unchanged at 58% of net assets. Within equities, the Fund increased its weightings in North America and Asia, and decreased its weightings in Europe and Latin America. On a sector basis, the Fund increased its equity weightings in materials, information technology, utilities, consumer discretionary and telecom, and decreased its weightings in financials, health care, industrials and energy.

•  The Fund’s allocation to fixed income increased from 29% of net assets to 31% as increases in nominal US Treasuries, US dollar-denominated foreign corporate bonds and US corporate bonds were partially offset by decreases in US Treasury inflation-protected securities, Japanese government bonds and European convertible bonds. The Fund’s cash equivalents decreased from 13% of net assets to 11%.

Describe Fund positioning at period end.

•  Compared to its Reference Benchmark, the Fund ended the period underweight in equities, underweight in fixed income and, consequently, overweight in cash equivalents. Within the equity segment, the Fund is underweight in the United States and Europe and it is overweight in Asia and Latin America.

•  On a sector basis, the Fund is overweight in materials, telecom, energy and health care. The Fund’s sector underweights include financials, consumer discretionary, consumer staples, information technology, industrials and utilities.

•  As for currency exposure, the Fund is underweight in the euro, the Japanese yen, the British pound and the Australian dollar, the Fund maintains overweights in the US dollar, the Brazilian real, the Canadian dollar, the Russian ruble and several Asian currencies, including the Singapore dollar, the Malaysian ringgit and the Indian rupee.

•  The Fund’s period end cash and cash equivalents position was 11%. Over the course of the past six months, cash has helped mitigate portfolio volatility and served as a source of funds for new investments. Currently, the Fund is overweight in cash equivalents relative to its reference benchmark, partially to keep overall portfolio duration low.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Global		BlackRock Global		BlackRock Global
	Allocation V.I.		Allocation V.I.		Allocation V.I.
	Fund(2)-Class I		Fund(2)-Class II		Fund(2)-Class III		FTSE World
	Shares(1)		Shares(1)		Shares(1)		Index(3)		Reference Benchmark(4)
6/00		10000		10000		10000		10000		10000
6/01		8290		8278		8269		8171		9038
6/02		8093		8069		8053		6994		8663
6/03		8794		8754		8728		6884		9119
6/04		10591		10566		10488		8589		10486
6/05		11851		11805		11700		9613		11395
6/06		13854		13781		13664		11386		12417
6/07		16322		16214		16056		14290		14387
6/08		17334		17191		17012		12970		14264
6/09		15073		14919		14756		9284		12173
6/10		16477		16288		16079		10363		13390

1	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 II shares and Class III shares prior to November 24, 2003 and November 18, 2003, the commencement of operations of Class II shares and Class III shares, respectively, are based on the performance of the Fund’s Class I shares. The returns for Class II and III shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class II and III shares.
2	The Fund invests primarily in a portfolio of equity and fixed-income securities of US and foreign issuers.
3	This unmanaged market capitalization-weighted Index is comprised of nearly 2,000 equities from 24 countries in 12 regions, including the United States.
4	The Reference Benchmark is an unmanaged weighted index comprised as follows: 36% of the S&P 500 Index; 24% FTSE World Index (excluding US); 24% BofA Merrill Lynch Current 5-Year US Treasury Bond Index; and 16% Citigroup Non-US Dollar World Government Bond Index.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares1		(4.56	)%		9.31	%		6.81	%		5.12	%
Class II Shares1		(4.63	)		9.17			6.65			5.00	6
Class III Shares1		(4.69	)		8.97			6.57			4.86	6
FTSE World Index		(9.66	)		11.63			1.51			0.36
Reference Benchmark		(4.23	)		9.99			3.28			2.96
US Stocks: S&P 500 Index2		(6.65	)		14.43			(0.79	)		(1.59	)
Non-US Stocks: FTSE World Index (excluding US)3		(11.97	)		9.43			3.45			2.26
US Bonds: BofA Merrill Lynch Current 5-Year US Treasury Bond Index4		6.26			7.85			5.88			6.29
Non-US Bonds: Citigroup Non-US Dollar World Government Bond Index5		(3.34	)		1.52			4.98			6.44

1	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
2	This unmanaged Index covers 500 industrial, utility, transportation and financial companies of the US markets (mostly New York Stock Exchange (“NYSE”) issues) representing about 75% of NYSE market capitalization and 30% of NYSE issues.
3	This unmanaged capitalization-weighted Index is comprised of 1,630 companies in 28 countries, excluding the United States.
4	This unmanaged Index is designed to track the total return of the current coupon five-year US Treasury bond.
5	This unmanaged market capitalization-weighted Index tracks 10 government bond indexes, excluding the United States.
6	The returns for Class II Shares and Class III Shares prior to November 24, 2003 and November 18, 2003, the commencement of operations of Class II Shares and Class III Shares, respectively, are based on the performance of the Fund’s Class I Shares. The returns for Class II and III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class II and III Shares.

Past performance is not indicative of future results.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Fund Information as of June 30, 2010

	Percent of Fund’s			Reference Benchmark
Portfolio Information	Net Assets			Percentages4
US Equities		31	%1		36	%
European Equities		8	1		12
Asian-Pacific Equities		13	1		9
Other Equities		6	1		3
Total Equities		58	2		60
US Dollar Denominated Fixed Income Securities		22			24
US Issuers		15			—
Non-US Issuers		7			—
Non-US Dollar Denominated Fixed Income Securities		9			16
Total Fixed Income Securities		31			40
Cash & Cash Equivalents		11	3		—

1	Includes value of financial futures contracts.
2	Includes Preferred Stock.
3	Cash & Cash Equivalents are reduced by the market (or nominal) value of long financial futures contracts.
4	The Reference Benchmark is an unmanaged weighted index comprised as follows: 36% S&P 500 Index; 24% FTSE World Index (excluding US) Equities; 24% BofA Merrill Lynch Current 5-Year US Treasury Index; and 16% Citigroup Non-US Dollar World Government Bond Index.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010), 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
Actual	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	954.40	$	3.44	$	1,000	$	1,021.28	$	3.56		0.71%
Class II	$	1,000	$	953.70	$	4.17	$	1,000	$	1,020.54	$	4.31		0.86%
Class III	$	1,000	$	953.10	$	4.65	$	1,000	$	1,020.04	$	4.81		0.96%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including financial futures contracts, swaps, options and foreign currency exchange contracts, as specified in Note 2 of the Notes to Consolidated Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Australia — 0.6%
BHP Billiton Ltd.		676,411	$	21,042,869
CSL Ltd.		199,946		5,459,220
Newcrest Mining Ltd.		108,062		3,152,877
Rio Tinto Ltd.		46,124		2,536,564
Telstra Corp. Ltd.		1,151,638		3,139,078
Woodside Petroleum Ltd.		54,888		1,907,871
				37,238,479
Austria — 0.0%
Telekom Austria AG		126,066		1,401,830
Belgium — 0.1%
RHJ International (a)		637,000		4,718,679
RHJ International — ADR (a)(b)		40,600		303,348
				5,022,027
Brazil — 2.0%
All America Latina Logistica SA		325,050		2,540,973
Banco Itau Holding Financeira SA, Preference Shares		284,900		5,136,092
Banco Santander Brasil SA		245,100		2,525,684
Cia Brasileira, Class B (a)		7,744		270,504
Cia Brasileira de Distribuicao Grupo Pao de Acucar, Preference Shares		314,868		10,998,575
Cia Energetica de Minas Gerais — ADR		113,395		1,663,505
Cosan Ltd. (a)		504,600		4,712,964
Cyrela Brazil Realty SA		634,600		6,905,010
Hypermarcas SA (a)		1,194,800		15,323,889
MRV Engenharia e Participacoes SA		591,100		4,175,360
NET Servicos de Comunicacao SA, Preference Shares (a)		256,000		2,406,825
Petroleo Brasileiro SA — ADR		1,258,740		37,510,452
SLC Agricola SA		511,900		3,771,895
Usinas Siderurgicas de Minas Gerais SA, Preference ‘A’ Shares		68,900		1,843,695
Vale SA, Preference ‘A’ Shares		382,300		8,090,781
Vivo Participacoes SA — ADR		418,000		10,834,560
				118,710,764
Canada — 3.1%
Agrium, Inc.		122,300		5,985,362
Alamos Gold, Inc.		385,400		5,911,965
BCE, Inc.		15,700		459,539
Barrick Gold Corp.		467,386		21,223,998
Canadian Natural Resources Ltd.		210,000		6,978,300
Canadian Pacific Railway Ltd.		96,093		5,152,507
Canadian Pacific Railway Ltd.		100,828		5,404,392
Cenovus Energy, Inc.		6,440		166,088
Daylight Energy Ltd.		522,230		4,380,737
Eldorado Gold Corp.		702,555		12,591,940
EnCana Corp.		6,440		195,390
Goldcorp, Inc.		537,168		23,554,817
Golden Star Resources Ltd. (a)		236,620		1,044,680
IAMGOLD Corp.		1,079,000		19,076,720
IAMGOLD, International African Mining Gold Corp.		295,221		5,205,296
Kinross Gold Corp.		287,605		4,915,169
Kinross Gold Corp.		1,035,180		17,697,878
New Gold, Inc. (a)		54,950		341,195
Potash Corp. of Saskatchewan, Inc.		25,770		2,222,405
Rogers Communications, Inc., Class B		23,300		761,236
Rogers Communications, Inc., Class B		116,900		3,829,644
Silver Wheaton Corp. (a)		330,000		6,633,000
Sino-Forest Corp. (a)		391,350		5,562,092
Suncor Energy, Inc.		115,660		3,403,906
TELUS Corp.		53,250		2,009,349
Talisman Energy, Inc.		94,780		1,433,430
Teck Resources Ltd., Class B		14,820		438,376
Thomson Reuters Corp.		6,700		240,061
Vittera, Inc. (a)		163,900		1,091,589
Yamaha Gold, Inc.		1,551,990		15,920,089
				183,831,150
Chile — 0.1%
Banco Santander Chile SA — ADR		42,300		2,837,907
Sociedad Quimica y Minera de Chile SA		60,100		1,959,861
				4,797,768
China — 0.6%
China BlueChemical Ltd.		3,843,600		2,152,088
China Communications Services Corp. Ltd.		39,000		19,032
China Huiyan Juice Group Ltd.		960,000		662,035
China Life Insurance Co. Ltd.		1,015,200		4,517,418
China Life Insurance Co. Ltd. — ADR (c)		70,649		4,606,315
China Pacific Insurance Group Co. Ltd.		427,100		1,708,532
China Shenhua Energy Co. Ltd., Class H		924,867		3,385,007
China South Locomotive and Rolling Corp.		1,178,800		811,410
China Unicom Ltd.		1,834,000		2,482,420
Dongfeng Motor Group Co. Ltd.		404,600		476,984
Guangshen Railway Co. Ltd.		4,255,000		1,486,291
Jiangsu Express		332,900		303,107

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts	KRW	South Korean Won
AUD	Australian Dollar	MSCI	Morgan Stanley Capital International
BRL	Brazilian Real	MYR	Malaysian Ringgit
CAD	Canadian Dollar	NZD	New Zealand Dollar
CHF	Swiss Frank	PLN	Polish Zloty
CNY	Chinese Yuan	SGD	Singapore Dollar
ETF	Exchange-Traded Fund	SPDR	Standard & Poor’s Depositary Receipts
EUR	Euro	THB	Thai Baht
GBP	British Pound	TRY	Turkish Lira
GDR	Global Depositary Receipts	TWD	Taiwan Dollar
HKD	Hong Kong Dollar	USD	US Dollar
HOLDRS	Holding Company Depositary Receipts	ZAR	South African Rand
JPY	Japanese Yen

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks		Shares		Value
China (concluded)
Mindray Medical International Ltd. — ADR			37,800	$	1,187,676
Ping An Insurance Group Co. of China Ltd.			302,918		2,503,278
Tianjin Port Development Holdings Ltd. (a)			19,527,800		4,313,374
Xiamen International Port Co. Ltd.			4,042,600		721,624
Zhongsheng Group Holdings Ltd. (a)			1,845,300		2,274,959
					33,611,550
Egypt — 0.1%
Telecom Egypt			1,665,979		4,522,904
Finland — 0.1%
Fortum Oyj			132,293		2,903,930
Nokia Oyj — ADR			58,300		475,145
					3,379,075
France — 0.7%
AXA SA			102,366		1,563,859
AXA SA — ADR			5,700		86,925
Cie Generale d’Optique Essilor International SA			169,811		10,091,017
France Telecom SA			408,872		7,091,867
Sanofi-Aventis			37,900		2,282,620
Sanofi-Aventis — ADR			6,167		185,380
Technip SA			20,700		1,187,269
Thales SA			47,200		1,523,812
Total SA			171,487		7,654,993
Total SA — ADR			215,200		9,606,528
					41,274,270
Germany — 0.2%
Allianz AG, Registered Shares			19,253		1,905,538
Bayer AG			60,550		3,383,627
Bayer AG — ADR			2,100		117,180
Bayerische Motoren Werke AG			26,100		1,267,851
Kabel Deutschland Holding AG (a)			21,200		606,633
Volkswagen AG, Preference Shares			63,332		5,557,435
					12,838,264
Hong Kong — 1.4%
Beijing Enterprises Holdings Ltd.			2,861,542		18,576,275
Chaoda Modern Agriculture Holdings Ltd.			10,729,998		10,610,254
Cheung Kong Holdings Ltd.			346,000		4,016,797
Cheung Kong Infrastructure Holdings Ltd.			460,500		1,712,039
China Dongxiang Group Co.			4,799,576		3,199,068
China Mobile Ltd.			1,139,500		11,443,437
China Telecom Corp., Ltd.			4,750,000		2,293,596
Denway Motors Ltd.			6,243,500		2,958,625
Hutchison Whampoa Ltd.			605,943		3,758,498
The Link Real Estate Investment Trust			3,650,746		9,095,336
Ports Design Ltd.			13,000		33,389
Shougang Concord International Enterprises Co. Ltd.			6,220,500		886,714
Sinopharm Group Co.			604,800		2,232,981
Tianjin Development Holdings Ltd.			12,224,207		7,434,458
Wharf Holdings Ltd.			830,537		4,069,012
					82,320,479
India — 0.8%
Adani Power Ltd. (a)			1,392,399		3,780,845
Bharat Heavy Electricals Ltd.			204,900		10,795,496
Container Corp. of India			45,100		1,304,734
Hindustan Lever Ltd.			365,400		2,100,635
Housing Development Finance Corp.			146,194		9,213,121
Larsen & Toubro Ltd.			102,900		3,979,925
Reliance Industries Ltd.			380,000		8,843,934
State Bank of India Ltd.			152,250		7,482,920
					47,501,610
Indonesia — 0.1%
Bumi Resources Tbk PT			13,350,036		2,725,561
Telekomunikasi Indonesia Tbk PT			5,750,800		4,874,457
					7,600,018
Ireland — 0.1%
Accenture Plc			12,228		472,612
Covidien Plc			92,178		3,703,712
Ingersoll-Rand Plc			12,200		420,778
Warner Chilcott Plc, Class A (a)			15,000		342,750
					4,939,852
Israel — 0.2%
AFI Development Plc — GDR (a)			313,400		510,842
Teva Pharmaceutical Industries Ltd. — ADR			191,015		9,930,870
					10,441,712
Italy — 0.0%
Assicurazioni Generali SpA			44,900		782,934
Intesa Sanpaolo SpA			638,500		1,681,619
					2,464,553
Japan — 5.8%
Aisin Seiki Co., Ltd.			100,600		2,708,409
Astellas Pharma, Inc.			89,000		2,982,008
The Bank of Kyoto Ltd.			154,500		1,271,900
Canon, Inc.			235,409		8,773,564
Coca-Cola Central Japan Co., Ltd.			84,997		1,089,105
Coca-Cola West Holdings Co., Ltd.			198,295		3,276,548
Daihatsu Motor Co., Ltd.			218,600		2,034,580
Daikin Industries Ltd.			21,200		646,395
Daiwa House Industry Co., Ltd.			309,400		2,783,412
Denso Corp.			133,400		3,687,030
East Japan Railway Co.			182,775		12,170,177
Fanuc Ltd.			30,150		3,404,615
Fuji Heavy Industries Ltd. (a)			854,000		4,574,946
Fujitsu Ltd.			196,700		1,229,537
Futaba Industrial Co., Ltd. (a)			208,500		1,566,803
Hitachi Chemical Co., Ltd.			180,100		3,345,923
Hokkaido Coca-Cola Bottling Co., Ltd.			71,300		343,537
Honda Motor Co., Ltd.			218,831		6,427,689
Hoya Corp.	��		343,818		7,315,648
JGC Corp.			355,000		5,386,850
KDDI Corp.			2,398		11,430,511
Kinden Corp.			234,000		1,992,607
Kirin Holdings Co., Ltd.			466,700		5,875,560
Kubota Corp.			1,183,939		9,081,173
Kuraray Co., Ltd.			256,100		3,004,457
Kyowa Hakko Kirin Co. Ltd.			287,300		2,724,679
Mikuni Coca-Cola Bottling Co., Ltd.			152,100		1,214,044
Mitsubishi Corp.			807,900		16,714,192
Mitsubishi Tanabe Pharma Corp.			155,000		2,361,597
Mitsubishi UFJ Financial Group, Inc.			1,275,100		5,789,856
Mitsui & Co., Ltd.			954,165		11,131,086
Mitsui OSK Lines Ltd.			461,700		3,052,606
Mitsui Sumitomo Insurance Group Holdings, Inc.			623,340		13,341,553
Murata Manufacturing Co., Ltd.			100,500		4,792,653
NGK Insulators Ltd.			111,400		1,735,059

See Notes to Consolidated Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Japan (concluded)
NKSJ Holdings, Inc. (a)		1,142,910	$	6,838,199
NTT DoCoMo, Inc.		11,460		17,353,760
NTT Urban Development Co.		1,538		1,221,852
Nintendo Co., Ltd.		10,900		3,200,340
Nippon Electric Glass Co.		127,600		1,461,599
Nippon Telegraph & Telephone Corp.		147,100		5,992,249
Nomura Holdings, Inc.		590,700		3,227,280
Okumura Corp.		926,500		3,389,463
Rinnai Corp.		59,269		3,042,266
Rohm Co., Ltd.		64,700		3,885,181
Sekisui House Ltd.		819,000		7,004,506
Seven & I Holdings Co., Ltd.		400,155		9,168,067
Shimachu Co., Ltd.		45,800		833,574
Shin-Etsu Chemical Co., Ltd.		269,681		12,538,870
Shionogi & Co., Ltd.		204,500		4,239,636
Sony Corp. — ADR		11,100		296,148
Sony Financial Holdings, Inc.		400		1,334,303
Sumitomo Chemical Co., Ltd.		3,716,600		14,383,900
Sumitomo Electric Industries Ltd.		255,500		2,977,579
Sumitomo Mitsui Financial Group, Inc.		148,800		4,211,392
Suzuki Motor Corp.		596,578		11,708,091
TDK Corp.		52,300		2,861,973
Tadano Ltd.		98,500		482,409
Terumo Corp.		58,300		2,791,965
Toda Corp.		880,300		2,831,646
Toho Co., Ltd.		229,144		3,798,889
Tokio Marine Holdings, Inc.		664,193		17,461,533
Tokyo Gas Co., Ltd.		1,731,927		7,906,492
Toyota Industries Corp.		323,025		8,197,112
Toyota Motor Corp.		141,300		4,854,878
Ube Industries Ltd.		1,347,600		3,186,323
West Japan Railway Co.		940		3,437,457
				345,379,241
Kazakhstan — 0.2%
KazMunaiGas Exploration Production — GDR		525,900		9,781,740
Luxembourg — 0.0%
Millicom International Cellular SA		5,100		413,457
Malaysia — 0.4%
Axiata Group Bhd (a)		2,187,825		2,631,488
British American Tobacco Malaysia Bhd		167,200		2,260,837
IOI Corp. Bhd		810,905		1,249,791
PLUS Expressways Bhd		3,533,908		3,708,084
Telekom Malaysia Bhd		1,434,000		1,478,814
Tenaga Nasional Bhd		1,353,203		3,505,522
YTL Power International		10,010,752		6,818,895
				21,653,431
Mexico — 0.2%
America Movil, SA de CV — ADR		171,200		8,132,000
Fomento Economico Mexicano, SA de CV — ADR		41,400		1,786,410
				9,918,410
Netherlands — 0.1%
Koninklijke KPN NV		239,069		3,047,303
Koninklijke Philips Electronics NV		126,300		3,771,588
Koninklijke Philips Electronics NV, New York Registered Shares		23,800		710,192
Unilever NV — ADR		51,900		1,417,908
				8,946,991
Norway — 0.1%
DnB NOR ASA		163,800		1,575,461
Statoil ASA		261,100		5,030,046
				6,605,507
Philippines — 0.0%
Philippine Long Distance Telephone Co. — ADR		53,200		2,711,604
Poland — 0.0%
Powszechny Zaklad Ubezpieczen SA		16,300		1,681,725
Russia — 1.0%
Kuzbassrazrezugol (a)		3,353,475		1,207,251
LSR Group — GDR (a)(b)		1,026,600		7,802,160
MMC Norilsk Nickel — ADR		186,817		2,712,583
Magnitogorsk Iron & Steel Works — GDR		224,500		2,085,605
Novorossiysk Commercial Sea Port — GDR		553,500		6,088,500
OAO Rosneft Oil Co. — GDR (a)		285,700		1,765,626
Polyus Gold Co. ZAO — ADR		424,600		11,676,500
RusHydro — ADR (a)		2,927,272		14,314,360
Sberbank		3,167,900		7,729,676
Uralkali — GDR		7,100		127,942
VimpelCom Ltd. — ADR (a)		342,500		5,541,650
				61,051,853
Singapore — 0.8%
CapitaLand Ltd.		1,315,250		3,353,813
DBS Group Holdings Ltd.		304,170		2,951,936
Fraser and Neave Ltd.		1,365,000		4,991,442
K-Green Trust (a)		209,100		156,904
Keppel Corp. Ltd.		1,102,100		6,653,995
MobileOne Ltd.		1,345,830		2,048,355
Noble Group Ltd.		1,115,171		1,347,890
Oversea-Chinese Banking Corp.		1,284,800		8,090,535
Parkway Holdings Ltd.		2,174,300		5,502,685
Parkway Life Real Estate Investment Trust		58,300		56,436
Sembcorp Marine Ltd.		727,900		1,989,147
Singapore Press Holdings Ltd.		762,240		2,051,815
Singapore Telecommunications Ltd.		3,385,330		7,318,793
United Overseas Bank Ltd.		169,300		2,355,279
				48,869,025
South Africa — 0.1%
Anglo Platinum Ltd. (a)		7,727		728,983
Gold Fields Ltd. — ADR		96,950		1,296,222
Impala Platinum Holdings Ltd.		27,500		640,037
Katanga Mining Ltd. (a)		894,288		546,040
Life Healthcare Group Holdings Ltd. (a)		1,268,700		2,239,855
Sasol Ltd.		7,300		259,337
				5,710,474
South Korea — 0.8%
Cheil Industries, Inc.		27,053		2,073,066
Korean Reinsurance Co.		41,008		320,956
KT Corp.		13,900		513,296
KT Corp. — ADR		348,790		6,686,304
KT&G Corp.		101,641		4,996,760
LG Corp.		51,900		2,776,871
LG Display Co. Ltd.		89,200		2,933,783
Mando Corp. (a)		7,800		718,106
Meritz Fire & Marine Insurance Co. Ltd.		38,122		240,435
POSCO		10,687		4,049,420

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
South Korea (concluded)
POSCO — ADR		39,580	$	3,733,186
Paradise Co. Ltd.		179,018		484,530
SK Telecom Co., Ltd.		41,720		5,467,586
Samsung Electronics Co., Ltd.		18,560		11,641,096
Samsung Fine Chemicals Co., Ltd.		70,400		3,665,710
				50,301,105
Spain — 0.1%
Telefonica SA		236,982		4,390,028
Telefonica SA — ADR		32,500		1,804,725
				6,194,753
Switzerland — 0.9%
Credit Suisse Group AG		100,955		3,795,629
Credit Suisse Group AG		14,900		557,707
Garmin Ltd. (c)		14,527		423,898
Nestle SA, Registered Shares		340,320		16,409,833
Noble Corp.		14,165		437,840
Novartis AG, Registered Shares		128,232		6,214,524
Roche Holding AG		43,280		5,957,133
Transocean Ltd. (a)		78,886		3,654,788
Tyco Electronics Ltd.		49,741		1,262,427
Tyco International Ltd.		48,865		1,721,514
UBS AG		327,100		4,333,361
Weatherford International Ltd. (a)		167,320		2,198,585
Zurich Financial Services AG		22,138		4,879,517
				51,846,756
Taiwan — 0.7%
Asustek Computer, Inc.		159,449		1,174,517
Catcher Technology Co. Ltd.		363,600		784,303
Cheng Shin Rubber Industry Co. Ltd.		870,000		1,760,958
Chunghwa Telecom Co., Ltd.		1,705,639		3,377,285
Chunghwa Telecom Co., Ltd. — ADR		357,673		7,042,581
Compal Electronics, Inc.		835,000		994,488
Delta Electronics, Inc.		1,990,141		6,352,838
Far EasTone Telecommunications Co., Ltd.		2,425,000		2,990,221
HON HAI Precision Industry Co., Ltd. (a)		765,637		2,683,690
HTC Corp.		528,550		7,019,201
MediaTek, Inc.		171,000		2,386,780
Pegatron Corp. (a)		429,159		401,358
Taiwan Cement Corp.		147,000		123,944
Taiwan Semiconductor Manufacturing Co., Ltd.		4,172,115		7,797,866
				44,890,030
Thailand — 0.2%
Hana Microelectronics Pcl		1,627,138		1,356,367
PTT Chemical Pcl		323,279		1,047,987
PTT Public Company THB10		495,292		3,761,711
Siam Commercial Bank Pcl		1,931,568		4,845,320
				11,011,385
Turkey — 0.3%
BIM Birlesik Magazalar AS		129,700		3,594,714
Tupas Turkiye Petrol Rafine		165,515		3,002,338
Turk Telekomunikasyon AS		938,258		2,995,253
Turkcell Iletisim Hizmet AS		403,617		2,093,442
Turkiye Garanti Bankasi AS		1,202,762		5,005,455
				16,691,202
United Kingdom — 1.7%
Anglo American Plc (a)		204,700		7,132,801
Antofagasta Plc		290,300		3,377,533
AstraZeneca Group Plc — ADR		14,600		688,098
BG Group Plc		748,900		11,138,258
BP Plc (a)		863,368		4,133,082
BP Plc — ADR (a)		26,900		776,872
BT Group Plc		743,000		1,434,209
British American Tobacco Plc		105,283		3,341,237
Diageo Plc — ADR		209,969		13,173,455
Ensco International Plc — ADR		10,400		408,512
GlaxoSmithKline Plc — ADR		15,000		510,150
Guinness Peat Group Plc		5,706,661		2,570,088
HSBC Holdings Plc		1,462,174		13,357,973
HSBC Holdings Plc — ADR		73,800		3,364,542
HSBC Holdings Plc, Hong Kong Registered		338,000		3,153,463
International Power Plc		461,800		2,062,849
Lloyds TSB Group Plc (a)		5,250,258		4,144,903
National Grid Plc		839,100		6,126,234
Prudential Plc		103,400		779,905
Royal Dutch Shell Plc — ADR		50,414		2,531,791
Shire Pharmaceuticals Plc — ADR		4,300		263,934
Standard Chartered Plc		130,600		3,180,161
Unilever Plc		110,291		2,948,298
Unilever Plc — ADR		34,300		916,839
Vodafone Group Plc		3,315,618		6,831,797
Vodafone Group Plc — ADR		219,080		4,528,383
				102,875,367
United States — 27.8%
3M Co.		116,323		9,188,354
ACE Ltd.		319,147		16,429,688
The AES Corp. (a)		127,064		1,174,071
AOL, Inc. (a)		7,834		162,869
AT&T Inc.		1,367,592		33,082,050
Abbott Laboratories		299,367		14,004,388
Advance Auto Parts, Inc.		9,819		492,717
Advanced Micro Devices, Inc. (a)		563,000		4,121,160
Aetna, Inc.		336,908		8,887,633
Agilent Technologies, Inc. (a)		109,100		3,101,713
Allergan, Inc.		8,400		489,384
Alliance Resource Partners LP		60,866		2,737,144
The Allstate Corp.		74,011		2,126,336
Altria Group, Inc.		287,004		5,751,560
Amdocs Ltd. (a)		14,289		383,660
American Commercial Lines, Inc. (a)		107,919		2,429,257
American Tower Corp., Class A (a)		126,200		5,615,900
American Water Works Co, Inc.		115,620		2,381,772
AmerisourceBergen Corp.		101,963		3,237,325
Amgen, Inc. (a)		142,141		7,476,617
Amphenol Corp., Class A		19,679		772,991
Anadarko Petroleum Corp.		170,484		6,152,768
Analog Devices, Inc.		34,287		955,236
Apache Corp.		95,180		8,013,204
Apple, Inc. (a)		168,022		42,262,574
Arch Capital Group Ltd. (a)		46,458		3,461,121
Ascent Media Corp., Class A (a)		479		12,100
Axis Capital Holdings Ltd.		2,900		86,188
BMC Software, Inc. (a)		21,609		748,320
Bank of America Corp.		1,925,364		27,667,481
The Bank of New York Mellon Corp.		600,859		14,835,209
Baxter International, Inc.		51,838		2,106,696
Biogen Idec, Inc. (a)		10,099		479,198
Boeing Co.		192,500		12,079,375
Boston Scientific Corp. (a)		390,634		2,265,677
Bristol-Myers Squibb Co.		1,778,099		44,345,789
Broadcom Corp., Class A		66,107		2,179,548

See Notes to Consolidated Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United States (continued)
Bunge Ltd.		92,188	$	4,534,728
CA, Inc.		478,487		8,804,161
CF Industries Holdings, Inc.		141,786		8,996,322
CMS Energy Corp.		107,377		1,573,073
CNA Financial Corp. (a)		2,300		58,788
CNH Global NV		19,500		441,675
CVS Caremark Corp.		242,010		7,095,733
Cablevision Systems Corp., Class A		18,300		439,383
Capital One Financial Corp.		10,500		423,150
Cardinal Health, Inc.		12,317		413,974
CareFusion Corp. (a)		16,436		373,097
CenturyTel, Inc.		88,830		2,958,927
Cephalon, Inc. (a)		6,300		357,525
Check Point Software Technologies Ltd. (a)		15,900		468,732
Chesapeake Energy Corp.		132,265		2,770,952
Chevron Corp.		426,240		28,924,646
Chubb Corp.		120,078		6,005,101
Cigna Corp.		135,159		4,198,039
Cimarex Energy Co.		7,700		551,166
Cisco Systems, Inc. (a)		813,568		17,337,134
Citigroup, Inc. (a)		4,193,497		15,767,549
The Coca-Cola Co.		87,141		4,367,507
Cognizant Technology Solutions Corp. (a)		33,779		1,690,977
Colgate-Palmolive Co.		99,831		7,862,690
Comcast Corp., Class A		943,251		16,384,270
Comerica, Inc.		12,797		471,313
Complete Production Services, Inc. (a)		193,513		2,767,236
Computer Sciences Corp.		29,383		1,329,581
Comverse Technology, Inc. (a)		384,715		3,000,777
ConAgra Foods, Inc.		82,144		1,915,598
ConocoPhillips		324,313		15,920,525
Consol Energy, Inc.		453,983		15,326,466
Constellation Brands, Inc., Class A (a)		61,530		961,099
Constellation Energy Group, Inc.		12,300		396,675
Corning, Inc.		909,726		14,692,075
Crown Holdings, Inc. (a)		91,987		2,303,354
DIRECTV, Class A (a)		131		4,444
DISH Network Corp.		92,415		1,677,332
DTE Energy Co.		9,600		437,856
Darden Restaurants, Inc.		10,000		388,500
DaVita, Inc. (a)		87,941		5,491,036
Dell, Inc. (a)		846,332		10,206,764
Devon Energy Corp.		156,881		9,557,190
Discover Financial Services, Inc.		550		7,689
Discovery Communications, Inc., Class A (a)		4,813		171,872
Discovery Communications, Inc., Class C (a)		4,895		151,402
Dollar Tree, Inc. (a)		12,900		537,027
The Dow Chemical Co.		324,781		7,703,805
Dr. Pepper Snapple Group, Inc.		57,174		2,137,736
E.I. du Pont de Nemours & Co.		227,556		7,871,162
EMC Corp. (a)		382,931		7,007,637
EXCO Resources, Inc.		570,153		8,329,935
Eastman Chemical Co.		6,500		346,840
Eaton Corp.		6,730		440,411
eBay, Inc. (a)		167,478		3,284,244
El Paso Corp.		1,055,548		11,727,138
Electronic Arts, Inc. (a)		269,250		3,877,200
Eli Lilly & Co.		106,827		3,578,704
Endo Pharmaceuticals Holdings, Inc. (a)		28,457		620,932
Endurance Specialty Holdings Ltd.		133,008		4,991,790
Entergy Corp.		71,487		5,119,899
Everest Re Group Ltd.		25,967		1,836,386
Exelon Corp.		108,496		4,119,593
Expedia, Inc.		18,200		341,796
Extreme Networks, Inc. (a)		10,021		27,057
Exxon Mobil Corp.		1,071,292		61,138,627
FMC Corp.		236,269		13,568,929
Family Dollar Stores, Inc.		6,752		254,483
Fidelity National Information Services, Inc.		35,465		951,171
Fidelity National Title Group, Inc., Class A		572,105		7,431,644
Fluor Corp.		4,400		187,000
Forest Laboratories, Inc. (a)		41,822		1,147,177
Freeport-McMoRan Copper & Gold, Inc., Class B		100,104		5,919,150
The Gap, Inc.		19,117		372,017
General Communication, Inc., Class A (a)		17,105		129,827
General Electric Co.		2,198,235		31,698,549
General Mills, Inc.		119,794		4,255,083
Genzyme Corp. (a)		147,363		7,481,619
Gilead Sciences, Inc. (a)		204,800		7,020,544
Global Industries Ltd. (a)		732,528		3,289,051
The Goldman Sachs Group, Inc.		70,100		9,202,027
Google, Inc., Class A (a)		37,703		16,775,950
H.J. Heinz Co.		60,102		2,597,608
Halliburton Co.		215,817		5,298,307
Hanesbrands, Inc. (a)		7,587		182,543
Harris Corp.		15,248		635,079
Hartford Financial Services Group, Inc.		75,347		1,667,429
HealthSouth Corp. (a)		138,529		2,591,878
Hess Corp.		96,594		4,862,542
Hewitt Associates, Inc., Class A (a)		10,347		356,558
Hewlett-Packard Co.		419,672		18,163,404
Hologic, Inc. (a)		610,642		8,506,243
Hospira, Inc. (a)		8,375		481,144
Humana, Inc. (a)		123,799		5,653,900
ITT Corp.		7,493		336,586
Intel Corp.		696,202		13,541,129
International Business Machines Corp.		321,357		39,681,162
International Game Technology		270,670		4,249,519
International Paper Co.		81,392		1,841,901
Intuit, Inc. (a)		13,223		459,764
JDS Uniphase Corp. (a)		45,189		444,660
JPMorgan Chase & Co.		959,761		35,136,850
Johnson & Johnson		666,102		39,339,984
KBR, Inc.		140,415		2,856,041
Kimberly-Clark Corp.		6,000		363,780
King Pharmaceuticals, Inc. (a)		42,912		325,702
Kraft Foods, Inc.		451,626		12,645,528
L-3 Communications Holdings, Inc.		1,800		127,512
LSI Corp. (a)		33,101		152,265
Lexmark International, Inc., Class A (a)(c)		127,763		4,220,012
Liberty Global, Inc. (a)		18,900		491,211
Liberty Media Corp. — Starz, Series A (a)		13		674
Liberty Media Holding Corp. — Capital (a)		8		335

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United States (continued)
Liberty Media Holding Corp. — Interactive (a)		7,000	$	73,500
Life Technologies Corp. (a)		97,128		4,589,298
Limited Brands, Inc.		17,600		388,432
Lockheed Martin Corp.		135,199		10,072,325
Lorillard, Inc.		32,900		2,368,142
Lubrizol Corp.		5,743		461,220
MEMC Electronic Materials, Inc. (a)		25,201		248,986
Marathon Oil Corp.		338,832		10,534,287
Marco Polo Investment Holdings Ltd. (a)		263		—
Mattel, Inc.		225,820		4,778,351
McDermott International, Inc. (a)		461,518		9,996,480
McDonald’s Corp.		97,300		6,409,151
The McGraw-Hill Cos., Inc.		7,400		208,236
McKesson Corp.		86,886		5,835,264
Mead Johnson Nutrition Co.		185,318		9,288,138
MeadWestvaco Corp.		20,463		454,279
Medco Health Solutions, Inc. (a)		158,118		8,709,139
Medtronic, Inc.		366,200		13,282,074
Merck & Co, Inc.		710,255		24,837,617
MetLife, Inc.		89,999		3,398,362
Mettler Toledo International, Inc. (a)		18,997		2,120,635
Microsoft Corp.		2,083,782		47,947,824
Molson Coors Brewing Co., Class B		10,100		427,836
Morgan Stanley		421,653		9,786,566
Motorola, Inc. (a)		691,038		4,505,568
Murphy Oil Corp.		39,426		1,953,558
Mylan, Inc. (a)(c)		21,200		361,248
NCB Holdings Ltd. (a)		2,150		—
NII Holdings, Inc. (a)		12,900		419,508
NRG Energy, Inc. (a)		58,350		1,237,603
Nabors Industries Ltd. (a)		47,064		829,268
National Oilwell Varco, Inc.		250,243		8,275,536
National Semiconductor Corp.		29,213		393,207
Newmont Mining Corp.		369,082		22,787,123
News Corp., Class A		329,610		3,942,136
NextEra Energy, Inc.		173,456		8,457,715
Northern Trust Corp.		232,389		10,852,566
Northrop Grumman Corp.		120,188		6,543,035
Novell, Inc. (a)		80,069		454,792
Occidental Petroleum Corp.		158,533		12,230,821
Oracle Corp.		757,532		16,256,637
PPG Industries, Inc.		6,300		380,583
PPL Corp.		258,030		6,437,848
Pall Corp.		30,200		1,037,974
Parker Hannifin Corp.		7,248		401,974
PartnerRe Ltd.		26,557		1,862,708
PerkinElmer, Inc.		104,343		2,156,770
Perrigo Co.		105,200		6,214,164
Pfizer, Inc.		1,826,799		26,050,154
PharMerica Corp. (a)		2,658		38,966
Philip Morris International, Inc.		177,136		8,119,914
Pitney Bowes, Inc.		17,794		390,756
Platinum Underwriters Holdings Ltd.		56,876		2,064,030
Polo Ralph Lauren Corp.		5,255		383,405
Polycom, Inc. (a)		267,853		7,979,341
Praxair, Inc.		40,690		3,092,033
Precision Castparts Corp.		45,665		4,699,842
Pride International, Inc. (a)		12,039		268,951
Principal Financial Group, Inc.		68,336		1,601,796
The Procter & Gamble Co.		391,853		23,503,343
The Progressive Corp.		158,687		2,970,621
QUALCOMM, Inc.		595,334		19,550,769
Qwest Communications International, Inc.		1,339,499		7,032,370
R.R. Donnelley & Sons Co.		25,563		418,466
Ralcorp Holdings, Inc. (a)		13,257		726,484
Raytheon Co.		70,149		3,394,510
RenaissanceRe Holdings Ltd.		56,641		3,187,189
Reynolds American, Inc.		2,800		145,936
Ross Stores, Inc.		8,892		473,855
RusHydro		14,181,593		680,716
Ryder System, Inc.		11,445		460,432
SM Energy Co.		129,600		5,204,736
SUPERVALU, Inc.		30,438		329,948
Safeway, Inc.		18,335		360,466
SanDisk Corp. (a)		14,674		617,335
Sara Lee Corp.		665,887		9,389,007
Schlumberger Ltd.		189,035		10,461,197
Seagate Technology Holdings (a)		28,000		365,120
Sears Holdings Corp. (a)(c)		4,400		284,460
Simon Property Group, Inc.		35,500		2,866,625
Smith International, Inc.		31,262		1,177,014
Sohu.com, Inc. (a)		17,800		731,402
The Southern Co.		36,629		1,219,013
Spirit Aerosystems Holdings, Inc., Class A (a)		380,795		7,257,953
Sprint Nextel Corp. (a)		526,475		2,232,254
The St. Joe Co. (a)(c)		179,681		4,161,412
State Street Corp.		193,826		6,555,195
Stryker Corp.		7,900		395,474
Symantec Corp. (a)		31,900		442,772
TJX Cos., Inc.		10,200		427,890
Target Corp.		8,300		408,111
Tellabs, Inc.		38,618		246,769
Teradata Corp. (a)		25,987		792,084
Texas Instruments, Inc.		361,834		8,423,495
Thermo Fisher Scientific, Inc. (a)		120,223		5,896,938
Time Warner Cable, Inc.		21,911		1,141,125
Time Warner, Inc.		87,027		2,515,951
Total System Services, Inc.		37,935		515,916
Transatlantic Holdings, Inc.		31,771		1,523,737
The Travelers Cos., Inc.		219,718		10,821,111
URS Corp. (a)		9,100		358,085
U.S. Bancorp		574,827		12,847,383
Unifi, Inc. (a)		242,210		925,242
Union Pacific Corp.		290,960		20,224,630
United Technologies Corp.		34,325		2,228,036
UnitedHealth Group, Inc.		207,808		5,901,747
UnumProvident Corp.		19,891		431,635
Valero Energy Corp.		171,016		3,074,868
Validus Holdings Ltd.		85,400		2,085,468
VeriSign, Inc. (a)		19,232		510,610
Verizon Communications, Inc.		1,009,033		28,273,105
Viacom, Inc., Class B		348,206		10,923,222
WABCO Holdings, Inc. (a)		600		18,888
Wal-Mart Stores, Inc.		423,131		20,339,907
Walgreen Co.		17,200		459,240
Waters Corp. (a)		78,148		5,056,176
Watson Pharmaceuticals, Inc. (a)		10,811		438,602
WellPoint, Inc. (a)		240,372		11,761,402
Wells Fargo & Co.		1,210,139		30,979,558
Western Digital Corp. (a)		43,205		1,303,063
Whirlpool Corp.		5,054		443,842
Williams Cos., Inc.		25,600		467,968
Windstream Corp.		77,412		817,471
XL Capital Ltd., Class A		814,069		13,033,245

See Notes to Consolidated Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United States (concluded)
Xerox Corp.		806,536	$	6,484,549
Xilinx, Inc.		17,081		431,466
				1,651,634,827
Total Common Stocks — 51.4%				3,060,065,188
Fixed Income Securities
	Par
Asset-Backed Securities	(000)
United States — 0.0%
Latitude CLO Ltd., Series 2005-1I, Class SUB, 13.00%, 12/15/17 (d)	USD	300		84,000
Total Asset-Backed Securities — 0.0%				84,000
Corporate Bonds
Brazil — 0.0%
Banco Santander Brasil SA, 4.50%, 4/06/15 (b)		2,406		2,369,910
Cosan Finance Ltd., 7.00%, 2/01/17 (b)		285		297,112
				2,667,022
Canada — 0.5%
Daylight Resources Trust, 6.25%, 12/31/14 (e)	CAD	3,034		2,972,582
PetroBakken Energy Ltd., 3.13%, 2/08/16 (e)	USD	12,600		11,425,176
Rogers Wireless Communications, Inc., 7.63%, 12/15/11	CAD	325		329,253
Sino-Forest Corp. (b):
5.00%, 8/01/13 (e)	USD	9,500		9,725,625
10.25%, 7/28/14		4,035		4,287,187
				28,739,823
China — 0.2%
Celestial Nutrifoods Ltd., 66.49%, 6/12/11 (d)(e)	SGD	11,400		5,499,178
China Petroleum & Chemical Corp., 5.26%, 4/24/14 (d)(e)	HKD	51,550		7,252,312
				12,751,490
Europe — 0.2%
European Investment Bank:
12.54%, 9/21/10 (b)(d)	BRL	6,160		3,215,145
4.38%, 4/15/13	EUR	4,550		6,030,469
Series 1158/0100, 3.63%, 10/15/11		652		825,188
				10,070,802
France — 0.0%
Compagnie Generale des Etablissements Michelin, Series ML, 7.76%, 1/01/17 (d)(e)	EUR	1,473		1,894,604
Germany — 0.0%
Fresenius Finance Jersey Ltd., 5.63%, 8/14/11 (e)	USD	1,200		1,790,256
Hong Kong — 0.4%
FU JI Food and Catering Services Holdings Ltd., 0.00%, 10/18/10 (a)(d)(e)(f)	CNY	13,100		347,716
Hongkong Land CB 2005 Ltd., 2.75%, 12/21/12 (e)	USD	1,500		2,008,125
Hutchison Whampoa International Ltd.:
(03/33), 6.25%, 1/24/14		1,310		1,446,758
(09), 7.63%, 4/09/19 (b)		3,775		4,499,143
(09/16), 4.63%, 9/11/15		3,967		4,141,151
(09/16), 4.63%, 9/11/15 (b)		6,900		7,199,708
(09/19), 5.75%, 9/11/19 (b)		946		1,008,190
Noble Group Ltd., 8.50%, 5/30/13 (b)		1,762		1,942,605
				22,593,396
India — 0.8%
Gujarat NRE Coke Ltd., 0.00% 4/12/11 (d)(e)		500		640,000
Jaiprakash Associates Ltd., 0.00% 9/12/12 (d)(e)		1,363		1,707,158
Punj Lloyd Ltd., 0.00%, 4/08/11 (d)(e)		2,600		2,990,000
REI Agro Ltd., 5.50%, 11/13/14 (b)(e)		6,845		6,571,200
Reliance Communications Ltd. (d)(e):
30.27%, 5/10/11		5,800		6,873,000
15.46%, 3/01/12		18,300		20,768,999
Suzlon Energy Ltd., 29.64%, 6/12/12 (d)(e)		2,825		2,904,046
Tata Motors Ltd., 14.95%, 7/12/12 (d)(e)		200		237,000
Tata Steel Ltd., 1.00%, 9/05/12 (e)		4,300		4,963,056
				47,654,459
Japan — 0.0%
The Mie Bank Ltd., 1.00%, 10/31/11 (e)	JPY	17,000		189,336
Nagoya Railroad Co. Ltd., 1.21%, 3/30/12 (d)(e)		14,000		161,511
				350,847
Kazakhstan — 0.3%
KazMunaiGaz Finance Sub BV (b):
9.13%, 7/02/18	USD	11,183		12,832,492
7.00%, 5/05/20		4,835		4,853,373
				17,685,865
Luxembourg — 1.0%
Acergy SA, Series ACY, 2.25%, 10/11/13 (e)		1,400		1,390,477
Actelion Finance SCA, 0.00%, 11/22/11 (d)(e)	CHF	3,915		3,575,670
Evraz Group SA:
8.88%, 4/24/13	USD	1,000		1,020,000
8.88%, 4/24/13 (b)		1,250		1,282,500
8.25%, 11/10/15		985		971,456
9.50%, 4/24/18		1,400		1,407,000
9.50%, 4/24/18 (b)		3,580		3,596,110
Gaz Capital SA, 2.89%, 11/15/12	JPY	300,000		3,200,569
TNK-BP Finance SA:
7.50%, 7/18/16 (b)	USD	1,679		1,737,765
6.63%, 3/20/17		1,000		985,000
6.63%, 3/20/17 (b)		8,140		8,017,900
7.88%, 3/13/18		1,200		1,250,400
7.88%, 3/13/18 (b)		10,444		10,882,648

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Luxembourg (concluded)
Series 2, 7.50%, 7/18/16	USD	1,015	$	1,054,331
UBS Luxembourg SA for OJSC Vimpel Communications:
8.25%, 5/23/16		2,900		2,987,000
8.25%, 5/23/16 (b)		421		433,630
9.13%, 4/30/18		575		619,562
9.13%, 4/30/18 (b)		13,836		14,890,995
				59,303,013
Malaysia — 0.5%
Berjaya Land Bhd, 8.00%, 8/15/11 (e)	MYR	13,080		4,132,545
Cherating Capital Ltd., 2.00%, 7/05/12 (e)(g)	USD	5,800		6,430,750
Johor Corp., Series P3, 1.00%, 7/31/12	MYR	22,247		8,108,559
Rafflesia Capital Ltd., 1.25%, 10/04/11 (e)(g)		11,800		14,345,877
				33,017,731
Mexico — 0.3%
BBVA Bancomer SA/Texas, 7.25%, 4/22/20 (b)	USD	5,805		5,727,126
Petroles Mexicanos, 6.00%, 3/05/20 (b)		9,480		9,918,460
				15,645,586
Netherlands — 0.2%
ASM International NV (e):
4.25%, 12/06/11		70		76,650
4.25%, 12/06/11 (b)		265		290,506
KazMunaiGaz Finance Sub BV, 9.13%, 7/02/18		4,650		5,324,250
Pargesa Netherlands NV, 1.75%, 6/15/14 (e)	CHF	4,425		3,833,413
				9,524,819
Norway — 0.1%
Subsea 7, Inc., 2.80%, 6/06/11 (e)	USD	5,000		4,912,500
Singapore — 1.2%
CapitaLand Ltd. (e):
2.10%, 11/15/16	SGD	8,500		5,737,837
3.13%, 3/05/18		23,000		16,169,692
2.95%, 6/20/22		27,750		17,757,323
Keppel Land Ltd., 2.50%, 6/23/13 (e)		4,800		3,468,877
Olam International Ltd., 6.00%, 10/15/16 (e)	USD	5,400		5,879,520
Wilmar International Ltd., 11.68%, 12/18/12 (d)(e)		5,200		6,432,993
Yanlord Land Group Ltd., 5.85%, 7/13/14 (e)	SGD	11,000		7,998,642
Ying Li International Real Estate Ltd., 4.00%, 3/03/15 (e)		9,750		5,713,571
				69,158,455
South Korea — 0.7%
Hyundai Motor Manufacturing Czech sro, 4.50%, 4/15/15 (b)	USD	5,044		5,002,034
Korea Development Bank/Republic of Korea, 4.38%, 8/10/15		11,875		12,108,225
Korea Electric Power Corp.:
5.13%, 4/23/34	USD	5,723		6,060,840
7.74%, 4/01/96 (h)		4,406		2,841,870
Zeus Cayman, 3.86%, 8/19/13 (d)(e)	JPY	1,262,000		13,967,899
				39,980,868
Spain — 0.1%
Telvent GIT SA, 5.50%, 4/15/15 (b)(e)	USD	4,918		3,947,334
Sweden — 0.0%
Svensk Exportkredit AB, 10.50%, 9/29/15 (g)	TRY	1,397		882,033
Trinidad — 0.0%
Petroleum Co. of Trinidad & Tobago Ltd., 9.75%, 8/14/19 (b)	USD	1,398		1,593,720
United Arab Emirates — 0.5%
Abu Dhabi National Energy Co., 6.50%, 10/27/36		817		782,278
Aldar Funding Ltd., 5.77%, 11/10/11 (e)		2,500		2,362,500
Dana Gas Sukuk Ltd., 7.50%, 10/31/12 (e)		32,890		28,610,353
				31,755,131
United Kingdom — 0.5%
Lloyds TSB Bank Plc, 13.00% (g)(i)	GBP	6,858		10,758,853
Petropavlovsk 2010 Ltd., 4.00%, 2/18/15 (e)	USD	6,500		6,920,290
Shire Plc, 2.75%, 5/09/14 (e)		13,466		13,028,355
				30,707,498
United States — 5.6%
Advanced Micro Devices, Inc.:
6.00%, 5/01/15 (e)		48,741		46,303,950
8.13%, 12/15/17 (b)		1,965		1,955,175
The AES Corp., 8.38%, 3/01/11	GBP	213		326,199
Alberto-Culver Co., 5.15%, 6/01/20	USD	1,172		1,217,999
Amgen, Inc., 0.38%, 2/01/13 (e)		18,706		18,472,175
Amylin Pharmaceuticals, Inc., 3.00%, 6/15/14 (e)		8,357		7,072,111
Banco do Brasil SA, 4.50%, 1/22/15 (b)		2,884		2,913,760
CCO Holdings LLC, 7.88%, 4/30/18 (b)		492		494,460
CF Industries, Inc., 7.13%, 5/01/20		3,365		3,449,125
CIGNA Corp., 5.13%, 6/15/20		1,036		1,078,288
Cell Genesys, Inc., 3.13%, 5/01/13 (e)		46		21,764
Central European Distribution Corp., 3.00%, 3/15/13 (e)		727		606,136
Chesapeake Energy Corp. (e):
2.50%, 5/15/37		15,893		12,376,674
2.25%, 12/15/38		18,078		13,038,757
China Milk Products Group Ltd., 24.49%, 1/05/12 (d)(e)		4,800		1,683,744
Cie de Financement Foncier, 2.13%, 4/22/13 (b)		13,500		13,630,693

See Notes to Consolidated Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
United States (continued)
Consol Energy, Inc., 8.00%, 4/01/17 (b)	USD	9,975	$	10,299,187
Crown Cork & Seal Co., Inc., 7.50%, 12/15/96		375		300,000
Ford Motor Credit Co. LLC, 7.00%, 4/15/15		2,465		2,438,304
GCI, Inc., 7.25%, 2/15/14		794		793,008
Gilead Sciences, Inc. (e):
0.50%, 5/01/11		2,410		2,485,313
0.63%, 5/01/13		5,894		6,542,340
Hana Bank, 4.50%, 10/30/15 (b)		2,182		2,185,799
Helix Energy Solutions Group, Inc., 3.25%, 12/15/25 (e)		2,282		1,973,930
Hologic, Inc., 2.00%, 12/15/37 (e)(j)		24,576		20,920,320
Host Marriott LP, 7.13%, 11/01/13		492		495,690
IOI Capital Bhd, Series IOI, 0.00%, 12/18/11 (d)(e)		5,975		7,170,000
Insight Communications, 9.38%, 7/15/18		3,176		3,176,000
Intel Corp. (e):
2.95%, 12/15/35		10,636		10,104,200
3.25%, 8/01/39 (b)		14,675		16,527,719
Kinetic Concepts, Inc., 3.25%, 4/15/15 (b)(e)		1,220		1,174,250
King Pharmaceuticals, Inc., 1.25%, 4/01/26 (e)		2,386		2,066,873
Kraft Foods, Inc.:
2.63%, 5/08/13		6,661		6,787,253
4.13%, 2/09/16		12,620		13,320,094
LifePoint Hospitals, Inc. (e):
3.50%, 5/15/14		857		791,654
3.25%, 8/15/25		4,838		4,529,578
McMoRan Exploration Co. (e):
5.25%, 10/06/11 (b)		325		346,125
5.25%, 10/06/11		1,965		2,092,725
Medtronic, Inc., 1.63%, 4/15/13 (e)		3,410		3,418,525
Mylan, Inc.:
1.25%, 3/15/12 (e)		10,935		10,880,325
7.63%, 7/15/17 (b)		3,502		3,572,040
Omnicare, Inc., Series OCR, 3.25%, 12/15/35 (e)		4,618		3,821,395
Omnicom Group, Inc., 0.04%, 7/31/32 (d)(e)		3,771		3,714,435
Paka Capital Ltd., 4.77%, 3/12/13 (d)(e)		2,700		2,710,125
Pemex Project Funding Master Trust, 5.50%, 2/24/25	EUR	7,530		8,554,307
Phibro Animal Health Corp., 9.25%, 7/01/18 (b)(k)	USD	694		690,530
Pontis Ltd., 6.25%, 7/20/10 (b)		897		879,060
Preferred Term Securities, Ltd. (a)(e)(f):
XXIV, 5.965%, 3/22/37 (b)		400		4
XXV, 5.758%, 6/22/37		500		5
XXVI, 6.191%, 9/22/37		500		5
XXVII, 6.29%, 12/22/37		500		5
Ranbaxy Laboratories Ltd., 0.00%, 3/18/11 (d)(e)		3,028		3,678,744
SBA Communications Corp. (e):
1.88%, 5/01/13	USD	3,676		3,694,380
4.00%, 10/01/14		1,974		2,521,785
SanDisk Corp., 1.00%, 5/15/13 (e)		15,950		14,175,562
Sino-Forest Corp., 5.00%, 8/01/13 (e)		2,000		2,085,280
SonoSite, Inc., 3.75%, 7/15/14 (e)		2,333		2,327,168
St. Mary Land & Exploration Co., 3.50%, 4/01/27 (e)		6,040		6,387,300
SunGard Data Systems, Inc., 9.13%, 8/15/13		492		499,995
Suzlon Energy Ltd. (d)(e):
29.64%, 10/11/12		5,825		5,912,375
6.39%, 7/25/14		6,225		5,319,337
Tenet Healthcare Corp., 9.25%, 2/01/15		600		619,500
Thermo Fisher Scientific, Inc., 3.20%, 5/01/15		3,076		3,173,829
Yanlord Land Group Ltd., 9.50%, 5/04/17 (b)		4,820		4,585,025
				334,382,413
Total Corporate Bonds — 13.1%				781,009,665
Floating Rate Loan Interests (g)
Indonesia — 0.2%
PT Bumi Resources, Term Loan, 10.23%, 10/08/12		6,000		6,000,000
PT Multi Daerah Bersaing, Term Loan, 7.30%, 4/13/12		5,719		5,661,889
Total Floating Rate Loan Interests — 0.2%				11,661,889
Foreign Agency Obligations
Australian Government Bonds, 5.75%, 6/15/11	AUD	14,669		12,494,703
Brazil Notas do Tesouro Nacional:
Series B, 6.00%, 5/15/17	BRL	6,300		6,572,307
Series F, 10.00%, 1/01/17		117,189		58,712,663
Series F, 10.00%, 1/01/21		25,426		12,242,274
Bundesrepublik Deutschland:
4.00%, 7/04/16	EUR	32,813		45,111,455
4.25%, 7/04/17		21,375		29,811,193
3.50%, 7/04/19		19,394		25,673,761
Series 07, 4.00%, 1/04/18		8,000		10,973,782
Series 08, 4.25%, 7/04/18		11,100		15,482,801
Caisse d’Amortissement de la Dette Sociale:
3.25%, 4/25/13		2,650		3,410,550
4.00%, 10/25/14		3,735		4,957,663
Canadian Government Bond:
4.00%, 9/01/10	CAD	2,355		2,224,436
4.00%, 9/01/10		3,500		3,305,956
4.00%, 6/01/16		8,512		8,623,942
Deutsche Bundesrepublik Inflation Linked, Series I/L, 1.50%, 4/15/16	EUR	4,659		6,037,753
Export-Import Bank of Korea, 4.13%, 9/09/15	USD	10,925		11,092,469

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Foreign Agency Obligations	(000)		Value
Federal Republic of Germany, 1.50%, 9/21/12 (b)	USD	19,166	$	19,350,032
Japanese Government Two Year Bond, Series 272, 0.70%, 9/15/10	JPY	1,493,700		16,913,333
Kreditanstalt fuer Wiederaufbau, 3.25%, 6/27/13 (e)	EUR	12,300		15,663,789
Magyar Nemzeti Vagonkezel Zrt, 4.40%, 9/25/14 (e)		3,300		3,902,245
Malaysia Government Bond:
3.76%, 4/28/11	MYR	31,107		9,687,983
Series 0108, 3.46%, 7/31/13		34,471		10,711,755
Netherland Government Bond, 3.75%, 7/15/14	EUR	4,000		5,349,540
New Zealand Government Bond, Series 216, 4.50%, 2/14/16	NZD	1,175		1,231,826
Poland Government Bond, 3.00%, 8/24/16	PLN	29,724		8,446,185
Socialist Republic of Vietnam, 6.75%, 1/29/20	USD	2,174		2,239,220
Turkey Government Bond:
10.00%, 1/09/13	TRY	4,268		2,750,809
10.50%, 1/15/20		6,802		4,521,492
Turkey Government International Bond, 4.00%, 4/01/20		6,051		3,718,942
Ukraine Government International Bond, 6.58%, 11/21/16	USD	773		716,030
United Kingdom Gilt, 4.25%, 3/07/11	GBP	21,710		33,256,230
Total Foreign Agency Obligations — 6.7%				395,187,119
Structured Notes
Taiwan — 0.0%
UBS AG (Total Return TWD Linked Notes), 0.26% 12/01/10 (b)(d)	USD	119		119,268
Total Structured Notes — 0.0%				119,268
U.S. Treasury Obligations
U.S. Treasury Inflation Indexed Bonds, 2.38%, 1/15/27		12,402		13,739,304
U.S. Treasury Notes:
2.75%, 7/31/10		37,007		37,085,048
4.88%, 5/31/11 (l)		25,500		26,548,891
0.88%, 1/31/12 (m)		10,847		10,904,619
4.88%, 6/30/12		4,500		4,886,366
1.38%, 2/15/13 (m)		101,499		102,830,668
1.38%, 3/15/13		9,850		9,977,755
2.13%, 11/30/14		27,476		28,059,865
2.63%, 12/31/14		55,786		58,104,161
2.25%, 1/31/15		45,115		46,239,356
2.38%, 2/28/15		54,124		55,781,818
2.38%, 3/31/15		55,661		57,678,711
2.63%, 2/29/16		13,460		13,848,025
3.50%, 5/15/20 (m)		119,165		124,713,322
Total U.S. Treasury Obligations — 9.9%				590,397,909
Total Fixed Income Securities — 29.9%				1,778,459,850
Investment Companies	Shares		Value
Brazil — 0.1%
iShares MSCI Brazil (Free) Index Fund (n)		56,500	$	3,500,740
South Korea — 0.1%
iShares MSCI South Korea Index Fund (n)		122,800		5,490,388
United States — 3.6%
Consumer Staples Select Sector SPDR Fund		207,900		5,301,450
ETFS Palladium Trust (a)		55,900		2,461,277
ETFS Platinum Trust (a)		54,000		8,239,050
Energy Select Sector SPDR Fund (c)		635,600		31,576,608
Financial Select Sector SPDR Fund		970,700		13,405,367
Health Care Select Sector SPDR Fund		208,000		5,859,360
iShares Dow Jones U.S. Telecommunications Sector Index Fund (n)		111,400		2,078,724
iShares Silver Trust (a)(n)		589,426		10,733,448
SPDR Gold Trust (a)		871,327		106,023,069
SPDR KBW Bank ETF		36,900		844,641
SPDR KBW Regional Banking ETF (c)		135,951		3,139,109
Technology Select Sector SPDR Fund		585,100		11,936,040
Telecom HOLDRS Trust		25,300		573,045
Utilities Select Sector SPDR Fund		435,400		12,304,404
Vanguard Telecommunication Services ETF		3,500		185,780
				214,661,372
Vietnam — 0.0%
Vietnam Enterprise Investments Ltd., R Shares (a)		380,361		722,686
Vinaland Ltd. (a)		1,971,800		1,533,074
				2,255,760
Total Investment Companies — 3.8%				225,908,260
Preferred Securities
	Par
Capital Trusts	(000)
Singapore — 0.0%
DBS Capital Funding Corp., 7.66% (g)(i)	USD	356		361,340
Total Capital Trusts — 0.0%				361,340
Preferred Stocks	Shares
Bermuda — 0.0%
Bunge Ltd., 4.88% (e)		7,797		646,761
United Kingdom — 0.1%
HSBC Holdings Plc, 8.00%		191,500		4,817,432
United States — 0.5%
Chesapeake Energy Corp., 5.75% (b)(e)		14,640		14,306,574
El Paso Corp. (e):
4.99% (b)		510		490,875
4.99%		8,307		7,995,487

See Notes to Consolidated Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Preferred Stocks	Shares		Value
United States (concluded)
Mylan, Inc., 6.50% (e)		6,218	$	6,609,672
XL Capital Ltd., 10.75% (e)		17,583		441,861
				29,844,469
Total Preferred Stocks — 0.6%				35,308,662
Total Preferred Securities — 0.6%				35,670,002
Warrants (o)
Canada — 0.0%
Kinross Gold Corp. (Expires 9/03/13)		37,568		102,694
New Gold, Inc. (Expires 4/03/12)		80,000		2,630
				105,324
United States — 0.1%
Bank of America Corp. (Expires 1/16/19)		348,105		2,663,003
Ford Motor Co. (Expires 1/01/13)		560,613		1,749,113
JPMorgan Chase & Co. (Expires 10/28/18)		67,835		857,434
				5,269,550
Total Warrants — 0.1%				5,374,874
Total Long-Term Investments (Cost — $4,953,031,478) — 85.8%				5,105,478,174
Short-Term Securities
Money Market Funds — 0.8%
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (n)(p)		5,060,996		5,060,996
	Beneficial
	Interest
	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (n)(p)(q)	USD	39,002		39,001,500
	Par
	(000)
Time Deposits — 0.0%
Canada — 0.0%
Brown Brothers Harriman & Co., 0.11%, 4/01/10	CAD	101		95,253
Hong Kong — 0.0%
Brown Brothers Harriman & Co., 0.01%, 4/01/10	HKD	629		80,754
Japan — 0.0%
Brown Brothers Harriman & Co., 0.01%, 4/01/10	JPY	132,238		1,494,389
				1,670,396
U.S. Treasury Obligations — 14.3%
U.S. Treasury Bills (r):
0.15%, 7/01/10	USD	18,875		18,875,000
0.15%, 7/15/10		70,426		70,423,253
0.14%, 7/22/10		51,314		51,310,049
0.15%, 7/29/10	USD	4,775		4,774,379
0.07%, 8/05/10		70,559		70,547,852
0.09%, 8/12/10		193,062		193,024,932
0.10%, 8/19/10		129,782		129,752,799
0.05%, 8/26/10		73,041		73,021,425
0.16%, 9/02/10		55,270		55,254,801
0.09%, 9/09/10		152,184		152,138,193
0.14%, 9/23/10		14,533		14,527,579
0.16%, 9/30/10		18,875		18,866,657
				852,516,919
Total Short-Term Securities (Cost — $898,285,521) — 15.1%				898,249,811
Options Purchased	Contracts
Exchange-Traded Call Options — 0.0%
Apple, Inc.:
Strike Price USD 250.00, expires 7/01/10		120		114,000
Strike Price USD 250.00, expires 10/16/10		62		151,280
Total Options Purchased (Cost — $286,100) — 0.0%				265,280
Total Investments Before Structured Options, Investments Sold Short and Outstanding Options Written (Cost — $5,851,603,099*) — 100.9%				6,003,993,265
Over-the-Counter Structured Options	Units
Credit Suisse Euro Stoxx Index Link, expires 9/30/10, Broker Credit Suisse International (s)		8,472		(2,191,355	)
FTSE 100 Index, expires 6/17/11, Broker Goldman Sachs Bank USA (t)		2,142		(315,966	)
Taiwan Taiex Index:
expires 12/21/11, Broker Citibank NA (u)		25,700		(222,054	)
expires 12/21/11, Broker Citibank NA (v)		13,200		(114,052	)
Total Over-the-Counter Structured Options (Premiums Received — $93,231) — (0.1)%				(2,843,427	)
Investments Sold Short	Shares
United States — (0.0)%
D.R. Horton, Inc.		38,437		(377,836	)
Total Investments Sold Short (Proceeds — $415,364) — (0.0)%				(377,836	)
Options Written	Contracts
Exchange-Traded Call Options — (0.0)%
Advanced Micro Devices, Inc., Strike Price USD 8.00, expires 7/17/10		3,430		(46,305	)

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Options Written	Contracts		Value
Exchange-Traded Call Options (concluded)
Apple, Inc.:
Strike Price USD 280.00, expires 7/17/10		120	$	(11,520	)
Strike Price USD 290.00, expires 10/16/10		62		(57,970	)
Dell, Inc., Strike Price USD 15.00, expires 1/22/11		1,622		(84,344	)
Fluor Corp., Strike Price USD 50.00, expires 7/17/10		44		(330	)
Ingersoll-Rand Plc, Strike Price USD 42.50, expires 9/18/10		122		(4,270	)
Kraft Foods, Inc., Strike Price USD 32.00, expires 9/18/10		794		(7,146	)
Mattel, Inc., Strike Price USD 22.50, expires 7/17/10		2,258		(56,450	)
				(268,335	)
Exchange-Traded Put Options — (0.0)%
Apple, Inc.:
Strike Price USD 240.00, expires 7/17/10		120		(55,200	)
Strike Price USD 230.00, expires 10/16/10		62		(89,280	)
Mead Johnson Nutrition Co., Strike Price USD 45.00, expires 1/22/11		244		(78,080	)
				(222,560	)
Over-the-Counter Call Options — (0.0)%
Thomson Reuters Corp., Strike Price USD 36.50, expires 7/17/10		67		(4,468	)
Total Options Written (Premiums Received — $1,473,347) — (0.0)%				(495,363	)
Total Investments, Net of Structured Options, Investments Sold Short and Outstanding Options Written — 100.8%				6,000,276,639
Liabilities in Excess of Other Assets — (0.8)%				(50,218,586	)
Net Assets — 100.0%			$	5,950,058,053

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost	$	5,893,315,859
Gross unrealized appreciation	$	371,781,896
Gross unrealized depreciation		(261,104,490)
Net unrealized appreciation	$	110,677,406

(a)	Non-income producing security.
(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(c)	Security, or a portion of security, is on loan.
(d)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(e)	Convertible security.
(f)	Issuer filed for bankruptcy and/or is in default of interest payments.
(g)	Variable rate security. Rate shown is as of report date.
(h)	Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown reflects the current yield as of report date.
(i)	Security is perpetual in nature and has no stated maturity date.
(j)	Represents a step-down bond that pays an initial coupon rate for the first period and then a lower coupon rate for the following periods. Rate shown is as of report date.
(k)	When-issued security. Unsettled when-issued transactions were as follows:

	Market		Unrealized
Counterparty	Value		Appreciation
Bank of America NA	$	690,530	$	6,052

(l)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(m)	All or a portion of security has been pledged as collateral in connection with swaps.

(n)  Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Beneficial								Beneficial
	Interest/								Interest/
	Shares Held					Beneficial			Shares Held		Value
	at December 31,		Shares			Interest/			at June 30,		at June 30,		Realized
Affiliate	2009		Purchased			Shares Sold			2010		2010		Gain (Loss)			Income
BlackRock Liquidity Funds, TempFund, Institutional Class		630,193		4,430,803	1		—			5,060,996	$	5,060,996		—		$	598
BlackRock Liquidity Series, LLC Money Market Series	$	124,868,750		—		$	(85,867,250	)2	$	39,001,500	$	39,001,500		—		$	46,703
iShares Dow Jones U.S. Telecommunication Sector Index Fund		111,400		—			—			111,400	$	2,078,724		—		$	38,932
iShares MSCI Brazil (Free) Index		56,500		—			—			56,500	$	3,500,740		—		$	15,561
iShares MSCI South Korea Index Fund		122,800		—			—			122,800	$	5,490,388		—		$	33,480
iShares Silver Trust		742,200		40,226			(193,000	)		589,426	$	10,733,448	$	(689,415	)		—

¹ Represents net purchase cost.

² Represents net sale cost.

See Notes to Consolidated Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued)

(o) Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date.

(p)	Represents the current yield as of report date.
(q)	Security was purchased with the cash collateral from loaned securities.
(r)	Rates shown are discount rates or a range of discount rates paid at the time of purchase.
(s)	CSFB DJ EuroStoxx Structured Option is issued in units. Each unit represents a structure based on the DJ EuroStoxx 50 Index, with an initial reference strike of 2,941.22. Each unit contains (a) one written put on the index at a strike price of 2,779.453 and (b) one call option on the index with a strike of 2,970.632. The Fund holds 8,472 units of the structure. On June 30, 2010, the EuroStoxx 50 Index was 2,573.32. At this time, the value of the structured option was ($2,191,355) based on a price of ($258.6586) per unit. The option expires on September 30, 2010.
(t)	Goldman Sachs FTSE 100 Structured Option is issued in units. Each unit represents a structure based on the FTSE 100 Index. Each unit contains (a) one written put on the index at a strike price of 4,692.042 and (b) one call option on the index with a strike of 5,067.000. The Fund holds 2,142 units of the structure. On June 30, 2010, the FTSE 100 Index was 4,916.87. At this time, the value of the structured option was ($315,966) based on a price of ($147.51) per unit. The option expires on June 11, 2011.
(u)	Citigroup Taiwan Taiex Structured Option traded May 19, 2010 is issued in units. Each unit represents a structure based on the Taiex Index. Each unit contains (a) one written put on the index at a strike price of 6,228.911899 and (b) one call option on the index with a strike of 7,531.937. The Fund holds 25,700 units of the structure. On June 30, 2010, the Taiex Index was 7,329.37. At this time, the value of the structured option was ($222,054) based on a price of ($8.6403) per unit. The option expires on December 21, 2011.
(v)	Citigroup Taiwan Taiex Structured Option traded June 2, 2010 is issued in units. Each unit represents a structure based on the Taiex Index. Each unit contains (a) one written put on the index at a strike price of 6,228.911899 and (b) one call option on the index with a strike of 7,531.937. At inception, the trade was initiated for a net credit of $7.0630. The Fund holds 13,200 units of the structure. On June 30, 2010, the Taiex Index was 7,329.37. At this time, the value of the structured option was ($114,052) based on a price of ($8.6403) per unit. The option expires on December 21, 2011.

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

							Unrealized
Currency		Currency			Settlement		Appreciation
Purchased		Sold		Counterparty	Date		(Depreciation)
	CHF 7,309,230		EUR 5,138,660	Credit Suisse International		7/01/2010	$	497,549
	EUR 5,138,660		CHF 6,769,773	Credit Suisse International		7/01/2010		3,012
	GBP 283,010		USD 425,563	Brown Brothers Harriman & Co.		7/01/2010		(2,717	)
	USD 1,713		BRL 3,091	Brown Brothers Harriman & Co.		7/01/2010		1
	USD 498,067		CHF 539,457	Brown Brothers Harriman & Co.		7/01/2010		(2,426	)
	USD 333,972		EUR 274,648	Brown Brothers Harriman & Co.		7/01/2010		(1,882	)
	USD 328,453		JPY 29,337,873	Brown Brothers Harriman & Co.		7/01/2010		(3,367	)
	USD 4,469		KRW 5,539,910	Brown Brothers Harriman & Co.		7/01/2010		(64	)
	EUR 4,198,800		USD 5,147,729	UBS AG		7/02/2010		(13,215	)
	EUR 14,734,230		USD 18,062,987	Deutsche Bank AG		7/02/2010		(45,069	)
	GBP 368,004		USD 551,822	Brown Brothers Harriman & Co.		7/02/2010		(1,988	)
	HKD 2,917,795		EUR 374,663	Brown Brothers Harriman & Co.		7/02/2010		43
	USD 1,168,781		CHF 1,262,400	Brown Brothers Harriman & Co.		7/02/2010		(2,440	)
	USD 174,563		EUR 142,060	Brown Brothers Harriman & Co.		7/02/2010		845
	USD 11,865,890		EUR 9,690,000	UBS AG		7/02/2010		16,364
	USD 11,308,847		EUR 9,243,030	Deutsche Bank AG		7/02/2010		5,904
	USD 1,160,748		JPY 102,900,289	Brown Brothers Harriman & Co.		7/02/2010		(3,085	)
	USD 80,763		HKD 628,845	Brown Brothers Harriman & Co.		7/06/2010		4
	KRW 7,524,330,000		USD 6,144,317	UBS AG		7/07/2010		11,788
	KRW 14,950,440,000		USD 12,249,439	Deutsche Bank AG		7/07/2010		(17,589	)
	USD 6,162,432		KRW 7,524,330,000	UBS AG		7/07/2010		6,328
	USD 12,194,486		KRW 14,950,440,000	Deutsche Bank AG		7/07/2010		(37,364	)
	USD 17,315,109		EUR 14,182,250	JPMorgan Chase Bank NA		7/09/2010		(28,302	)
	USD 10,465,575		EUR 8,558,336	UBS AG		7/09/2010		(9,376	)
	USD 11,810,938		EUR 9,670,000	Deutsche Bank AG		7/09/2010		(14,462	)
	EUR 1,014,606		USD 1,222,550	Barclays Bank Plc		7/15/2010		18,247
	JPY 1,313,835,816		USD 14,380,323	Credit Suisse International		7/15/2010		483,091
	JPY 1,407,340,888		USD 15,394,128	Barclays Bank Plc		7/15/2010		527,108
	JPY 470,418,000		USD 5,161,771	Brown Brothers Harriman & Co.		7/15/2010		160,064
	USD 22,251,345		EUR 18,622,710	Barclays Bank Plc		7/15/2010		(523,011	)
	USD 11,656,350		EUR 9,769,310	UBS AG		7/15/2010		(290,877	)
	USD 2,200,189		ZAR 17,244,640	UBS AG		7/15/2010		(40,646	)
	CHF 20,952,622		EUR 15,091,200	UBS AG		7/16/2010		988,253
	EUR 6,753,500		USD 8,282,965	Credit Suisse International		7/16/2010		(23,832	)
	GBP 4,180,129		USD 6,094,920	Credit Suisse International		7/16/2010		150,510
	JPY 463,321,455		EUR 4,111,834	Barclays Bank Plc		7/16/2010		213,107
	USD 7,355,105		AUD 8,533,000	UBS AG		7/16/2010		186,252
	USD 23,550,087		EUR 19,555,000	Credit Suisse International		7/16/2010		(364,527	)
	USD 28,861,296		EUR 23,907,040	JPMorgan Chase Bank NA		7/16/2010		(375,606	)
	USD 10,669,668		EUR 8,693,717	Deutsche Bank AG		7/16/2010		37,765
	USD 11,429,477		EUR 9,275,140	UBS AG		7/16/2010		86,527
	USD 14,016,344		EUR 11,374,410	Credit Suisse International		7/16/2010		106,111
	USD 1,200,000		GBP 793,667	Credit Suisse International		7/16/2010		14,202
	USD 14,077,773		CHF 15,628,440	Brown Brothers Harriman & Co.		7/21/2010		(426,492	)
	JPY 879,679,335		USD 9,704,214	Deutsche Bank AG		7/22/2010		248,739
	JPY 185,763,128		USD 2,048,353	UBS AG		7/22/2010		53,426
	JPY 92,934,745		USD 1,025,068	Barclays Bank Plc		7/22/2010		26,423
	JPY 92,182,843		USD 1,010,190	Brown Brothers Harriman & Co.		7/22/2010		32,794
	USD 21,631,259		EUR 17,619,192	HSBC Bank USA NA		7/23/2010		83,222
	USD 19,775,355		EUR 16,107,448	JPMorgan Chase Bank NA		7/23/2010		76,162
	USD 21,940,933		EUR 17,929,847	Morgan Stanley Capital Services Inc.		7/23/2010		12,970

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued)

							Unrealized
Currency		Currency			Settlement		Appreciation
Purchased		Sold		Counterparty	Date		(Depreciation)
	CHF 13,405,784		EUR 10,024,660	Credit Suisse International		7/29/2010	$	182,678
	CAD 11,116,528		USD 10,760,100	Credit Suisse International		7/30/2010		(319,594	)
	CAD 15,566,343		USD 14,873,930	Deutsche Bank AG		7/30/2010		(254,214	)
	CHF 32,571,390		EUR 23,903,190	UBS AG		7/30/2010		998,508
	USD 5,148,359		EUR 4,198,800	UBS AG		7/30/2010		13,091
	KRW 7,524,330,000		USD 6,157,339	UBS AG		8/06/2010		(7,783	)
	KRW 14,950,440,000		USD 12,187,528	Deutsche Bank AG		8/06/2010		31,310
	CNY 29,681,400		USD 4,440,000	JPMorgan Chase Bank NA		10/13/2010		(54,035	)
Total							$	2,408,435

  •  Financial futures contracts purchased as of June 30, 2010 were as follows:

				Expiration	Notional		Unrealized
Contracts		Issue	Exchange	Date	Value		Depreciation
	26	Hang Seng Index Future	Hong Kong	July 2010	$	3,456,814	$	(104,684	)
	26	MSCI Singapore IX ETS Future	Singapore	July 2010	$	1,255,959		(6,963	)
	57	Dax Index 25 Euro	Eurex	September 2010	$	10,737,255		(348,953	)
	1,380	DJ Euro Stoxx 50	Eurex	September 2010	$	43,446,962		(111,020	)
	92	FTSE 100 Index	NYSE LIFFE— London	September 2010	$	7,017,523		(308,932	)
	72	S&P 500 Index	Chicago Mercantile	September 2010	$	19,642,168		(1,163,368	)
	38	S&P TSE 60 Index	Montreal	September 2010	$	4,886,454		(180,315	)
	200	Yen Denom Nikkei	Chicago Mercantile	September 2010	$	10,760,427		(354,953	)
Total							$	(2,579,188	)

  •  Financial futures contracts sold as of June 30, 2010 were as follows:

				Expiration	Notional		Unrealized
Contracts		Issue	Exchange	Date	Value		Appreciation
	50	IBEX 35 Plus Index	Meff Renta Variable (Madrid)	July 2010		EUR 5,832,212	$	205,255

  •  Total return swaps outstanding as of June 30, 2010 were as follows:

Interest					Notional
Payable			Counter-		Amount		Unrealized
Rate			party	Expiration	(000)		Depreciation
	(0.31	)%1	BNP Paribas SA	September 2010	$	23,192	$	(18,511	)2
	(0.18	)%3	Deutsche Bank AG	September 2010	$	10,823		(8,639	)2
	(0.20	)%4	BNP Paribas SA	September 2010	$	7,968		(6,360	)2
	0.65	%5	BNP Paribas SA	September 2010	$	14,296		(709,917	)6
	1.02	%7	JPMorgan Chase Bank NA	December 2010	$	11,721		(88,558	)8
	0.66	%9	BNP Paribas SA	January 2011	$	9,657		(1,037,643	)8
	(0.25	)%10	JPMorgan Chase Bank NA	February 2011	$	11,370		(198,069	)2
	(0.25	)%10	JPMorgan Chase Bank NA	February 2011	$	1,849		(32,218	)2
	0.30	%11	Citibank NA	April 2011	$	6,400		(947,622	)12
Total							$	(3,047,537	)

1	Based on the 3-month LIBOR minus 0.85%.
2	Based on the change in the return of the MSCI Daily Total Return Net Europe (excluding United Kingdom) USD Index.
3	Based on the 3-month LIBOR minus 0.72%.
4	Based on the 3-month LIBOR minus 0.74%.
5	Based on the 3-month LIBOR minus 0.24%.
6	Based on the change in the return of the MSCI Daily Total Return Net EAFE USD Index.
7	Based on the 3-month LIBOR plus 0.48%.
8	Based on the change in the return of the MSCI Daily Total Return Net Emerging Markets USD Index.
9	Based on the 3-month LIBOR plus 0.37%.
10	Based on the 3-month LIBOR minus 0.71%.
11	Based on the 3-month LIBOR minus 0.15%.
12	Based on the change in the return of the MSCI Daily Total Return All Country World USD Index.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Consolidated Financial Statements.

See Notes to Consolidated Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (continued)

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1			Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments:
Common Stocks
Australia		—		$	37,238,479		—	$	37,238,479
Austria		—			1,401,830		—		1,401,830
Belgium	$	303,348			4,718,679		—		5,022,027
Brazil		118,440,260			—	$	270,504		118,710,764
Canada		183,831,150			—		—		183,831,150
Chile		4,797,768			—		—		4,797,768
China		29,628,059			3,983,491		—		33,611,550
Egypt		—			4,522,904		—		4,522,904
Finland		475,145			2,903,930		—		3,379,075
France		9,878,833			31,395,437		—		41,274,270
Germany		723,813			12,114,451		—		12,838,264
Hong Kong		53,110,678			29,209,801		—		82,320,479
India		—			47,501,610		—		47,501,610
Indonesia		—			7,600,018		—		7,600,018
Ireland		4,939,852			—		—		4,939,852
Israel		10,441,712			—		—		10,441,712
Italy		—			2,464,553		—		2,464,553
Japan		13,905,573			331,473,668		—		345,379,241
Kazakhstan		9,781,740			—		—		9,781,740
Luxembourg		413,457			—		—		413,457
Malaysia		—			21,653,431		—		21,653,431
Mexico		9,918,410			—		—		9,918,410
Netherlands		2,128,100			6,818,891		—		8,946,991
Norway		—			6,605,507		—		6,605,507
Philippines		2,711,604			—		—		2,711,604
Poland		1,681,725			—		—		1,681,725
Russia		58,966,248			2,085,605		—		61,051,853
Singapore		156,904			48,712,121		—		48,869,025
South Africa		4,082,117			1,628,357		—		5,710,474
South Korea		11,137,596			39,163,509		—		50,301,105
Spain		1,804,725			4,390,028		—		6,194,753
Switzerland		10,256,759			41,589,997		—		51,846,756
Taiwan		7,443,939			37,446,091		—		44,890,030
Thailand		—			11,011,385		—		11,011,385
Turkey		—			16,691,202		—		16,691,202
United Kingdom		30,316,039			72,559,328		—		102,875,367
United States		1,651,634,827			—		—		1,651,634,827
Asset-Backed Securities		—			—		84,000		84,000
Corporate Bonds		—			698,063,048		82,946,617		781,009,665
Floating Rate Loan Interests		—			5,661,889		6,000,000		11,661,889
Foreign Agency Obligations		—			386,740,934		8,446,185		395,187,119
Structured Notes		—			—		119,268		119,268
U.S. Treasury Obligations		—			590,397,909		—		590,397,909
Investment Companies		225,908,260			—		—		225,908,260
Capital Trusts		—			361,340		—		361,340
Preferred Stocks		11,868,965			23,439,697		—		35,308,662
Warrants		5,374,874			—		—		5,374,874
Short-Term Securities:
Money Market Funds		5,060,996			39,001,500		—		44,062,496
Time Deposits		—			1,670,396		—		1,670,396
U.S. Treasury Obligations		—			852,516,919		—		852,516,919
Liabilities:
Investments in Securities:
Investments Sold Short		(377,836	)		—		—		(377,836	)
Total	$	2,480,745,640		$	3,424,737,935	$	97,866,574	$	6,003,350,149

	Derivative Financial Instruments1
Valuation Inputs	Level 1			Level 2			Level 3			Total
Assets:
Foreign currency exchange contracts		—		$	5,272,398			—		$	5,272,398
Equity contracts	$	470,535			—			—			470,535
Liabilities:
Foreign currency exchange contracts		—			(2,863,963	)		—			(2,863,963	)
Equity contracts		(3,065,813	)		(3,056,275	)		(2,843,427	)		(8,965,515	)
Total	$	(2,595,278	)	$	(647,840	)		(2,843,427	)	$	(6,086,545	)

¹ Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Swaps, financial futures contracts and foreign currency exchange contracts are shown at the unrealized appreciation/depreciation on the instrument and options are shown at market value.

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Schedule of Investments (concluded)

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

			Asset-					Floating		Foreign
	Common		Backed		Corporate			Rate Loan		Agency			Structured			Preferred
	Stocks		Securities		Bonds			Interests		Obligations			Notes			Stocks			Total
Assets:
Balance, as of December 31, 2009		—	$	6,000	$	99,937,671		$	6,000,000	$	8,348,349		$	193,637		$	491,702		$	114,977,359
Accrued discounts/premiums		—		110		351,647			—		(17,785	)		153			—			334,125
Net realized gain (loss)		—		—		7,541,820			—		—			336			6			7,542,162
Net change in unrealized appreciation/depreciation2		—		77,890		(4,297,313	)		—		(1,052,032	)		(584	)		(105,904	)		(5,377,943	)
Purchases		—		—		12,247,348			—		1,167,653			—			—			13,415,001
Sales		—		—		(40,623,912	)		—		—			(74,274	)		(115,300	)		(40,813,486	)
Transfers in3	$	270,504		—		12,410,119			—		—			—			—			12,680,623
Transfers out3		—		—		(4,620,763	)		—		—			—			(270,504	)		(4,891,267	)
Balance, as of June 30, 2010	$	270,504	$	84,000	$	82,946,617		$	6,000,000	$	8,446,185		$	119,268		$	—		$	97,866,574

² Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation on securities still held at June 30, 2010 was $(1,596,797).

The following table is a reconciliation of Level 3 derivative financial instruments for which significant unobservable inputs were used to determine fair value:

	Structured
	Options
Liabilities:
Balance, as of December 31, 2009	$	7,346,847
Accrued discounts/premiums		—
Realized gain		5,789,320
Change in unrealized appreciation/depreciation		(7,346,847	)
Purchases		—
Sales		(5,789,320	)
Transfers in3		(2,843,427	)
Transfers out3		—
Balance, as of June 30, 2010	$	(2,843,427	)

³ The Fund’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.

See Notes to Consolidated Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned $37,345,746) (cost—$5,789,169,965)	$	5,938,127,469
Investment at value—affiliated (cost—$62,433,134)		65,865,796
Unrealized appreciation on foreign currency exchange contracts		5,272,398
Foreign currency at value (cost—$8,132,048)		8,061,569
Cash held as collateral for short sales		415,364
Interest receivable		21,498,564
Investments sold receivable		8,426,731
Dividends receivable		6,312,321
Capital shares sold receivable		4,967,974
Securities lending income receivable—affiliated		18,279
Prepaid expenses		114,153
Total assets		6,059,080,618
Liabilities:
Bank overdraft		47,554
Collateral on securities loaned at value		39,001,500
Investments sold short at value (proceeds—$415,364)		377,836
Options written at value (premiums received—$1,473,347)		495,363
Structured options (premiums received—$93,231)		2,843,427
Unrealized depreciation on foreign currency exchange contracts		2,863,963
Unrealized depreciation on swaps		3,047,537
Investments purchased payable—unaffiliated		50,078,314
Investments purchased payable—affiliated		2,362,790
Investment advisory fees payable		3,199,075
Capital shares redeemed payable		1,929,171
Distribution fees payable		1,019,383
Deferred foreign capital gain tax		861,028
Margin variation payable		282,209
Other affiliates payable		28,001
Swaps payable		12,258
Officer’s and Directors’ fees payable		3,905
Other accrued expenses payable		569,152
Other liabilities		99
Total Liabilities		109,022,565
Net Assets	$	5,950,058,053
Net Assets Consist of:
Paid-in capital	$	5,826,503,781
Undistributed net investment income		20,578,274
Accumulated net realized loss		(43,066,615	)
Net unrealized appreciation/depreciation		146,042,613
Net Assets	$	5,950,058,053
Net Asset Value:
Class I—Based on net assets of $999,801,795 and 70,233,190 shares outstanding, 200 million shares authorized, $0.10 par value	$	14.24
Class II—Based on net assets of $11,691,886 and 822,368 shares outstanding, 200 million shares authorized, $0.10 par value	$	14.22
Class III—Based on net assets of $4,938,564,372 and 386,040,048 shares outstanding, 200 million shares authorized, $0.10 par value	$	12.79

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 23

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	38,088,818
Foreign taxes withheld		(1,893,704	)
Interest		37,768,934
Dividends—affiliated		88,571
Securities lending—affiliated		46,703
Total income		74,099,322
Expenses:
Investment advisory		18,791,719
Distribution—Class II		7,891
Distribution—Class III		6,040,790
Transfer agent I		380
Transfer agent II		4
Transfer agent III		1,958
Accounting services		720,049
Custodian		551,359
Printing		244,467
Professional		96,951
Officer and Directors		69,379
Registration		39,899
Stock loan fees		2,639
Miscellaneous		20,860
Total expenses excluding dividend expense		26,588,345
Dividend expense		34,495
Total expenses including dividend expense		26,622,840
Less fees waived by advisor		(393	)
Total expenses after fees waived		26,622,447
Net investment income		47,476,875
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments—unaffiliated		63,885,838
Investments—affiliated		(689,415	)
Financial futures contracts		(20,842,315	)
Swaps		(11,353,041	)
Short Sales		(3,183,962	)
Options written and structured options		2,228,117
Foreign currency transactions		(7,202,523	)
		22,842,699
Net change in unrealized appreciation/depreciation on:
Investments (including $861,028 deferred foreign capital gain credit)		(356,837,351	)
Financial futures contracts		(7,067,836	)
Swaps		(3,370,740	)
Short Sales		1,745,522
Options written and structured options		(4,840,888	)
Foreign currency transactions		5,803,995
		(364,567,298	)
Total realized and unrealized loss		(341,724,599	)
Net Decrease in Net Assets Resulting from Operations	$	(294,247,724	)

See Notes to Consolidated Financial Statements.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Consolidated Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	47,476,875		$	67,610,049
Net realized gain (loss)		22,842,699			(21,067,408	)
Net change in unrealized appreciation/depreciation		(364,567,298	)		761,570,622
Net increase (decrease) in net assets resulting from operations		(294,247,724	)		808,113,263
Dividends and Distributions to Shareholders From:
Net investment income:
Class I		—			(13,027,335	)
Class II		—			(94,232	)
Class III		—			(68,171,865	)
Tax return of capital:
Class I		—			(767,656	)
Class II		—			(7,050	)
Class III		—			(4,541,863	)
Decrease in net assets resulting from dividends and distributions to shareholders		—			(86,610,001	)
Capital Share Transactions:
Net increase in net assets derived from capital share transactions		833,304,401			2,277,640,598
Net Assets:
Total increase in net assets		539,056,677			2,999,143,860
Beginning of period		5,411,001,376			2,411,857,516
End of period	$	5,950,058,053		$	5,411,001,376
Undistributed (distributions in excess of) net investment income	$	20,578,274		$	(26,898,601	)

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 25

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Consolidated)			2009
	(Unaudited)			(Consolidated)		2008		2007		2006			2005
Per Share Operating Performance:
Net asset value, beginning of period	$	14.92		$	12.52	$	16.03	$	14.78	$	13.54		$	12.56
Net investment income1		0.14			0.27		0.27		0.32		0.32			0.27
Net realized and unrealized gain (loss)		(0.82)			2.39		(3.39)		2.19		1.92			1.03
Net increase (decrease) from investment operations		(0.68)			2.66		(3.12)		2.51		2.24			1.30
Dividends and distributions from:
Net investment income		—			(0.24)		(0.33)		(0.47)		(0.41)			(0.32)
Net realized gain		—			—		(0.06)		(0.79)		(0.59)			—
Tax return of capital		—			(0.02)		—		—		—			—
Total dividends and distributions		—			(0.26)		(0.39)		(1.26)		(1.00)			(0.32)
Net asset value, end of period	$	14.24		$	14.92	$	12.52	$	16.03	$	14.78		$	13.54
Total Investment Return:2
Based on net asset value		(4.56)%	3		21.30%		(19.48)%		17.01%		16.53%	4		10.43%
Ratios to Average Net Assets:
Total expenses		0.71%	5		0.74%		0.80%		0.78%		0.79%			0.77%
Total expenses after fees waived		0.71%	5		0.74%		0.80%		0.78%		0.79%			0.77%
Net investment income		1.86%	5		1.99%		1.81%		2.03%		2.18%			2.07%
Supplemental Data:
Net assets, end of period (000)	$	999,802		$	855,977	$	589,326	$	755,675	$	717,928		$	679,681
Portfolio turnover		16%			26%		31%		34%		55%			57%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	The previous investment advisor fully reimbursed the Fund in order to resolve a regulatory issue relating to an investment, which had a minimal impact on total investment return.
5	Annualized.

See Notes to Consolidated Financial Statements.

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Financial Highlights (continued)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Consolidated)			2009
	(Unaudited)			(Consolidated)		2008		2007		2006			2005
Per Share Operating Performance:
Net asset value, beginning of period	$	14.91		$	12.53	$	16.03	$	14.78	$	13.54		$	12.56
Net investment income1		0.13			0.24		0.25		0.30		0.29			0.25
Net realized and unrealized gain (loss)		(0.82)			2.39		(3.39)		2.19		1.92			1.03
Net increase (decrease) from investment operations		(0.69)			2.63		(3.14)		2.49		2.21			1.28
Dividends and distributions from:
Net investment income		—			(0.22)		(0.30)		(0.45)		(0.38)			(0.30)
Net realized gain		—			—		(0.06)		(0.79)		(0.59)			—
Tax return of capital		—			(0.03)		—		—		—			—
Total dividends and distributions		—			(0.25)		(0.36)		(1.24)		(0.97)			(0.30)
Net asset value, end of period	$	14.22		$	14.91	$	12.53	$	16.03	$	14.78		$	13.54
Total Investment Return:2
Based on net asset value		(4.63)%	3		21.05%		(19.57)%		16.82%		16.36%	4		10.27%
Ratios to Average Net Assets:
Total expenses		0.86%	5		0.89%		0.95%		0.93%		0.94%			0.92%
Total expenses after fees waived		0.86%	5		0.89%		0.95%		0.93%		0.94%			0.92%
Net investment income		1.74%	5		1.76%		1.69%		1.90%		2.03%			1.92%
Supplemental Data:
Net assets, end of period (000)	$	11,692		$	7,843	$	1,544	$	1,521	$	1,771		$	1,743
Portfolio turnover		16%			26%		31%		34%		55%			57%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	The previous investment advisor fully reimbursed the Fund in order to resolve a regulatory issue relating to an investment, which had a minimal impact on total investment return.
5	Annualized.

See Notes to Consolidated Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 27

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Financial Highlights (concluded)

	Class III
	Six Months Ended
	June 30, 2010		Year Ended December 31,
	(Consolidated)		2009
	(Unaudited)		(Consolidated)		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	13.42	$	11.30	$	14.53	$	13.51	$	12.45	$	11.58
Net investment income1		0.11		0.21		0.21		0.24		0.23		0.22
Net realized and unrealized gain (loss)		(0.74)		2.15		(3.07)		2.02		1.81		0.95
Net increase (decrease) from investment operations		(0.63)		2.36		(2.86)		2.26		2.04		1.17
Dividends and distributions from:
Net investment income		—		(0.22)		(0.31)		(0.45)		(0.39)		(0.30)
Net realized gain		—		—		(0.06)		(0.79)		(0.59)		—
Tax return of capital		—		(0.02)		—		—		—		—
Total dividends and distributions		—		(0.24)		(0.37)		(1.24)		(0.98)		(0.30)
Net asset value, end of period	$	12.79	$	13.42	$	11.30	$	14.53	$	13.51	$	12.45
Total Investment Return:2
Based on net asset value		(4.69)%3		20.92%		(19.67)%		16.75%		16.40%4		10.18%
Ratios to Average Net Assets:
Total expenses		0.96%5		0.99%		1.03%		1.04%		1.04%		1.02%
Total expenses after fees waived		0.96%5		0.99%		1.03%		1.04%		1.04%		1.02%
Net investment income		1.60%5		1.75%		1.66%		1.67%		1.88%		1.85%
Supplemental Data:
Net assets, end of period (000)	$	4,938,564	$	4,547,181	$	1,820,988	$	333,475	$	71,208	$	29,074
Portfolio turnover		16%		26%		31%		34%		55%		57%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	The previous investment advisor fully reimbursed the Fund in order to resolve a regulatory issue relating to an investment, which had a minimal impact on total investment return.
5	Annualized.

See Notes to Consolidated Financial Statements.

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Allocation V.I. Fund

Notes to Consolidated Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Global Allocation V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I, Class II and Class III Shares have equal 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 II and Class III Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Basis of Consolidation: The accompanying consolidated financial statements include the accounts of BlackRock Cayman Global Allocation V.I. Fund I, Ltd. (the “Subsidiary”), a wholly owned subsidiary of the Fund, which primarily invests in commodity-related instruments. The Fund may invest up to 25% of its assets in the Subsidiary. Intercompany accounts and transactions have been eliminated.

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security.

The Fund values its bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more brokers or dealers as obtained from a pricing service. 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, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. 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 and trades and values of the underlying reference instruments. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be value at amortized cost, which approximates fair value.

The Fund values its investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion,

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 29

may permit an investor to withdraw more than 25% on any one day.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business 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. Over-the-counter (“OTC”) options and 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.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed Securities: The Fund may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally 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 subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the 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.

Capital Trusts: These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. 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. Payments on these securities are treated as interest rather than dividends for federal income tax purposes. These securities can have a rating that is slightly below that of the issuing company’s senior debt securities.

Preferred Stock: The Fund may invest in 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: The Fund may invest in floating rate loan interests. The floating rate loans the Fund holds are typically issued to companies (the “borrower”) by banks, other financial institutions, and 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 levered. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interest 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. The base lending rates are generally the lending rate offered by one or more European banks, such as LIBOR (London Inter Bank Offered Rate), the prime rate offered by one or more US banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. The Fund considers these investments to be investments in debt securities for purposes of their investment policies.

When the Fund buys 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, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. The Fund earns if applicable/or pays facility and other fees on floating rate loan interests, which if applicable are shown as facility and other fees in the Consolidated Statement of Operations. 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 the Fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. The 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. The Fund may invest in such loans in the form of participations in loans (“Participations”) and assignments of all or a portion of loans from third parties. Participations typically will result in the Fund having a contractual relationship only with the lender, not with the borrower. The Fund will have 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, the 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, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the Participation. The 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, the Fund may be treated as general creditors of the lender and may not benefit from any offset between the lender and the borrower.

Short Sales: The Fund may enter into short sale transactions in which the Fund sells a security it does not hold in anticipation of a decline in the market price of that security. When the Fund makes a short sale, it will borrow the security sold short

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 31

and deliver it to the counterparty to which it sold the security short. When the Fund engages in a short sale, an amount equal to the proceeds received by the 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. The Fund is required to repay the counterparty any dividends received on the security sold short, which is shown as dividend expense in the Statement of Operations. The Fund may pay a fee on the assets borrowed from the counterparty, which is shown as stock loan fees in the Statement of Operations. The Fund maintains a segregated account of securities or deposits cash with the broker-dealer as collateral for the short sales. The Fund may receive interest on its collateral deposited with the broker-dealer. The 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 a theoretically unlimited loss since there is a theoretically unlimited potential for the market price of the security sold short to increase. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited as to the dollar amount, will be recognized upon the termination of a short sale if the market price is greater or less than the proceeds originally received. There is no assurance the Fund will be able to close out a short position at a particular time or at an acceptable price.

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

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the SEC require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., financial futures contracts, foreign currency exchange contracts, swaps, short sales, structured options and written options), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined 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 of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. Consent fees are compensation for agreeing to changes in the terms of debt instruments and are included in interest income in the Consolidated Statement of Operations.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. If the total dividends and distributions made in any tax year exceeds net investment income and accumulated realized capital gains, a portion of the total distribution may be treated as a tax return of capital. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls

32 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Consolidated Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as equity risk and foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contracts. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between the Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from their counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. 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 value of the contract. Such receipts or payments are known as margin variation and are recognized by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 33

movements in the price of financial futures contracts, interest or foreign currency exchange rates and the underlying assets.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (equity risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

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 the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of an option written could result in the Fund purchasing or selling a security at a price different from the current market value. The Fund may execute transactions in both listed and OTC options.

The Fund invests in structured options to increase or decrease its exposure to an underlying index or group of securities (equity risk). These structured options are European-Style Options and may consist of single or multiple OTC options which are priced as a single security. European-Style Options may only be exercised at the expiration date, but may be transferred/sold prior to the expiration date. The value of a structured option may either increase or decrease with the underlying index, or group of securities depending on the combination of options used. One type of structure involves the combination of selling a put while buying a call on a specific index. This option would rise in value as the underlying index increases and fall in value as the underlying index decreases. Alternatively, another structure involves the sale of a call and the purchase of a put. This option structure would rise in value as the underlying index decreases and fall in value as the underlying index increases. Upon the exercise of the structured option, the Fund will receive a payment from, or be required to remit a payment to the counterparty, depending on the value of the underlying index at exercise.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Fund are recorded in the Consolidated Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Fund will record a realized gain or loss 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 contracts is the premium received or paid. Swap transactions involve, to varying degrees, elements of interest rate, credit and market risk in excess of the amounts recognized in the

34 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

Consolidated 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.

•  Total return swaps—The Fund enters into total return swaps to obtain exposure to a security or market without owning such security or investing directly in that market or to transfer the risk/return of one market (e.g., fixed income) to another market (e.g., equity) (equity risk and/or interest rate risk). Total return swaps are agreements in which one party commits to pay interest in exchange for the total return (coupons plus capital gains/losses) of an underlying asset. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts		5,272,398	Unrealized depreciation on foreign currency exchange contracts		2,863,963
Equity contracts**	Net appreciation/depreciation; investments at value - unaffiliated/Structured options at value		470,535	Net appreciation/depreciation; Unrealized depreciation on swaps; Options written - at value		8,965,515
Total		$	5,742,933		$	11,829,478

 *  Includes cumulative appreciation/depreciation of financial futures contracts as reported in Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.

**  Includes options purchased at value as reported in the Schedule of Investments.

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Financial								Foreign
	Futures								Currency
	Contracts			Swaps			Options***		Transactions
Net Realized Gain (Loss) from
Foreign currency exchange contracts		—			—			—	$	(7,008,888	)
Equity contracts	$	(20,842,315	)	$	(11,353,041	)	$	2,910,291		—
Total	$	(20,842,315	)	$	(11,353,041	)	$	2,910,291	$	(7,008,888	)

Net Change in Unrealized Appreciation/Depreciation on
	Financial									Foreign
	Futures									Currency
	Contracts			Swaps			Options***			Transactions
Foreign currency exchange contracts		—			—			—		$	6,670,457
Equity contracts	$	(7,067,836	)	$	(3,370,740	)	$	(1,159,556	)		—
Total	$	(7,067,836	)	$	(3,370,740	)	$	(1,159,556	)	$	6,670,457

***  Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Financial futures contracts:
Average number of contracts purchased		2,667
Average number of contracts sold		64
Average notional value of contracts purchased	$	144,531,558
Average notional value of contracts sold	$	8,894,013
Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		40
Average number of contracts-US dollars sold		35
Average US dollar amounts purchased	$	223,476,658
Average US dollar amounts sold	$	217,959,876
Options:
Average number of contracts purchased		20,612
Average number of contracts sold		12,489
Average notional value of contracts purchased	$	2,286,532
Average notional value of contracts sold	$	35,572,200
Structured options:
Average number of units		8,472
Average notional value	$	24,918,016
Total return swaps:
Average number of contracts		10
Average notional value	$	97,586,788

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.65% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 35

(“BIM”) and BlackRock International Limited, both affiliates of the Manager. The Manager pays each sub-advisor for services they provide, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II and Class III shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Consolidated Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $51,896 for certain accounting services, which is included in accounting services in the Consolidated Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% and 0.25% based upon the average daily net assets attributable to Class II and Class III.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown on the Consolidated Statement of Assets and Liabilities as securities loaned and collateral on securities loaned at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Consolidated Statement of Operations. For the six months ended June 30, 2010, BIM received $10,935 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns and excluding short-term securities and US government securities for the six months ended June 30, 2010, were $1,360,099,860 and $480,290,815, respectively.

Purchases and sales of US government securities for the six months ended June 30, 2010, were $422,740,991 and $287,942,724, respectively.

Transactions in options written for the six months ended June 30, 2010, were as follows:

		Calls						Puts
					Premiums						Premiums
		Contracts			Received			Contracts			Received
Outstanding options, beginning of period			15,020		$	5,932,452			1,871		$	1,834,267
Options written			10,266			2,109,473			426			346,561
Options closed			(2,988	)		(1,508,789	)		—			—
Options expired			(3,833	)		(919,843	)		(1,871	)		(1,834,267	)
Options exercised			(9,946	)		(4,486,507	)
	��
Outstanding options, end of period			8,519		$	1,126,786			426		$	346,561

36 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

As of June 30, 2010, the value of portfolio holdings subject to cover call options was $16,893,705.

5. Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Consolidated Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

6. Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2016	$	19,694,526
2017		14,665,517
Total	$	34,360,043

7. Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Consolidated Statements of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance. Please see the Consolidated Schedule of Investments for concentrations in specific countries.

As of June 20, 2010, the Fund had the following industry classifications:

	Percent of
	Long-Term
	Investments
U.S. Government		12	%
Oil, Gas & Consumable Fuels		11
Metals & Mining		8
Foreign Agency Obligations		8
Pharmaceuticals		5
Other*		56

*  All other industries held were each less than 5% of long-term investments.

8.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		15,833,758		$	235,577,904
Shares redeemed		(2,985,764	)		(44,131,499	)
Net increase		12,847,994		$	191,446,405

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		15,859,836		$	227,775,783
Shares issued to shareholders in reinvestment of dividends and distributions		948,194			13,794,991
Total issued		16,808,030			241,570,774
Shares redeemed		(6,476,970	)		(86,929,801	)
Net increase		10,331,060		$	154,640,973

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		465,613		$	6,898,369
Shares redeemed		(169,317	)		(2,476,525	)
Net increase		296,296		$	4,421,844

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 37

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		490,084		$	6,895,524
Shares issued to shareholders in reinvestment of dividends and distributions		6,881			101,282
Total issued		496,965			6,996,806
Shares redeemed		(94,106	)		(1,295,559	)
Net increase		402,859		$	5,701,247

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		84,254,855		$	1,127,609,582
Shares redeemed		(37,016,184	)		(490,173,430	)
Net increase		47,238,671		$	637,436,152

Class III Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		248,876,521		$	2,950,992,388
Shares issued to shareholders in reinvestment of dividends and distributions		5,563,432			72,713,728
Total issued		254,439,953			3,023,706,116
Shares redeemed		(76,785,117	)		(906,407,738	)
Net increase		177,654,836		$	2,117,298,378

9.  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.

38 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Global Opportunities V.I. Fund

Semi-Annual Report (Unaudited)

June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Global Opportunities V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  During the period, the Fund’s name was changed from the BlackRock Global Growth V.I. Fund to the BlackRock Global Opportunities V.I. Fund.

•  Effective January 1, 2010, the Fund changed its primary benchmark from the S&P Global Broad Market Index to the MSCI All Country World Index. The MSCI All Country World Index represents the industry standard benchmark for global multi-cap strategies such as the Fund’s, is widely used by the Fund’s peer group, and more accurately reflects the universe of securities in which the Fund invests.

•  For the six-month period ended June 30, 2010, the Fund underperformed both the MSCI All Country World Index and the S&P Global Broad Market Index.

What factors influenced performance?

•  Fund performance relative to the new benchmark, the MSCI All Country World Index, was negatively affected by stock selection in the information technology (IT) sector, where Fund holdings underperformed their benchmark counterparts. Specific detractors included the Fund’s positioning in the communications equipment industry and its overweight in the internet software & services industry, which underperformed during the period. Additionally, stock selection in the financials, consumer staples and industrials sectors detracted from performance.

•  Conversely, factors that contributed to the Fund’s relative results included stock selection in the energy and consumer discretionary sectors. In late May, we sold BP Plc given its deteriorating earnings outlook and the lack of clarity around its valuation. This move ultimately benefited the Fund’s relative performance in the energy sector. Regionally, the Fund’s overweight in Japan and underweight in Europe proved advantageous.

Describe recent portfolio activity.

•  During the six-month period, changes to overall Fund positioning were small in magnitude. Additions to the consumer staples, energy and industrials sectors were financed by trimming positions in financials, IT and health care. The Fund generally remained underweight in emerging market equities, although many of its developed market holdings benefit from significant demand in those economies.

Describe Fund positioning at period end.

•  The Fund seeks to balance risk and reward during this important phase of recovery from a major financial crisis. We believe that a rotational, range-bound market will remain until there is more clarity on the issues facing the global economy. Against this backdrop, the Fund maintains a low-risk profile compared to its benchmark as of the end of the period. The Fund’s regional, industry and style risks at period-end remained well below its historic averages.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Global		BlackRock Global
	Opportunities V.I.		Opportunities V.I.		MSCI All		S&P Global
	Fund(1)-Class I		Fund(1)-Class III		Country World		Broad Market
	Shares(2)		Shares(2)		Index(3)		Index4
6/00		10000		10000		10000		10000
6/01		7198		7180		7931		8296
6/02		5566		5538		6777		7231
6/03		5112		5074		6639		7190
6/04		6413		6349		8257		9142
6/05		7386		7294		9179		10319
6/06		9049		8914		10834		12332
6/07		12134		11924		13567		15554
6/08		12053		11816		12310		14103
6/09		8528		8337		8700		10060
6/10		9215		8986		9724		11459

1	The Fund invests in a diversified portfolio of equity securities of issuers located in various foreign countries and the United States, placing particular emphasis on companies that have exhibited above-average earnings growth.
2	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 June 23, 2008, the recommencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.
3	This market capitalization-weighted index is made up of equities from forty-five countries, including the United States. Effective January 1, 2010, the Fund changed the benchmark against which it measures its performance from the S&P Global Broad Market Index to the MSCI All Country World Index.
4	This rules-based index is designed to measure global stock market performance.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares5		(11.21	)%		8.06	%		4.52	%		(0.81	)%
Class III Shares5		(11.33	)		7.79			4.26	6		(1.06	)6
MSCI All Country World Index		(9.37	)		11.76			1.16			(0.28	)
S&P Global Broad Market Index		(8.26	)		13.90			2.12			1.37

5	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
6	The returns for Class III Shares prior to June 23, 2008, the recommencement of operations of Class III Shares, are based upon performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Geographic Allocation	Long-Term Investments
United States		54	%
Japan		9
Germany		6
Canada		5
United Kingdom		4
Netherlands		3
France		3
Switzerland		2
Spain		2
Other1		12

¹ Other includes a 1% investment in each of the following countries: Hong Kong, Sweden, Mexico, Thailand, Finland, China, Belgium, India, Brazil, Singapore, Taiwan, Ireland, South Korea, Russia and Austria.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	887.90	$	5.15	$	1,000	$	1,019.35	$	5.51		1.10%
Class III	$	1,000	$	886.70	$	6.32	$	1,000	$	1,018.11	$	6.76		1.35%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including options and forward currency exchange contracts, as specified in Note 2 of the Notes to Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, equity and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Austria — 0.4%
Erste Bank der Oesterreichischen Sparkassen AG		6,500	$	206,234
Belgium — 0.6%
Anheuser-Busch InBev NV		6,600		317,337
Brazil — 0.6%
BM&FBOVESPA SA		15,000		97,230
Banco Santander Brasil SA — ADR		8,900		91,937
Cia de Bebidas das Americas, Preference Shares — ADR		1,200		121,212
				310,379
Canada — 4.3%
Canadian Natural Resources Ltd.		10,600		351,790
Crescent Point Energy Corp.		7,100		247,838
Enbridge Inc.		6,000		279,442
Pan American Silver Corp.		15,500		391,840
Silver Wheaton Corp. (a)		12,900		259,290
Suncor Energy, Inc.		6,200		182,468
The Toronto-Dominion Bank		3,100		200,872
TransCanada Corp.		8,100		270,951
				2,184,491
Cayman Islands — 0.4%
Want Want China Holdings Ltd.		232,200		194,914
China — 0.7%
China Construction Bank, Class H		177,900		143,212
Focus Media Holding Ltd. — ADR (a)		12,300		191,019
				334,231
Finland — 0.7%
Fortum Oyj		9,400		206,337
Nokia Oyj — ADR		20,800		169,520
				375,857
France — 2.7%
AXA SA		8,000		122,217
BNP Paribas SA		3,940		211,976
Compagnie Generale des Etablissements Michelin		3,900		271,722
Pinault-Printemps-Redoute		900		111,801
Total SA		8,700		388,359
Unibail — Rodamco		1,400		228,175
				1,334,250
Germany — 6.1%
Bayerische Motoren Werke AG		5,200		252,599
Deutsche Boerse AG		2,300		139,733
Deutsche Lufthansa AG		26,900		371,880
Deutsche Post AG		21,000		306,183
Deutsche Telekom AG		21,800		257,362
Fresenius Medical Care AG		4,000		215,444
Merck KGaA		1,400		102,702
RWE AG		3,600		235,570
SAP AG — ADR		7,300		323,390
Siemens AG		5,600		500,864
Volkswagen AG, Preference Shares		4,264		374,169
				3,079,896
Hong Kong — 1.4%
CNOOC Ltd. — ADR		1,400		238,238
Cheung Kong Holdings Ltd.		26,000		301,840
Wing Hang Bank Ltd.		14,900		145,475
				685,553
India — 0.6%
Punjab National Bank Ltd.		10,300		231,279
Sterlite Industries India Ltd. — ADR		5,600		79,744
				311,023
Ireland — 0.5%
Accenture Plc		7,000		270,550
Israel — 0.3%
Teva Pharmaceutical Industries Ltd. — ADR		3,400		176,766
Italy — 0.4%
Intesa Sanpaolo SpA		68,500		180,409
Japan — 9.0%
Amada Co., Ltd.		45,800		301,055
Asahi Breweries Ltd.		10,500		177,881
Canon, Inc.		8,700		324,244
Honda Motor Co., Ltd.		12,100		355,411
Itochu Corp.		45,400		354,913
JTEKT Corp.		52,700		487,379
Japan Tobacco, Inc.		130		404,443
Marubeni Corp.		71,800		368,076
Mitsubishi UFJ Financial Group, Inc.		45,900		208,418
Nitto Denko Corp.		7,600		249,306
Nomura Holdings, Inc.		37,400		204,334
Sumitomo Heavy Industries Ltd.		50,500		296,311
Sumitomo Mitsui Financial Group, Inc.		9,000		254,721
T&D Holdings, Inc.		12,600		269,418
Tokio Marine Holdings, Inc.		9,500		249,754
				4,505,664
Malaysia — 0.4%
CIMB Group Holdings Bhd		94,800		204,111
Mexico — 0.9%
Fomento Economico Mexicano, SA de CV — ADR		4,200		181,230
Grupo Mexico, SA de CV		105,900		251,382
				432,612
Netherlands — 2.8%
Aegon NV (a)		40,000		212,474
Corio NV		2,400		116,547

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts	JPY	Japanese Yen
AUD	Australian Dollar	MXN	Mexican New Peso
BRL	Brazilian Real	NOK	Norwegian Krone
CAD	Canadian Dollar	NZD	New Zealand Dollar
CHF	Swiss Franc	PLN	Poland Zloty
DKK	Danish Krone	SEK	Swedish Krona
EUR	Euro	SGD	Singapore Dollar
GBP	British Pound	USD	US Dollar
HKD	Hong Kong Dollar	ZAR	South African Rand

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Netherlands (concluded)
ING Groep NV CVA (a)		33,000	$	244,217
Royal Dutch Shell Plc, Class A		32,400		814,462
				1,387,700
Russia — 0.4%
VimpelCom Ltd. — ADR (a)		13,700		221,666
Singapore — 0.6%
CapitaLand Ltd.		53,100		135,402
DBS Group Holdings Ltd.		16,000		155,278
				290,680
South Africa — 0.4%
Naspers Ltd.		5,500		185,215
South Korea — 0.5%
Samsung Electronics Co., Ltd.		400		250,886
Spain — 1.7%
Banco Santander SA		30,500		319,829
Inditex SA		4,100		233,788
Telefonica SA		15,800		292,691
				846,308
Sweden — 1.0%
Nordea Bank AB		26,600		219,348
Svenska Cellulosa AB		24,700		290,505
				509,853
Switzerland — 1.9%
Nestle SA, Registered Shares		9,900		477,366
Novartis AG, Registered Shares		5,500		266,547
Swiss Life Holding		2,300		219,818
				963,731
Taiwan — 0.6%
Mega Financial Holding Co., Ltd.		298,100		159,168
Siliconware Precision Industries Co., Ltd. — ADR		24,000		128,400
				287,568
Thailand — 0.8%
Bangkok Bank PCL, Foreign Shares		31,500		123,168
Banpu PCL		15,400		285,225
				408,393
United Kingdom — 3.8%
Barclays Plc		70,300		280,602
GlaxoSmithKline Plc		12,700		215,657
HSBC Holdings Plc		28,425		259,682
Tullow Oil Plc		17,100		254,368
Unilever Plc		9,800		261,973
Vodafone Group Plc — ADR		16,700		345,189
WPP Plc		29,200		275,078
				1,892,549
United States — 51.6%
ACE Ltd.		5,700		293,436
AMR Corp. (a)		28,900		195,942
AT&T, Inc.		15,900		384,621
Aetna, Inc.		4,500		118,710
American Electric Power Co., Inc.		7,900		255,170
Ameriprise Financial, Inc.		8,400		303,492
Apple, Inc. (a)		2,300		578,519
Applied Materials, Inc.		16,400		197,128
Arch Coal, Inc.		10,100		200,081
Avon Products, Inc.		8,800		233,200
Bemis Co.		9,400		253,800
Bristol-Myers Squibb Co.		19,300		481,342
Bucyrus International, Inc.		6,200		294,190
Bunge Ltd.		3,700		182,003
CVS Caremark Corp.		5,900		172,988
Caterpillar, Inc.		7,500		450,525
Celgene Corp. (a)		2,400		121,968
Chevron Corp.		6,300		427,518
Cisco Systems, Inc. (a)		19,500		415,545
Citigroup, Inc. (a)		51,600		194,016
Colgate-Palmolive Co.		5,600		441,056
Comerica, Inc.		7,200		265,176
ConAgra Foods, Inc.		12,700		296,164
ConocoPhillips		10,800		530,172
Corning, Inc.		22,700		366,605
DIRECTV, Class A (a)		8,800		298,496
Deere & Co.		4,700		261,696
Dominion Resources, Inc.		6,500		251,810
E.I. du Pont de Nemours & Co.		5,400		186,786
EMC Corp. (a)		20,000		366,000
EOG Resources, Inc.		2,400		236,088
eBay, Inc. (a)		16,000		313,760
Edison International		9,700		307,684
Entergy Corp.		4,200		300,804
Express Scripts, Inc. (a)		4,100		192,782
Exxon Mobil Corp.		12,400		707,668
FMC Corp.		6,100		350,323
Federal Realty Investment Trust		3,600		252,972
FedEx Corp.		3,500		245,385
General Electric Co.		45,000		648,900
General Mills, Inc.		7,300		259,296
Genzyme Corp. (a)		2,600		132,002
Goodrich Corp.		7,100		470,375
Google, Inc., Class A (a)		800		355,960
Hewlett-Packard Co.		5,700		246,696
Home Depot, Inc.		3,900		109,473
Hudson City Bancorp, Inc.		2,300		28,152
Intel Corp.		12,100		235,345
International Business Machines Corp.		3,700		456,876
International Paper Co.		10,200		230,826
JPMorgan Chase & Co.		6,000		219,660
KeyCorp		46,100		354,509
Kohl’s Corp. (a)		5,100		242,250
Liberty Global, Inc. (a)		10,700		278,093
Lincoln National Corp.		9,800		238,042
McKesson Corp.		2,800		188,048
Microsoft Corp.		29,400		676,494
NII Holdings, Inc. (a)		5,400		175,608
Newmont Mining Corp.		12,200		753,228
News Corp., Class A		21,400		255,944
Nike, Inc., Class B		4,200		283,710
Norfolk Southern Corp.		7,800		413,790
Occidental Petroleum Corp.		6,700		516,905
Oracle Corp.		14,200		304,732
PPL Corp.		10,000		249,500
PepsiCo, Inc.		7,800		475,410
Pfizer, Inc.		24,900		355,074
Piper Jaffray Cos. (a)		2,800		90,216
Qwest Communications International, Inc.		29,100		152,775
Sonoco Products Co.		8,300		252,984
Sprint Nextel Corp. (a)		36,500		154,760
St. Jude Medical, Inc. (a)		1,700		61,353
Stanley Black & Decker, Inc.		5,027		253,964
SunTrust Banks, Inc.		14,900		347,170
T. Rowe Price Group, Inc.		4,000		177,560
Target Corp.		4,300		211,431
Temple-Inland, Inc.		14,000		289,380

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
United States (concluded)
Texas Instruments, Inc.		10,300	$	239,784
Textron, Inc.		13,500		229,095
Thermo Fisher Scientific, Inc. (a)		6,100		299,205
U.S. Bancorp		12,200		272,670
United Parcel Service, Inc., Class B		6,300		358,407
UnitedHealth Group, Inc.		4,200		119,280
Urban Outfitters, Inc. (a)		5,400		185,706
Wal-Mart Stores, Inc.		8,000		384,560
WellPoint, Inc. (a)		2,400		117,432
Yum! Brands, Inc.		9,300		363,072
Zions Bancorp.		11,700		252,369
				25,893,692
Total Long-Term Investments (Cost — $49,805,946) — 96.1%				48,242,518
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (b)(c)		1,776,489		1,776,489
Total Short-Term Securities (Cost — $1,776,489) — 3.6%				1,776,489
Total Investments Before Outstanding Options Written (Cost — $51,582,435*) — 99.7%				50,019,007
Options Written	Contracts
Exchange-Traded Call Options Written — (0.0)%
Edison International, Strike Price USD 32.50, expires 7/17/10		50		(1,500	)
Sprint Nextel Corp., Strike Price USD 5, expires 11/20/10		365		(16,608	)
				(18,108	)
Exchange-Traded Put Options Written — (0.1)%
Sprint Nextel Corp., Strike Price USD 4, expires 11/20/10		365		(20,805	)
Over-the-Counter Call Options Written — (0.0)%
Entergy Corp., Strike Price USD 76, expires 8/13/10, Broker Jeffries & Co., Inc.		21		(1,458	)
PPL Corp., Strike Price USD 26, expires 8/13/10, Broker Jeffries & Co., Inc.		52		(1,643	)
Piper Jaffray Cos., Strike Price USD 37, expires 7/21/10, Broker UBS AG		28		(285	)
Qwest Communications International Inc., Strike Price USD 5.50, expires 11/18/10, Broker Citibank NA		291		(4,781	)
				(8,167	)
Over-the-Counter Put Options Written — (0.0)%
Qwest Communications International Inc., Strike Price USD 5, expires 11/18/10, Broker Citibank NA		291		(3,993	)
Total Options Written (Premiums Received — $55,017) — (0.1)%				(51,073	)
Total Investments, Net of Outstanding Options Written — 99.6%				49,967,934
Other Assets Less Liabilities — 0.4%				215,050
Net Assets — 100.0%			$	50,182,984

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost	$	52,209,179
Gross unrealized appreciation	$	2,011,564
Gross unrealized depreciation		(4,201,736	)
Net unrealized depreciation	$	(2,190,172	)

(a)	Non-income producing security.
(b)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares				Shares
	Held at				Held at
	December 31,		Net		June 30,
Affiliate	2009		Activity		2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		377,439		1,399,050		1,776,489	$	769

(c)  Represents the current yield as of report date.

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

						Unrealized
Currency	Currency			Settlement		Appreciation
Purchased	Sold		Counterparty	Date		(Depreciation)
BRL 690,245		USD 370,900	Royal Bank of Scotland		7/02/10	$	11,335
CHF 100,000		USD 92,816	Deutsche Bank AG		7/02/10		(39	)
USD 370,900		BRL 660,944	Goldman Sachs		7/02/10		4,891
USD 383,150		BRL 690,245	Royal Bank of Scotland		7/02/10		915
USD 46,349		EUR 38,000	Citibank NA		7/02/10		(120	)
AUD 1,826,000		USD 1,649,180	UBS AG		7/21/10		(116,049	)
CAD 1,474,000		USD 1,466,066	Citibank NA		7/21/10		(81,632	)
CAD 171,000		USD 166,174	Deutsche Bank AG		7/21/10		(5,565	)
CHF 42,000		USD 36,670	Citibank NA		7/21/10		2,309
CHF 112,000		USD 99,125	Morgan Stanley Capital Services, Inc.		7/21/10		4,819
CHF 133,600		USD 117,319	Royal Bank of Scotland		7/21/10		6,671
CHF 1,024,000		USD 954,455	UBS AG		7/21/10		(4,112	)
DKK 147,000		USD 25,350	UBS AG		7/21/10		(1,217	)
EUR 286,000		USD 350,842	Citibank NA		7/21/10		(1,071	)
EUR 315,800		USD 391,061	Deutsche Bank AG		7/21/10		(4,845	)
EUR 20,000		USD 25,174	Morgan Stanley Capital Services, Inc.		7/21/10		(715	)

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Schedule of Investments (continued)

						Unrealized
Currency	Currency			Settlement		Appreciation
Purchased	Sold		Counterparty	Date		(Depreciation)
EUR 83,000		USD 102,983	Royal Bank of Scotland		7/21/10	$	(1,476	)
GBP 1,688,000		USD 2,592,018	Citibank NA		7/21/10		(70,018	)
GBP 381,000		USD 581,038	Morgan Stanley Capital Services, Inc.		7/21/10		(11,795	)
GBP 222,400		USD 326,711	UBS AG		7/21/10		5,572
HKD 1,133,000		USD 145,880	Royal Bank of Scotland		7/21/10		(365	)
HKD 8,937,000		USD 1,152,147	UBS AG		7/21/10		(4,340	)
JPY 25,795,000		USD 288,535	Citibank NA		7/21/10		3,313
JPY 30,715,000		USD 333,957	Deutsche Bank AG		7/21/10		13,556
JPY 23,415,000		USD 260,985	Morgan Stanley Capital Services, Inc.		7/21/10		3,935
JPY 60,000,000		USD 655,903	Royal Bank of Scotland		7/21/10		22,944
JPY 28,683,000		USD 317,664	UBS AG		7/21/10		6,859
MXN 1,764,000		USD 142,971	Citibank NA		7/21/10		(6,863	)
NOK 1,000,000		USD 168,916	Citibank NA		7/21/10		(15,423	)
NZD 139,000		USD 93,593	Royal Bank of Scotland		7/21/10		1,605
PLN 305,000		USD 103,779	Deutsche Bank AG		7/21/10		(14,005	)
SEK 619,000		USD 86,304	Citibank NA		7/21/10		(6,920	)
SEK 81,000		USD 10,650	Deutsche Bank AG		7/21/10		(262	)
SEK 148,400		USD 18,887	UBS AG		7/21/10		145
SGD 219,000		USD 159,747	Deutsche Bank AG		7/21/10		(3,227	)
SGD 358,000		USD 253,919	Morgan Stanley Capital Services, Inc.		7/21/10		1,944
USD 813,174		AUD 935,000	Goldman Sachs		7/21/10		28,138
USD 334,897		AUD 400,000	UBS AG		7/21/10		(948	)
USD 424,608		CAD 440,000	Citibank NA		7/21/10		11,344
USD 46,734		CAD 47,000	Royal Bank of Scotland		7/21/10		2,590
USD 330,265		CAD 341,000	UBS AG		7/21/10		9,985
USD 77,982		CHF 89,000	Citibank NA		7/21/10		(4,616	)
USD 92,839		CHF 100,000	Deutsche Bank AG		7/21/10		32
USD 164,053		CHF 177,000	UBS AG		7/21/10		(215	)
USD 2,287,932		EUR 1,719,000	Citibank NA		7/21/10		185,641
USD 904,294		EUR 688,000	Deutsche Bank AG		7/21/10		62,888
USD 70,056		EUR 57,000	Morgan Stanley Capital Services, Inc.		7/21/10		346
USD 12,383		EUR 10,000	Royal Bank of Scotland		7/21/10		153
USD 378,669		EUR 306,000	UBS AG		7/21/10		4,439
USD 39,293		GBP 26,000	Deutsche Bank AG		7/21/10		447
USD 831,682		GBP 562,000	UBS AG		7/21/10		(7,989	)
USD 62,157		HKD 484,000	Citibank NA		7/21/10		(5	)
USD 75,136		HKD 585,000	UBS AG		7/21/10		2
USD 1,693,892		JPY  159,422,000	Citibank NA		7/21/10		(109,826	)
USD 482		JPY 44,000	Morgan Stanley Capital Services, Inc.		7/21/10		(16	)
USD 120,243		JPY 11,311,000	UBS AG		7/21/10		(7,731	)
USD 491,397		SGD 674,000	Deutsche Bank AG		7/21/10		9,687
ZAR 2,340,000		USD 309,548	UBS AG		7/21/10		(5,810	)
BRL 665,691		USD 370,900	Goldman Sachs		8/03/10		(4,797	)
Total						$	(85,507	)

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:
Common Stocks:
Austria		—	$	206,234		—		$	206,234
Belgium		—		317,337		—			317,337
Brazil	$	310,379		—		—			310,379
Canada		2,184,491		—		—			2,184,491
Cayman Islands		—		194,914		—			194,914
China		191,019		143,212		—			334,231
Finland		169,520		206,337		—			375,857
France		—		1,334,250		—			1,334,250
Germany		426,092		2,653,804		—			3,079,896
Hong Kong		540,078		145,475		—			685,553
India		79,744		231,279		—			311,023
Ireland		270,550		—		—	��		270,550
Israel		176,766		—		—			176,766
Italy		—		180,409		—			180,409
Japan		355,411		4,150,253		—			4,505,664
Malaysia		—		204,111		—			204,111
Mexico		432,612		—		—			432,612
Netherlands		—		1,387,700		—			1,387,700
Russia		221,666		—		—			221,666
Singapore		—		290,680		—			290,680
South Africa		—		185,215		—			185,215

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Schedule of Investments (concluded)

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets: Investments in Securities: Common Stocks (concluded):
South Korea		—	$	250,886		—	$	250,886
Spain		—		846,308		—		846,308
Sweden		—		509,853		—		509,853
Switzerland		—		963,731		—		963,731
Taiwan	$	128,400		159,168		—		287,568
Thailand		—		408,393		—		408,393
United Kingdom		345,189		1,547,360		—		1,892,549
United States		25,893,692		—		—		25,893,692
Short-Term Securities		1,776,489		—		—		1,776,489
Total	$	33,502,098	$	16,516,909		—	$	50,019,007

Derivative Financial Instruments1
Valuation Inputs	Level 1			Level 2			Level 3		Total
Assets:
Foreign currency exchange contracts		—		$	406,505			—	$	406,505
Liabilities:
Foreign currency exchange contracts		—			(492,012	)		—		(492,012	)
Equity contracts	$	(38,913	)		(12,160	)		—		(51,073	)
Total	$	(38,913	)	$	(97,667	)		—	$	(136,580	)

¹ Derivative financial instruments are foreign currency exchange contracts and options written. Foreign currency exchange contracts are shown at the unrealized appreciation/depreciation on the instrument and options written are shown at value.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$49,805,946)	$	48,242,518
Investments at value—affiliated (cost—$1,776,489)		1,776,489
Unrealized appreciation on foreign currency exchange contracts		406,505
Foreign currency at value (cost—$212,466)		210,934
Investments sold receivable		892,614
Dividends receivable		130,129
Options written receivable		7,849
Capital shares sold receivable		143
Prepaid expenses		25,928
Total assets		51,693,109
Liabilities:
Options written, at value (premiums received—$55,017)		51,073
Unrealized depreciation on foreign currency exchange contracts		492,012
Investments purchased payable		823,203
Capital shares redeemed payable		55,505
Investment advisory fees payable		32,460
Other affiliates payable		1,109
Officer’s and Directors’ fees payable		248
Distribution fees payable		183
Other accrued expenses payable		54,332
Total liabilities		1,510,125
Net Assets	$	50,182,984
Net Assets Consist of:
Paid-in capital	$	104,018,282
Undistributed net investment income		484,684
Accumulated net realized loss		(52,674,576	)
Net unrealized appreciation/depreciation		(1,645,406	)
Net Assets	$	50,182,984
Net Asset Value:
Class I—Based on net assets of $49,304,913 and 4,325,310 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.40
Class III—Based on net assets of $878,071 and 77,347 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.35

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	755,747
Foreign taxes withheld		(50,169	)
Dividends—affiliated		769
Total income		706,347
Expenses:
Investment advisory		217,808
Professional		29,240
Custodian		24,728
Accounting services		14,782
Officer and Directors		10,120
Printing		6,813
Transfer agent—Class I		2,696
Transfer agent—Class III		43
Distribution—Class III		1,145
Miscellaneous		12,652
Total expenses		320,027
Less fees waived by advisor		(448	)
Total expenses after fees waived		319,579
Net investment income		386,768
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		3,589,648
Options written		18,478
Foreign currency transactions		(242,799	)
		3,365,327
Net change in unrealized appreciation/depreciation on:
Investments		(10,294,881	)
Options written		3,944
Foreign currency transactions		3,557
		(10,287,380	)
Total realized and unrealized loss		(6,922,053	)
Net Decrease in Net Assets Resulting from Operations	$	(6,535,285	)

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	386,768		$	624,213
Net realized gain		3,365,327			15,164,662
Net change in unrealized appreciation/depreciation		(10,287,380	)		7,100,266
Net increase (decrease) in net assets resulting from operations		(6,535,285	)		22,889,141
Dividends to Shareholders From:
Net investment income:
Class I		—			(1,453,221	)
Class III		—			(20,769	)
Decrease in net assets resulting from dividends to shareholders		—			(1,473,990	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(5,239,441	)		(6,855,522	)
Net Assets:
Total increase (decrease) in net assets		(11,774,726	)		14,559,629
Beginning of period		61,957,710			47,398,081
End of period	$	50,182,984		$	61,957,710
Undistributed net investment income	$	484,684		$	97,916

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	12.84		$	9.69	$	18.02	$	13.29	$	10.99	$	9.65
Net investment income1		0.08			0.11		0.13		0.14		0.13		0.13
Net realized and unrealized gain (loss)		(1.52)			3.34		(8.41)		4.76		2.29		1.34
Net increase (decrease) from investment operations		(1.44)			3.45		(8.28)		4.90		2.42		1.47
Dividends from net investment income		—			(0.30)		(0.05)		(0.17)		(0.12)		(0.13)
Net asset value, end of period	$	11.40		$	12.84	$	9.69	$	18.02	$	13.29	$	10.99
Total Investment Return:2
Based on net asset value		(11.21)%	3		35.65%		(45.93)%		36.88%		22.01%		15.19%
Ratios to Average Net Assets:
Total expenses		1.10%	4		1.11%		0.99%		0.95%		0.96%		1.00%
Total expenses after fees waived		1.10%	4		1.11%		0.99%		0.95%		0.96%		1.00%
Net investment income		1.33%	4		1.02%		0.88%		0.90%		1.08%		1.32%
Supplemental Data:
Net assets, end of period (000)	$	49,305		$	61,030	$	47,267	$	115,961	$	76,032	$	63,494
Portfolio turnover		75%			218%		131%		64%		85%		117%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Financial Highlights (concluded)

	Class III
						Period										Period
						June 23,										September 30,
	Six Months Ended			Year Ended		20081 to										20043 to
	June 30, 2010			December 31,		December 31,			Year Ended December 31,							December 31,
	(Unaudited)			2009		2008			20072			2006		2005		2004
Per Share Operating Performance:
Net asset value, beginning of period	$	12.80		$	9.68	$	15.76		$	13.28		$	11.00	$	9.65	$	8.76
Net investment income4		0.07			0.06		0.02			0.11			0.12		0.10		0.05
Net realized and unrealized gain (loss)		(1.52)			3.36		(6.06)			4.76			2.28		1.38		0.99
Net increase (decrease) from investment operations		(1.45)			3.42		(6.04)			4.87			2.40		1.48		1.04
Dividends from net investment income		—			(0.30)		(0.04)			(0.14)			(0.12)		(0.13)		(0.15)
Net asset value, end of period	$	11.35		$	12.80	$	9.68		$	18.01		$	13.28	$	11.00	$	9.65
Total Investment Return:5
Based on net asset value		(11.33)%	6		35.38%		(38.29)%	6		36.66%			21.81%		15.29%		11.82%	6
Ratios to Average Net Assets:
Total expenses		1.35%	7		1.39%		1.36%	7		1.17%			1.07%		1.00%		0.92%	7
Total expenses after fees waived		1.35%	7		1.39%		1.36%	7		1.17%			1.07%		1.00%		0.92%	7
Net investment income		1.14%	7		0.48%		1.20%	7		0.69%			1.00%		1.24%		2.09%	7
Supplemental Data:
Net assets, end of period (000)	$	878		$	928	$	132		$	—	2	$	2	$	1	$	1
Portfolio turnover		75%			218%		131%			64%			85%		117%		78%

1	Recommencement of operations.
2	All shares were redeemed as of December 31, 2007.
3	Commencement of operations.
4	Based on average shares outstanding.
5	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
6	Aggregate total investment return.
7	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock Global Opportunities V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Global Opportunities V.I. Fund (“the Fund”) (formerly BlackRock Global Growth V.I. Fund), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I and Class III Shares have equal 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 following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

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. Over-the-counter (“OTC”) options and 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.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. Each business day, the Fund uses a pricing service

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (foreign currency exchange contracts and written options), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, their exposure to certain risks such as equity risk and foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. For OTC options purchased, the Fund bears the risk of loss in the amount of the premiums paid

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

plus the positive change in market values net of any collateral received on the options should the counterparty fail to perform under the contracts. Options written by the Fund does not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (equity risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

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 the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of an option written could result in the Fund purchasing or selling a security at a price different from the current market value. The Fund may execute transactions in both listed and OTC options.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts	$	406,505	Unrealized depreciation on foreign currency exchange contracts	$	492,012
Equity contracts				Options written at value		51,073
Total		$	406,505		$	543,085

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Foreign Currency
	Transactions			Options		Total
Net Realized Gain (Loss) from
Foreign currency transactions	$	(306,239	)	$	—	$	(306,239	)
Equity contracts		—		$	18,478	$	18,478
Net Change in Unrealized Appreciation/Depreciation on
Foreign currency transactions	$	21,425		$	—	$	21,425
Equity contracts		—		$	3,944	$	3,944

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Foreign currency exchange contracts:
Average number of contracts – US dollars purchased		44
Average number of contracts – US dollars sold		43
Average US dollar amounts purchased	$	10,947,744
Average US dollar amounts sold	$	15,703,477
Options:
Average number of contracts written		842
Average notional value of contracts written	$	864,225

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.75% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $556 for certain accounting services, which is included in accounting services in the Statement of Operations.

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

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares,

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $42,337,743 and $48,630,957, respectively.

Transactions in options written for the six months ended June 30, 2010, were as follows:

	Calls						Puts
				Premiums						Premiums
	Contracts*			Received			Contracts*			Received
Outstanding options, beginning of period		—			—			—			—
Options written		1,030		$	47,283			811		$	32,338
Options closed		—			—			(70	)		(9,627	)
Options expired		(223	)		(10,989	)		(85	)		(3,988	)
Outstanding options, end of period		807		$	36,294			656		$	18,723

*  One contract represents a notional amount of $100.

As of June 30, 2010, the value of portfolio securities subject to cover call options written was $836,493.

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2010	$	41,396,526
2011		6,428,142
2017		7,590,088
Total	$	55,414,756

7. ��Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statements of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance. Please see the Schedule of Investments for concentrations in specific countries.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

As of June 30, 2010, the Fund had the following industry classifications:

	Percent of
	Long-Term
Industry	Investments
Oil, Gas & Consumable Fuels		12	%
Commercial Banks		11
Machinery		4
Metals & Mining		4
Other*		69

*  All other industries held were each less than 5% of long-term investments.

8.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		112,996		$	1,455,428
Shares redeemed		(541,979	)		(6,763,007	)
Net decrease		(428,983	)	$	(5,307,579	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		3,295,209		$	33,075,938
Shares issued to shareholders in reinvestment of dividends		113,683			1,453,221
Total issued		3,408,892			34,529,159
Shares redeemed		(3,533,857	)		(42,103,345	)
Net decrease		(124,965	)	$	(7,574,186	)

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		16,928		$	219,848
Shares redeemed		(12,057	)		(151,710	)
Net increase		4,871		$	68,138

Class III Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		62,421		$	760,218
Shares issued to shareholders in reinvestment of dividends		1,617			20,769
Total issued		64,038			780,987
Shares redeemed		(5,150	)		(62,323	)
Net increase		58,888		$	718,664

9.  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.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

BlackRock Government Income V.I. Fund

Semi-Annual Report (Unaudited)

June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund outperformed its benchmark, a 50%/50% blend of the Barclays Capital Mortgage-Backed Securities Index and the BofA Merrill Lynch 10-Year Treasury Index.

What factors influenced performance?

•  Spread sectors generally performed well during the six-month period, even in the face of weaker economic data and the European sovereign debt crisis. As a result, the Fund’s exposure to non-agency mortgage-backed securities (MBS), which are not represented in the benchmark index, benefited performance. Also additive to Fund results was an overweight position in agency MBS, particularly 30-year pass-throughs, which performed well following the end of the Federal Reserve’s mortgage purchase program and through the second quarter. Finally, a longer duration bias and a yield-curve-flattening position aided Fund performance as the curve flattened in the latter half of the period.

•  Conversely, the Fund’s yield curve positioning in the first half of the reporting period modestly detracted from performance.

Describe recent portfolio activity.

•  Early in the six-month period, we increased the Fund’s exposure to US Treasuries. However, given the second-quarter rally in government assets, we reduced exposure to the sector and the Fund ended the period with less exposure than where it began. We also reduced exposure to agency mortgages (primarily at the bottom of the coupon stack) following strong performance due to favorable supply and demand conditions. We also reduced the Fund’s position in agency debt and increased exposure to foreign government-guaranteed issuers.

Describe Fund positioning at period end.

•  As of the end of the period, the Fund’s duration was short relative to the benchmark. The Fund was underweight in government-related sectors including Treasuries and agency mortgages, which face increased refinancing risk due to the recent rally in government assets pushing rates down. The Fund also had modest allocations to agency debt and foreign government-guaranteed paper at period end. In the non-government space, the Fund continued to hold an allocation outside of the benchmark indexes in non-agency MBS, which we believe are attractive given their high loss-adjusted yields.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Total Return Based on a $10,000 Investment

			50% Barclays
			Capital Mortgage-Backed
			Securities Index
	BlackRock Government		& 50%
	Income V.I.		BofA Merrill		BofA Merrill		Barclays Capital
	Fund(2)-Class I		Lynch 10-Year		Lynch 10-Year		Mortgage-Backed Securities
	Shares(1)		Treasury Index(3)		Treasury Index(3)		Index(3)
6/00		10000		10000		10000		10000
6/01		11005		10983		10835		11128
6/02		11934		11952		11768		12128
6/03		12962		13225		13605		12821
6/04		12895		13137		13115		13107
6/05		13771		14170		14370		13912
6/06		13702		13783		13538		13966
6/07		14187		14567		14213		14859
6/08		15040		16046		15982		16023
6/09		15538		17414		17167		17527
6/10		16982		18786		18575		18837

1	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
2	The Fund invests in fixed income securities issued or guaranteed by the US government, its agencies or instrumentalities, including mortgage-backed securities issued or guaranteed by US Government sponsored enterprises.
3	This composite index is comprised of the returns of the Barclays Capital Mortgage-Backed Securities Index (50%) and the BofA Merrill Lynch 10-Year Treasury Index (50%). The Barclays Capital Mortgage-Backed Securities Index is a widely recognized unmanaged index that includes the mortgage-backed pass through securities of the Government National Mortgage Association, the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation that meet certain maturity and liquidity criteria. The BofA Merrill Lynch 10-Year Treasury Index is a widely recognized unmanaged one security index that consists of the current “on-the-run” 10-Year Treasury issue.

Performance Summary as of June 30, 2010

	Standardized			6-Month			Average Annual Total Returns
	30-Day Yield			Total Returns			1 Year			5 Years			10 Years
Class I Shares4		3.85	%		7.38	%		9.29	%		4.28	%		5.44	%
50% Barclays Capital Mortgage-Backed Securities Index/50% BofA Merrill Lynch 10-Year Treasury Index		—			6.90			7.87			5.80			6.51
Barclays Capital Mortgage-Backed Securities Index		—			4.46			7.47			6.25			6.54
BofA Merrill Lynch 10-Year Treasury Index		—			9.36			8.20			5.27			6.39

⁴ Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the payable date. Insurance-related fees and expenses are not reflected in these returns.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Portfolio Composition	Long-Term Investments
U.S. Government Sponsored Agency Securities		79	%
U.S. Treasury Obligations		18
Corporate Bonds		1
Non-Agency Mortgage-Backed Securities		1
Foreign Agency Obligations		1

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance the yield and NAV. However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage through borrowings including entering into reverse repurchase agreements and treasury rolls. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage will be based on short-term interest rates, which normally will be lower than the income earned by the Fund on its longer-term portfolio investments. 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 will benefit from the incremental net income.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of the portfolio investments. Changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on Fund performance from leverage.

The use of leverage may enhance opportunities for increased returns to the Fund, but as described above, they also create risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in a Fund’s NAV, market price and dividend rate than a comparable portfolio without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Fund’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. The Fund may be required to sell portfolio securities at inopportune times or below fair market values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of 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 will incur expenses in connection with the use of leverage, all of which are borne by Fund shareholders and may reduce investment returns.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including financial futures contracts, swaps, swaptions, as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, interest rate and/or other risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Including Interest Expense
	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	1,073.80	$	4.16	$	1,000	$	1,020.78	$	4.06		0.81%
	Excluding Interest Expense
Class I	$	1,000	$	1,073.80	$	3.19	$	1,000	$	1,021.73	$	3.11		0.62%

1	Expenses are equal to the expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

	Par
Asset-Backed Securities	(000)		Value
Carrington Mortgage Loan Trust, Series 2006-NC1, Class A2, 0.51%, 1/25/36 (a)	$	1,861	$	1,828,313
Total Asset-Backed Securities — 0.9%				1,828,313
Corporate Bonds
Capital Markets — 0.6%
CDP Financial, Inc., 3.00%, 11/25/14 (b)		1,295		1,306,932
Commercial Banks — 1.7%
Dexia Credit Local SA, 2.00%, 3/05/13 (b)		665		664,632
Eksportfinans ASA:
1.88%, 4/02/13		1,760		1,774,415
3.00%, 11/17/14		990		1,019,516
				3,458,563
Thrifts & Mortgage Finance — 0.4%
Achmea Hypotheekbank NV, 3.20%, 11/03/14 (b)		880		909,178
Total Corporate Bonds — 2.7%				5,674,673
Foreign Agency Obligations
Inter-American Development Bank, 2.25%, 7/15/15		1,835		1,845,279
Landwirtschaftliche Rentenbank:
4.13%, 7/15/13		95		102,091
Series E, 5.25%, 7/02/12		320		345,454
Province of Ontario Canada:
4.10%, 6/16/14		50		53,770
Series 1, 1.88%, 11/19/12		785		794,169
Total Foreign Agency Obligations — 1.5%				3,140,763
Non-Agency Mortgage-Backed Securities
Collateralized Mortgage Obligations — 1.6%
Countrywide Alternative Loan Trust, Series 2008-2R:
Class 3A1, 6.00%, 8/25/37		1,373		968,768
Class 4A1, 6.25%, 8/25/37		2,604		2,114,717
Residential Funding Mortgage Securities I, Series 2007-S2, Class A3, 6.00%, 2/25/37		362		351,875
Total Non-Agency Mortgage-Backed Securities — 1.6%				3,435,360
U.S. Government Sponsored Agency Securities
Agency Obligations — 2.5%
Fannie Mae, 2.63%, 11/20/14		1,390		1,436,583
Freddie Mac, 1.13%, 12/15/11		3,740		3,769,531
				5,206,114
Collateralized Mortgage Obligations — 4.7%
Freddie Mac Mortgage-Backed Securities, Series 3207, Class NB, 6.00%, 11/15/30		781		793,293
Ginnie Mae Mortgage-Backed Securities, Class Z (a):
Series 2004-43, 4.50%, 6/16/44		4,260		3,959,218
Series 2004-45, 5.68%, 6/16/45		4,584		5,140,701
				9,893,212
Federal Deposit Insurance Corporation Guaranteed — 0.8%
General Electric Capital Corp.:
2.00%, 9/28/12		1,300		1,331,039
2.13%, 12/21/12		365		375,252
				1,706,291
Interest Only Collateralized Mortgage Obligations — 5.2%
Fannie Mae Mortgage-Backed Securities (a):
Series 2006-58, Class SI, 6.31%, 7/25/36		5,488		664,875
Series 2010-2, Class SG, 6.22%, 10/25/39		9,817		969,294
Freddie Mac Mortgage-Backed Securities, Series 3153, Class SI, 6.36%, 5/15/36 (a)		6,440		793,639
Ginnie Mae Mortgage-Backed Securities (a):
Series 2002-83, Class IO, 1.57%, 10/16/42		37,289		567,104
Series 2003-17, Class IO, 1.24%, 3/16/43		59,575		1,322,589
Series 2003-109, Class IO, 1.10%, 11/16/43		33,350		727,209
Series 2004-9, Class IO, 1.38%, 3/16/34		16,785		361,839
Series 2004-77, Class IO, 1.07%, 9/16/44		43,955		999,205
Series 2007-7, Class JI, 5.86%, 2/20/37		4,669		559,683
Series 2007-36, Class SG, 6.12%, 6/20/37		5,811		638,656
Series 2009-33, Class SN, 6.04%, 5/20/39		6,670		599,357
Series 2009-64, Class SY, 5.84%, 8/20/39		5,159		515,235
Series 2009-92, Class SC, 5.86%, 10/16/39		6,874		686,819
Series 2009-106, Class SL, 5.76%, 4/20/36		5,178		568,984
Series 2009-110, Class CS, 6.04%, 11/16/39		8,852		969,791
				10,944,279
Interest Only Mortgage-Backed Securities — 0.3%
Ginnie Mae Mortgage-Backed Securities (a):
Series 2006-49, Class SA, 6.22%, 2/20/36		2,909		261,525
Series 2007-23, Class ST, 5.96%, 4/20/37		2,509		232,374
				493,899

Portfolio Abbreviations

LIBOR London Inter-Bank Offered Rate USD US Dollar

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
U.S. Government Sponsored Agency Securities	(000)			Value
Mortgage-Backed Securities — 157.1%
Fannie Mae Mortgage-Backed Securities:
4.00%, 7/15/15-7/15/40 (c)	$	19,051		$	19,520,972
4.49%, 11/01/35 (a)		1,844			1,917,592
4.50%, 7/15/40 (c)		66,700			69,128,280
5.00%, 8/15/25-7/15/40 (c)		64,514			68,329,583
5.07%, 11/01/35 (a)		2,027			2,114,822
5.50%, 11/01/21-7/15/40 (c)(d)		69,049			74,224,961
6.00%, 4/01/35-7/15/40 (c)		32,444			35,323,733
6.50%, 8/15/40 (c)		3,300			3,604,735
8.00%, 1/01/31		2			2,792
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/25-6/01/25		6,867			7,140,444
4.50%, 8/01/40 (c)		8,700			8,980,036
5.00%, 9/01/33-7/15/40 (c)(e)		2,796			2,971,385
5.50%, 7/15/40-8/15/40 (c)		10,100			10,836,674
8.00%, 12/01/29-7/01/30 (e)		171			197,369
Ginnie Mae Mortgage-Backed Securities (c):
4.50%, 7/15/40		2,100			2,187,280
5.00%, 7/15/40		11,000			11,711,545
5.50%, 1/15/34-6/15/40		7,439			8,065,778
6.50%, 7/15/40		2,200			2,413,468
					344,264,701
Total U.S. Government Sponsored Agency Securities — 170.6%					328,671,449
U.S. Treasury Obligations
U.S. Treasury Bonds:
8.75%, 8/15/20 (f)		12,760			19,130,034
8.13%, 8/15/21 (e)		2,985			4,366,494
8.00%, 11/15/21		21,500			31,269,062
U.S. Treasury Notes:
1.00%, 4/30/12 (f)		1,505			1,516,288
2.00%, 5/31/15 (f)		2			2,034
2.75%, 2/15/19		17,455			17,389,544
3.50%, 5/15/20		280			293,037
8.75%, 5/15/20		2,460			3,676,546
4.25%, 5/15/40 (f)		1,280			1,384,000
Total U.S. Treasury Obligations — 37.8%					79,027,039
Total Long-Term Investments (Cost — $440,661,009) — 215.1%					450,021,392
Short-Term Securities	Shares
Money Market Fund — 0.8%
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (g)(h)		1,611,413			1,611,413
Total Short-Term Securities (Cost — $1,611,413) — 0.8%					1,611,413
Options Purchased	Contracts			Value
Exchange-Traded Put Options Purchased — 0.0%
Eurodollar 1-Year Mid-Curve Future:
Strike Price USD 97.25, expires 9/10/10		626		$	11,737
Strike Price USD 97.75, expires 9/10/10		48			300
					12,037
Over-the-Counter Call Swaptions Purchased — 0.7%
Receive a fixed rate of 1.15% and pay a floating rate based on 3-month LIBOR, expires 9/03/10, Broker Deutsche Bank AG		19 (i	)		71,462
Receive a fixed rate of 3.70% and pay a floating rate based on 3-month LIBOR, expires 11/08/10, Broker BNP Paribas SA		8 (i	)		460,737
Receive a fixed rate of 4.22% and pay a floating rate based on 3-month LIBOR, expires 4/29/11, Broker Credit Suisse International		3 (i	)		280,470
Receive a fixed rate of 4.39% and pay a floating rate based on 3-month LIBOR, expires 5/08/12, Broker Citibank NA		1 (i	)		117,608
Receive a fixed rate of 4.21% and pay a floating rate based on 3-month LIBOR, expires 4/22/13, Broker JPMorgan Chase Bank NA		3 (i	)		90,262
Receive a fixed rate of 5.20% and pay a floating rate based on 3-month LIBOR, expires 4/28/15, Broker Citibank NA		5 (i	)		590,491
					1,611,030
Over-the-Counter Put Swaptions Purchased — 0.2%
Pay a fixed rate of 1.92% and receive a floating rate based on 3-month LIBOR, expires 9/02/10, Broker Morgan Stanley Capital Services, Inc.		19 (i	)		255
Pay a fixed rate of 1.95% and receive a floating rate based on 3-month LIBOR, expires 9/18/10, Broker Citibank NA		19 (i	)		25,088
Pay a fixed rate of 3.70% and receive a floating rate based on 3-month LIBOR, expires 11/08/10, Broker BNP Paribas SA		8 (i	)		54,240
Pay a fixed rate of 4.22% and receive a floating rate based on 3-month LIBOR, expires 4/29/11, Broker Credit Suisse International		3 (i	)		33,366
Pay a fixed rate of 4.39% and receive a floating rate based on 3-month LIBOR, expires 5/08/12, Broker Citibank NA		1 (i	)		39,192
Pay a fixed rate of 4.21% and receive a floating rate based on 3-month LIBOR, expires 4/22/13, Broker JPMorgan Chase Bank NA		3 (i	)		23,293
Pay a fixed rate of 4.25% and receive a floating rate based on 3-month LIBOR, expires 4/28/15, Broker Citibank NA		5 (i	)		230,912
					406,346
Total Options Purchased (Cost — $2,085,426) — 0.9%					2,029,413
Total Investments Before TBA Sale Commitments and Outstanding Options Written (Cost — $444,357,848) — 216.8%					453,662,218

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
TBA Sale Commitments (c)	(000)			Value
Fannie Mae Mortgage-Backed Securities:
4.00%, 7/15/15-7/15/40	$	16,500		$	(16,920,185	)
4.50%, 7/15/40		66,700			(69,128,280	)
5.00%, 8/15/25-7/15/40		60,000			(63,478,140	)
5.50%, 11/01/21-7/15/40		56,200			(60,327,216	)
6.00%, 4/01/35-7/15/40		19,000			(20,606,089	)
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/25-6/01/25		3,000			(3,113,907	)
4.50%, 8/01/40		8,700			(9,009,938	)
5.00%, 9/01/33-7/15/40		2,700			(2,855,671	)
Ginnie Mae Mortgage-Backed Securities, 5.50%, 1/15/34-6/15/40		7,400			(7,994,309	)
Total TBA Sale Commitments (Proceeds — $251,391,703) — (121.1)%					(253,433,735	)
Options Written	Contracts
Exchange-Traded Call Options Written — (0.0)%
10-year U.S. Treasury Bond Future, Strike Price USD 119.50, expires 8/27/10		35			(13,672	)
Exchange-Traded Put Options Written — (0.0)%
10-year U.S. Treasury Bond Future, Strike Price USD 122.50, expires 8/27/10		35			(48,672	)
Over-the-Counter Call Swaptions Written — (1.3)%
Pay a fixed rate of 4.12% and receive a floating rate based on 3-month LIBOR, expires 8/21/10, Broker Goldman Sachs Bank USA		2(i	)		(220,733	)
Pay a fixed rate of 3.70% and receive a floating rate based on 3-month LIBOR, expires 12/03/10, Broker BNP Paribas SA		8(i	)		(430,159	)
Pay a fixed rate of 3.43% and receive a floating rate based on 3-month LIBOR, expires 3/19/11, Broker JPMorgan Chase Bank NA		3(i	)		(111,495	)
Pay a fixed rate of 4.06% and receive a floating rate based on 3-month LIBOR, expires 5/13/11, Broker BNP Paribas SA		2(i	)		(155,356	)
Pay a fixed rate of 4.49% and receive a floating rate based on 3-month LIBOR, expires 12/05/11, Broker Deutsche Bank AG		2(i	)		(247,837	)
Pay a fixed rate of 4.05% and receive a floating rate based on 3-month LIBOR, expires 6/18/12, Broker Deutsche Bank AG		2(i	)		(135,933	)
Pay a fixed rate of 5.01% and receive a floating rate based on 3-month LIBOR, expires 1/07/13, Broker Deutsche Bank AG		3(i	)		(387,933	)
Pay a fixed rate of 4.90% and receive a floating rate based on 3-month LIBOR, expires 3/04/13, Broker Deutsche Bank AG		3(i	)		(315,882	)
Pay a fixed rate of 5.00% and receive a floating rate based on 3-month LIBOR, expires 4/22/13, Broker JPMorgan Chase Bank NA		3(i	)		(396,306	)
Pay a fixed rate of 4.89% and receive a floating rate based on 3-month LIBOR, expires 12/03/14, Broker Deutsche Bank AG		1(i	)		(177,513	)
Pay a fixed rate of 4.76% and receive a floating rate based on 3-month LIBOR, expires 5/30/17, Broker JPMorgan Chase Bank NA		1			(154,369	)
					(2,733,516	)
Over-the-Counter Put Swaptions Written — (0.4)%
Receive a fixed rate of 4.12% and pay a floating rate based on 3-month LIBOR, expires 8/21/10, Broker Goldman Sachs Bank USA		2			(369	)
Receive a fixed rate of 2.10% and pay a floating rate based on 3-month LIBOR, expires 12/02/10, Broker Citibank NA		9			(5,454	)
Receive a fixed rate of 3.70% and pay a floating rate based on 3-month LIBOR, expires 12/03/10, Broker BNP Paribas SA		8			(68,575	)
Receive a fixed rate of 3.43% and pay a floating rate based on 3-month LIBOR, expires 3/19/11, Broker JPMorgan Chase Bank NA		3			(80,490	)
Receive a fixed rate of 4.06% and pay a floating rate based on 3-month LIBOR, expires 5/13/11, Broker BNP Paribas SA		2			(28,703	)
Receive a fixed rate of 4.49% and pay a floating rate based on 3-month LIBOR, expires 12/05/11, Broker Deutsche Bank AG		2			(45,705	)
Receive a fixed rate of 4.05% and pay a floating rate based on 3-month LIBOR, expires 6/18/12, Broker Deutsche Bank AG		2			(83,704	)
Receive a fixed rate of 5.01% and pay a floating rate based on 3-month LIBOR, expires 1/07/13, Broker Deutsche Bank AG		3			(86,105	)
Receive a fixed rate of 4.90% and pay a floating rate based on 3-month LIBOR, expires 3/04/13, Broker Deutsche Bank AG		3			(88,719	)
Receive a fixed rate of 5.00% and pay a floating rate based on 3-month LIBOR, expires 4/22/13, Broker JPMorgan Chase Bank NA		3			(104,454	)
Receive a fixed rate of 4.89% and pay a floating rate based on 3-month LIBOR, expires 12/03/14, Broker Deutsche Bank AG		1			(89,091	)
Receive a fixed rate of 4.76% and pay a floating rate based on 3-month LIBOR, expires 5/30/17, Broker JPMorgan Chase Bank NA		1			(112,862	)
					(794,231	)
Total Options Written (Premiums Received — $3,497,307) — (1.7)%					(3,590,091	)
Total Investments, Net of TBA Sale Commitments and Outstanding Options Written — 94.0%					196,638,392
Other Assets Less Liabilities — 6.0%					12,549,986
Net Assets — 100.0%				$	209,188,378

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (continued)

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	444,358,218
Gross unrealized appreciation	$	11,366,497
Gross unrealized depreciation		(2,062,497	)
Net unrealized appreciation	$	9,304,000

(a)	Variable rate security. Rate shown is as of report date.
(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(c)	Represents or includes a to-be-announced (“TBA”) transaction. Unsettled TBA transactions as of report date were as follows:

			Unrealized
			Appreciation
Counterparty	Value		(Depreciation)
BNP Paribas	$	(3,721,437)	$	(56,280	)
Bank of America NA	$	(11,838,188)	$	(130,813	)
Citigroup Global Markets, Inc.	$	(11,102,610)	$	(70,922	)
Credit Suisse Securities LLC	$	2,351,706	$	(58,793	)
Deutsche Bank Securities, Inc.	$	(5,907,514)	$	2
Goldman Sachs & Co.	$	13,077,197	$	78,452
Greenwich Financial Services	$	(8,598,452)	$	(53,249	)
JPMorgan Securities, Inc.	$	11,711,546	$	48,889
Morgan Stanley Capital Services, Inc.	$	3,191,418	$	(40,328	)
Nomura Securities International, Inc.	$	(32,466,953)	$	(540,250	)
UBS Securities	$	(1,556,954)	$	(24,688	)
Wells Fargo Bank, NA	$	2,554,500	$	(4,500	)

(d)	All or a portion of security has been pledged as collateral in connection with swaps.
(e)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(f)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.
(g)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares Held at					Shares Held at
	December 31,					June 30,
Affiliate	2009		Net Activity			2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		1,623,479		(12,066	)		1,611,413	$	6,206

(h)	Represents the current yield as of report date.
(i)	One contract represents a notional amount of $1 million.

  •  Financial futures contracts purchased as of June 30, 2010 were as follows:

			Expiration	Notional		Unrealized
Contracts		Issue	Date	Value		Appreciation
	243	10-Year U.S. Treasury Bond	September 2010	$	29,603,723	$	175,168
	12	30-Year U.S. Treasury Bond	September 2010	$	1,571,132		58,618
Total						$	233,786

  •  Financial futures contracts sold as of June 30, 2010 were as follows:

			Expiration	Notional		Unrealized
Contracts		Issue	Date	Value		Depreciation
	216	2-Year U.S. Treasury Bond	September 2010	$	47,111,058	$	(155,817	)
	62	5-Year U.S. Treasury Bond	September 2010	$	7,277,823		(59,974	)
	5	30-Year U.S. Treasury Bond	September 2010	$	620,028	$	(17,472	)
	15	Euro Dollar Future	September 2010	$	3,722,605		(2,833	)
	8	Euro Dollar Future	December 2010	$	1,983,527		(1,073	)
	47	Euro Dollar Future	March 2011	$	11,627,482		(23,818	)
	44	Euro Dollar Future	June 2011	$	10,854,111		(42,489	)
	50	Euro Dollar Future	September 2011	$	12,303,618		(60,757	)
	94	Euro Dollar Future	December 2011	$	23,181,358		(15,492	)
	24	Euro Dollar Future	March 2012	$	5,884,947		(25,653	)
	15	Euro Dollar Future	June 2012	$	3,675,214		(10,286	)
	13	Euro Dollar Future	September 2012	$	3,173,778		(12,847	)
	13	Euro Dollar Future	December 2012	$	3,165,448		(13,377	)
	13	Euro Dollar Future	March 2013	$	3,158,498		(13,665	)
	4	Euro Dollar Future	June 2013	$	973,013		(887	)
Total						$	(456,440	)

  •  Interest rate swaps outstanding as of June 30, 2010 were as follows:

					Notional		Unrealized
Fixed		Floating			Amount		Appreciation
Rate		Rate	Counterparty	Expiration	(000)		(Depreciation)
	1.62%(a)	3-month LIBOR	JPMorgan Chase Bank NA	June 2011	$	5,500	$	(47,757	)
	1.31%(b)	3-month LIBOR	Deutsche Bank AG	October 2011	$	25,000		173,178
	1.12%(a)	3-month LIBOR	BNP Paribas SA	January 2012	$	16,500		(72,221	)
	1.14%(b)	3-month LIBOR	BNP Paribas SA	February 2012	$	8,400		38,088
	1.10%(b)	3-month LIBOR	Goldman Sachs Bank USA	March 2012	$	10,800		36,857
	1.24%(a)	3-month LIBOR	JPMorgan Chase Bank NA	April 2012	$	15,100		(87,640	)
	1.21%(b)	3-month LIBOR	Citibank NA	May 2012	$	17,500		91,147
	1.26%(b)	3-month LIBOR	Deutsche Bank AG	May 2012	$	4,000		23,474
	1.21%(a)	3-month LIBOR	Goldman Sachs Bank USA	May 2012	$	3,500		(18,544	)
	1.29%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2012	$	4,200		(26,984	)
	1.67%(b)	3-month LIBOR	JPMorgan Chase Bank NA	May 2013	$	2,100		22,497
	1.72%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2013	$	5,600		64,502
	3.16%(b)	3-month LIBOR	Deutsche Bank AG	June 2014	$	3,300		183,621
	3.11%(b)	3-month LIBOR	JPMorgan Chase Bank NA	June 2014	$	4,800		258,433
	2.91%(b)	3-month LIBOR	JPMorgan Chase Bank NA	July 2014	$	15,300		700,560
	2.90%(a)	3-month LIBOR	Credit Suisse International	August 2014	$	6,800		(307,975	)
	3.05%(a)	3-month LIBOR	Credit Suisse International	August 2014	$	13,000		(668,255	)
	2.79%(a)	3-month LIBOR	JPMorgan Chase Bank NA	November 2014	$	1,415		(55,449	)
	2.60%(b)	3-month LIBOR	JPMorgan Chase Bank NA	December 2014	$	11,000		338,200
	2.69%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2015	$	5,300		175,770

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (continued)

					Notional		Unrealized
Fixed		Floating			Amount		Appreciation
Rate		Rate	Counterparty	Expiration	(000)		(Depreciation)
	2.68%(b)	3-month LIBOR	BNP Paribas SA	April 2015	$	5,200	$	163,633
	2.72%(a)	3-month LIBOR	JPMorgan Chase Bank NA	April 2015	$	4,100		(137,749	)
	2.73%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2015	$	3,900		(133,393	)
	2.49%(a)	3-month LIBOR	Credit Suisse International	May 2015	$	3,500		(78,710	)
	2.62%(a)	3-month LIBOR	Credit Suisse International	May 2015	$	3,900		(111,431	)
	2.23%(b)	3-month LIBOR	Deutsche Bank AG	May 2015	$	13,400		124,975
	2.46%(b)	3-month LIBOR	Deutsche Bank AG	May 2015	$	1,400		28,886
	2.38%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2015	$	9,700		(164,046	)
	2.38%(b)	3-month LIBOR	BNP Paribas SA	June 2015	$	7,100		112,907
	2.24%(b)	3-month LIBOR	Citibank NA	June 2015	$	15,000		135,239
	2.36%(a)	3-month LIBOR	Citibank NA	June 2015	$	3,100		(47,574	)
	2.09%(b)	3-month LIBOR	Credit Suisse International	June 2015	$	2,700		4,611
	2.23%(a)	3-month LIBOR	Deutsche Bank AG	June 2015	$	25,900		(214,235	)
	2.22%(a)	3-month LIBOR	Goldman Sachs International	June 2015	$	4,300		(34,660	)
	2.37%(b)	3-month LIBOR	JPMorgan Chase Bank NA	June 2015	$	16,000		246,832
	2.79%(a)	3-month LIBOR	Deutsche Bank AG	June 2017	$	1,700		(24,259	)
	3.80%(b)	3-month LIBOR	Deutsche Bank AG	June 2019	$	4,000		295,301
	3.90%(b)	3-month LIBOR	JPMorgan Chase Bank NA	July 2019	$	21,000		1,715,825
	3.68%(b)	3-month LIBOR	Deutsche Bank AG	August 2019	$	6,100		386,479
	3.50%(b)	3-month LIBOR	Citibank NA	September 2019	$	2,800		133,405
	3.43%(a)	3-month LIBOR	Deutsche Bank AG	October 2019	$	1,400		(58,565	)
	4.80%(a)	3-month LIBOR	Deutsche Bank AG	October 2019	$	33,000		(3,772,191	)
	3.50%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	November 2019	$	800		(37,444	)
	3.40%(a)	3-month LIBOR	Deutsche Bank AG	December 2019	$	2,300		(87,772	)
	3.50%(b)	3-month LIBOR	Deutsche Bank AG	December 2019	$	900		41,618
	3.89%(b)	3-month LIBOR	BNP Paribas SA	January 2020	$	2,100		165,000
	3.93%(b)	3-month LIBOR	BNP Paribas SA	January 2020	$	2,600		214,249
	3.89%(b)	3-month LIBOR	Credit Suisse International	January 2020	$	3,100		244,135
	3.75%(b)	3-month LIBOR	Citibank NA	February 2020	$	5,000		332,522
	3.71%(a)	3-month LIBOR	Deutsche Bank AG	February 2020	$	10,000		(628,720	)
	3.78%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2020	$	2,000		(139,123	)
	3.68%(b)	3-month LIBOR	BNP Paribas SA	March 2020	$	3,200		193,793
	3.77%(b)	3-month LIBOR	Citibank NA	March 2020	$	2,800		189,121
	3.68%(a)	3-month LIBOR	Deutsche Bank AG	March 2020	$	1,200		(72,343	)
	3.75%(a)	3-month LIBOR	Deutsche Bank AG	March 2020	$	1,400		(91,842	)
	3.66%(a)	3-month LIBOR	Goldman Sachs International	March 2020	$	3,900		(226,520	)
	3.83%(a)	3-month LIBOR	JPMorgan Chase Bank NA	March 2020	$	1,200		(87,197	)
	3.70%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2020	$	2,700		(166,241	)
	3.71%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2020	$	2,900		(181,874	)
	3.96%(a)	3-month LIBOR	BNP Paribas SA	April 2020	$	2,200		(184,969	)
	4.05%(a)	3-month LIBOR	Credit Suisse International	April 2020	$	2,000		(183,554	)
	3.77%(b)	3-month LIBOR	Deutsche Bank AG	April 2020	$	1,600		107,748
	3.80%(b)	3-month LIBOR	Deutsche Bank AG	April 2020	$	2,800		195,938
	3.95%(a)	3-month LIBOR	JPMorgan Chase Bank NA	April 2020	$	2,100		(175,593	)
	3.92%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2020	$	1,100		88,706
	3.47%(b)	3-month LIBOR	BNP Paribas SA	May 2020	$	1,900		77,730
	3.51%(a)	3-month LIBOR	BNP Paribas SA	May 2020	$	1,400		(62,368	)
	3.46%(a)	3-month LIBOR	Credit Suisse International	May 2020	$	1,400		(56,588	)
	3.28%(a)	3-month LIBOR	Deutsche Bank AG	May 2020	$	1,400		(33,616	)
	3.33%(a)	3-month LIBOR	Deutsche Bank AG	May 2020	$	900		(25,508	)
	3.39%(a)	3-month LIBOR	Deutsche Bank AG	May 2020	$	5,400		(185,087	)
	3.45%(b)	3-month LIBOR	Deutsche Bank AG	May 2020	$	200		7,801
	3.48%(a)	3-month LIBOR	Deutsche Bank AG	May 2020	$	1,400		(58,803	)
	2.52%(c)	3-month LIBOR	Deutsche Bank AG	May 2020	$	2,600		29,453
	3.57%(b)	3-month LIBOR	Goldman Sachs Bank USA	May 2020	$	2,400		120,748
	3.57%(a)	3-month LIBOR	JPMorgan Chase Bank NA	May 2020	$	900		(44,476	)
	3.60%(a)	3-month LIBOR	JPMorgan Chase Bank NA	May 2020	$	1,800		(79,561	)
	3.16%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	1,400		(19,400	)

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (continued)

					Notional		Unrealized
Fixed		Floating			Amount		Appreciation
Rate		Rate	Counterparty	Expiration	(000)		(Depreciation)
	3.64%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	1,400	$	78,871
	3.73%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	2,700		171,529
	3.41%(a)	3-month LIBOR	BNP Paribas SA	June 2020	$	1,600		(56,399	)
	4.80%(a)	3-month LIBOR	Citibank NA	June 2020	$	4,300		(453,591	)
	3.35%(b)	3-month LIBOR	Credit Suisse International	June 2020	$	1,400		41,687
	3.39%(b)	3-month LIBOR	Credit Suisse International	June 2020	$	2,400		79,765
	3.35%(a)	3-month LIBOR	Deutsche Bank AG	June 2020	$	1,300		(38,939	)
	3.38%(a)	3-month LIBOR	Deutsche Bank AG	June 2020	$	4,600		(148,960	)
	3.39%(b)	3-month LIBOR	Goldman Sachs Bank USA	June 2020	$	400		13,449
	3.31%(b)	3-month LIBOR	Goldman Sachs Bank USA	June 2020	$	700		18,600
	3.34%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	4,500		130,081
	3.43%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	1,600		59,322
	3.02%(a)	3-month LIBOR	Deutsche Bank AG	July 2020	$	600		—
	3.01%(b)	3-month LIBOR	JPMorgan Chase Bank NA	July 2020	$	400		(198	)
	3.05%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2020	$	8,000		23,526
	3.46%(d)	3-month LIBOR	BNP Paribas SA	October 2020	$	2,000		(54,199	)
	4.52%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2040	$	1,100		163,388
Total							$	(1,399,323	)

(a)	Pays fixed interest rate and receives floating rate.
(b)	Pays floating interest rate and receives fixed rate.
(c)	Pays floating amount and receives fixed interest amount at expiration.
(d)	Pays fixed interest amount and receives floating amount at expiration.

  •  Total return swaps outstanding as of June 30, 2010 were as follows:

Interest					Notional		Unrealized
Receivable		Interest			Amount		Appreciation
Rate		Payable Rate	Counterparty	Expiration	(000)		(Depreciation)
	2.62%	—	Morgan Stanley Capital Services, Inc.	May 2020		USD 4,300	$	87,823	(e)
	—	5.50%	Goldman Sachs International	January 2039		USD 3,558		50,297	(f)
	—	5.50%	Morgan Stanley Capital Services, Inc.	January 2039		USD 1,748		18,122	(f)
	—	4.50%	Goldman Sachs International	January 2040		USD 2,773	$	(26,103	)(g)
Total							$	130,139

(e)	Based on the change in return of the Consumer Price Index for All Urban Consumers.
(f)	Based on the change of the Market IOS Index referencing the interest component of 5.50% coupon, 30 year, fixed rate Fannie Mae residential mortgage-backed securities pools.
(g)	Based on the change of the Market IOS Index referencing the interest component of 4.50% coupon, 30 year, fixed rate Fannie Mae residential mortgage-backed securities pools.

  •  Reverse repurchase agreements outstanding as of June 30, 2010 were as follows:

					Net
	Interest		Trade	Maturity	Closing		Face
Counterparty	Rate		Date	Date	Amount		Amount
Barclays Capital, Inc.		0.00%	6/29/10	7/01/10	$	19,108,127	$	19,108,100
Barclays Capital, Inc.		0.00%	6/30/10	7/01/10		8,727,339		8,727,338
Total					$	27,835,466	$	27,835,438

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2			Level 3		Total
Assets:
Investments in Securities:
Long Term Investments1		—	$	450,021,392			—	$	450,021,392
Short-Term Securities	$	1,611,413		—			—		1,611,413
Liabilities:
TBA Sale Commitments		—		(253,433,735	)		—		(253,433,735	)
Total	$	1,611,413	$	196,587,657			—	$	198,199,070

¹ See above Schedule of Investments for values in each security type.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Schedule of Investments (concluded)

	Derivative Financial Instruments2
Valuation Inputs	Level 1			Level 2			Level 3			Total
Assets:
Interest rate contracts	$	245,823		$	10,260,576			68,419		$	10,574,818
Other contracts		—			87,823			—			87,823
Liabilities:
Interest rate contracts		(518,784	)		(13,170,270	)		(26,103	)		(13,715,157	)
Total	$	(272,961	)	$	(2,821,871	)		42,316		$	(3,052,516	)

² Derivative financial instruments are swaps, financial futures contracts, and options. Financial futures contracts and swaps are shown at the unrealized appreciation/depreciation on the instrument and options are shown at value.

The following table is a reconciliation of Level 3 derivatives financial instruments for which significant unobservable inputs were used to determine fair value:

	Interest Rate
Assets/Liabilities:	Contracts
Balance, as of December 31, 2009		—
Accrued discounts/premiums		—
Net realized gain (loss)		—
Net change in unrealized appreciation/depreciation		—
Purchases		—
Sales		—
Transfer In3	$	42,316
Transfer Out3		—
Balance, as of June 30, 2010	$	42,316

³ The Fund’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$442,746,435)	$	452,050,805
Investments at value—affiliated (cost—$1,611,413)		1,611,413
Unrealized appreciation on swaps		8,399,442
TBA sale commitments receivable		251,391,703
Investments sold receivable		148,809,533
Interest receivable		2,000,467
Swap receivable		1,574,872
Swap premiums paid		79,589
Margin variation receivable		46,742
Principal paydown receivable		667
Prepaid expenses		33,476
Other assets		230,125
Total assets		866,228,834
Liabilities:
TBA sale commitments (proceeds—$251,391,703)		253,433,735
Reverse repurchase agreements		27,835,438
Options written at value (premiums received—$3,497,307)		3,590,091
Unrealized depreciation on swaps		9,668,626
Cash collateral on swaps		670,000
Swap premiums received		1,595,718
Investments purchased payable		351,813,112
Capital shares redeemed payable		6,113,821
Swaps payable		1,430,883
Income dividends payable		668,912
Investment advisory fees payable		87,013
Other affiliates payable		2,418
Officer’s and Directors’ fees payable		337
Interest expense payable		28
Other accrued expenses payable		62,916
Other liabilities		67,408
Total liabilities		657,040,456
Net Assets	$	209,188,378
Net Assets Consist of:
Paid-in capital	$	210,881,543
Undistributed net investment income		518,274
Accumulated net realized loss		(7,993,195	)
Net unrealized appreciation/depreciation		5,781,756
Net Assets	$	209,188,378
Net Asset Value:
Class I—Based on net assets of $209,188,378 and 19,948,357 shares outstanding, 300 million shares authorized, $0.10 par value	$	10.49

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Interest	$	5,341,029
Dividends—affiliated		6,206
Total income		5,347,235
Expenses:
Investment advisory		527,736
Custodian		41,805
Accounting services		29,531
Professional fees		21,595
Printing		12,474
Officer and Directors		10,457
Transfer agent		2,293
Miscellaneous		15,228
Total expenses excluding interest expense		661,119
Interest expense		201,546
Total expenses		862,665
Less fees waived by advisor		(3,152	)
Total expenses after fees waived		859,513
Net investment income		4,487,722
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		5,160,263
Financial futures contracts		(420,681	)
Swaps		39,128
Options written		705,639
Borrowed bonds		(298,069	)
		5,186,280
Net change in unrealized appreciation/depreciation on:
Investments		7,273,099
Financial futures contracts		(1,246,934	)
Swaps		41,334
Options written		(161,231	)
Borrowed bonds		(351,160	)
		5,555,108
Total realized and unrealized gain		10,741,388
Net Increase in Net Assets Resulting from Operations	$	15,229,110

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	4,487,722		$	9,604,773
Net realized gain (loss)		5,186,280			(13,800,017	)
Net change in unrealized appreciation/depreciation		5,555,108			49,652
Net increase (decrease) in net assets resulting from operations		15,229,110			(4,145,592	)
Dividends and Distributions to Shareholders From:
Net investment income		(4,798,619	)		(9,345,123	)
Net realized gain		—			(6,134,697	)
Decrease in net assets resulting from dividends and distributions to shareholders		(4,798,619	)		(15,479,820	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		(23,823,098	)		3,182,669
Net Assets:
Total decrease in net assets		(13,392,607	)		(16,442,743	)
Beginning of period		222,580,985			239,023,728
End of period	$	209,188,378		$	222,580,985
Undistributed net investment income	$	518,274		$	829,171

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009			2008			2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.99		$	10.81		$	10.32		$	10.43	$	10.50	$	10.65
Net investment income1		0.21			0.41			0.37			0.47		0.46		0.39
Net realized and unrealized gain (loss)		0.51			(0.59)			0.41			(0.07)		(0.06)		(0.05)
Net increase (decrease) from investment operations		0.72			(0.18)			0.78			0.40		0.40		0.34
Dividends and distributions from:
Net investment income		(0.22)			(0.39)			(0.27)			(0.44)		(0.47)		(0.49)
Net realized gain		—			(0.25)			(0.02)			(0.07)		—		(0.00)	2
Total dividends and distributions		(0.22)			(0.64)			(0.29)			(0.51)		(0.47)		(0.49)
				��
Net asset value, end of period	$	10.49		$	9.99		$	10.81		$	10.32	$	10.43	$	10.50
Total Investment Return:3
Based on net asset value		7.38%	4		(1.64)%			7.69%			4.06%		3.91%		3.22%
Ratios to Average Net Assets:
Total expenses		0.82%	5		0.66%			0.87%			0.91%		0.58%		0.59%
Total expenses after fees waived		0.81%	5		0.65%			0.86%			0.91%		0.58%		0.59%
Total expenses after fees waived and excluding interest expense		0.62%	5		0.61%			0.61%			0.63%		0.58%		0.59%
Net investment income		4.25%	5		3.90%			3.58%			4.70%		4.43%		3.69%
Supplemental Data:
Net assets, end of period (000)	$	209,188		$	222,581		$	239,024		$	238,557	$	325,861	$	298,080
Portfolio turnover		1,808%	6		2,909%	7		5,353%	8		2,305%		448%		61%

1	Based on average shares outstanding.
2	Amount is less than $(0.01) per share.
3	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
4	Aggregate total investment return.
5	Annualized.
6	Includes mortgage dollar roll transactions. Excluding these transactions the portfolio turnover rate would have been 1,455%.
7	Includes mortgage dollar roll transactions. Excluding these transactions the portfolio turnover rate would have been 2,227%.
8	Includes TBA transactions. Excluding these transactions the portfolio turnover rate would have been 4,916%.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Government Income V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Government Income V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Fund’s Board of Directors (the “Board”). The Fund values its bond investments on the basis of last available bid prices or current market quotations 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, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. 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 and trades and values of the underlying reference instruments. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be value at amortized cost, which approximates fair value.

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. Over-the-counter (“OTC”) options and 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.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Asset-Backed and Mortgaged-Backed Securities: The Fund may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally 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

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

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 subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the 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.

The Fund may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by the Government National Mortgage Association (“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 the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and Federal National Mortgage Association (“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 and are supported by the right of the issuer to borrow from the Treasury.

Multiple Class Pass-Through Securities: The Fund may invest in multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities. These multiple class securities may be issued by Ginnie Mae, US 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, and multiple class pass-through securities represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Classes of CMOs include interest only (“IOs”), principal only (“POs”), planned amortization classes (“PACs”) and targeted amortization classes (“TACs”). 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 pre-payments of principal, the Fund may not fully recoup its initial investment in IOs.

Stripped Mortgage-Backed Securities: The Fund may invest in stripped mortgage-backed securities 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. The Fund also may invest in stripped mortgage-backed securities that are privately issued.

Borrowed Bond Agreements: In a borrowed bond agreement, the Fund borrows securities from a third party, with the commitment that the securities will be returned to the lender on an agreed-upon date. Borrowed bond agreements are primarily entered into to enable the Fund to settle short bond positions. To support the borrowing, the Fund’s prime broker or third party broker takes possession of collateral of securities or cash that will be released upon termination of the borrowing. The value of the underlying collateral securities or cash approximates the market value of the borrowed bond transaction, including accrued interest. To the extent that borrowed bond transactions exceed one business day, the value of the collateral in the possession of the Fund’s prime broker or third party broker is marked to market on a daily basis to ensure the adequacy of the collateral. In the event of default by the counterparty and the value of noncash collateral increases, the Fund’s amount of loss is the unrealized gain of the collateral. Full realization of the collateral by the Fund may be limited if the value of an investment purchased with the cash collateral by the lender decreases. The Fund may also experience delays in gaining access to the collateral.

TBA Commitments: The Fund may enter into TBA commitments pursuant to which it agrees to purchase or sell mortgage-backed securities for a fixed price, with payment and delivery at a scheduled future date beyond the customary settlement period for the mortgage-backed security. 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. The Fund generally enters into TBA transactions with the intent to take possession

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

of 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, which is in addition to the risk of decline in the value of the Fund’s other assets.

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

Treasury Roll Transactions: A treasury roll transaction involves the sale of a Treasury security, with an agreement to repurchase the same security at an agreed upon price and date. Treasury rolls constitute a borrowing and the difference between the sale and repurchase price represents interest expense at an agreed upon rate. Whether such a transaction produces a positive impact on performance depends upon whether the income on the securities purchased with the proceeds received from the sale of the security exceeds the interest expense incurred by the Fund. For accounting purposes, treasury rolls are not considered purchases and sales and any gains or losses incurred on the treasury rolls will be deferred until the Treasury securities are disposed.

Treasury roll transactions involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon purchase price of those securities. If investment performance of securities purchased with proceeds from these transactions does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the treasury roll, the use of this technique will adversely impact the investment performance of the Fund.

Reverse Repurchase Agreements: The Fund may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Fund sell securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. 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. The 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 and also the risk that the market value of the securities that the Fund is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., dollar rolls, TBAs beyond normal settlement, financial futures contracts, swaps and written options), or certain borrowings (e.g., reverse repurchase agreements and treasury rolls) the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: It is the Fund’s policy to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as interest rate risk or other risk (inflation risk). These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contracts. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk) or foreign currencies (foreign currency exchange rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. 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 value of the contract. Such receipts or payments are known as margin variation and are recognized by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

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

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swap option is granting or buying the right to enter into a previously agreed upon interest rate swap agreement at any time before the expiration of the option.

The Fund also purchases or sells listed or OTC foreign currency options, foreign currency futures and related options on foreign currency futures as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies. When foreign currency is purchased or sold through an exercise of a foreign currency option, the related premium paid (or received) is added to (or deducted from) the basis of the foreign currency acquired or deducted from (or added to) the proceeds of the foreign currency sold. Such transactions may be effected with respect to hedges on non-US dollar denominated instruments owned by the Fund but not yet delivered, or committed or anticipated to be purchased by the Fund.

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 the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of an option written could result in the Fund purchasing or selling a security at a price different from the current market value.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Fund are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid or received on swaps are recognized as cost and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Fund will record a realized gain or loss 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 contracts is the premium received or paid. 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.

•  Credit default swaps—The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Fund enters into credit default agreements to provide a measure of protection against the default of an issuer (as buyer protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). 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 on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or 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 of an 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 of an 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 of an index.

•  Total return swaps—The Fund enters into total return swaps to obtain exposure to a security or market without owning such security or investing directly in that market or to transfer the risk/return of one market (e.g., fixed income) to another market (e.g., equity) (equity risk and/or interest rate risk). Total return swaps are agreements in which one party commits to pay interest in exchange for the total return (coupons plus capital gains/losses) of an underlying instrument or index. To the extent the total return of the instrument or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from or make a payment to the counterparty.

•  Interest rate swaps—The Fund enters into interest rate swaps to gain or reduce exposure to or manage duration, the yield curve or interest rate risk by economically hedging the value of the fixed rate bonds which may decrease when interest rates rise (interest rate risk). Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating rate, for another party’s stream of interest payments, either fixed or floating, on the same principal amount for a specified period of time. Interest rate floors, which are a type of interest rate swap, are agreements in which one party agrees to make payments to the other party to the extent that interest rates fall below a specified rate or floor in return for a premium. In more complex swaps, the notional principal amount may decline (or amortize) over time.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Interest rate contracts	Net unrealized appreciation/depreciation*; Unrealized appreciation on swaps; Investments at value—unaffiliated**	$	10,574,818	Net unrealized appreciation/depreciation*; Unrealized depreciation on swaps; Options written at value	$	13,715,157
Other contracts	Unrealized appreciation on swaps		87,823			—
Total		$	10,662,641		$	13,715,157

*	Includes cumulative appreciation/depreciation of financial futures contracts as reported in Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.
**	Includes options purchased at value as reported in the Schedule of Investments.

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Financial Futures
	Contracts			Swaps		Options***
Net Realized Gain (Loss) from
Interest rate contracts	$	(420,681	)	$	39,128	$	(268,912	)
Total	$	(420,681	)	$	39,128	$	(268,912	)

	Financial Futures
	Contracts			Swaps			Options***
Net Change in Unrealized Appreciation/Depreciation on
Interest rate contracts	$	(1,246,934	)	$	(46,489	)	$	(178,832	)
Other contracts		—			87,823			—
Total	$	(1,246,934	)	$	41,334		$	(178,832	)

***  Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Financial futures contracts:
Average number of contracts purchased		287
Average number of contracts sold		667
Average notional value of contracts purchased	$	34,227,166
Average notional value of contracts sold	$	141,683,170
Options:
Average number of contracts purchased		548
Average number of contracts sold		189
Average notional value of contracts purchased	$	135,185,000
Average notional value of contracts sold	$	84,252,500
Interest rate swaps:
Average number of contracts-pays fixed rate		30
Average number of contracts-receives fixed rate		28
Average notional value-pays fixed rate	$	157,115,000
Average notional value-receives fixed rate	$	168,950,000
Total return swaps:
Average number of contracts		2
Average notional value	$	6,189,559

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.50% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,816 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Fund Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions and excluding short-term securities and US government securities for the six months ended June 30, 2010, were $3,553,287,009 and $3,642,950,262, respectively.

Purchases and sales of US government securities for the six months ended June 30, 2010, were $1,265,724,433 and $1,268,086,592, respectively.

For the six months ended June 30, 2010, purchases and sales of mortgage dollar rolls were $940,633,520 and $941,163,465, respectively.

Transactions in options written for the six months ended June 30, 2010, were as follows:

	Calls						Puts
				Premiums						Premiums
	Contracts			Received			Contracts			Received
Outstanding options, beginning of period		20		$	1,025,335			261		$	1,879,983
Options written		83			2,189,634			92			2,219,333
Options closed		(27	)		(1,203,585	)		(203	)		(2,025,920	)
Options exercised		(6	)		(239,795	)		—			—
Options expired		(5	)		(35,490	)		(76	)		(312,188	)
Outstanding options, end of period		65		$	1,736,099			74		$	1,761,208

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 23

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

For the six months ended June 30, 2010, the Fund’s daily average amount of outstanding transactions considered as borrowings from reverse repurchase agreements and treasury rolls was approximately $106,014,000 and the daily weighted average interest rate was 0.39%.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2017	$	12,015,389

7.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statements of Assets and Liabilities, less any collateral held by the Fund.

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. Please see the Schedule of Investments for these securities. 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.

8.  Capital Share Transactions:

Transactions in capital shares were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		220,306		$	2,258,748
Shares issued to shareholders in reinvestment of dividends and distributions		503,341			5,071,838
Total issued		723,647			7,330,586
Shares redeemed		(3,058,595	)		(31,153,684	)
Net decrease		(2,334,948	)	$	(23,823,098	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		5,125,315		$	54,180,880
Shares issued to shareholders in reinvestment of dividends and distributions		1,444,275			14,610,330
Total issued		6,569,590			68,791,210
Shares redeemed		(6,395,325	)		(65,608,541	)
Net increase		174,265		$	3,182,669

9.  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.

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock High Income V.I. Fund

Semi-Annual Report (Unaudited)

June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the BlackRock High Income V.I. Fund underperformed its benchmark, the Barclays U.S. Corporate High Yield 2% Issuer Capped Index.

What factors influenced performance?

•  During the period, the Fund was negatively impacted by an underweight in the non-captive consumer sector, as well as security selection within the media non-cable and non-captive diversified sectors. Security selection among paper names within the upper end of the high yield quality range also detracted from performance.

•  Conversely, security selection in the health care and home construction sectors bolstered performance, as did an underweight position in information technology (IT). Strong security selection within lower-rated credits was noticeably beneficial as well.

Describe recent portfolio activity.

•  During the six-month period, we selectively participated in the new-issue calendar, seeking higher-quality credits that were coming to market with solid risk-reward profiles and stable fundamentals. We also continued to seek out opportunities in new senior-secured bonds offering attractive downside protection.

•  Early in the period, we reduced exposure to lower-quality names and replaced beta with small positions in equity-like credits and convertible bonds. However, as the high yield market experienced considerable volatility due to ongoing global macroeconomic concerns, we reduced exposure to positions exhibiting higher beta and/or equity-correlated risks, in light of their larger susceptibility to market weakness.

Describe Fund positioning at period end.

•  As of period end, the Fund was overweight in the packaging, wireless and metals sectors and underweight in IT, gaming and banking. Overall, we remain very constructive on high yield and maintain our view that the asset class is attractively priced for a slow structural recovery in 2010. We believe the combination of improving US economic data, strengthening corporate trends and declining default volumes should bode well for the asset class. Historically, high yield has performed strongly in post-recessionary periods. We believe high yield’s ability to offer attractive yields with minimal duration risk, as well as its potential to provide equity-like returns, makes the asset class a compelling investment choice as the economy heals.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Total Return Based on a $10,000 Investment

			Barclays Capital
			U.S.
	BlackRock High		Corporate High
	Income V.I.		Yield 2%
	Fund(1) Class		Issuer Capped
	I Shares(2)		Index(3)
6/00		10000.00		10000.00
6/01		9997.00		9928.00
6/02		9517.00		9719.00
6/03		11219.00		11875.00
6/04		12706.00		13099.00
6/05		13764.00		14495.00
6/06		14443.00		15128.00
6/07		15871.00		16825.00
6/08		15693.00		16531.00
6/09		13923.00		16216.00
6/10		18127.00		20540.00

1	The Fund invests primarily in fixed income securities with lower credit quality.
2	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
3	This unmanaged index is 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 as of June 30, 2010

	Standardized			6-Month			Average Annual Total Returns
	30-Day Yield			Total Returns			1 Year			5 Years			10 Years
Class I Shares4		8.24	%		4.15	%		30.20	%		5.66	%		6.13	%
Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index		—			4.45			26.66			7.22			7.46

⁴ Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the payable date. Insurance-related fees and expenses are not reflected in these returns.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Fund Profile as of June 30, 2010

	Percent of
Credit Allocation1	Corporate Bonds
BBB/Baa		3	%
BB/Ba		37
B		46
CCC/Caa		10
Not Rated		4

¹ Using the higher of Standard & Poor’s or Moody’s Investors Service ratings.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including foreign currency exchange contracts and swaps, as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge credit and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Account Value

Account Value

Expenses Paid

Account Value

Account Value

Expenses Paid

Annualized

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Expense Ratio

Class I

$

1,000

$

1,041.50

$

3.59

$

1,000

$

1,021.28

$

3.56

0.71%

1	Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Auto Components — 0.1%
Lear Corp. (a)		1,758	$	116,380
Construction Materials — 0.0%
Nortek, Inc. (a)		500		22,750
Electrical Equipment — 0.0%
Medis Technologies Ltd. (a)		33,870		1,321
Paper & Forest Products — 0.3%
Ainsworth Lumber Co., Ltd. (a)		52,562		142,693
Ainsworth Lumber Co., Ltd. (a)(b)		59,550		161,664
				304,357
Wireless Telecommunication Services — 0.2%
FiberTower Corp. (a)		59,958		283,002
Total Common Stocks — 0.6%				727,810
	Par
Corporate Bonds	(000)
Aerospace & Defense — 0.5%
DynCorp International, Inc., 10.38%, 7/01/17 (b)(c)	$	210		210,525
GeoEye, Inc., 9.63%, 10/01/15 (b)		80		81,600
Kratos Defense & Security Solutions, Inc., 10.00%, 6/01/17 (b)		260		263,900
				556,025
Airlines — 1.1%
Continental Airlines, Inc., Series 2001-1-C, 7.03%, 12/15/12		539		538,164
Delta Air Lines, Inc., Series B, 9.75%, 12/17/16		304		316,240
United Air Lines, Inc., 12.75%, 7/15/12		400		430,500
				1,284,904
Auto Components — 1.6%
Allison Transmission, Inc. (b):
11.00%, 11/01/15		300		314,250
11.25%, 11/01/15 (d)		85		89,037
Delphi International Holdings, Unsecured, 12.00%, 10/06/14		2		1,958
The Goodyear Tire & Rubber Co.:
8.63%, 12/01/11		178		185,120
8.75%, 8/15/20		150		153,375
Icahn Enterprises LP (b):
4.00%, 8/15/13 (e)(f)		155		135,625
8.00%, 1/15/18		1,100		1,067,000
				1,946,365
Biotechnology — 0.3%
QHP Pharma, 10.25%, 3/15/15 (b)		300		305,101
Building Products — 1.2%
Associated Materials LLC, 9.88%, 11/15/16		220		235,950
Building Materials Corp. of America, 7.00%, 2/15/20 (b)		190		188,100
CPG International I, Inc., 10.50%, 7/01/13		600		597,000
Ply Gem Industries, Inc., 11.75%, 6/15/13		400		418,000
				1,439,050
Capital Markets — 0.2%
E*Trade Financial Corp. (e)(g):
3.33%, 8/31/19 (b)		172		196,510
Series A, 4.05%, 8/31/19		3		3,428
				199,938
Chemicals — 3.5%
American Pacific Corp., 9.00%, 2/01/15		435		421,950
CF Industries, Inc.:
6.88%, 5/01/18		265		269,637
7.13%, 5/01/20		335		343,375
Georgia Gulf Corp., 9.00%, 1/15/17 (b)		85		86,275
Hexion U.S. Finance Corp.:
9.75%, 11/15/14		325		307,125
8.88%, 2/01/18		360		324,900
Huntsman International LLC, 8.63%, 3/15/20 (b)		115		106,375
Ineos Finance Plc, 9.00%, 5/15/15 (b)		200		199,500
Innophos, Inc., 8.88%, 8/15/14		510		525,300
Koppers, Inc., 7.88%, 12/01/19		215		217,150
LBI Escrow Corp., 8.00%, 11/01/17 (b)		170		175,100
MacDermid, Inc., 9.50%, 4/15/17 (b)		445		445,000
Nalco Co., 8.25%, 5/15/17		265		274,275
Nova Chemicals Corp., 8.63%, 11/01/19		370		366,300
Solutia, Inc., 8.75%, 11/01/17		110		114,400
				4,176,662
Commercial Banks — 2.9%
CIT Group, Inc.:
7.00%, 5/01/16		1,182		1,078,515
7.00%, 5/01/17		2,627		2,364,036
				3,442,551
Commercial Services & Supplies — 1.9%
ARAMARK Corp., 3.84%, 2/01/15 (f)		365		335,800
Corrections Corp. of America, 6.75%, 1/31/14		325		329,875
DI Finance, Series B, 9.50%, 2/15/13		166		170,357
Mobile Services Group, Inc., 9.75%, 8/01/14		450		460,125
RSC Equipment Rental, Inc., 10.00%, 7/15/17 (b)		385		412,912
Scientific Games International, Inc., 9.25%, 6/15/19		5		5,113
West Corp.:
9.50%, 10/15/14		240		241,200
11.00%, 10/15/16		300		305,250
				2,260,632
Construction Materials — 0.6%
Nortek, Inc., 11.00%, 12/01/13		622		648,666

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

CAD	Canadian Dollar
FKA	Formerly Known As
USD	US Dollar

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Consumer Finance — 1.2%
Credit Acceptance Corp., 9.13%, 2/01/17 (b)	$	340	$	341,700
Ford Motor Credit Co. LLC, 8.00%, 12/15/16		1,080		1,104,398
				1,446,098
Containers & Packaging — 5.2%
Ball Corp.:
7.38%, 9/01/19		80		83,200
6.75%, 9/15/20		235		237,350
Berry Plastics Corp.:
8.88%, 9/15/14		380		365,750
8.25%, 11/15/15		410		406,925
9.50%, 5/15/18 (b)		375		343,125
Berry Plastics Holding Corp., 8.88%, 9/15/14		360		346,500
Cascades, Inc., 7.75%, 12/15/17		265		263,675
Crown Americas LLC, 7.63%,5/15/17 (b)		550		569,250
Graphic Packaging International, Inc., 9.50%, 6/15/17		545		569,525
Greif, Inc., 7.75%, 8/01/19		135		139,050
Impress Holdings BV, 3.43%, 9/15/13 (b)(f)		1,180		1,088,550
Owens-Brockway Glass Container, Inc., 7.38%, 5/15/16		290		302,325
Packaging Dynamics Finance Corp., 10.00%, 5/01/16 (b)		160		133,600
Pregis Corp., 12.38%, 10/15/13		680		672,350
Rock-Tenn Co., 5.63%, 3/15/13		230		231,150
Sealed Air Corp., 7.88%, 6/15/17 (b)		365		381,529
				6,133,854
Diversified Financial Services — 3.8%
Axcan Intermediate Holdings, Inc., 12.75%, 3/01/16		230		232,875
Citigroup, Inc., 4.75%, 5/19/15		175		174,907
GMAC, Inc.:
2.74%, 12/01/14 (f)		141		121,369
6.75%, 12/01/14		410		396,675
8.30%, 2/12/15 (b)		690		698,625
8.00%, 3/15/20 (b)		920		899,300
Leucadia National Corp., 8.13%, 9/15/15		560		574,000
Reynolds Group DL Escrow, Inc., 7.75%, 10/15/16 (b)		705		689,138
Reynolds Group Issuer, Inc., 8.50%, 5/15/18 (b)		510		500,438
Southern Star Central Corp., 6.75%, 3/01/16 (b)		240		232,200
				4,519,527
Diversified Telecommunication Services — 3.1%
Broadview Networks Holdings, Inc., 11.38%, 9/01/12		425		412,250
ITC Deltacom, Inc., 10.50%, 4/01/16 (b)		260		249,600
New Communications Holdings, Inc. (b):
7.88%, 4/15/15		200		201,500
8.25%, 4/15/17		190		190,712
8.50%, 4/15/20		190		190,475
Nordic Telephone Co. Holdings ApS, 8.88%, 5/01/16 (b)		85		87,338
Qwest Communications International, Inc.:
7.50%, 2/15/14		155		155,388
8.00%, 10/01/15 (b)		300		308,250
Series B, 7.50%, 2/15/14		945		947,362
tw telecom holdings, Inc., 8.00%, 3/01/18 (b)		130		132,600
Wind Acquisition Finance SA, 12.00%, 12/01/15 (b)		415		429,525
Windstream Corp.:
8.13%, 8/01/13		110		113,713
7.88%, 11/01/17		190		185,487
				3,604,200
Electric Utilities — 1.4%
Elwood Energy LLC, 8.16%, 7/05/26		142		134,232
FPL Energy National Wind Portfolio, LLC, 6.13%, 3/25/19 (b)		314		307,150
IPALCO Enterprises, Inc.:
8.63%, 11/14/11		200		208,000
7.25%, 4/01/16 (b)		200		204,500
NSG Holdings LLC, 7.75%, 12/15/25 (b)		880		774,400
				1,628,282
Electronic Equipment, Instruments & Components — 0.1%
NXP BV, 3.05%, 10/15/13 (f)		175		149,625
Energy Equipment & Services — 2.0%
Cie Generale de Geophysique-Veritas, 9.50%, 5/15/16		100		101,500
Compagnie Generale de Geophysique-Veritas, 7.75%, 5/15/17		695		658,512
Expro Finance Luxembourg SCA, 8.50%, 12/15/16 (b)		970		926,350
Global Geophysical Services, Inc., 10.50%, 5/01/17 (b)		150		144,000
North American Energy Alliance LLC, 10.88%, 6/01/16 (b)		280		288,400
Thermon Industries, Inc., 9.50%, 5/01/17 (b)		205		208,075
				2,326,837
Food & Staples Retailing — 0.4%
Rite Aid Corp.:
9.75%, 6/12/16		220		229,900
10.25%, 10/15/19		260		259,025
				488,925
Food Products — 0.7%
B&G Foods, Inc., 7.63%, 1/15/18		110		110,550
Reddy Ice Corp., 11.25%, 3/15/15 (b)		220		226,600
Smithfield Foods, Inc., 10.00%, 7/15/14 (b)		400		443,000
TreeHouse Foods, Inc., 7.75%, 3/01/18		80		83,000
				863,150
Health Care Equipment & Supplies — 1.2%
DJO Finance LLC, 10.88%, 11/15/14		920		966,000
Hologic, Inc., 2.00%, 12/15/37 (e)(h)		530		451,163
				1,417,163
Health Care Providers & Services — 2.6%
American Renal Holdings, 8.38%, 5/15/18 (b)		135		133,650
HCA, Inc.:
6.25%, 2/15/13		630		618,975
7.25%, 9/15/20		265		266,325
Tenet Healthcare Corp. (b):
9.00%, 5/01/15		575		608,063
10.00%, 5/01/18		235		259,675
8.88%, 7/01/19		885		938,100
Viant Holdings, Inc., 10.13%, 7/15/17 (b)		251		255,706
				3,080,494

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Health Care Technology — 0.9%
IMS Health, Inc., 12.50%, 3/01/18 (b)	$	890	$	1,016,825
Hotels, Restaurants & Leisure — 0.7%
HRP Myrtle Beach Operations LLC, 0.00%, 4/01/12 (a)(b)(i)		750		75
MGM Resorts International, 10.38%, 5/15/14		280		304,500
Travelport LLC:
5.16%, 9/01/14 (f)		150		140,250
9.88%, 9/01/14		110		110,275
Tropicana Entertainment LLC, Series WI, 9.63%, 12/15/14 (a)(i)		95		7
Virgin River Casino Corp., 9.00%, 1/15/12 (a)(i)		300		135,000
Waterford Gaming LLC, 8.63%, 9/15/14 (b)		406		182,700
				872,807
Household Durables — 2.5%
Ashton Woods USA LLC, 15.47%, 6/30/15 (b)(j)		497		288,028
Beazer Homes USA, Inc.:
6.88%, 7/15/15		185		162,337
8.13%, 6/15/16		65		58,175
12.00%, 10/15/17		320		351,200
9.13%, 6/15/18		830		767,750
Pulte Homes, Inc., 6.38%, 5/15/33		30		23,100
Standard Pacific Corp.:
6.25%, 4/01/14		60		55,650
7.00%, 8/15/15		75		69,375
10.75%, 9/15/16		670		716,900
8.38%, 5/15/18		435		413,250
				2,905,765
IT Services — 0.8%
Alliance Data Systems Corp., 1.75%, 8/01/13 (e)		830		803,025
First Data Corp., 9.88%, 9/24/15		235		176,250
				979,275
Independent Power Producers & Energy Traders — 3.5%
AES Eastern Energy LP:
Series 1999-A, 9.00%, 1/02/17		64		66,126
Series 99-B, 9.67%, 1/02/29		330		356,400
AES Gener SA, 7.50%, 3/25/14		500		550,168
Calpine Construction Finance Co. LP, 8.00%, 6/01/16 (b)		690		705,525
Dynegy Holdings, Inc., 8.38%, 5/01/16		135		106,819
Energy Future Holdings Corp.:
10.88%, 11/01/17		470		347,800
11.25%, 11/01/17 (d)		309		201,235
10.00%, 1/15/20 (b)		790		786,050
NRG Energy, Inc.:
7.25%, 2/01/14		995		1,008,681
7.38%, 2/01/16		15		14,925
				4,143,729
Industrial Conglomerates — 1.7%
Sequa Corp. (b):
11.75%, 12/01/15		690		667,575
13.50%, 12/01/15 (d)		1,403		1,375,359
				2,042,934
Insurance — 0.2%
USI Holdings Corp., 4.31%, 11/15/14 (b)(f)		220		179,850
Leisure Equipment & Products — 0.3%
Brunswick Corp., 11.25%, 11/01/16 (b)		205		225,500
Easton-Bell Sports, Inc., 9.75%, 12/01/16 (b)		145		150,075
True Temper Sports, Inc., 8.38%, 9/15/11 (a)(i)		975		605
				376,180
Life Sciences Tools & Services — 0.2%
Patheon, Inc., 8.63%, 4/15/17 (b)		280		277,900
Machinery — 2.4%
Case New Holland, Inc., 7.88%, 12/01/17 (b)		120		120,900
ESCO Corp., 8.63%, 12/15/13 (b)		410		406,925
Navistar International Corp.:
3.00%, 10/15/14 (e)		850		996,625
8.25%, 11/01/21		500		507,500
Oshkosh Corp., 8.25%, 3/01/17		270		280,800
Titan International, Inc.:
8.00%, 1/15/12		310		322,400
5.63%, 1/15/17 (b)(e)		120		142,050
				2,777,200
Marine — 0.6%
Horizon Lines, Inc., 4.25%, 8/15/12 (e)		795		655,875
Media — 9.3%
Affinion Group, Inc., 10.13%, 10/15/13		1,235		1,265,875
CCH II LLC, 13.50%, 11/30/16		319		371,283
CCO Holdings LLC (b):
7.88%, 4/30/18		220		221,100
8.13%, 4/30/20		220		224,950
CMP Susquehanna Corp., 3.20%, 5/15/14 (b)(f)		60		1,200
Charter Communications Operating LLC, 10.88%, 9/15/14 (b)		80		88,800
Clear Channel Worldwide Holdings, Inc. (b):
Series A, 9.25%, 12/15/17		423		420,885
Series B, 9.25%, 12/15/17		1,394		1,400,970
DISH DBS Corp.:
7.00%, 10/01/13		215		221,450
7.88%, 9/01/19		240		249,600
Gannett Co., Inc., 8.75%, 11/15/14 (b)		155		161,975
Gray Television, Inc., 10.50%, 6/29/15 (b)		215		208,550
Harland Clarke Holdings Corp.:
6.00%, 5/15/15 (f)		140		113,050
9.50%, 5/15/15		160		145,600
Intelsat Corp.:
9.25%, 8/15/14		140		143,150
9.25%, 6/15/16		730		766,500
Intelsat Subsidiary Holding Co. Ltd., 8.88%, 1/15/15		80		81,300
LIN Television Corp., 8.38%, 4/15/18 (b)		275		273,625
Lamar Media Corp., 7.88%, 4/15/18 (b)		65		64,838
Liberty Global, Inc., 4.50%, 11/15/16 (b)(e)		240		278,400
Live Nation Entertainment, Inc., 8.13%, 5/15/18 (b)		70		67,900
McClatchy Co., 11.50%, 2/15/17 (b)		250		253,750
Nielsen Finance LLC:
10.00%, 8/01/14		1,035		1,058,288
16.86%, 8/01/16 (j)		40		38,100
ProtoStar I Ltd., 18.00%, 10/15/12 (a)(b)(e)(i)		599		569,327
TL Acquisitions, Inc., 10.50%, 1/15/15 (b)		820		762,600

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Media (concluded)
UPC Germany GmbH, 8.13%, 12/01/17 (b)	$	1,300	$	1,274,000
UPC Holding BV, 9.88%, 4/15/18 (b)		200		201,000
				10,928,066
Metals & Mining — 4.4%
AK Steel Corp., 7.63%, 5/15/20		405		392,850
Aleris International, Inc. (a)(i):
9.00%, 12/15/14		410		3,065
10.00%, 12/15/16		375		3,281
Arch Western Finance LLC, 6.75%, 7/01/13		235		235,588
Drummond Co., Inc.:
9.00%, 10/15/14 (b)		400		402,000
7.38%, 2/15/16		410		385,400
FMG Finance Property Ltd. (b):
10.00%, 9/01/13		55		57,750
10.63%, 9/01/16		485		533,500
Goldcorp, Inc., 2.00%, 8/01/14 (e)		95		110,438
McJunkin Red Man Corp., 9.50%, 12/15/16 (b)		565		548,050
Murray Energy Corp., 10.25%, 10/15/15 (b)		295		293,525
Novelis, Inc., 7.25%, 2/15/15		765		738,225
Ryerson, Inc.:
7.72%, 11/01/14 (f)		200		186,000
12.00%, 11/01/15		40		40,900
Steel Dynamics, Inc., 7.38%, 11/01/12		670		693,450
United States Steel Corp., 7.38%, 4/01/20		250		247,187
Vedanta Resources Plc, 9.50%, 7/18/18 (b)		335		355,937
				5,227,146
Multi-Utilities — 0.2%
CMS Energy Corp., 8.75%, 6/15/19		170		187,695
Multiline Retail — 1.5%
Dollar General Corp.:
10.63%, 7/15/15		105		114,844
11.88%, 7/15/17 (d)		1,430		1,626,625
				1,741,469
Oil, Gas & Consumable Fuels — 9.0%
Arch Coal, Inc., 8.75%, 8/01/16 (b)		40		41,700
Atlas Energy Operating Co. LLC:
12.13%, 8/01/17		245		270,725
10.75%, 2/01/18		110		117,288
Bill Barrett Corp., 9.88%, 7/15/16		25		26,500
Chesapeake Energy Corp.:
6.38%, 6/15/15		65		67,113
2.25%, 12/15/38 (e)		400		288,500
Cimarex Energy Co., 7.13%, 5/01/17		420		422,100
Coffeyville Resources LLC, 9.00%, 4/01/15 (b)		140		138,600
Concho Resources, Inc., 8.63%, 10/01/17		95		97,850
Connacher Oil and Gas Ltd., 10.25%, 12/15/15 (b)		705		696,187
Consol Energy, Inc., 8.25%, 4/01/20 (b)		1,020		1,063,350
Crosstex Energy LP, 8.88%, 2/15/18		500		499,375
Denbury Resources, Inc.:
7.50%, 12/15/15		250		252,500
9.75%, 3/01/16		320		345,600
8.25%, 2/15/20		364		380,380
El Paso Corp., 8.25%, 2/15/16		345		361,387
Forest Oil Corp., 8.50%, 2/15/14		130		135,525
Hilcorp Energy I LP, 8.00%, 2/15/20 (b)		185		182,688
Linn Energy LLC, 8.63%, 4/15/20 (b)		440		450,450
Massey Energy Co., 6.88%, 12/15/13		105		102,506
Niska Gas Storage US LLC, 8.88%, 3/15/18 (b)		770		781,550
OPTI Canada, Inc., 9.00%, 12/15/12 (b)		890		898,900
Patriot Coal Corp., 8.25%, 4/30/18		195		187,688
Penn Virginia Corp., 10.38%, 6/15/16		50		53,250
Penn Virginia Resource Partners LP, 8.25%, 4/15/18		250		245,625
Petrohawk Energy Corp.:
10.50%, 8/01/14		345		370,875
7.88%, 6/01/15		225		225,562
Range Resources Corp.:
6.38%, 3/15/15		750		740,625
8.00%, 5/15/19		200		208,750
Sabine Pass LNG LP, 7.50%, 11/30/16		165		137,363
Swift Energy Co., 7.13%, 6/01/17		305		281,362
Teekay Corp., 8.50%, 1/15/20		330		328,350
Whiting Petroleum Corp., 7.25%, 5/01/13		170		171,275
				10,571,499
Paper & Forest Products — 3.0%
Ainsworth Lumber Co. Ltd., 11.00%, 7/29/15 (b)(d)		481		404,029
Boise Cascade LLC, 7.13%, 10/15/14		195		183,544
Boise Paper Holdings LLC (b):
9.00%, 11/01/17		170		175,100
8.00%, 4/01/20		75		74,813
Clearwater Paper Corp., 10.63%, 6/15/16		215		236,769
Georgia-Pacific LLC, 8.25%, 5/01/16 (b)		345		367,856
Glatfelter, 7.13%, 5/01/16 (b)		105		102,375
NewPage Corp.:
10.00%, 5/01/12		445		241,412
11.38%, 12/31/14		1,110		1,007,325
Verso Paper Holdings LLC:
11.50%, 7/01/14		645		694,987
Series B, 4.09%, 8/01/14 (f)		90		77,175
				3,565,385
Pharmaceuticals — 0.8%
Angiotech Pharmaceuticals, Inc., 4.29%, 12/01/13 (f)		525		404,250
Elan Finance Plc, 8.88%, 12/01/13		150		150,375
Novasep Holding SAS, 9.75%, 12/15/16 (b)		432		431,510
				986,135
Real Estate Management & Development — 0.5%
Forest City Enterprises, Inc., 7.63%, 6/01/15		650		599,625
Road & Rail — 0.5%
Avis Budget Car Rental LLC, 9.63%, 3/15/18 (b)		250		252,500
Syncreon Global Ireland Ltd., 9.50%, 5/01/18 (b)		380		366,700
				619,200
Semiconductors & Semiconductor Equipment — 0.3%
Advanced Micro Devices, Inc., 8.13%, 12/15/17 (b)		85		84,575
STATS ChipPAC Ltd.:
7.50%, 7/19/10		85		84,894
6.75%, 11/15/11		190		190,950
				360,419

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Software — 0.0%
BMS Holdings, Inc., 7.89%, 2/15/12 (b)(d)	$	247	$	4,939
Specialty Retail — 1.1%
General Nutrition Centers, Inc., 10.75%, 3/15/15		150		150,750
Group 1 Automotive, Inc., 2.25%, 6/15/36 (e)(h)		300		220,500
Sonic Automotive, Inc., 9.00%, 3/15/18		180		182,700
United Auto Group, Inc., 7.75%, 12/15/16		820		770,800
				1,324,750
Tobacco — 0.6%
Vector Group Ltd., 11.00%, 8/15/15		700		714,000
Wireless Telecommunication Services — 5.8%
Cricket Communications, Inc.:
10.00%, 7/15/15		720		752,400
7.75%, 5/15/16		340		346,800
Digicel Group Ltd. (b):
9.13%, 1/15/15 (d)		593		581,140
8.25%, 9/01/17		595		589,050
10.50%, 4/15/18		200		206,250
FiberTower Corp., 9.00%, 1/01/16 (b)(d)		223		189,182
iPCS, Inc., 2.47%, 5/01/13 (f)		795		743,325
MetroPCS Wireless, Inc., 9.25%, 11/01/14		1,270		1,308,100
NII Holdings, Inc., 2.75%, 8/15/25 (e)		120		119,850
Nextel Communications, Inc.:
Series D, 7.38%, 8/01/15		110		104,500
Series E, 6.88%, 10/31/13		770		745,937
Series F, 5.95%, 3/15/14		150		139,125
SBA Telecommunications, Inc., 8.00%, 8/15/16 (b)		240		248,400
Sprint Capital Corp., 6.88%, 11/15/28		940		780,200
				6,854,259
Total Corporate Bonds — 86.3%				101,830,976
Floating Rate Loan Interests (f)
Auto Components — 0.4%
Allison Transmission, Inc., Term Loan, 3.05% — 3.11%, 8/07/14		474		430,687
Automobiles — 0.6%
Ford Motor Co.:
Tranche B-1 Term Loan, 3.31% — 3.35%, 12/15/13		764		720,651
Tranche B-2 Term Loan, 3.35%, 12/15/13		48		45,324
				765,975
Commercial Services & Supplies — 0.2%
AWAS Aviation Capital Ltd., Term Loan B, 7.75%, 5/27/16		250		246,563
Consumer Finance — 1.0%
American General Finance Corp., Term Loan, 7.25%, 4/16/16		1,000		971,500
Daimler Chrysler Financial Services Americas LLC, Term Loan (Second Lien), 6.85%, 8/02/13		184		182,949
				1,154,449
Electric Utilities — 0.4%
Conectiv, Term Loan B, 7.00%, 5/26/17		500		494,375
Food & Staples Retailing — 0.4%
Rite Aid Corp., Tranche 4 Term Loan, 9.50%, 6/10/15		448		453,751
Health Care Providers & Services — 0.4%
HCA, Inc., Tranche A-1 Term Loan, 2.03%, 11/16/12		312		294,300
Harden Healthcare, Term Loan A, 8.50%, 2/22/15		164		160,965
				455,265
Hotels, Restaurants & Leisure — 1.1%
Travelport LLC (FKA Travelport, Inc.), Loan, 8.44%, 3/27/12		1,432		1,332,164
IT Services — 0.2%
First Data Corp., Initial Tranche B-3 Term Loan, 3.10%, 9/24/14		349		293,295
Independent Power Producers & Energy Traders — 1.0%
Dynegy Holdings, Inc.:
Term Letter of Credit Facility, 4.10%, 4/02/13		189		175,956
Tranche B Term Loan, 4.10%, 4/02/13		11		10,358
Texas Competitive Electric Holdings Co., LLC (TXU):
Initial Tranche B-1 Term Loan, 3.85% — 4.03%, 10/10/14		117		86,425
Initial Tranche B-3 Term Loan, 3.85% — 4.03%, 10/10/14		1,187		873,999
				1,146,738
Media — 0.4%
Newsday, LLC, Fixed Rate Term Loan, 10.50%, 8/01/13		500		521,250
Multiline Retail — 0.0%
The Neiman Marcus Group, Inc., Term Loan, 2.35% — 2.54%, 4/06/13		9		8,268
Real Estate Management & Development — 0.4%
Realogy Corp., Term Loan (Second Lien), 13.50%, 10/15/17		400		417,333
Specialty Retail — 0.1%
Claire’s Stores, Inc., Term B Loan, 3.10%, 5/29/14		89		73,544
Total Floating Rate Loan Interests — 6.6%				7,793,657
	Beneficial
	Interest
Other Interests (k)	(000)
Auto Components — 0.1%
Delphi Debtor-in-Possession Holding Co. LLP, Class B Membership Interests		— (l)		180,927
Household Durables — 0.1%
Stanley Martin, Class B Membership Units (m)		— (l)		94,725
Total Other Interests — 0.2%				275,652

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Preferred Securities
Preferred Stocks	Shares		Value
Diversified Financial Services — 1.3%
Ally Financial Inc., 7.00% (b)		1,278	$	993,365
Citigroup, Inc., 7.50% (e)		5,000		565,000
				1,558,365
Diversified Telecommunication Services — 0.0%
PTV, Inc., Series A, 10.00% (a)		47		4
Household Durables — 0.1%
Beazer Homes USA, Inc., 7.50% (e)		5,543		111,726
Media — 0.0%
CMP Susquehanna Radio Holdings Corp., 0.00% (a)(b)(f)		13,993		—
Real Estate Investment Trusts (REITs) — 0.1%
MPG Office Trust, Inc., Series A, 7.63% (a)		4,287		61,133
Thrifts & Mortgage Finance — 0.0%
Fannie Mae, Series O (a)		10,000		6,000
Freddie Mac, Series Z (a)		32,188		10,944
				16,944
Total Preferred Securities — 1.5%				1,748,172
Warrants (n)	Shares		Value
Media — 0.0%
CMP Susquehanna Radio Holdings Corp. (Expires 3/26/19) (b)		15,990	$	—
Virgin Media, Inc. (Expires 1/13/11)		22,461		449
Total Warrants — 0.0%				449
Total Long-Term Investments (Cost — $115,596,354) — 95.2%				112,376,716
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (o)(p)		3,858,041		3,858,041
Total Short-Term Securities (Cost — $3,858,041) — 3.3%				3,858,041
Total Investments (Cost — $119,454,395*) — 98.5%				116,234,757
Other Assets Less Liabilities — 1.5%				1,797,211
Net Assets — 100.0%			$	118,031,968

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	119,980,930
Gross unrealized appreciation	$	3,327,051
Gross unrealized depreciation		(7,073,224)
Net unrealized depreciation	$	(3,746,173)

(a)	Non-income producing security.
(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(c)	When-issued security. Unsettled when-issued transactions were as follows:

			Unrealized
Counterparty	Value		Appreciation
Citigroup Global Markets, Inc.	$	210,525	$	525

(d)	Represents a payment-in-kind security which may pay interest/dividends in additional face/shares.
(e)	Convertible security.
(f)	Variable rate security. Rate shown is as of report date.
(g)	Represents a zero-coupon bond. Rate shown reflects the current yield as of report date.
(h)	Represents a step-down bond that pays an initial coupon rate for the first period and then a lower coupon rate for the following periods. Rate shown is as of report date.
(i)	Issuer filed for bankruptcy and/or is in default of interest payments.
(j)	Represents a step-up bond that pays an initial coupon rate for the first period and then a higher coupon rate for the following periods. Rate shown reflects the current yield as of report date.
(k)	Other interests represent beneficial interest in liquidation trusts and other reorganization entities and are non-income producing.
(l)	Amount is less than $1,000.
(m)	Restricted security as to resale, representing 0.1% of net assets was as follows:

	Acquisition
Issue	Date		Cost		Value
Stanley Martin, Class B Membership Units		4/03/06	$	227,862	$	94,725

(n)	Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date.
(o)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares Held				Shares Held
	at December 31,		Net		at June 30,
Affiliate	2009		Activity		2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		269,742		3,588,299		3,858,041	$	789

(p)  Represents the current yield as of report date.

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

Currency						Settlement		Unrealized
Purchased		Currency Sold		Counterparty		Date		Appreciation
USD	78,787	CAD	80,000		Citibank NA		7/28/10	$	3,651

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Schedule of Investments (concluded)

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2		Level 3			Total
Assets:
Investments in Securities:
Long-Term Investments:
Common Stocks	$	566,146	$	161,664		—		$	727,810
Corporate Bonds		—		100,781,206	$	1,049,770			101,830,976
Floating Rate Loan Interests		—		5,809,651		1,984,006			7,793,657
Other Interests		—		—		275,652			275,652
Preferred Securities		748,807		999,365		—			1,748,172
Warrants		449		—		—			449
Short-Term Securities		3,858,041		—		—			3,858,041
Liabilities:
Unfunded Loan Commitments		—		—		(1,197	)		(1,197	)
Total	$	5,173,443	$	107,751,886	$	3,308,231		$	116,233,560

Derivative Financial Instruments1
Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Foreign currency exchange contracts		—	$	3,651		—	$	3,651

¹ Derivative financial instruments are foreign currency exchange contracts, which are shown at the unrealized appreciation/depreciation on the instrument.

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

							Floating
							Rate					Unfunded
	Common			Corporate			Loan			Other		Loan
	Stocks			Bonds			Interests			Interests		Commitments			Total
Assets/Liabilities:
Balance, as of December 31, 2009	$	17,500		$	849,914		$	4,538,488		$	121,958	$	(2,762	)	$	5,525,098
Accrued discounts/ premiums		—			33,054			20,555			—		—			53,609
Net realized gain (loss)		—			68,768			(260,834	)		—		—			(192,066	)
Net change in unrealized appreciation/ depreciation2		5,250			166,802			190,072			86,194		1,565			449,883
Purchases		—			—			3,974,808			—		—			3,974,808
Sales		—			(68,768	)		(6,237,204	)		—		—			(6,305,972	)
Transfers in3		—			—			161,700			67,500		—			229,200
Transfers out3		(22,750	)		—			(403,579	)		—		—			(426,329	)
Balance, as of June 30, 2010	$	—		$	1,049,770		$	1,984,006		$	275,652	$	(1,197	)	$	3,308,231

2	Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation on securities still held at June 30, 2010 was $270,126.
3	The Fund’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the change in circumstances that caused the transfer.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$115,596,354)	$	112,376,716
Investments at value—affiliated (cost—$3,858,041)		3,858,041
Unrealized appreciation on foreign currency exchange contracts		3,651
Cash		974
Foreign currency at value (cost—$2,266)		2,191
Investments sold receivable		2,201,035
Interest receivable		2,067,785
Dividends receivable		2,598
Other assets		14,863
Prepaid expenses		34,787
Total assets		120,562,641
Liabilities:
Unrealized depreciation on unfunded loan commitments		1,197
Investments purchased payable		1,602,581
Income dividends payable		751,438
Capital shares redeemed payable		70,718
Investment advisory fees payable		52,368
Other affiliates payable		1,394
Officer’s and Directors’ fees payable		498
Deferred income		10,014
Other accrued expenses payable		40,465
Total liabilities		2,530,673
Net Assets	$	118,031,968
Net Assets Consist of:
Paid-in capital	$	274,706,146
Distributions in excess of net investment income		(94,840	)
Accumulated net realized loss		(153,365,217	)
Net unrealized appreciation/depreciation		(3,214,121	)
Net Assets	$	118,031,968
Net Asset Value:
Based on net assets of $118,031,968 and 17,633,992 shares outstanding, 200 million shares authorized, $0.10 par value	$	6.69

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Interest	$	5,176,984
Facility and other fees		19,838
Dividends—affiliated		789
Total income		5,197,611
Expenses:
Investment advisory		321,748
Professional		28,101
Accounting services		18,364
Custodian		10,398
Officer and Directors		9,880
Printing		8,927
Transfer agent		2,467
Miscellaneous		24,230
Total expenses		424,115
Less fees waived by advisor		(420	)
Total expenses after fees waived		423,695
Net investment income		4,773,916
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		2,099,766
Swaps		4,073
Foreign currency transactions		(1,907	)
		2,101,932
Net change in unrealized appreciation/depreciation on:
Investments		(1,821,089	)
Unfunded loan commitments		1,565
Foreign currency transactions		3,169
		(1,816,355	)
Total realized and unrealized gain		285,577
Net Increase in Net Assets Resulting from Operations	$	5,059,493

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	4,773,916		$	10,207,280
Net realized gain (loss)		2,101,932			(8,938,103	)
Net change in unrealized appreciation/depreciation		(1,816,355	)		47,458,040
Net increase in net assets resulting from operations		5,059,493			48,727,217
Dividends to Shareholders From:
Net investment income		(4,728,391	)		(10,121,764	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(6,405,788	)		(7,846,706	)
Net Assets:
Total increase (decrease) in net assets		(6,074,686	)		30,758,747
Beginning of period		124,106,654			93,347,907
End of period	$	118,031,968		$	124,106,654
Distributions in excess of net investment income	$	(94,840	)	$	(140,365	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended June 30,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	6.68		$	4.64	$	7.26	$	7.67	$	7.55	$	8.12
Net investment income1		0.26			0.54		0.57		0.59		0.56		0.61
Net realized and unrealized gain (loss)		0.01			2.03		(2.62)		(0.42)		0.12		(0.50)
Net increase (decrease) from investment operations		0.27			2.57		(2.05)		0.17		0.68		0.11
Less dividends from net investment income		(0.26)			(0.53)		(0.57)		(0.58)		(0.56)		(0.68)
Net asset value, end of period	$	6.69		$	6.68	$	4.64	$	7.26	$	7.67	$	7.55
Total Investment Return:2
Based on net asset value		4.15%	3		58.00%		(29.88)%		2.42%		9.44%		1.51%
Ratios to Average Net Assets:
Total expenses		0.71%	4		0.73%		0.68%		0.64%		0.60%		0.59%
Total expenses after fees waived		0.71%	4		0.73%		0.68%		0.64%		0.60%		0.59%
Net investment income		7.99%	4		9.45%		0.80%		7.77%		7.45%		7.78%
Supplemental Data:
Net assets, end of period (000)	$	118,032		$	124,107	$	93,348	$	162,681	$	213,937	$	246,483
Portfolio turnover		43%			107%		53%		55%		56%		24%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock High Income V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock High Income V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Fund’s Board of Directors (the “Board”). The Fund values its bond investments on the basis of last available bid prices or current market quotations provided by dealers or pricing services. Floating rate loan interests are valued at the mean of the bid prices from one or more brokers or dealers as obtained from a pricing service. 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, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value. The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Floating Rate Loan Interests: The Fund may invest in floating rate loan interests. The floating rate loans the Fund holds are typically issued to companies (the “borrower”) by banks, other financial institutions, and 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. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interest 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. The base lending rates are generally the lending rate offered by one or more European banks, such as LIBOR (London InterBank Offered Rate), the prime rate offered by one or more US banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. The Fund considers these investments to be investments in debt securities for purposes of its investment policies.

When the Fund buys 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, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. The Fund earns and/or pays facility and other fees on floating rate loan interests, which are shown as facility and other fees in the Statement of Operations. 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 the Fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. The 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. The Fund may invest in such loans in the form of participations in loans (“Participations”) and assignments of all or a portion of loans from third parties. Participations typically will result in the Fund having a contractual relationship only with the lender, not with the borrower. The Fund will have 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, the 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, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the Participation. The 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, the Fund may be treated as general creditors of the lender and may not benefit from any offset between the lender and the borrower.

Preferred Stock: The Fund may invest in 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.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., foreign currency exchange contracts), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as credit risk and foreign currency exchange rate risk. These contracts may be transacted on an exchange or over-the-counter (“OTC”).

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contract. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between the Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform it obligations under the agreement.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Fund are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Fund will record a realized gain or loss 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 contracts is the premium received or paid. 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.

•  Credit default swaps—The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Fund enters into credit default agreements to provide a measure of protection against the default of an issuer (as buyer protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). 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 on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or 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 of an 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 of an 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 of an index.

Derivative Instruments Categorized by Risk Exposure:

Fair Value of Derivative Instruments as of June 30, 2010
	Asset Derivatives
	Statement of Assets and
	Liabilities Location	Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts	$	3,651

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Net Realized Gain (Loss) from
			Foreign Currency
	Swaps		Transactions
Foreign currency exchange contracts		—	$	(1,901	)
Credit contracts	$	4,073		—

	Net Change in Unrealized
	Appreciation/Depreciation on
	Foreign Currency
	Transactions
Foreign currency exchange contracts	$	3,246

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		1
Average US dollar amounts purchased	$	77,595

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services.

The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 the following annual rates of the Fund and the Company’s BlackRock Total Return V.I. Fund’s aggregate average daily net assets:

Portion of average daily value of net assets	Rate
Not exceeding $250 million		0.55	%
In excess of $250 million, but not exceeding $500 million		0.50	%
In excess of $500 million, but not exceeding $750 million		0.45	%
In excess of $750 million		0.40	%

For the six months ended June 30, 2010, the aggregate average daily net assets of the Fund and the Company’s BlackRock Total Return V.I. Fund was approximately $324,114,000.

The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds; however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $1,124 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC, an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments including paydowns and excluding short-term securities for the six months ended June 30, 2010, were $51,760,285 and $62,431,916, respectively.

5.  Commitments:

The Fund may invest in floating rate loans. In connection with these investments, the Fund may also enter into unfunded corporate loans (“commitments”). Commitments may obligate the Fund to furnish temporary financing to a borrower until permanent financing can be arranged. In

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income, which is classified in the Statement of Operations as facility and other fees, is recognized ratably over the commitment period. As of June 30, 2010, the Fund had the following unfunded loan commitment:

	Unfunded		Value of
	Commitment		Underlying
Borrower	(000)		Loan (000)
Delphi Holdings, LLP	$	733	$	734

6.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Series based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

7.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2010	$	63,839,053
2011		44,871,728
2012		8,918,857
2013		12,665,469
2014		4,347,980
2016		9,129,091
2017		11,211,061
Total	$	154,983,239

8.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

9.  Capital Share Transactions:

Transactions in capital shares were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		363,022		$	2,453,583
Shares issued to shareholders in reinvestment of dividends		722,584			4,887,817
Total issued		1,085,606			7,341,400
Shares redeemed		(2,035,899	)		(13,747,188	)
Net decrease		(950,293	)	$	(6,405,788	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		1,064,397		$	6,161,168
Shares issued to shareholders in reinvestment of dividends		1,843,116			9,996,332
Total issued		2,907,513			16,157,500
Shares redeemed		(4,428,548	)		(24,004,206	)
Net decrease		(1,521,035	)	$	(7,846,706	)

10.  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.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock International Value V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock International Value V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund underperformed its benchmark, the MSCI EAFE Index.

What factors influenced performance?

•  During the period, detrimental stock selection within the industrials and health care sectors detracted from the Fund’s relative results. Key disappointments were Vinci SA in industrials and Bayer AG in health care. An overweight position in the energy sector also hampered Fund returns, as did stock selection in Japan.

•  Despite the relative underperformance, there were several positives during the period. The consumer staples sector made the largest positive contribution to Fund returns primarily through successful stock selection in companies such as brewer Carlsberg A/S and confectionery conglomerate Nestle SA, Registered Shares and food retailer Ahold NV. In financials, the Fund benefited from an overweight position in insurer Zurich Financial Services AG and from underweight exposure in bank Banco Santander SA, which was sold due to its exposure to the European periphery. Other individual positions that were helpful during the period included an underweight in troubled oil major BP Plc and overweights in integrated energy company Centrica Plc and automobile manufacturer Daimler AG, which delivered encouraging earnings results. Regionally, the Fund benefited from its exposure to the Asia ex-Japan region.

Describe recent portfolio activity.

•  During the period, we maintained a value bias and sought to increase the level of quality in the portfolio by placing more emphasis on low-valued companies that also offered attractive dividend yields.

•  Regionally, we increased the Fund’s weighting in emerging markets (through Samsung Electronics Co., Ltd., Quanta Computer, Inc., Teva Pharmaceutical Industries Ltd. — ADR and America Movil SA de CV — ADR) amid an improving economic climate and signs that tightening measures undertaken in 2009 have been effective without suppressing growth. We funded this increase through a reduction in Japanese companies (Honda Motor Co., Ltd., Mitsubishi Heavy Industries Ltd., Sumitomo Corp., TDK Corp. and Komatsu Ltd.), which appeared close to full value.

•  We also increased the Fund’s exposure to the UK, where we identified attractive stock-specific opportunities in banks (Lloyds TSB Group Plc and Barclays Plc) and given our broadly positive view on the pound as political stability appeared to be restored after the election.

•  At the sector level, we decreased the Fund’s weighting in industrials and trimmed our allocation in automobile-related companies (Mazda Motor Corp., Fiat SpA and Honda Motor), which will no longer benefit from government incentive programs.

Describe Fund positioning at period end.

•  As always, a market dominated by fear presents attractive investment opportunities. We continue to follow our disciplined investment process that has guided us through the volatility, seeking to identify good companies trading at distressed prices with attractive upside potential. At the end of period, the Fund was overweight in the energy, information technology and telecommunication services sectors, and underweight in materials, financials and utilities. Regionally, the Fund ended the period overweight in selected emerging markets and underweight in Japan and Asia ex-Japan.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Total Return Based on a $10,000 Investment

1	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
2	The Fund seeks current income and long-term growth of income, accompanied by growth of capital through investments in international stocks.
3	This unmanaged Index measures the total returns of developed foreign stock markets in Europe, Australasia and the Far East (in U.S. dollars).

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year5			5 Years5			10 Years5
Class I Shares4		(15.56)	%		2.67	%		0.06	%		2.89	%
MSCI EAFE Index		(13.23)			5.92			0.88			0.16

4	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
5	For a portion of the period, the Fund’s advisor waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Geographic Allocation	Long-Term Investments
United Kingdom		20	%
Japan		17
Germany		11
Switzerland		10
France		9
Spain		8
Australia		6
South Korea		3
Brazil		3
Taiwan		3
Israel		2
Netherlands		2
Mexico		2
Other1		4

¹ Other includes a 1% investment in Denmark, India, Finland and Russia.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Account Value

Account Value

Expenses Paid

Account Value

Account Value

Expenses Paid

Annualized

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Expense Ratio

Class I

$

1,000

$

844.40

$

4.12

$

1,000

$

1,020.34

$

4.51

0.90%

1	Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including foreign currency exchange contracts, as specified in Note 2 of the Notes to Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Australia — 5.4%
National Australia Bank Ltd.		173,182	$	3,348,346
Newcrest Mining Ltd.		74,614		2,176,980
Suncorp-Metway Ltd.		392,140		2,623,488
				8,148,814
Brazil — 2.7%
Cyrela Brazil Realty SA		92,210		1,003,326
Itau Unibanco Holdings SA — ADR		174,072		3,135,037
				4,138,363
Denmark — 1.5%
Carlsberg A/S		29,645		2,259,216
Finland — 1.4%
KCI Konecranes Oyj		80,049		2,087,553
France — 9.1%
European Aeronautic Defense and Space Co.		115,549		2,358,108
Sanofi-Aventis		33,366		2,009,549
Societe Generale SA		66,156		2,722,254
Total SA		89,019		3,973,711
Vinci SA		67,897		2,819,202
				13,882,824
Germany — 10.6%
Bayer AG		51,200		2,861,135
Bilfinger Berger AG		50,684		2,808,826
Continental AG		47,024		2,440,991
DaimlerChrysler AG		60,034		3,036,857
Deutsche Post AG		170,829		2,490,715
HeidelbergCement AG		51,614		2,439,317
				16,077,841
Hungary — 0.3%
OTP Bank Nyrt. (a)		24,551		495,006
Israel — 2.0%
Teva Pharmaceutical Industries Ltd. — ADR		58,898		3,062,107
Japan — 16.5%
Fuji Photo Film Co., Ltd.		90,200		2,606,732
Hitachi Ltd. (a)		586,000		2,128,532
Inpex Corp.		392		2,174,233
Mitsubishi Heavy Industries Ltd.		812,000		2,801,191
Mitsui Chemicals, Inc.		650,000		1,816,578
Nippon Telegraph & Telephone Corp.		77,200		3,144,811
Nomura Holdings, Inc.		428,200		2,339,464
Seven & I Holdings Co., Ltd.		104,100		2,385,065
Sony Corp.		109,900		2,931,364
Sumitomo Corp.		273,700		2,733,444
				25,061,414
Mexico — 1.5%
America Movil SA de CV — ADR		49,076		2,331,110
Netherlands — 1.6%
Koninklijke Ahold NV		200,545		2,480,724
Russia — 1.0%
OAO Gazprom — ADR		81,754		1,537,793
South Korea — 2.9%
KB Financial Group, Inc.		56,844		2,178,875
Samsung Electronics Co., Ltd.		3,686		2,311,912
				4,490,787
Spain — 7.5%
Banco Santander SA		366,075		3,838,740
Repsol YPF SA		135,663		2,737,695
Telefonica SA		261,530		4,844,773
				11,421,208
Switzerland — 10.0%
Nestle SA, Registered Shares		106,404		5,130,677
Novartis AG, Registered Shares		106,623		5,167,284
Transocean Ltd. (a)		26,725		1,269,490
Zurich Financial Services AG		16,678		3,676,058
				15,243,509
Taiwan — 2.5%
Quanta Computer, Inc.		866,000		1,565,332
Taiwan Semiconductor Manufacturing Co., Ltd. — ADR		222,145		2,168,135
				3,733,467
United Kingdom — 18.9%
Aviva Plc		593,383		2,757,561
BHP Billiton Plc		133,501		3,461,482
Barclays Plc		748,982		2,989,562
British American Tobacco Plc		123,504		3,919,495
Centrica Plc		961,842		4,244,624
Ladbrokes Plc		1,156,268		2,185,003
Lloyds TSB Group Plc (a)		2,952,898		2,331,214
Royal Dutch Shell Plc, Class B		166,485		4,024,056
United Business Media Ltd.		390,524		2,884,206
				28,797,203
Total Common Stocks — 95.4%				145,248,939
Structured Notes
India — 1.5%
Deutsche Bank AG (Axis Bank), due 8/17/17 (a)		65,240		1,731,887
Morgan Stanley BV (Rolta India Ltd.), due 5/26/14		145,318		526,037
Total Structured Notes — 1.5%				2,257,924
Total Long-Term Investments (Cost — $161,865,791) — 96.9%				147,506,863
Short-Term Securities
Money Market Funds — 1.8%
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (b)(c)		2,780,487		2,780,487

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts	EUR	Euro
AUD	Australian Dollar	GBP	British Pound
CHF	Swiss Franc	JPY	Japanese Yen
DKK	Danish Krone	KRW	South Korean Won
		USD	US Dollar

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Time Deposits	(000)		Value
Australia — 0.0%
Brown Brothers Harriman & Co., 3.36%, 7/01/10		AUD 4	$	3,059
Denmark — 0.0%
Brown Brothers Harriman & Co., 0.10%, 7/01/10		DKK 19		3,119
Euro — 0.3%
Brown Brothers Harriman & Co., 0.10%, 7/01/10		EUR 399		488,485
Japan — 0.1%
Brown Brothers Harriman & Co., 0.00%, 7/01/10		JPY 9,694		109,550
Total Time Deposits — 0.4%				604,213
Total Short-Term Securities (Cost — $3,384,700) — 2.2%				3,384,700
Total Investments (Cost — $165,250,491*) — 99.1%				150,891,563
Other Assets Less Liabilities — 0.9%				1,406,139
Net Assets — 100.0%			$	152,297,702

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, as amended, were as follows:

Aggregate cost	$	167,803,506
Gross unrealized appreciation	$	3,416,118
Gross unrealized depreciation		(20,328,061	)
Net unrealized depreciation	$	(16,911,943	)

(a)	Non-income producing security.
(b)	Represents the current yield as of report date.
(c)	Investments in companies 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:

	Shares					Shares
	Held at					Held at
	December 31,		Net			June 30,
Affiliate	2009		Activity			2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		3,092,060		(311,573	)		2,780,487	$	1,250

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

					Unrealized
Currency	Currency			Settlement	Appreciation
Purchased	Sold		Counterparty	Date	(Depreciation)
GBP 443,344		USD 669,540	Goldman Sachs & Co.	7/01/10	$	(7,142	)
GBP 37		USD 56	JPMorgan Chase Bank NA.	7/01/10		(1	)
USD 639,110		EUR 520,449	Goldman Sachs & Co.	7/01/10		2,676
AUD 415,140		USD 351,624	Brown Brothers Harriman & Co	7/02/10		(2,179	)
CHF 647,312		USD 600,642	Brown Brothers Harriman & Co	7/02/10		(84	)
DKK 586,889		USD 96,636	Brown Brothers Harriman & Co	7/02/10		(291	)
EUR 1,549,508		USD 1,900,936	Brown Brothers Harriman & Co	7/02/10		(6,117	)
GBP 751,829		USD 1,124,736	Brown Brothers Harriman & Co	7/02/10		(1,430	)
JPY 95,445,485		USD 1,077,749	Brown Brothers Harriman & Co	7/02/10		1,768
KRW 121,590,313		USD 99,136	Brown Brothers Harriman & Co	7/02/10		368
KRW 115,266,049		USD 93,980	Brown Brothers Harriman & Co	7/02/10		349
USD 627,255		EUR 514,396	Citibank, NA	7/02/10		(1,780	)
USD 43,358		JPY 3,842,853	JPMorgan Chase Bank NA	7/02/10		(105	)
USD 467,863		EUR 381,458	Citibank, NA	7/06/10		1,386
Total					$	(12,582	)

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Schedule of Investments (concluded)

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Common Stocks:
Australia		—	$	8,148,814		—	$	8,148,814
Brazil	$	4,138,363		—		—		4,138,363
Denmark		—		2,259,216		—		2,259,216
Finland		—		2,087,553		—		2,087,553
France		—		13,882,824		—		13,882,824
Germany		—		16,077,841		—		16,077,841
Hungary		—		495,006		—		495,006
Israel		3,062,107		—		—		3,062,107
Japan		—		25,061,414		—		25,061,414
Mexico		2,331,110		—		—		2,331,110
Netherlands		—		2,480,724		—		2,480,724
Russia		1,537,793		—		—		1,537,793
South Korea		—		4,490,787		—		4,490,787
Spain				11,421,208				11,421,208
Switzerland		1,269,490		13,974,019		—		15,243,509
Taiwan		2,168,135		1,565,332		—		3,733,467
United Kingdom		—		28,797,203		—		28,797,203
Structured Notes:
India		—		2,257,924		—		2,257,924
Short-Term Securities:
Money Market Funds		2,780,487		—		—		2,780,487
Time Deposits		—		604,213		—		604,213
Total	$	17,287,485	$	133,604,078		—	$	150,891,563

Derivative Financial Instruments1
Valuation Inputs	Level 1		Level 2			Level 3		Total
Assets:
Foreign currency exchange contracts		—	$	6,547			—	$	6,547
Liabilities:
Foreign currency exchange contracts		—		(19,129	)		—		(19,129	)
Total		—	$	(12,582	)		—	$	(12,582	)

¹ Derivative financial instruments are foreign currency exchange contracts, which are shown at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$162,470,004)	$	148,111,076
Investments at value—affiliated (cost—$2,780,487)		2,780,487
Foreign currency at value (cost—$601)		419
Unrealized appreciation on foreign currency exchange contracts		6,547
Investments sold receivable		1,731,930
Dividends receivable		940,894
Capital shares sold receivable		6,162,032
Prepaid expenses		34,086
Total assets		159,767,471
Liabilities:
Unrealized depreciation on foreign currency exchange contracts		19,129
Investments purchased payable		7,158,513
Capital shares redeemed payable		154,432
Investment advisory fees payable		93,887
Other affiliates payable		1,650
Officer’s and Directors’ fees payable		317
Other accrued expenses payable		41,841
Total liabilities		7,469,769
Net Assets	$	152,297,702
Net Assets Consist of:
Paid-in capital	$	222,303,354
Undistributed net investment income		1,741,734
Accumulated net realized loss		(57,345,800	)
Net unrealized appreciation/depreciation		(14,401,586	)
Net Assets	$	152,297,702
Net Asset Value:
Class I—Based on net assets of $152,297,702 and 19,902,247 shares outstanding, 100 million shares authorized, $0.10 par value	$	7.65

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	2,682,028
Foreign taxes withheld		(260,178	)
Dividends—affiliated		1,250
Interest		111
Total income		2,423,211
Expenses:
Investment advisory		637,932
Custodian		41,784
Accounting services		24,590
Professional		23,541
Printing		13,111
Officer and Directors		10,869
Transfer agent		2,586
Miscellaneous		13,124
Total expenses		767,537
Less fees waived by advisor		(672	)
Total expenses after fees waived		766,865
Net investment income		1,656,346
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		952,877
Foreign currency transactions		(830,045	)
		122,832
Net change in unrealized appreciation/depreciation on:
Investments		(28,939,530	)
Foreign currency transactions		(438,646	)
		(29,378,176	)
Total realized and unrealized loss		(29,255,344	)
Net Decrease in Net Assets Resulting from Operations	$	(27,598,998	)

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	1,656,346		$	2,943,623
Net realized gain (loss)		122,832			(1,676,032	)
Net change in unrealized appreciation/depreciation		(29,378,176	)		34,340,296
Net increase (decrease) in net assets resulting from operations		(27,598,998	)		35,607,887
Dividends to Shareholders From:
Net investment income		—			(3,551,972	)
Decrease in net assets resulting from dividends to shareholders		—			(3,551,972	)
Capital Share Transactions:
Net Increase (decrease) in net assets derived from capital share transactions		(4,816,603	)		15,602,983
Net Assets:
Total increase (decrease) in net assets		(32,415,601	)		47,658,898
Beginning of period		184,713,303			137,054,405
End of period	$	152,297,702		$	184,713,303
Undistributed net investment income	$	1,741,734		$	85,388

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006			2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.06		$	7.11	$	14.38	$	16.80	$	14.86		$	13.67
Net investment income1		0.08			0.16		0.31		0.34		0.42			0.35
Net realized and unrealized gain (loss)		(1.49)			1.97		(6.43)		1.42		3.73			1.24
Net increase (decrease) from investment operations		(1.41)			2.13		(6.12)		1.76		4.15			1.59
Dividends and distributions from:
Net investment income		—			(0.18)		(0.39)		(0.50)		(0.60)			(0.40)
Net realized gain		—			—		(0.76)		(3.68)		(1.61)			—
Total dividends and distributions		—			(0.18)		(1.15)		(4.18)		(2.21)			(0.40)
Net asset value, end of period	$	7.65		$	9.06	$	7.11	$	14.38	$	16.80		$	14.86
Total Investment Return:2
Based on net asset value		(15.56)%	3		29.97%		(42.49)%		10.34%		27.91%	4		11.68%	5
Ratios to Average Net Assets:
Total expenses		0.90%	6		0.92%		0.91%		0.87%		0.87%			0.88%
Total expenses after fees waived		0.90%	6		0.91%		0.91%		0.87%		0.87%			0.70%
Net investment income		1.95%	6		2.01%		2.71%		1.91%		2.49%			2.30%
Supplemental Data:
Net assets, end of period (000)	$	152,298		$	184,713	$	137,054	$	347,299	$	405,486		$	356,277
Portfolio turnover		76%			199%		118%		79%		62%			78%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	The previous investment advisor reimbursed the Fund in order to resolve a regulatory issue relating to an investment, which increased the total investment return by 0.13%.
5	The previous investment advisor reimbursed the Fund for a loss on a security transaction related to a revised capital share transaction, which had a minimal impact on total investment return.
6	Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock International Value V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock International Value V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the Financial Statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid or price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., foreign currency exchange contracts), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Under the applicable foreign tax laws a withholding tax at various rates may be imposed on capital gains, dividends and interest.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contracts. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between the Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from their counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

“Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts	$	6,547	Unrealized depreciation on foreign currency exchange contracts	$	19,129

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Foreign Currency
	Transactions
Net Realized Gain (Loss) from
Foreign currency transactions	$	(837,327	)
Net Change in Unrealized Appreciation/Depreciation on
Foreign currency transactions	$	(366,430	)

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		3
Average number of contracts-US dollars sold		7
Average US dollar amounts purchased	$	7,548,144
Average US dollar amounts sold	$	9,894,902

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.75% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock International Limited. (“BIL”), an affiliate of the Manager. The Manager pays BIL for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

For the six months ended June 30, 2010, the Fund reimbursed the Manager $1,732 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $126,888,834 and $131,831,674, respectively.

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2016	$	28,933,559
2017		26,038,359
Total	$	54,971,918

7.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the Funds 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a substantial amount of its assets in issuers located in a single country or a limited number of countries. When the Fund concentrates its investments in this manner, it assumes the risk that economic, political and social conditions in those countries may have a significant impact on their investment performance. Please see the Schedule of Investments for concentrations in specific countries.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

As of June 30, 2010, the Fund had the following industry classifications:

	Percent of
	Long-Term
Industry	Investments
Commercial Banks		15	%
Oil, Gas & Consumable Fuels		10
Pharmaceuticals		9
Insurance		6
Diversified Telecommunication Services		5
Other*		55

*  All other industries held were each less than 5% of long-term investments.

8.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		1,260,851		$	10,195,591
Shares redeemed		(1,753,500	)		(15,012,194	)
Net decrease		(492,649	)	$	(4,816,603	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		4,212,334		$	37,996,280
Shares issued to shareholders in reinvestment of dividends		395,021			3,551,972
Total issued		4,607,355			41,548,252
Shares redeemed		(3,484,186	)		(25,945,269	)
Net increase		1,123,169		$	15,602,983

9.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following item was noted:

The Fund paid a net investment income dividend of $0.025101 per share on July 23, 2010 to shareholders of record on July 21, 2010.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Large Cap Core V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Large Cap Core V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund underperformed its benchmark, the Russell 1000 Index.

What factors influenced performance?

•  Overall, negative results in the financials, energy, industrials and consumer staples sectors overshadowed positive results in health care.

•  In financials, an underweight in commercial banks and a lack of exposure to real estate investment trusts hampered returns, as both segments performed well during the period. Equipment & services names detracted from results within the energy sector. In general, holdings struggled amid commodity price volatility related to the economic slowdown, as well as contagion from the oil spill in the Gulf of Mexico. Within industrials, holdings in the aerospace & defense and commercial services & supplies industries hindered performance. Lastly, underweights and stock selection in the more defensive food products and household products industries accounted for the majority of weakness in consumer staples.

•  The largest individual detractors from performance were Seagate Technology Holdings, Harley-Davidson, Inc., Western Digital Corp. and Microsoft Corp. An underweight in Apple, Inc. also hindered relative returns.

•  Conversely, health care was the largest contributor to Fund performance. A significant overweight in the health care providers & services industry was the greatest source of relative strength. In particular, solid earnings results and favorable guidance drove up shares of select distributor holdings in the Fund. Stock selection within the pharmaceuticals industry also yielded favorable results.

•  The largest individual contributors to performance were Ross Stores, Inc., AmerisourceBergen Corp., Advance Auto Parts, Inc., Limited Brands, Inc., The Estée Lauder Cos., Inc., Class A and TJX Cos., Inc. An underweight in Google, Inc., Class A proved advantageous as well.

Describe recent portfolio activity.

•  During the six-month period, we increased the Fund’s exposure to consumer discretionary and industrials. We reduced exposure to telecommunication services, utilities and energy.

•  The largest purchases for the Fund were Intel Corp., Chevron Corp., Freeport-McMoRan Copper & Gold, Inc., Class B, Seagate Technology and Harley-Davidson. The largest sales included International Business Machines Corp., Oracle Corp., Johnson & Johnson, AT&T, Inc. and Philip Morris International, Inc.

Describe Fund positioning at period end.

•  As of June 30, 2010, we maintained the Fund’s pro-cyclical bias and used weakness at the end of the period to boost that exposure, believing that the market was beginning to discount a double-dip recession (an event we consider unlikely). The Fund’s largest sector overweights relative to the benchmark included health care and consumer discretionary, while financials and consumer staples represented the largest underweights. As always, we rely on a disciplined investment process and a belief in the importance of portfolio construction and risk management to strive to deliver consistent outperformance over the long term.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Large		BlackRock Large		BlackRock Large
	Cap Core		Cap Core		Cap Core
	V.I. Fund(2)-Class		V.I. Fund(2)-Class		V.I. Fund(2)-Class		Russell 1000
	I Shares(1)		II Shares(1)		III Shares(1)		Index(3)
6/00		10000		10000		10000		10000
6/01		8331		8318		8310		8505
6/02		7762		7739		7724		6984
6/03		7556		7522		7500		7050
6/04		9318		9263		9225		8424
6/05		10699		10634		10566		9091
6/06		12030		11940		11852		9917
6/07		14218		14091		13972		11943
6/08		12660		12528		12410		10467
6/09		8895		9789		8696		7673
6/10		9870		9739		9621		8842

1	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower. The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, and the returns for Class III Shares prior to January 27, 2009, the recommencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class II and Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class II and Class III Shares.
2	The Fund, under normal circumstances, invests at least 80% of its net assets in a diversified portfolio of equity securities, primarily common stocks, of large cap companies included at the time of purchase in the Russell 1000 Index.
3	This unmanaged Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares4		(9.08)	%		10.97	%		(1.60)	%		(0.13)	%
Class II Shares4		(9.12)			10.81			(1.74)			(0.26)	5
Class III Shares4		(9.19)			10.63			(1.86)	5		(0.39)	5
Russell 1000 Index		(6.40)			15.24			(0.56)			(1.22)

4

Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower.

5

The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, and the returns for Class III Shares prior to January 27, 2009, the recommencement of operations of Class III Shares, are based upon performance of the Fund’s Class I shares. The returns for Class II and Class III Shares, however, are adjusted to reflect the distribution (12b–1) fees applicable to Class II and Class III Shares.

    Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Health Care		19	%
Information Technology		17
Consumer Discretionary		16
Energy		13
Industrials		11
Financials		7
Consumer Staples		7
Materials		6
Utilities		2
Telecommunication Services		2

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	909.20	$	2.79	$	1,000	$	1,021.87	$	2.96		0.59%
Class II	$	1,000	$	908.80	$	3.50	$	1,000	$	1,021.13	$	3.71		0.74%
Class III	$	1,000	$	908.10	$	3.97	$	1,000	$	1,020.63	$	4.21		0.84%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 4.3%
Honeywell International, Inc.		81,000	$	3,161,430
L-3 Communications Holdings, Inc.		25,000		1,771,000
Northrop Grumman Corp.		51,000		2,776,440
Raytheon Co.		56,000		2,709,840
				10,418,710
Automobiles — 1.0%
Harley-Davidson, Inc. (a)		110,000		2,445,300
Beverages — 1.2%
Dr. Pepper Snapple Group, Inc.		75,000		2,804,250
Biotechnology — 1.4%
Amgen, Inc. (b)		67,000		3,524,200
Chemicals — 0.7%
Eastman Chemical Co.		16,000		853,760
Lubrizol Corp.		10,000		803,100
				1,656,860
Commercial Banks — 0.2%
Wells Fargo & Co.		17,000		435,200
Commercial Services & Supplies — 0.8%
R.R. Donnelley & Sons Co.		125,000		2,046,250
Communications Equipment — 1.2%
Cisco Systems, Inc. (b)		16,000		340,960
Tellabs, Inc.		410,000		2,619,900
				2,960,860
Computers & Peripherals — 5.3%
Apple, Inc. (b)		12,000		3,018,360
Dell, Inc. (b)		218,000		2,629,080
SanDisk Corp. (b)		60,000		2,524,200
Seagate Technology Holdings (b)		198,000		2,581,920
Western Digital Corp. (b)		70,000		2,111,200
				12,864,760
Construction & Engineering — 0.6%
URS Corp. (b)		38,000		1,495,300
Consumer Finance — 1.2%
Capital One Financial Corp.		74,000		2,982,200
Containers & Packaging — 1.6%
Crown Holdings, Inc. (b)		99,000		2,478,960
Temple-Inland, Inc.		74,000		1,529,580
				4,008,540
Diversified Financial Services — 2.8%
Bank of America Corp.		170,000		2,442,900
CME Group, Inc.		1,000		281,550
Citigroup, Inc. (b)		769,000		2,891,440
JPMorgan Chase & Co.		33,000		1,208,130
				6,824,020
Diversified Telecommunication Services — 2.0%
AT&T, Inc.		38,000		919,220
Verizon Communications, Inc.		144,000		4,034,880
				4,954,100
Electric Utilities — 1.1%
Edison International		83,000		2,632,760
Electrical Equipment — 1.3%
Emerson Electric Co.		71,000		3,101,990
Energy Equipment & Services — 3.0%
Nabors Industries Ltd. (b)		130,000		2,290,600
National Oilwell Varco, Inc.		80,000		2,645,600
Rowan Cos., Inc. (b)		108,000		2,369,520
				7,305,720
Food & Staples Retailing — 1.8%
Safeway, Inc.		70,000		1,376,200
Walgreen Co.		113,000		3,017,100
				4,393,300
Food Products — 1.6%
The Hershey Co.		21,000		1,006,530
Sara Lee Corp.		200,000		2,820,000
				3,826,530
Health Care Providers & Services — 12.4%
Aetna, Inc.		102,000		2,690,760
AmerisourceBergen Corp.		89,000		2,825,750
Cardinal Health, Inc.		89,000		2,991,290
Health Management Associates, Inc., Class A (b)		281,000		2,183,370
Humana, Inc. (b)		57,000		2,603,190
McKesson Corp.		45,000		3,022,200
Medco Health Solutions, Inc. (b)		54,000		2,974,320
Omnicare, Inc.		83,000		1,967,100
Quest Diagnostics, Inc.		30,000		1,493,100
Tenet Healthcare Corp. (b)		318,000		1,380,120
UnitedHealth Group, Inc.		114,000		3,237,600
WellPoint, Inc. (b)		57,000		2,789,010
				30,157,810
Household Durables — 1.0%
Whirlpool Corp.		28,000		2,458,960
Household Products — 0.6%
The Procter & Gamble Co.		23,000		1,379,540
IT Services — 1.6%
Amdocs Ltd. (b)		91,000		2,443,350
International Business Machines Corp.		11,000		1,358,280
				3,801,630
Independent Power Producers & Energy Traders — 1.4%
Calpine Corp. (b)		106,000		1,348,320
NRG Energy, Inc. (b)		93,000		1,972,530
				3,320,850
Industrial Conglomerates — 1.0%
General Electric Co.		166,000		2,393,720
Insurance — 2.6%
Berkshire Hathaway, Inc. (b)		9,000		717,210
Lincoln National Corp.		38,000		923,020
Prudential Financial, Inc.		55,000		2,951,300
UnumProvident Corp.		78,000		1,692,600
				6,284,130
Internet & Catalog Retail — 1.0%
Expedia, Inc.		135,000		2,535,300
Internet Software & Services — 1.2%
Google, Inc., Class A (b)		1,000		444,950
VeriSign, Inc. (b)		94,000		2,495,700
				2,940,650
Life Sciences Tools & Services — 0.7%
Pharmaceutical Product Development, Inc.		69,000		1,753,290

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Machinery — 3.1%
Eaton Corp.		40,000	$	2,617,600
Gardner Denver, Inc.		21,000		936,390
Parker Hannifin Corp.		48,000		2,662,080
Timken Co.		34,000		883,660
Trinity Industries, Inc.		28,000		496,160
				7,595,890
Metals & Mining — 2.2%
Freeport-McMoRan Copper & Gold, Inc., Class B		51,000		3,015,630
Titanium Metals Corp. (b)		135,000		2,374,650
				5,390,280
Multiline Retail — 6.6%
Big Lots, Inc. (b)		81,000		2,599,290
Dollar Tree, Inc. (b)		27,000		1,124,010
JCPenney Co., Inc.		99,000		2,126,520
Macy’s, Inc.		127,000		2,273,300
Nordstrom, Inc.		73,000		2,349,870
Sears Holdings Corp. (b)		35,000		2,262,750
Target Corp.		68,000		3,343,560
				16,079,300
Oil, Gas & Consumable Fuels — 10.1%
Chevron Corp.		83,000		5,632,380
Cimarex Energy Co.		36,000		2,576,880
ConocoPhillips		83,000		4,074,470
Exxon Mobil Corp.		75,000		4,280,250
Marathon Oil Corp.		94,000		2,922,460
Whiting Petroleum Corp. (b)		31,000		2,431,020
Williams Cos., Inc.		145,000		2,650,600
				24,568,060
Paper & Forest Products — 1.1%
International Paper Co.		114,000		2,579,820
Personal Products — 1.1%
The Estée Lauder Cos., Inc., Class A		46,000		2,563,580
Pharmaceuticals — 5.0%
Bristol-Myers Squibb Co.		106,000		2,643,640
Eli Lilly & Co.		71,000		2,378,500
Forest Laboratories, Inc. (b)		99,000		2,715,570
Johnson & Johnson		24,000		1,417,440
Perrigo Co.		45,000		2,658,150
Pfizer, Inc.		18,000		256,680
				12,069,980
Semiconductors & Semiconductor Equipment — 4.3%
Intel Corp.		235,000		4,570,750
Micron Technology, Inc. (b)		290,000		2,462,100
National Semiconductor Corp.		60,000		807,600
Xilinx, Inc.		105,000		2,652,300
				10,492,750
Software — 3.7%
CA, Inc.		140,000		2,576,000
Microsoft Corp.		281,000		6,465,810
				9,041,810
Specialty Retail — 5.9%
Advance Auto Parts, Inc.		24,000		1,204,320
Dick’s Sporting Goods, Inc. (b)		93,000		2,314,770
The Gap, Inc.		138,000		2,685,480
Limited Brands, Inc.		117,000		2,582,190
Ross Stores, Inc.		50,000		2,664,500
TJX Cos., Inc.		69,000		2,894,550
				14,345,810
Tobacco — 0.4%
Lorillard, Inc.		15,000		1,079,700
Total Long-Term Investments (Cost — $250,017,904) — 100.1%				243,513,710
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (c)(d)		1,308,049		1,308,049
	Beneficial
	Interest
	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (c)(d)(e)	$	1,800		1,800,000
Total Short-Term Securities (Cost — $3,108,049) — 1.3%				3,108,049
Total Investments (Cost — $253,125,953*) — 101.4%				246,621,759
Liabilities in Excess of Other Assets — (1.4)%				(3,458,547	)
Net Assets — 100.0%			$	243,163,212

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	260,995,804
Gross unrealized appreciation	$	7,588,195
Gross unrealized depreciation		(21,962,240	)
Net unrealized depreciation	$	(14,374,045	)

(a)	Security, or a portion of security, is on loan.
(b)	Non-income producing security.
(c)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/Beneficial				Shares/Beneficial
	Interest Held at				Interest Held at
	December 31,		Net		June 30,
Affiliate	2009		Activity		2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		570,264		737,785		1,308,049	$	392
BlackRock Liquidity Series, LLC Money Market Series	$	11,419,200	$	(9,619,200)	$	1,800,000	$	3,772

(d)	Represents the current yield as of report date.
(e)	Security was purchased with the cash collateral from loaned securities.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Schedule of Investments (concluded)

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	243,513,710		—		—	$	243,513,710
Short-Term Securities		1,308,049	$	1,800,000		—		3,108,049
Total	$	244,821,759	$	1,800,000		—	$	246,621,759

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned of $1,667,250) (cost—$250,017,904)	$	243,513,710
Investments at value—affiliated (cost—$3,108,049)		3,108,049
Foreign currency at value (cost—$369)		373
Investments sold receivable		18,268,536
Dividends receivable		151,260
Capital shares sold receivable		36,591
Securities lending income receivable—affiliated		189
Prepaid expenses		37,795
Total assets		265,116,503
Liabilities:
Collateral on securities loaned, at value		1,800,000
Investments purchased payable		19,760,502
Capital shares redeemed payable		220,872
Investment advisory fees payable		106,038
Distribution fees payable		9,412
Other affiliates payable		2,057
Officer’s and Directors’ fees payable		586
Other accrued expenses payable		52,158
Other liabilities		1,666
Total liabilities		21,953,291
Net Assets	$	243,163,212
Net Assets Consist of:
Paid-in capital	$	331,281,480
Undistributed net investment income		1,501,819
Accumulated net realized loss		(83,115,897	)
Net unrealized appreciation/depreciation		(6,504,190	)
Net Assets	$	243,163,212
Net Asset Value:
Class I—Based on net assets of $195,605,549 and 10,226,316 shares outstanding, 200 million shares authorized, $0.10 par value	$	19.13
Class II—Based on net assets of $6,028,380 and 315,209 shares outstanding, 100 million shares authorized, $0.10 par value	$	19.13
Class III—Based on net assets of $41,529,283 and 2,177,199 shares outstanding, 100 million shares authorized, $0.10 par value	$	19.07

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	2,121,960
Dividends—affiliated		392
Securities lending—affiliated		3,772
Total income		2,126,124
Expenses:
Investment advisory		655,878
Distribution—Class II		4,788
Distribution—Class III		43,753
Accounting services		46,774
Professional		22,015
Printing		14,446
Officer and Directors		12,685
Custodian		9,735
Transfer agent—Class I		2,293
Transfer agent—Class II		65
Transfer agent—Class III		357
Registration fees		226
Miscellaneous		10,397
Total expenses		823,412
Less fees waived by advisor		(203	)
Total expenses after fees waived		823,209
Net investment income		1,302,915
Realized and Unrealized Gain (Loss):
Net realized gain from investments		8,236,051
Net change in unrealized appreciation/depreciation on investments		(33,951,248	)
Total realized and unrealized loss		(25,715,197	)
Net Decrease in Net Assets Resulting from Operations	$	(24,412,282	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	1,302,915		$	3,198,912
Net realized gain (loss)		8,236,051			(32,317,619	)
Net change in unrealized appreciation/depreciation		(33,951,248	)		77,232,283
Net increase (decrease) in net assets resulting from operations		(24,412,282	)		48,113,576
Dividends to Shareholders From:
Net investment income:
Class I		—			(2,787,644	)
Class II		—			(67,890	)
Class III		—			(279,988	)
Decrease in net assets resulting from dividends to shareholders		—			(3,135,522	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		6,693,295			(10,922,132	)
Net Assets:
Total increase (decrease) in net assets		(17,718,987	)		34,055,922
Beginning of period		260,882,199			226,826,277
End of period	$	243,163,212		$	260,882,199
Undistributed net investment income	$	1,501,819		$	198,904

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008			2007		2006		2005
Per Share Operating Performance:								��
Net asset value, beginning of period	$	21.04		$	17.38	$	29.75		$	32.17	$	31.69	$	29.38
Net investment income1		0.11			0.26		0.27			0.31		0.30		0.19
Net realized and unrealized gain (loss)		(2.02)			3.66		(11.80)			2.41		4.34		3.68
Net increase (decrease) from investment operations		(1.91)			3.92		(11.53)			2.72		4.64		3.87
Dividends and distributions from:
Net investment income		—			(0.26)		(0.31)			(0.34)		(0.32)		(0.20)
Net realized gain		—			—		(0.53)			(4.80)		(3.84)		(1.36)
Total dividends and distributions		—			(0.26)		(0.84)			(5.14)		(4.16)		(1.56)
Net asset value, end of period	$	19.13		$	21.04	$	17.38		$	29.75	$	32.17	$	31.69
Total Investment Return:2
Based on net asset value		(9.08)%	3		22.54%		(38.75)%			8.34%		14.74%		13.20%
Ratios to Average Net Assets:
Total expenses		0.59%	4		0.62%		0.60%			0.55%		0.53%		0.54%
Total expenses after fees waived		0.59%	4		0.62%		0.60%			0.55%		0.53%		0.54%
Net investment income		1.03%	4		1.42%		1.12%			0.91%		0.91%		0.62%
Supplemental Data:
Net assets, end of period (000)	$	195,606		$	228,900	$	225,183		$	476,467	$	537,525	$	538,794
Portfolio turnover		97%			165%		104%			72%		72%		75%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Financial Highlights (continued)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	21.05		$	17.40	$	29.74	$	32.18	$	31.69	$	29.38
Net investment income1		0.09			0.23		0.21		0.24		0.25		0.16
Net realized and unrealized gain (loss)		(2.01)			3.66		(11.77)		2.42		4.35		3.69
Net increase (decrease) from investment operations		(1.92)			3.89		(11.56)		2.66		4.60		3.85
Dividends and distributions from:
Net investment income		—			(0.24)		(0.25)		(0.30)		(0.27)		(0.18)
Net realized gain		—			—		(0.53)		(4.80)		(3.84)		(1.36)
Total dividends and distributions		—			(0.24)		(0.78)		(5.10)		(4.11)		(1.54)
Net asset value, end of period	$	19.13		$	21.05	$	17.40	$	29.74	$	32.18	$	31.69
Total Investment Return:2
Based on net asset value		(9.12)%	3		22.35%		(38.85)%		8.16%		14.61%		13.13%
Ratios to Average Net Assets:
Total expenses		0.74%	4		0.77%		0.74%		0.71%		0.68%		0.69%
Total expenses after fees waived		0.74%	4		0.77%		0.74%		0.71%		0.68%		0.69%
Net investment income		0.87%	4		1.20%		0.84%		0.72%		0.75%		0.53%
Supplemental Data:
Net assets, end of period (000)	$	6,028		$	6,176	$	1,644	$	3,974	$	1,973	$	2,025
Portfolio turnover		97%			165%		104%		72%		72%		75%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Financial Highlights (concluded)

	Class III
				Period										Period
				January 27,										September 30,
	Six Months Ended			20091 to										20043 to
	June 30, 2010			December 31,			Year Ended December 31,							December 31,
	(Unaudited)			2009			20072			2006		2005		2004
Per Share Operating Performance:
Net asset value, beginning of period	$	21.00		$	16.75		$	32.23		$	31.76	$	29.38	$	26.07
Net investment income4		0.08			0.21			0.23			0.28		0.20		0.12
Net realized and unrealized gain (loss)		(2.01)			4.28			2.42			4.35		3.74		3.43
Net increase (decrease) from investment operations		(1.93)			4.49			2.65			4.63		3.94		3.55
Dividends and distributions from:
Net investment income		—			(0.24)			(0.25)			(0.32)		(0.20)		(0.24)
Net realized gain		—			—			(4.80)			(3.84)		(1.36)		—
Total dividends and distributions		—			(0.24)			(5.05)			(4.16)		(1.56)		(0.24)
Net asset value, end of period	$	19.07		$	21.00		$	29.83		$	32.23	$	31.76	$	29.38
Total Investment Return:5
Based on net asset value		(9.19)%	6		26.77%	6		8.12%			14.68%		13.43%		13.61%	6
Ratios to Average Net Assets:
Total expenses		0.84%	7		0.87%	7		0.76%			0.60%		0.54%		0.53%	7
Total expenses after fees waived		0.84%	7		0.87%	7		0.76%			0.60%		0.54%		0.53%	7
Net investment income		0.76%	7		1.10%	7		0.68%			0.85%		0.67%		1.70%	7
Supplemental Data:
Net assets, end of period (000)	$	41,529		$	25,806		$	—	2	$	1	$	1	$	1
Portfolio turnover		97%			165%			72%			72%		75%		131%

1	Recommencement of operations.
2	There were no Class III Shares outstanding as of December 31, 2007 and during the year January 1, 2008 through December 31, 2008.
3	Commencement of operations.
4	Based on average shares outstanding.
5	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
6	Aggregate total investment return.
7	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Core V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Large Cap Core V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I, Class II and Class III Shares have equal 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 II and Class III Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investments in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 the following annual rates of the Fund’s average daily net assets:

Portfolio of average daily value of net assets	Rate
Not exceeding $250 million		0.500	%
In excess of $250 million, but not exceeding $300 million		0.450	%
In excess of $300 million, but not exceeding $400 million		0.425	%
In excess of $400 million		0.400	%

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II and Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,659 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% and 0.25% based upon the average daily net assets attributable to Class II and Class III.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Administrator. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral on securities loaned, at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $898 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $223,746,207 and $214,532,125, respectively.

4.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount, which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

		��
Expires December 31,
2016	$	25,419,371
2017		57,229,547
Total	$	82,648,918

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

6.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statements of Assets and Liabilities, less any collateral held by the Fund.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		49,843		$	1,022,976
Shares redeemed		(704,446	)		(14,997,980	)
Net decrease		(654,603	)	$	(13,975,004	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		76,774		$	1,322,872
Shares issued to shareholders in reinvestment of dividends		131,901			2,787,644
Total issued		208,675			4,110,516
Shares redeemed		(2,283,679	)		(41,215,312	)
Net decrease		(2,075,004	)	$	(37,104,796	)

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		50,509		$	1,097,930
Shares redeemed		(28,701	)		(609,842	)
Net increase		21,808		$	488,088

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		273,372		$	5,134,463
Shares issued to shareholders in reinvestment of dividends		3,197			67,890
Total issued		276,569			5,202,353
Shares redeemed		(77,611	)		(1,379,380	)
Net increase		198,958		$	3,822,973

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		955,840		$	20,341,936
Shares redeemed		(7,255	)		(161,725	)
Net increase		948,585		$	20,180,211

Class III Shares
Period January 27, 2009* to December 31, 2009	Shares			Amount
Shares sold		1,216,191		$	22,096,034
Shares issued to shareholders in reinvestment of dividends		13,236			279,988
Total issued		1,229,427			22,376,022
Shares redeemed		(813	)		(16,331	)
Net increase		1,228,614		$	22,359,691

*  Recommencement of operations.

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to Common Shareholders of record on July 21, 2010 as follows:

	Dividend Per Share
Class I	$	0.015562
Class II	$	0.015540
Class III	$	0.015499

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Large Cap Growth V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Large Cap Growth V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund outperformed its benchmark, the Russell 1000 Growth Index.

What factors influenced performance?

•  Overall, positive results in the health care, consumer discretionary and information technology (IT) sectors overshadowed negative results in consumer staples and utilities.

•  The health care sector was the largest contributor to Fund performance. A significant overweight in the health care providers & services industry was the greatest source of relative strength. In particular, solid earnings results and favorable guidance drove up shares of select distributor holdings in the Fund. Stock selection within the pharmaceuticals and life sciences tools & services industries also aided returns. In the consumer discretionary sector, favorable performance came primarily from stock selection among specialty retailers, particularly from an emphasis on more defensive discount retailers. An underweight and stock selection in the internet software & services industry provided the most significant boost in the IT sector. Finally, an underweight in communications equipment names also positively affected performance.

•  The largest individual contributors to performance were Lincare Holdings, Inc. and Ross Stores, Inc. An underweight in Google, Inc., Class A proved advantageous as well.

•  Conversely, an underweight in the more defensive household products industry accounted for the majority of weakness in the consumer staples sector. Additionally, an overweight and stock selection among independent power producers & energy traders hampered results within the utilities sector, as rising coal prices and falling natural gas prices squeezed the margin outlook for most companies in the group.

•  The largest individual detractors from performance were Seagate Technology Holdings, Western Digital Corp., Atwood Oceanics, Inc., Microsoft Corp. and AES Corp. An underweight in Apple, Inc. also hindered results.

Describe recent portfolio activity.

•  During the six-month period, we increased the Fund’s exposure to the consumer discretionary, industrials, telecommunication services, materials and utilities sectors. We reduced exposure to energy, IT and consumer staples.

•  The largest purchases within the Fund were Exxon Mobil Corp., Intel Corp., Emerson Electric Co., Walgreen Co. and Honeywell International, Inc. The largest sales included International Business Machines Corp., Oracle Corp., Philip Morris International Inc., Amgen, Inc. and Microsoft.

Describe Fund positioning at period end.

•  As of June 30, 2010, we maintained the Fund’s pro-cyclical bias and used weakness at the end of the period to boost that exposure, believing that the market was beginning to discount a double-dip recession (an event we consider unlikely). The Fund’s largest sector overweights relative to the benchmark included health care, consumer discretionary and utilities, while IT, energy and consumer staples represented the largest underweights. As always, we rely on a disciplined investment process and a belief in the importance of portfolio construction and risk management to strive to deliver consistent outperformance over the long term.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Total Return Based on a $10,000 Investment

1	The Fund invests in a diversified portfolio of equity securities of large cap companies located in the United States that Fund management believes are undervalued or have good prospects for earnings growth.
2	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 May 19, 2004, the commencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.
3	This unmanaged broad-based Index is a subset of the Russell 1000 Index consisting of those Russell 1000 securities with higher price-to-book ratios and higher forecasted growth values.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years5			10 Years5
Class I Shares4		(5.50	)%		15.37	%		(2.14	)%		(2.18	)%
Class III Shares4		(5.73	)		14.91			(2.41	)		(2.43	)6
Russell 1000 Growth Index		(7.65	)		13.62			0.38			(5.14	)

4	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
5	For a portion of the period, the Fund’s Advisor waived a portion of its fee. Without such waiver, the Fund’s performance would have been lower.
6	The returns for Class III Shares prior to May 19, 2004, the commencement of operations of Class III Shares, are based upon performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Information Technology		23	%
Health Care		22
Consumer Discretionary		18
Industrials		13
Materials		6
Consumer Staples		6
Energy		5
Utilities		3
Telecommunication Services		2
Financials		2

For Fund compliance purposes, the Fund’s sector classifications refer to any one of more the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	945.00	$	3.67	$	1,000	$	1,021.03	$	3.81		0.76	%
Class III	$	1,000	$	942.70	$	4.86	$	1,000	$	1,019.79	$	5.06		1.01	%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 4.4%
Honeywell International, Inc.		53,000	$	2,068,590
L-3 Communications Holdings, Inc.		17,000		1,204,280
Northrop Grumman Corp.		24,000		1,306,560
Raytheon Co.		28,000		1,354,920
				5,934,350
Airlines — 1.0%
Southwest Airlines Co.		123,000		1,366,530
Auto Components — 0.9%
TRW Automotive Holdings Corp. (a)		45,000		1,240,650
Automobiles — 1.0%
Harley-Davidson, Inc.		63,000		1,400,490
Beverages — 1.1%
Dr. Pepper Snapple Group, Inc.		40,000		1,495,600
Building Products — 0.9%
Armstrong World Industries, Inc. (a)		38,000		1,146,840
Chemicals — 2.1%
Albemarle Corp.		37,000		1,469,270
Nalco Holding Co.		68,000		1,391,280
				2,860,550
Communications Equipment — 0.3%
Cisco Systems, Inc. (a)		19,000		404,890
Computers & Peripherals — 8.0%
Apple, Inc. (a)		13,000		3,269,890
Dell, Inc. (a)		154,000		1,857,240
SanDisk Corp. (a)		33,000		1,388,310
Seagate Technology Holdings (a)		111,000		1,447,440
Teradata Corp. (a)		47,000		1,432,560
Western Digital Corp. (a)		47,000		1,417,520
				10,812,960
Construction & Engineering — 0.9%
URS Corp. (a)		31,000		1,219,850
Construction Materials — 0.6%
Eagle Materials, Inc.		30,000		777,900
Consumer Finance — 1.0%
Capital One Financial Corp.		32,000		1,289,600
Containers & Packaging — 1.1%
Crown Holdings, Inc. (a)		60,000		1,502,400
Electrical Equipment — 1.6%
Emerson Electric Co.		50,000		2,184,500
Electronic Equipment, Instruments & Components — 0.3%
Arrow Electronics, Inc. (a)		17,000		379,950
Energy Equipment & Services — 0.9%
Rowan Cos., Inc. (a)		53,000		1,162,820
Food & Staples Retailing — 1.5%
Walgreen Co.		75,000		2,002,500
Food Products — 1.1%
Sara Lee Corp.		107,000		1,508,700
Health Care Equipment & Supplies — 1.8%
Teleflex, Inc.		16,000		868,480
Varian Medical Systems, Inc. (a)		30,000		1,568,400
				2,436,880
Health Care Providers & Services — 15.1%
Aetna, Inc.		53,000		1,398,140
AmerisourceBergen Corp.		55,000		1,746,250
Cardinal Health, Inc.		42,000		1,411,620
Community Health Systems, Inc. (a)		38,000		1,284,780
Health Management Associates, Inc., Class A (a)		170,000		1,320,900
Humana, Inc. (a)		31,000		1,415,770
Laboratory Corp. of America Holdings (a)		21,000		1,582,350
Lincare Holdings, Inc.		45,000		1,462,950
McKesson Corp.		25,000		1,679,000
Medco Health Solutions, Inc. (a)		35,000		1,927,800
Omnicare, Inc.		54,000		1,279,800
Tenet Healthcare Corp. (a)		262,000		1,137,080
UnitedHealth Group, Inc.		49,000		1,391,600
WellPoint, Inc. (a)		27,000		1,321,110
				20,359,150
Hotels, Restaurants & Leisure — 0.9%
Wyndham Worldwide Corp.		63,000		1,268,820
IT Services — 2.0%
Amdocs Ltd. (a)		53,000		1,423,050
International Business Machines Corp.		10,000		1,234,800
				2,657,850
Independent Power Producers & Energy Traders — 2.2%
Calpine Corp. (a)		109,000		1,386,480
Mirant Corp. (a)		64,000		675,840
NRG Energy, Inc. (a)		41,000		869,610
				2,931,930
Insurance — 1.0%
Prudential Financial, Inc.		24,000		1,287,840
Internet & Catalog Retail — 1.0%
Expedia, Inc.		74,000		1,389,720
Internet Software & Services — 1.4%
Google, Inc., Class A (a)		1,000		444,950
VeriSign, Inc. (a)		55,000		1,460,250
				1,905,200
Life Sciences Tools & Services — 1.1%
Pharmaceutical Product Development, Inc.		56,000		1,422,960
Machinery — 3.6%
Crane Co.		31,000		936,510
Dover Corp.		27,000		1,128,330
Toro Co.		28,000		1,375,360
Valmont Industries, Inc.		19,000		1,380,540
				4,820,740
Metals & Mining — 2.2%
Freeport-McMoRan Copper & Gold, Inc., Class B		29,000		1,714,770
Titanium Metals Corp. (a)		72,000		1,266,480
				2,981,250
Multi-Utilities — 1.1%
CenterPoint Energy, Inc.		113,000		1,487,080
Multiline Retail — 5.1%
Big Lots, Inc. (a)		45,000		1,444,050
Dollar Tree, Inc. (a)		36,000		1,498,680
Macy’s, Inc.		16,000		286,400
Nordstrom, Inc.		42,000		1,351,980
Target Corp.		46,000		2,261,820
				6,842,930
Oil, Gas & Consumable Fuels — 4.0%
Exxon Mobil Corp.		71,000		4,051,970
Teekay Corp.		49,000		1,282,330
				5,334,300

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Schedule of Investments (concluded) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Personal Products — 1.1%
The Estée Lauder Cos., Inc., Class A		27,000	$	1,504,710
Pharmaceuticals — 4.0%
Bristol-Myers Squibb Co.		55,000		1,371,700
Eli Lilly & Co.		47,000		1,574,500
Endo Pharmaceuticals Holdings, Inc. (a)		11,000		240,020
Johnson & Johnson		10,000		590,600
Perrigo Co.		26,000		1,535,820
				5,312,640
Semiconductors & Semiconductor Equipment — 5.7%
Altera Corp.		62,000		1,538,220
Intel Corp.		166,000		3,228,700
Microchip Technology, Inc.		53,000		1,470,220
National Semiconductor Corp.		107,000		1,440,220
				7,677,360
Software — 5.3%
CA, Inc.		80,000		1,472,000
Microsoft Corp.		187,000		4,302,870
Symantec Corp. (a)		99,000		1,374,120
				7,148,990
Specialty Retail — 8.8%
Advance Auto Parts, Inc.		30,000		1,505,400
Chico’s FAS, Inc.		59,000		582,920
Dick’s Sporting Goods, Inc. (a)		55,000		1,368,950
The Gap, Inc.		76,000		1,478,960
Limited Brands, Inc.		67,000		1,478,690
PetSmart, Inc.		48,000		1,448,160
Ross Stores, Inc.		29,000		1,545,410
TJX Cos., Inc.		44,000		1,845,800
Williams-Sonoma, Inc.		26,000		645,320
				11,899,610
Tobacco — 1.0%
Lorillard, Inc.		19,000		1,367,620
Trading Companies & Distributors — 0.2%
WESCO International, Inc. (a)		8,000		269,360
Wireless Telecommunication Services — 2.0%
MetroPCS Communications, Inc. (a)		168,000		1,375,920
NII Holdings, Inc. (a)		39,000		1,268,280
				2,644,200
Total Investments (Cost — $135,258,380*) — 99.3%				133,642,220
Other Assets Less Liabilities — 0.7%				965,790
Net Assets — 100.0%			$	134,608,010

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	137,488,541
Gross unrealized appreciation	$	6,563,797
Gross unrealized depreciation		(10,410,118	)
Net unrealized depreciation	$	(3,846,321	)

  (a)  Non-income producing security.

  •  Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/Beneficial
	Interest Held at				Shares/Beneficial
	December 31,		Net		Interest Held at
Affiliate	2009		Activity		June 30, 2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		562,772		(562,772)		—	$	11
BlackRock Liquidity Series, LLC Money Market Series	$	5,335,230	$	(5,335,230)		—	$	4,765

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	133,642,220		—		—	$	133,642,220

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$135,258,380)	$	133,642,220
Investments sold receivable		23,405,889
Capital shares sold receivable		1,313,692
Dividends receivable		113,725
Security lending income receivable—affiliated		1,514
Prepaid expenses		24,521
Total assets		158,501,561
Liabilities:
Bank overdraft		566,001
Investments purchased payable		23,102,242
Capital shares redeemed payable		112,075
Investment advisory fees payable		76,134
Other affiliates payable		1,592
Distribution fees payable		742
Officer’s and Directors’ fees payable		524
Other accrued expenses payable		33,909
Other liabilities		332
Total liabilities		23,893,551
Net Assets	$	134,608,010
Net Assets Consist of:
Paid-in capital		161,261,498
Undistributed net investment income		337,113
Accumulated net realized loss		(25,374,441	)
Net unrealized appreciation/depreciation		(1,616,160	)
Net Assets	$	134,608,010
Net Asset Value:
Class I—Based on net assets of $131,015,889 and 14,676,650 shares outstanding, 100 million shares authorized, $0.10 par value	$	8.93
Class III—Based on net assets of $3,592,121 and 403,858 shares outstanding, 100 million shares authorized, $0.10 par value	$	8.89

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends—unaffiliated	$	922,266
Securities lending—affiliated		4,765
Dividends—affiliated		11
Total income		927,042
Expenses:
Investment advisory		506,273
Accounting services		27,293
Professional		20,705
Printing		13,046
Officer and Directors		11,846
Custodian		8,601
Distribution—Class III		4,524
Transfer agent—Class I		2,729
Transfer agent—Class III		65
Miscellaneous		4,803
Total expenses		599,885
Less fees waived by advisor		(19	)
Total expenses after fees waived		599,866
Net investment income		327,176
Realized and Unrealized Gain (Loss):
Net realized gain from investments		19,424,179
Net change in unrealized appreciation/depreciation on investments		(26,463,335	)
Total realized and unrealized loss		(7,039,156	)
Net Decrease in Net Assets Resulting from Operations	$	(6,711,980	)

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	327,176		$	889,955
Net realized gain (loss)		19,424,179			(10,285,635	)
Net change in unrealized appreciation/depreciation		(26,463,335	)		47,525,023
Net increase (decrease) in net assets resulting from operations		(6,711,980	)		38,129,343
Dividends to Shareholders From:
Net investment income
Class I		—			(880,952	)
Class III		—			(10,600	)
Decrease in net assets resulting from dividends to shareholders		—			(891,552	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		(21,733,186	)		11,892,234
Net Assets:
Total increase (decrease) in net assets		(28,445,166	)		49,130,025
Beginning of period		163,053,176			113,923,151
End of period	$	134,608,010		$	163,053,176
Undistributed net investment income	$	337,113		$	9,937

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc,

BlackRock Large Cap Growth V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.45		$	7.49	$	12.71	$	11.76	$	11.00	$	9.96
Net investment income1		0.02			0.05		0.05		0.03		0.03		0.02
Net realized and unrealized gain (loss)		(0.54)			1.96		(5.22)		0.96		0.76		1.04
Net increase (decrease) from investment operations		(0.52)			2.01		(5.17)		0.99		0.79		1.06
Dividends from net investment income		—			(0.05)		(0.05)		(0.04)		(0.03)		(0.02)
Net asset value, end of period	$	8.93		$	9.45	$	7.49	$	12.71	$	11.76	$	11.00
Total Investment Return:2
Based on net asset value		(5.50)%	3		26.81%		(40.70)%		8.39%		7.21%		10.64%
Ratios to Average Net Assets:
Total expenses		0.76%	4		0.77%		0.79%		0.76%		0.76%		0.77%
Total expenses after fees waived		0.76%	4		0.77%		0.79%		0.76%		0.76%		0.60%
Net investment income		0.43%	4		0.63%		0.45%		0.28%		0.30%		0.20%
Supplemental Data:
Net assets, end of period (000)	$	131,016		$	159,615	$	111,216	$	208,573	$	215,808	$	205,406
Portfolio turnover		102%			167%		139%		86%		116%		105%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Financial Highlights (concluded)

	Class III
	Six Months Ended
	June 30, 2010			Year Ended December 31
	(Unaudited)			2009		2008		2007			2006			2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.43		$	7.47	$	12.68	$	11.74		$	10.99		$	9.95
Net investment income (loss)1		0.01			0.03		0.02		(0.00)	2		0.00	3		(0.00)	2
Net realized and unrealized gain (loss)		(0.55)			1.96		(5.21)		0.95			0.76			1.04
Net increase (decrease) from investment operations		(0.54)			1.99		(5.19)		0.95			0.76			1.04
Dividends from net investment income		—			(0.03)		(0.02)		(0.01)			(0.01)			(0.00)	2
Net asset value, end of period	$	8.89		$	9.43	$	7.47	$	12.68		$	11.74		$	10.99
Total Investment Return:4
Based on net asset value		(5.73)%	5		26.63%		(40.89)%		8.07%			6.88%			10.47%
Ratios to Average Net Assets:
Total expenses		1.01%	6		1.02%		1.04%		1.01%			1.01%			1.02%
Total expenses after fees waived		1.01%	6		1.02%		1.04%		1.01%			1.01%			0.84%
Net investment income (loss)		0.19%	6		0.39%		0.23%		(0.01)%			0.02%			(0.01)%
Supplemental Data:
Net assets, end of period (000)	$	3,592		$	3,438	$	2,707	$	3,597		$	3,109		$	1,387
Portfolio turnover		102%			167%		139%		86%			116%			105%

1	Based on average shares outstanding.
2	Amount is less than $(0.01) per share.
3	Amount is less than $0.01 per share.
4	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
5	Aggregate total investment return.
6	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Growth V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Large Cap Growth V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I and Class III Shares have equal 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 following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (the “SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Investment Transactions and Investment Income: 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 dates. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.65% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds; however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $19 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.25% based upon the average daily net assets attributable to Class III.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Fund received an exemptive order from the SEC permitting it, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral at value—securities loaned, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $1,137 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $160,000,118 and $194,033,743, respectively.

4.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Series based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share, which is included in miscellaneous in the Statement of Operations, of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2012	$	1,018,926
2016		16,576,204
2017		24,973,329
Total	$	42,568,459

6.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a significant portion of its assets in securities in the Information Technology and Health Care sectors. Changes in economic conditions affecting these sectors would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		430,748		$	4,064,691
Shares redeemed		(2,642,402	)		(26,185,797	)
Net decrease		(2,211,654	)	$	(22,121,106	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		7,856,512		$	58,911,983
Shares issued to shareholders in reinvestment of dividends		92,318			880,952
Total issued		7,948,830			59,792,935
Shares redeemed		(5,911,685	)		(47,942,858	)
Net increase		2,037,145		$	11,850,077

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		79,989		$	781,379
Shares redeemed		(40,790	)		(393,459	)
Net increase		39,199		$	387,920

Class III Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		69,296		$	568,891
Shares issued to shareholders in reinvestment of dividends		1,116			10,600
Total issued		70,412			579,491
Shares redeemed		(67,882	)		(537,334	)
Net increase		2,530		$	42,157

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to shareholders of record on July 21, 2010 as follows:

	Dividend
	Per Share
Class I	$	0.000663
Class III	$	0.000663

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Large Cap Value V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Large Cap Value V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund underperformed its benchmark, the Russell 1000 Value Index.

What factors influenced performance?

•  Overall, negative results in the financials, industrials, consumer staples and information technology (IT) sectors overshadowed positive results in materials.

•  In financials, an underweight in commercial banks and a lack of exposure to real estate investment trusts hampered returns, as both segments performed well during the period. Aerospace & defense holdings detracted from results within the industrials sector, as did an underweight in select industrial conglomerates. In consumer staples, underweights and stock selection in the more defensive food products and household products industries accounted for the majority of weakness. Lastly, stock selection was the primary detractor within the IT sector. Weakness was most visible in hardware-related industries due to concerns regarding consumer PC demand.

•  The largest individual detractors from performance included Seagate Technology Holdings, Western Digital Corp. and King Pharmaceuticals, Inc. Underweight positions in General Electric Co., Citigroup, Inc., AT&T, Inc. and Bank of America Corp. also hindered results.

•  On the positive side, stock selection in materials more than offset the negative effects of an overweight in the sector. Most notable were the Fund’s specialty chemicals holdings, which outperformed amid renewed industrial demand, volume increases and pricing power. An overweight position and stock selection in containers & packaging also contributed to performance.

•  The largest individual contributors to performance were AmerisourceBergen Corp. and Limited Brands, Inc. Underweights in Pfizer, Inc. and Exxon Mobil Corp., and a lack of exposure to Anadarko Petroleum Corp. also helped.

Describe recent portfolio activity.

•  During the six-month period, we increased the Fund’s exposure to materials, financials, IT, industrials and consumer staples; we reduced exposure to telecommunication services, energy and health care.

•  The largest purchases for the Fund were Bank of America, General Electric, Chevron Corp., Intel Corp. and Citigroup. The largest sales included AT&T, Exxon Mobil, Goldman Sachs Group, Inc., The Travelers Cos., Inc. and XTO Energy, Inc.

Describe Fund positioning at period end.

•  As of June 30, 2010, we maintained the Fund’s pro-cyclical bias and used weakness at the end of the period to boost that exposure, believing that the market was beginning to discount a double-dip recession (an event we consider unlikely). The Fund’s largest sector overweights relative to the benchmark included materials, industrials and energy, while financials and consumer staples represented the largest underweights. As always, we rely on a disciplined investment process and a belief in the importance of portfolio construction and risk management to strive to deliver consistent outperformance over the long term.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Large		BlackRock Large		BlackRock Large
	Cap Value		Cap Value		Cap Value
	V.I. Fund(1)-Class		V.I. Fund(1)-Class		V.I. Fund(1)-Class		Russell 1000
	I Shares(2)		II Shares(2)		III Shares(2)		Value Index(3)
4/23/01(4)		10000		10000		10000		10000
6/01		10460		10457		10455		10225
6/02		10570		10551		10538		9309
6/03		10059		10026		10004		9214
6/04		12949		12887		12846		11162
6/05		15539		15470		15378		12731
6/06		17917		17837		17687		14271
6/07		21601		21451		21272		17391
6/08		18619		18481		18289		14126
6/09		12386		12279		12086		10025
6/10		13582		13448		13220		11721

1	The Fund invests primarily in equity securities of large cap companies that Fund management selects from among those included in the unmanaged Russell 1000 Value Index.
2	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower. The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, and the returns for Class III Shares, prior to January 27, 2009, the recommencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class II and Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class II and Class III Shares.
3	This unmanaged broad-based Index is a subset of the Russell 1000 Index consisting of those Russell 1000 securities with lower price-to-book ratios and lower forecasted growth values.
4	Commencement of operations of Class I.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			Since Inception6
Class I Shares5		(9.53	)%		9.65	%		(2.66	)%		3.39	%
Class II Shares5		(9.52	)		9.53			(2.76	)		3.28	7
Class III Shares5		(9.59	)		9.39			(2.98	)7		3.09	7
Russell 1000 Value Index		(5.12	)		16.92			(1.64	)		1.74

5	Average annual and cumulative total investment returns are based on changes in net asset value for the period shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower.
6	Commencement of operations for Class I is April 23, 2001.
7	The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, and the returns for Class III Shares, prior to January 27, 2009, the recommencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class II and Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class II and Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Financials		19	%
Energy		15
Health Care		15
Industrials		14
Materials		9
Consumer Discretionary	��	8
Information Technology		7
Consumer Staples		6
Utilities		4
Telecommunication Services		3

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	904.70	$	4.06	$	1,000	$	1,020.54	$	4.31		0.86%
Class II	$	1,000	$	904.80	$	4.77	$	1,000	$	1,019.79	$	5.06		1.01%
Class III	$	1,000	$	904.10	$	5.24	$	1,000	$	1,019.30	$	5.56		1.11%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 3.5%
L-3 Communications Holdings, Inc.		21,000	$	1,487,640
Northrop Grumman Corp.		31,000		1,687,640
Raytheon Co.		29,000		1,403,310
				4,578,590
Chemicals — 5.0%
Albemarle Corp.		34,000		1,350,140
Ashland, Inc.		28,000		1,299,760
Cytec Industries, Inc.		17,000		679,830
Huntsman Corp.		57,000		494,190
Lubrizol Corp.		16,000		1,284,960
PPG Industries, Inc.		25,000		1,510,250
				6,619,130
Commercial Banks — 0.4%
Wells Fargo & Co.		18,000		460,800
Commercial Services & Supplies — 0.8%
R.R. Donnelley & Sons Co.		66,000		1,080,420
Computers & Peripherals — 2.3%
Lexmark International, Inc., Class A (a)		6,000		198,180
Seagate Technology Holdings (a)		103,000		1,343,120
Western Digital Corp. (a)		47,000		1,417,520
				2,958,820
Consumer Finance — 2.4%
Capital One Financial Corp.		45,000		1,813,500
SLM Corp. (a)		130,000		1,350,700
				3,164,200
Containers & Packaging — 1.1%
Sonoco Products Co.		46,000		1,402,080
Diversified Financial Services—6.0%
Bank of America Corp.		334,000		4,799,580
Citigroup, Inc. (a)		538,000		2,022,880
JPMorgan Chase & Co.		28,000		1,025,080
				7,847,540
Diversified Telecommunication Services— 3.3%
AT&T Inc.		41,000		991,790
Verizon Communications, Inc.		117,000		3,278,340
				4,270,130
Electric Utilities — 1.3%
Edison International		52,000		1,649,440
Electrical Equipment — 1.0%
Thomas & Betts Corp. (a)		37,000		1,283,900
Energy Equipment & Services—3.6%
Nabors Industries Ltd. (a)		74,000		1,303,880
National Oilwell Varco, Inc.		47,000		1,554,290
Tidewater, Inc.		19,000		735,680
Unit Corp. (a)		29,000		1,177,110
				4,770,960
Food & Staples Retailing — 1.0%
Safeway, Inc.		70,000		1,376,200
Food Products — 2.2%
ConAgra Foods, Inc.		67,000		1,562,440
Sara Lee Corp.		98,000		1,381,800
				2,944,240
Health Care Equipment & Supplies — 0.7%
Teleflex, Inc.		18,000		977,040
Health Care Providers & Services — 10.6%
Aetna, Inc.		58,000		1,530,040
AmerisourceBergen Corp.		46,000		1,460,500
Cardinal Health, Inc.		46,000		1,546,060
Community Health Systems, Inc. (a)		34,000		1,149,540
Coventry Health Care, Inc. (a)		22,000		388,960
Humana, Inc. (a)		32,000		1,461,440
McKesson Corp.		24,000		1,611,840
Omnicare, Inc.		35,000		829,500
UnitedHealth Group, Inc.		77,000		2,186,800
WellPoint, Inc. (a)		36,000		1,761,480
				13,926,160
Hotels, Restaurants & Leisure — 1.0%
Wyndham Worldwide Corp.		63,000		1,268,820
Household Durables — 1.0%
Whirlpool Corp.		15,000		1,317,300
Household Products — 0.9%
The Procter & Gamble Co.		20,000		1,199,600
IT Services — 1.0%
Amdocs Ltd. (a)		51,000		1,369,350
Independent Power Producers & Energy Traders — 1.1%
Constellation Energy Group, Inc.		8,000		258,000
NRG Energy, Inc. (a)		55,000		1,166,550
				1,424,550
Industrial Conglomerates — 3.2%
General Electric Co.		292,000		4,210,640
Insurance — 9.8%
American Financial Group, Inc.		40,000		1,092,800
Assurant, Inc.		41,000		1,422,700
Berkshire Hathaway, Inc. (a)		9,000		717,210
Genworth Financial, Inc., Class A (a)		99,000		1,293,930
Lincoln National Corp.		57,000		1,384,530
Loews Corp.		48,000		1,598,880
Prudential Financial, Inc.		31,000		1,663,460
Torchmark Corp.		14,000		693,140
UnumProvident Corp.		72,000		1,562,400
XL Capital Ltd., Class A		87,000		1,392,870
				12,821,920
Internet & Catalog Retail — 0.3%
Expedia, Inc.		24,000		450,720
Machinery — 4.7%
Eaton Corp.		23,000		1,505,120
Gardner Denver, Inc.		28,000		1,248,520
Parker Hannifin Corp.		26,000		1,441,960
SPX Corp.		24,000		1,267,440
Timken Co.		26,000		675,740
				6,138,780
Media — 1.0%
Gannett Co., Inc.		98,000		1,319,080
Metals & Mining — 0.9%
Freeport-McMoRan Copper & Gold, Inc., Class B		21,000		1,241,730
Multi-Utilities — 2.2%
Integrys Energy Group, Inc.		35,000		1,530,900
NiSource, Inc.		97,000		1,406,500
				2,937,400

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Schedule of Investments (concluded) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Multiline Retail — 2.1%
JCPenney Co., Inc.		58,000	$	1,245,840
Macy’s, Inc.		81,000		1,449,900
				2,695,740
Oil, Gas & Consumable Fuels—11.1%
Chevron Corp.		66,000		4,478,760
Cimarex Energy Co.		19,000		1,360,020
ConocoPhillips		49,000		2,405,410
Marathon Oil Corp.		54,000		1,678,860
Southern Union Co.		38,000		830,680
Spectra Energy Corp.		53,000		1,063,710
Whiting Petroleum Corp. (a)		17,000		1,333,140
Williams Cos., Inc.		77,000		1,407,560
				14,558,140
Paper & Forest Products — 1.9%
International Paper Co.		58,000		1,312,540
MeadWestvaco Corp.		53,000		1,176,600
				2,489,140
Pharmaceuticals — 3.3%
Eli Lilly & Co.		26,000		871,000
Forest Laboratories, Inc. (a)		57,000		1,563,510
Johnson & Johnson		11,000		649,660
King Pharmaceuticals, Inc. (a)		144,000		1,092,960
Pfizer, Inc.		10,000		142,600
				4,319,730
Road & Rail — 0.5%
Ryder System, Inc.		15,000		603,450
Semiconductors & Semiconductor Equipment — 2.7%
Intel Corp.		111,000		2,158,950
Micron Technology, Inc. (a)		166,000		1,409,340
				3,568,290
Software — 0.9%
CA, Inc.		62,000		1,140,800
Specialty Retail — 2.2%
GameStop Corp., Class A (a)		78,000		1,465,620
The Gap, Inc.		6,000		116,760
Limited Brands, Inc.		61,000		1,346,270
				2,928,650
Tobacco — 2.3%
Lorillard, Inc.		20,000		1,439,600
Reynolds American, Inc.		29,000		1,511,480
				2,951,080
Total Investments (Cost — $132,953,569*) — 99.3%				130,264,560
Other Assets Less Liabilities — 0.7%				852,852
Net Assets — 100.0%			$	131,117,412

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes, were as follows:

Aggregate cost	$	138,453,177
Gross unrealized appreciation	$	5,263,621
Gross unrealized depreciation		(13,452,238	)
Net unrealized depreciation	$	(8,188,617	)

  (a)  Non-income producing security.

  •  Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Beneficial					Beneficial
	Interest					Interest
	Held at					Held at
	December 31,		Net			June 30,
Affiliate	2009		Activity			2010		Income
BlackRock Liquidity Series, LLC Money Market Series	$	1,365,000	$	(1,365,000	)		—	$	1,510

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	130,264,560		—		—	$	130,264,560

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$132,953,569)	$	130,264,560
Investments sold receivable		16,306,766
Capital shares sold receivable		1,123,649
Dividends receivable		133,880
Prepaid expenses		24,453
Total assets		147,853,308
Liabilities:
Bank overdraft		557,110
Investments purchased payable		15,981,248
Investment advisory fees payable		86,355
Capital shares redeemed payable		78,117
Other affiliates payable		1,475
Officer’s and Directors’ fees payable		507
Distribution fees payable		334
Other accrued expenses payable		30,566
Other liabilities		184
Total liabilities		16,735,896
Net Assets	$	131,117,412
Net Assets Consist of:
Paid in capital	$	153,326,576
Undistributed net investment income		1,106,764
Accumulated net realized loss		(20,626,919	)
Net unrealized appreciation/depreciation		(2,689,009	)
Net Assets	$	131,117,412
Net Asset Value:
Class I—Based on net assets of $128,818,967 and 15,593,475 shares outstanding, 100 million shares authorized, $0.10 par value	$	8.26
Class II—Based on net assets of $1,833,170 and 221,798 shares outstanding, 100 million shares authorized, $0.10 par value	$	8.27
Class III—Based on net assets of $465,275 and 56,738 shares outstanding, 100 million shares authorized, $0.10 par value	$	8.20

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	1,443,829
Securities lending—affiliated		1,510
Total income		1,445,339
Expenses:
Investment advisory		537,074
Accounting services		27,066
Professional		19,419
Officer and Directors		10,409
Printing		9,944
Custodian		6,645
Transfer agent—Class I		2,555
Transfer agent—Class II		35
Transfer agent—Class III		7
Distribution—Class II		1,446
Distribution—Class III		490
Miscellaneous		6,180
Total expenses		621,270
Less fees waived by advisor		(132	)
Total expenses after fees waived		621,138
Net investment income		824,201
Realized and Unrealized Gain (Loss):
Net realized gain from investments		8,424,596
Net change in unrealized appreciation/depreciation on investments		(23,598,740	)
Total realized and unrealized loss		(15,174,144	)
Net Decrease in Net Assets Resulting from Operations	$	(14,349,943	)

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	824,201		$	2,282,580
Net realized gain (loss)		8,424,596			(11,756,302	)
Net change in unrealized appreciation/depreciation		(23,598,740	)		28,201,752
Net increase (decrease) in net assets resulting from operations		(14,349,943	)		18,728,030
Dividends to Shareholders From:
Net investment income:
Class I		—			(2,133,615	)
Class II		—			(27,189	)
Class III		—			(2,989	)
Decrease in net assets resulting from dividends to shareholders		—			(2,163,793	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		6,094,721			(27,629,664	)
Net Assets:
Total decrease in net assets		(8,255,222	)		(11,065,427	)
Beginning of period		139,372,634			150,438,061
End of period	$	131,117,412		$	139,372,634
Undistributed net investment income	$	1,106,764		$	282,563

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.13		$	8.11	$	13.32	$	14.98	$	14.31	$	13.36
Net investment income1		0.05			0.13		0.13		0.15		0.12		0.09
Net realized and unrealized gain (loss)		(0.92)			1.03		(5.09)		0.75		2.16		2.19
Net increase (decrease) from investment operations		(0.87)			1.16		(4.96)		0.90		2.28		2.28
Dividends and distributions from:
Net investment income		—			(0.14)		(0.09)		(0.16)		(0.13)		(0.08)
Net realized gain		—			—		(0.16)		(2.40)		(1.48)		(1.25)
Total dividends and distributions		—			(0.14)		(0.25)		(2.56)		(1.61)		(1.33)
Net asset value, end of period	$	8.26		$	9.13	$	8.11	$	13.32	$	14.98	$	14.31
Total Investment Return:2
Based on net asset value		(9.53)%	3		14.33%		(37.26)%		5.88%		16.01%		17.39%
Ratios to Average Net Assets:
Total expenses		0.86%	4		0.89%		0.91%		0.86%		0.83%		0.85%
Total expenses after fees waived		0.86%	4		0.89%		0.91%		0.86%		0.83%		0.85%
Net investment income		1.15%	4		1.66%		1.17%		0.93%		0.81%		0.64%
Supplemental Data:
Net assets, end of period (000)	$	128,819		$	137,262	$	149,944	$	203,634	$	231,547	$	214,033
Portfolio turnover		85%			143%		117%		75%		68%		74%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Financial Highlights (continued)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	9.14		$	8.12	$	13.34	$	14.98	$	14.31	$	13.36
Net investment income1		0.05			0.12		0.11		0.17		0.12		0.09
Net realized and unrealized gain (loss)		(0.92)			1.03		(5.10)		0.71		2.16		2.19
Net increase (decrease) from investment operations		(0.87)			1.15		(4.99)		0.88		2.28		2.28
Dividends and distributions from:
Net investment income		—			(0.13)		(0.07)		(0.12)		(0.13)		(0.08)
Net realized gain		—			—		(0.16)		(2.40)		(1.48)		(1.25)
Total dividends and distributions		—			(0.13)		(0.23)		(2.52)		(1.61)		(1.33)
Net asset value, end of period	$	8.27		$	9.14	$	8.12	$	13.34	$	14.98	$	14.31
Total Investment Return:2
Based on net asset value		(9.52)%	3		14.19%		(37.38)%		5.70%		16.01%		17.39%
Ratios to Average Net Assets:
Total expenses		1.01%	4		1.05%		1.06%		0.99%		0.86%		0.85%
Total expenses after fees waived		1.01%	4		1.05%		1.06%		0.99%		0.86%		0.85%
Net investment income		1.00%	4		1.40%		0.98%		0.88%		0.80%		0.67%
Supplemental Data:
Net assets, end of period (000)	$	1,833		$	1,899	$	494	$	3	$	2	$	1
Portfolio turnover		85%			143%		117%		75%		68%		74%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Financial Highlights (concluded)

	Class III
				Period												Period
				January 27,												September 30,
	Six Months Ended			20091 to												20043 to
	June 30, 2010			December 31,			Year Ended December 31,									December 31,
	(Unaudited)			2009			20072			2006			2005			2004
Per Share Operating Performance:
Net asset value, beginning of period	$	9.07		$	7.63		$	14.97		$	14.31		$	13.36		$	12.70
Net investment income4		0.04			0.08			0.11			0.12			0.09			0.04
Net realized and unrealized gain (loss)		(0.91	)		1.50			0.76			2.15			2.19			1.59
Net increase (decrease) from investment operations		(0.87	)		1.58			0.87			2.27			2.28			1.63
Dividends and distributions from:
Net investment income		—			(0.14	)		(0.12	)		(0.13	)		(0.08	)		(0.11	)
Net realized gain		—			—			(2.40	)		(1.48	)		(1.25	)		(0.86	)
Total dividends and distributions		—			(0.14	)		(2.52	)		(1.61	)		(1.33	)		(0.97	)
Net asset value, end of period	$	8.20		$	9.07		$	13.32		$	14.97		$	14.31		$	13.36
Total Investment Return:5
Based on net asset value		(9.59)%6			20.67%	6		5.69%			15.94%			17.39%			12.80%	6
Ratios to Average Net Assets:
Total expenses		1.11%	7		1.15%	7		1.06%			0.88%			0.85%			0.85%	7
Total expenses after fees waived		1.11%	7		1.15%	7		1.06%			0.88%			0.85%			0.85%	7
Net investment income		0.92%	7		0.99%	7		0.73%			0.78%			0.67%			1.31%	7
Supplemental Data:
Net assets, end of period (000)	$	465		$	212		$	—	2	$	2		$	1		$	1
Portfolio turnover		85%			143%			75%			68%			74%			116%

1	Recommencement of operations.
2	There were no Class III Shares outstanding as of December 31, 2007 and during the year January 1, 2008 through December 31, 2008.
3	Commencement of operations.
4	Based on average shares outstanding.
5	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
6	Aggregate total investment return.
7	Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Large Cap Value V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Large Cap Value V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I, Class II and Class III Shares have equal 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 II and Class III Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Investment Transactions and Investment Income: 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 dates. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to the Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.75% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund (excluding interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II and Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds; however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $1,301 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% and 0.25% based upon the average daily net assets attributable to Class II and Class III, respectively.

PNC Global Investment Servicing (U.S.) Inc (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting it, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral at value—securities loaned, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $364 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $125,419,645 and $119,530,798, respectively.

4.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Series based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share, which is included in miscellaneous in the Statement of Operations, of the unused portion of the credit agreement and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2016	$	5,286,411
2017		18,265,497
Total	$	23,551,908

6.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. Financial assets, which potentially expose the

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		2,089,986		$	19,874,739
Shares redeemed		(1,530,834	)		(14,214,793	)
Net increase		559,152		$	5,659,946

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		1,985,723		$	14,985,718
Shares issued to shareholders in reinvestment of dividends		233,633			2,133,615
Total issued		2,219,356			17,119,333
Shares redeemed		(5,679,762	)		(46,004,041	)
Net decrease		(3,460,406	)	$	(28,884,708	)

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		37,815		$	353,132
Shares redeemed		(23,755	)		(219,556	)
Net increase		14,060		$	133,576

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		206,186		$	1,543,971
Shares issued to shareholders in reinvestment of dividends		2,971			27,189
Total issued		209,157			1,571,160
Shares redeemed		(62,262	)		(519,412	)
Net increase		146,895		$	1,051,748

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		33,851		$	305,039
Shares redeemed		(434	)		(3,840	)
Net increase		33,417		$	301,199

Class III Shares
Period January 27, 2009* to December 31, 2009	Shares			Amount
Shares sold		23,110		$	201,269
Shares issued to shareholders in reinvestment of dividends		326			2,989
Total issued		23,436			204,258
Shares redeemed		(115	)		(962	)
Net increase		23,321		$	203,296

*  Recommencement of operations.

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following item was noted:

The Fund paid a net investment income dividend on July 23, 2010 to shareholders of record on July 21, 2010 as follows:

	Dividend
	Per Share
Class I	$	0.017901
Class II	$	0.017901
Class III	$	0.017884

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Money Market V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Portfolio Composition	Net Assets
Commercial Paper		47	%
U.S. Government Sponsored Agency Obligations		20
U.S. Treasury Obligations		17
Municipal Bonds		12
Repurchase Agreements		2
Corporate Notes		2
Total		100	%

	7-Day			7-Day
Yields	SEC Yield			Yield
Class I		0.00	%		0.00	%

The 7-Day SEC Yield may differ from the 7-Day Yield shown above due to the fact that the 7-Day SEC Yield excludes distributed capital gains.

Past performance is not indicative of future results.

2 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Account Value,

Account Value

Expenses Paid

Account Value,

Account Value

Expenses Paid

Annualized

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Expense Ratio

Class I

$

1,000

$

1,000.00

$

2.88

$

1,000

$

1,021.92

$

2.91

0.58%

1	Expenses are equal to the annualized expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

	Par
Commercial Paper (a)	(000)		Value
Antalis U.S. Funding Corp.:
0.42%, 7/12/10	$	5,500	$	5,499,294
0.42%, 7/15/10		7,800		7,798,726
Cancara Asset Securitization LLC, 0.39%, 7/14/10		8,000		7,998,873
Clipper Receivables Co., LLC, 0.50%, 9/07/10		3,000		2,997,167
Fairway Finance Co., LLC, 0.50%, 9/02/10		5,000		4,995,625
Falcon Asset Securitization Corp., 0.46%, 9/03/10		5,000		4,995,911
Govco LLC, 0.52%, 8/13/10		2,500		2,498,447
Grampian Funding LLC:
0.40%, 7/01/10		2,000		2,000,000
0.40%, 7/06/10		2,000		1,999,889
0.48%, 8/05/10		9,500		9,495,567
JPMorgan Chase & Co.:
0.25%, 7/14/10		3,500		3,499,684
0.25%, 7/26/10		5,000		4,999,132
Jupiter Securitization Co., LLC:
0.46%, 9/01/10		6,000		5,995,247
0.45%, 9/08/10		7,000		6,993,963
LMA Americas LLC, 0.35%, 7/06/10		1,800		1,799,913
Old Line Funding LLC, 0.40%, 8/02/10		2,000		1,999,289
Regency Markets No. 1 LLC, 0.35%, 7/26/10		1,755		1,754,573
Scaldis Capital LLC, 0.40%, 7/21/10		7,000		6,998,444
Societe Generale North America, Inc.:
0.28%, 7/01/10		4,000		4,000,000
0.30%, 7/08/10		5,000		4,999,708
Solitaire Funding LLC, 0.33%, 7/26/10		5,000		4,998,854
State Street Corp., 0.48%, 9/28/10		5,000		4,994,067
Straight-A Funding, LLC, 0.40%, 8/13/10		4,000		3,998,089
Sydney Capital Corp., 0.65%, 9/15/10		2,500		2,496,569
Thunder Bay Funding LLC:
0.40%, 8/02/10		10,000		9,996,444
0.43%, 8/04/10		1,000		999,594
Variable Funding Capital Corp.:
0.27%, 7/20/10		3,000		2,999,573
0.40%, 8/27/10		5,000		4,996,833
Total Commercial Paper — 47.0%				128,799,475
Corporate Notes
JPMorgan Chase & Co., 0.55%, 5/16/11 (b)		4,950		4,949,851
Total Corporate Notes — 1.8%				4,949,851
	Par
Municipal Bonds	(000)		Value
California HFA, RB, VRDN, Home Mortgage, Series U, AMT (Fannie Mae LOC, Freddie Mac LOC), 0.25%, 7/07/10 (c)	$	2,700	$	2,700,000
California State Department of Water Resources, RB, VRDN, Series C-9 (Citibank NA LOC), 0.26%, 7/07/10 (c)		3,300		3,300,000
City of Charlotte North Carolina, COP, Refunding, VRDN, NASCAR, Series D (Bank of America NA LOC), 0.35%, 7/07/10 (c)		7,800		7,800,000
Maryland Community Development Administration, RB, VRDN, Residential Housing, Series J, AMT (State Street Bank & Co. SBPA), 0.30%, 7/07/10 (c)		3,000		3,000,000
New York City Industrial Development Agency, RB, VRDN, New York Law School Project, Series A (JPMorgan Chase Bank LOC), 0.26%, 7/07/10 (c)		2,245		2,245,000
New York State HFA, RB, VRDN, Series A (c):
10 Barclay Street (Fannie Mae), 0.24%, 7/07/10		5,000		5,000,000
Biltmore Tower Housing, AMT (Fannie Mae LOC), 0.25%, 7/07/10		3,000		3,000,000
Victory Housing, Series 2001, AMT (Freddie Mac LOC), 0.25%, 7/07/10		5,000		5,000,000
Total Municipal Bonds — 11.7%				32,045,000
U.S. Government Sponsored Agency Obligations
Fannie Mae Discount Notes (a):
0.25%, 9/01/10		963		962,594
0.30%, 9/22/10		1,000		999,308
0.29%, 11/10/10		1,700		1,698,192
Fannie Mae Variable Rate Notes, 0.30%, 8/05/10 (b)		1,530		1,529,947
Federal Home Loan Bank Variable Rate Notes (b):
0.15%, 7/09/10		3,005		3,004,987
0.25%, 10/08/10		2,000		1,999,837
0.23%, 10/06/11		3,000		2,998,457
Freddie Mac Discount Notes (a):
0.51%, 7/06/10		2,500		2,499,823
0.21%, 8/09/10		2,000		1,999,545
0.23%, 8/10/10		1,000		999,744
0.27%, 9/07/10		1,000		999,490
Freddie Mac Variable Rate Notes (b):
0.20%, 7/14/10		2,000		1,999,975
0.46%, 8/24/10		1,315		1,315,008
0.52%, 9/03/10		2,680		2,679,906
0.51%, 12/30/10		15,000		15,004,418
0.42%, 2/14/11		2,400		2,399,839
0.23%, 5/05/11		4,000		3,998,981
0.30%, 12/29/11		3,500		3,497,356
0.31%, 2/16/12		5,000		4,996,715
Total U.S. Government Sponsored Agency Obligations — 20.3%				55,584,122

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

AMT	Alternative Minimum Tax	RB	Revenue Bonds
COP	Certificates of Participation	SBPA	Stand-by Bond Purchase Agreement
HFA	Housing Finance Agency	VRDN	Variable Rate Demand Notes
LOC	Letter of Credit

See Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Schedule of Investments (concluded) (Percentages shown are based on Net Assets)

	Par
U.S. Treasury Obligations	(000)		Value
U.S. Treasury Bills (a):
0.31%-0.39%, 7/15/10	$	13,300	$	13,298,250
0.47%, 7/29/10		570		569,792
0.23%-0.32%, 8/26/10		3,800		3,798,418
0.19%, 9/02/10		3,000		2,999,029
0.24%, 9/30/10		2,835		2,833,280
0.22%, 10/21/10		5,000		4,996,539
0.24%, 10/28/10		7,000		6,994,539
0.22%, 11/12/10		2,000		1,998,362
0.32%, 11/18/10		5,000		4,993,875
0.21%, 11/26/10		1,700		1,698,518
U.S. Treasury Notes, 0.88%, 1/31/11		3,000		3,010,937
Total U.S. Treasury Obligations — 17.2%				47,191,539
	Par
Repurchase Agreements	(000)		Value
Deutsche Bank Securities, Inc., 0.03%, 7/01/10 (Purchased on 6/29/10 to be repurchased at $6,200,010, collateralized by Freddie Mac, 3.10% due 5/19/17, par and fair value of $6,243,000 and $6,302,184, respectively)	$	6,200	$	6,200,000
Total Repurchase Agreements — 2.3%				6,200,000
Total Investments (Cost — $274,769,987*) — 100.3%				274,769,987
Liabilities in Excess of Other Assets — (0.3)%				(741,334	)
Net Assets — 100.0%			$	274,028,653

*   Cost for federal income tax purposes

(a)	Rates shown are discount rates or a range of discount rates paid at the time of purchase.
(b)	Variable rate security. Rate shown is as of report date.
(c)	Variable rate security. Rate shown is as of report date and maturity shown is the date the principal owed can be recovered through demand.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Short-Term Securities1		—	$	274,769,987		—	$	274,769,987

¹ See above Schedule of Investments for values in each security type.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$274,769,987)	$	274,769,987
Cash		10,701
Interest receivable		35,376
Prepaid expenses		28,836
Total assets		274,844,900
Liabilities:
Capital shares redeemed payable		729,372
Investment advisory fees payable		57,555
Other affiliates payable		2,198
Officer’s and Directors’ fees payable		378
Other accrued expenses payable		26,744
Total liabilities		816,247
Net Assets	$	274,028,653
Net Assets Consist of:
Paid-in capital	$	274,022,347
Accumulated net realized gain		6,306
Net Assets	$	274,028,653
Net Asset Value:
Class I—Based on net assets of $274,028,653 and 274,026,278 shares outstanding, 3.3 billion shares authorized, $0.10 par value	$	1.00

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Money Market V.I. Fund
Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Interest	$	373,661
Expenses:
Investment advisory		699,362
Accounting services		41,422
Professional		20,844
Printing		15,618
Officer and Directors		11,547
Custodian		9,187
Transfer agent		2,409
Miscellaneous		8,855
Total expenses		809,244
Less fees waived by advisor		(435,583	)
Total expenses after fees waived		373,661
Net investment income		—
Realized Gain:
Net realized gain from investments		2,694
Net Increase in Net Assets Resulting from Operations	$	2,694

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	—		$	406,895
Net realized gain		2,694			22,689
Net increase in net assets resulting from operations		2,694			429,584
Dividends and Distributions to Shareholders From:
Net investment income		—			(415,300	)
Net realized gain		—			(38,434	)
Decrease in net assets resulting from dividends and distributions to shareholders		—			(453,734	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		(33,455,888	)		19,474,295
Net Assets:
Total increase (decrease) in net assets		(33,453,194	)		19,450,145
Beginning of period		307,481,847			288,031,702
End of period	$	274,028,653		$	307,481,847

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	1.00		$	1.00	$	1.00	$	1.00	$	1.00	$	1.00
Net investment income		—			0.0014		0.0249		0.0476		0.0443		0.0266
Net realized and unrealized gain		—			0.0001		0.0001		0.0002		0.0003		0.0001
Net increase from investment operations		—			0.0015		0.0250		0.0478		0.0446		0.0267
Dividends and distributions from:
Net investment income		—			(0.0014)		(0.0249)		(0.0476)		(0.0443)		(0.0266)
Net realized gain		—			(0.0001)		—		—		—		—
Total dividends and distributions		—			(0.0015)		(0.0249)		(0.0476)		(0.0443)		(0.0266)
Net asset value, end of period	$	1.00		$	1.00	$	1.00	$	1.00	$	1.00	$	1.00
Total Investment Return:1
Based on net asset value		0.00%	2		0.16%		2.53%		4.86%		4.48%		2.66%
Ratios to Average Net Assets:
Total expenses		0.58%	3		0.62%		0.60%		0.58%		0.58%		0.59%
Total expenses after fees waived		0.27%	3		0.48%		0.60%		0.58%		0.58%		0.59%
Net investment income		0.00%	3		0.15%		2.52%		4.76%		4.45%		2.63%
Supplemental Data:
Net assets, end of period (000)	$	274,029		$	307,482	$	288,032	$	307,056	$	275,563	$	267,028

1	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
2	Aggregate total investment return.
3	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Money Market V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Money Market V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value. The Fund’s securities are valued under the amortized cost method which approximates current market value in accordance with Rule 2a-7 of the 1940 Act. Under this method, securities are valued at cost when purchased and thereafter, a constant proportionate amortization of any discount or premium is recorded until the maturity of the security. The Fund seeks to maintain its net asset value per share at $1.00, although there is no assurance that it will be able to do so on a continuing basis.

Repurchase Agreements: The Fund may invest in repurchase agreements. In a repurchase agreement, the Fund purchases a security from a counterparty who agrees to repurchase the same security at a mutually agreed upon date and price. On a daily basis, the counterparty is required to maintain collateral subject to the agreement and in value no less than the agreed repurchase amount. The agreements are conditioned upon the collateral being deposited under the Federal Reserve book entry system or held in a segregated account by the Fund’s custodian or designated sub-custodians under tri-party repurchase agreements. In the event the counterparty defaults and the fair value of the collateral declines, the Fund could experience losses, delays and costs in liquidating the collateral.

Investment Transactions and Investment Income: 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. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: The Fund declares dividends daily and reinvests monthly such dividends (net of non-resident alien tax and backup withholding tax withheld) in additional Fund shares at net asset value. Dividends are declared from the total of net investment income. Distributions of net realized gain, if any, on investments are paid at least annually. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 the following annual rates of the Fund’s average daily net assets:

Portion of average daily value of net assets	Rate
Not exceeding $1 billion		0.500%
In excess of $1 billion, but not exceeding $2 billion		0.450%
In excess of $2 billion, but not exceeding $3 billion		0.400%
In excess of $3 billion, but not exceeding $4 billion		0.375%
In excess of $4 billion, but not exceeding $7 billion		0.350%
In excess of $7 billion, but not exceeding $10 billion		0.325%
In excess of $10 billion, but not exceeding $15 billion		0.300%
In excess of $15 billion		0.290%

The Manager entered into a sub-advisory agreement with BlackRock Institutional Management, LLC (“BIMC”), an affiliate of the Manager. The Manager pays BIMC for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive management fees and reimburse operating expenses to enable the Fund to maintain a minimum daily net investment income dividend. These amounts are reported in the Statement of Operations as fees waived by advisor. The Manager may discontinue the waiver or reimbursement at any time.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,786 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC, an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

4.  Capital Share Transactions:

Transactions in capital shares were as follows:

	Six Months Ended			Year Ended
Class I Shares	June 30, 2010			December 31, 2009
Shares sold		22,033,559			176,213,469
Shares issued to shareholders in reinvestment of dividends and distributions		—			453,734
Total issued		22,033,559			176,667,203
Shares redeemed		(55,489,447	)		(157,192,908	)
Net increase (decrease)		(33,455,888	)		19,474,295

5.  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.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock S&P 500 Index V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period, the Fund’s Class I and Class II shares returned (6.80)% and (6.71)%, respectively, underperforming the benchmark, Standard & Poor’s (S&P) 500 Index, which returned (6.65)% for the same period. The S&P 500 is a market-weighted index composed of 500 common stocks issued by large-capitalization companies in a wide range of businesses. The stocks included in the index collectively represent a substantial portion of all common stocks publicly traded in the United States.

•  Returns for the Fund’s respective share classes differ from the benchmark based on individual share-class expenses.

Describe the market environment.

•  At the beginning of 2010, we expected to see a modest cyclical recovery. For the first four months of the year, the cyclical recovery did dominate, but over the past two months, structural problems (especially those in Europe) began to win out, and risk assets (including US equities) struggled. Financial markets took a dramatic turn in late April, as investor sentiment became dominated by concerns over the European sovereign debt crisis, some less-positive economic data and uncertainty over financial regulatory reform in the United States. Volatility levels moved noticeably higher over the past several months, and investors embarked on a renewed “flight to quality,” abandoning risk assets such as stocks in favor of safer alternatives, most notably US Treasury bonds and gold.

•  In the United States, the Dow Jones Industrial Average fell 5.00%, the S&P 500 declined 6.65% and the Nasdaq Composite lost 6.63%.

•  Within the benchmark S&P 500 Index, all 10 sectors recorded negative returns for the period. Industrials (0.85)%, consumer discretionary (1.59)% and consumer staples (2.79)% were the smallest detractors from performance, while materials (12.88)% and energy (12.21)% posted comparatively larger losses.

Describe recent portfolio activity.

•  During the six-month period, as changes were made to the composition of the S&P 500, the Fund purchased and sold securities to maintain its objective of replicating the risks and return of the benchmark.

Describe Fund positioning at period end.

•  The Fund remains positioned to match the risk characteristics of its benchmark, irrespective of the market’s future direction.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock S&P		BlackRock S&P
	500 Index		500 Index		Standard &
	V.I. Fund(1)-Class		V.I. Fund(1)-Class		Poor’s 500
	I Shares(2)		II Shares(2)		Index(3)
6/00		10000		10000		10000
6/01		8486		8474		8517
6/02		6926		6905		6985
6/03		6924		6892		7002
6/04		8217		8167		8341
6/05		8696		8641		8868
6/06		9420		9361		9633
6/07		11319		11170		11617
6/08		9824		9680		10093
6/09		7231		7111		7447
6/10		8252		8113		8521

1	Under normal circumstances, the Fund invests at least 80% of its net assets in the common stocks of the S&P 500 Index and in derivative instruments linked to the S&P 500.
2	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower. The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, are based on performance of the Fund’s Class I Shares and are adjusted to reflect the distribution (12b-1) fees applicable to Class II Shares.
3	This unmanaged index covers 500 industrial, utility, transportation and financial companies of the U.S. markets (mostly New York Stock Exchange (“NYSE”) issues), representing about 75% of NYSE market capitalization and 30% of NYSE issues.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares4		(6.80	)%		14.11	%		(1.04	)%		(1.90	)%
Class II Shares4		(6.71	)		14.08			(1.25	)		(2.07	)5
S&P 500 Index		(6.65	)		14.43			(0.79	)		(1.59	)

4

Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns. For a portion of the period, returns do not show the effects of distribution fees (12b-1 fees) applicable to Class II Shares. If such fees were included, returns shown would have been lower.

5

The returns for Class II Shares prior to September 30, 2004, the commencement of operations of Class II Shares, are based on performance of the Fund’s Class I Shares and are adjusted to reflect the distribution (12b-1) fees applicable to Class II Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Information Technology		19	%
Financials		16
Health Care		12
Consumer Staples		12
Energy		11
Industrials		10
Consumer Discretionary		10
Utilities		4
Materials		3
Telecommunication Services		3

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

	Actual						Hypothetical2
	Beginning		Ending				Beginning		Ending				Annualized
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Expense
Actual	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Ratio
Class I	$	1,000	$	932.00	$	2.06	$	1,000	$	1,022.67	$	2.16		0.43%
Class II	$	1,000	$	932.90	$	2.78	$	1,000	$	1,021.92	$	2.91		0.58%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including financial futures contracts, as specified in Note 2 of the Notes to Financial Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or equity risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 2.8%
Boeing Co.		11,413	$	716,166
General Dynamics Corp.		5,771		337,950
Goodrich Corp.		1,854		122,827
Honeywell International, Inc.		11,451		446,933
ITT Corp.		2,698		121,194
L-3 Communications Holdings, Inc.		1,713		121,349
Lockheed Martin Corp.		4,675		348,287
Northrop Grumman Corp.		4,535		246,885
Precision Castparts Corp.		2,122		218,396
Raytheon Co.		5,748		278,146
Rockwell Collins, Inc.		2,383		126,609
United Technologies Corp.		14,026		910,428
				3,995,170
Air Freight & Logistics — 1.0%
C.H. Robinson Worldwide, Inc.		2,517		140,096
Expeditors International Washington, Inc.		3,168		109,328
FedEx Corp.		4,683		328,325
United Parcel Service, Inc., Class B		14,872		846,068
				1,423,817
Airlines — 0.1%
Southwest Airlines Co.		11,275		125,265
Auto Components — 0.2%
The Goodyear Tire & Rubber Co. (a)		3,634		36,122
Johnson Controls, Inc.		10,142		272,515
				308,637
Automobiles — 0.4%
Ford Motor Co. (a)(b)		51,043		514,513
Harley-Davidson, Inc.		3,486		77,494
				592,007
Beverages — 2.6%
Brown-Forman Corp., Class B		1,581		90,481
The Coca-Cola Co.		34,624		1,735,355
Coca-Cola Enterprises, Inc.		4,837		125,085
Constellation Brands, Inc., Class A (a)		2,877		44,939
Dr. Pepper Snapple Group, Inc.		3,760		140,586
Molson Coors Brewing Co., Class B		2,382		100,901
PepsiCo, Inc.		24,192		1,474,502
				3,711,849
Biotechnology — 1.4%
Amgen, Inc. (a)		14,370		755,862
Biogen Idec, Inc. (a)		4,021		190,796
Celgene Corp. (a)		6,880		349,642
Cephalon, Inc. (a)		1,083		61,460
Genzyme Corp. (a)		3,985		202,319
Gilead Sciences, Inc. (a)		13,350		457,638
				2,017,717
Building Products — 0.0%
Masco Corp.		5,551		59,729
Capital Markets — 2.4%
Ameriprise Financial, Inc.		3,884		140,329
The Bank of New York Mellon Corp.		18,096		446,790
The Charles Schwab Corp.		14,641		207,609
E*Trade Financial Corp. (a)		2,922		34,538
Federated Investors, Inc., Class B		1,400		28,994
Franklin Resources, Inc.		2,222		191,514
The Goldman Sachs Group, Inc.		7,722		1,013,667
Invesco Ltd.		6,973		117,355
Janus Capital Group, Inc.		2,960		26,285
Legg Mason, Inc.		2,500		70,075
Morgan Stanley		20,941		486,041
Northern Trust Corp.		3,597		167,980
State Street Corp.		7,551		255,375
T. Rowe Price Group, Inc.		3,879		172,189
				3,358,741
Chemicals — 1.9%
Air Products & Chemicals, Inc.		3,213		208,235
Airgas, Inc.		1,216		75,635
CF Industries Holdings, Inc.		1,065		67,574
The Dow Chemical Co.		17,229		408,672
E.I. du Pont de Nemours & Co.		13,538		468,279
Eastman Chemical Co.		1,117		59,603
Ecolab, Inc.		3,501		157,230
FMC Corp.		1,100		63,173
International Flavors & Fragrances, Inc.		1,199		50,862
Monsanto Co.		8,173		377,756
PPG Industries, Inc.		2,460		148,609
Praxair, Inc.		4,570		347,274
The Sherwin-Williams Co.		1,346		93,130
Sigma-Aldrich Corp.		1,834		91,388
				2,617,420
Commercial Banks — 3.1%
BB&T Corp.		10,344		272,151
Comerica, Inc.		2,674		98,483
Fifth Third Bancorp		11,713		143,953
First Horizon National Corp. (a)		3,430		39,270
Huntington Bancshares, Inc.		10,905		60,414
KeyCorp		13,403		103,069
M&T Bank Corp.		1,243		105,593
Marshall & Ilsley Corp.		7,900		56,722
The PNC Financial Services Group, Inc. (c)		7,881		445,276
Regions Financial Corp.		18,193		119,710
SunTrust Banks, Inc.		7,505		174,866
U.S. Bancorp		28,659		640,529
Wells Fargo & Co.		78,133		2,000,205
Zions Bancorporation		2,311		49,848
				4,310,089
Commercial Services & Supplies — 0.5%
Avery Dennison Corp.		1,667		53,561
Cintas Corp.		2,036		48,803
Iron Mountain, Inc.		2,784		62,529
Pitney Bowes, Inc.		3,215		70,601
R.R. Donnelley & Sons Co.		3,144		51,467
Republic Services, Inc., Class A		4,820		143,299
Stericycle, Inc. (a)		1,300		85,254
Waste Management, Inc.		7,202		225,350
				740,864
Communications Equipment — 2.3%
Cisco Systems, Inc. (a)		85,764		1,827,631
Harris Corp.		2,000		83,300
JDS Uniphase Corp. (a)		3,334		32,807
Juniper Networks, Inc. (a)		7,904		180,369
Motorola, Inc. (a)		34,637		225,833
QUALCOMM, Inc.		24,607		808,094
Tellabs, Inc.		5,833		37,273
				3,195,307
Computers & Peripherals — 4.6%
Apple, Inc. (a)		13,648		3,432,882
Dell, Inc. (a)		25,740		310,424
EMC Corp. (a)		30,746		562,652
Hewlett-Packard Co.		35,020		1,515,666
Lexmark International, Inc., Class A (a)		1,207		39,867
NetApp, Inc. (a)		5,161		192,557

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Computers & Peripherals (concluded)
QLogic Corp. (a)		1,786	$	29,683
SanDisk Corp. (a)		3,486		146,656
Teradata Corp. (a)		2,436		74,249
Western Digital Corp. (a)		3,493		105,349
				6,409,985
Construction & Engineering — 0.2%
Fluor Corp.		2,639		112,158
Jacobs Engineering Group, Inc. (a)		1,900		69,236
Quanta Services, Inc. (a)		3,111		64,242
				245,636
Construction Materials — 0.1%
Vulcan Materials Co.		1,945		85,249
Consumer Finance — 0.8%
American Express Co.		18,044		716,347
Capital One Financial Corp.		6,815		274,645
Discover Financial Services, Inc.		8,281		115,768
SLM Corp. (a)		7,423		77,125
				1,183,885
Containers & Packaging — 0.2%
Ball Corp.		1,436		75,864
Bemis Co.		1,540		41,580
Owens-Illinois, Inc. (a)		2,475		65,464
Pactiv Corp. (a)		2,067		57,566
Sealed Air Corp.		2,420		47,722
				288,196
Distributors — 0.1%
Genuine Parts Co.		2,438		96,179
Diversified Consumer Services — 0.1%
Apollo Group, Inc., Class A (a)		1,910		81,118
DeVry, Inc.		883		46,348
H&R Block, Inc.		4,939		77,493
				204,959
Diversified Financial Services — 4.5%
Bank of America Corp.		150,585		2,163,907
CME Group, Inc.		985		277,327
Citigroup, Inc. (a)		338,913		1,274,313
IntercontinentalExchange, Inc. (a)		1,100		124,333
JPMorgan Chase & Co.		59,667		2,184,409
Leucadia National Corp.		2,744		53,535
Moody’s Corp.		3,004		59,840
The NASDAQ Stock Market, Inc. (a)		2,200		39,116
NYSE Euronext		3,815		105,408
				6,282,188
Diversified Telecommunication Services — 2.6%
AT&T Inc.		88,614		2,143,573
CenturyTel, Inc.		4,455		148,396
Frontier Communications Corp. (b)		4,703		33,438
Qwest Communications International, Inc.		22,696		119,154
Verizon Communications, Inc.		42,476		1,190,178
Windstream Corp.		7,102		74,997
				3,709,736
Electric Utilities — 1.9%
Allegheny Energy, Inc.		2,605		53,871
American Electric Power Co., Inc.		7,158		231,204
Duke Energy Corp.		19,609		313,744
Edison International		4,840		153,525
Entergy Corp.		2,865		205,191
Exelon Corp.		9,884		375,296
FirstEnergy Corp.		4,549		160,261
NextEra Energy, Inc.		6,191		301,873
Northeast Utilities, Inc.		2,596		66,146
PPL Corp.		7,027		175,324
Pepco Holdings, Inc.		3,400		53,312
Pinnacle West Capital Corp.		1,661		60,394
Progress Energy, Inc.		4,323		169,548
The Southern Co.		12,287		408,911
				2,728,600
Electrical Equipment — 0.5%
Emerson Electric Co.		11,270		492,386
Rockwell Automation, Inc.		2,183		107,164
Roper Industries, Inc.		1,403		78,512
				678,062
Electronic Equipment, Instruments & Components — 0.6%
Agilent Technologies, Inc. (a)		5,250		149,257
Amphenol Corp., Class A		2,601		102,167
Corning, Inc.		23,347		377,054
Flir Systems, Inc. (a)		2,300		66,907
Jabil Circuit, Inc.		2,915		38,770
Molex, Inc.		2,063		37,629
				771,784
Energy Equipment & Services — 1.7%
Baker Hughes, Inc.		6,431		267,337
Cameron International Corp. (a)		3,655		118,861
Diamond Offshore Drilling, Inc.		1,068		66,419
FMC Technologies, Inc. (a)		1,809		95,262
Halliburton Co.		13,493		331,253
Helmerich & Payne, Inc.		1,624		59,308
Nabors Industries Ltd. (a)		4,371		77,017
National Oilwell Varco, Inc.		6,259		206,985
Rowan Cos., Inc. (a)		1,735		38,066
Schlumberger Ltd.		17,923		991,859
Smith International, Inc.		3,662		137,874
				2,390,241
Food & Staples Retailing — 2.5%
CVS Caremark Corp.		20,415		598,568
Costco Wholesale Corp.		6,580		360,781
The Kroger Co.		9,665		190,304
SUPERVALU, Inc.		3,238		35,100
SYSCO Corp.		8,874		253,530
Safeway, Inc.		5,736		112,770
Wal-Mart Stores, Inc.		31,163		1,498,006
Walgreen Co.		14,756		393,985
Whole Foods Market, Inc. (a)		2,609		93,976
				3,537,020
Food Products — 1.9%
Archer-Daniels-Midland Co.		9,624		248,492
Campbell Soup Co.		2,754		98,676
ConAgra Foods, Inc.		6,623		154,448
Dean Foods Co. (a)		2,700		27,189
General Mills, Inc.		10,003		355,307
H.J. Heinz Co.		4,735		204,647
The Hershey Co.		2,445		117,189
Hormel Foods Corp.		1,100		44,528
The J.M. Smucker Co.		1,800		108,396
Kellogg Co.		3,795		190,888
Kraft Foods, Inc.		26,181		733,068
McCormick & Co., Inc.		2,000		75,920
Mead Johnson Nutrition Co.		3,100		155,372

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Food Products (concluded)
Sara Lee Corp.		9,902	$	139,618
Tyson Foods, Inc., Class A		4,488		73,558
				2,727,296
Gas Utilities — 0.2%
EQT Corp.		2,209		79,833
Nicor, Inc.		729		29,525
Oneok, Inc.		1,621		70,108
Questar Corp.		2,586		117,637
				297,103
Health Care Equipment & Supplies — 1.8%
Baxter International, Inc.		9,015		366,370
Becton Dickinson & Co.		3,530		238,699
Boston Scientific Corp. (a)		23,050		133,690
C.R. Bard, Inc.		1,454		112,729
CareFusion Corp. (a)		2,724		61,835
Dentsply International, Inc.		2,138		63,947
Hospira, Inc. (a)		2,442		140,293
Intuitive Surgical, Inc. (a)		584		184,322
Medtronic, Inc.		16,546		600,123
St. Jude Medical, Inc. (a)		4,862		175,469
Stryker Corp.		4,197		210,102
Varian Medical Systems, Inc. (a)		1,900		99,332
Zimmer Holdings, Inc. (a)		3,042		164,420
				2,551,331
Health Care Providers & Services — 2.1%
Aetna, Inc.		6,374		168,146
AmerisourceBergen Corp.		4,175		132,556
Cardinal Health, Inc.		5,389		181,124
Cigna Corp.		4,189		130,110
Coventry Health Care, Inc. (a)		2,110		37,305
DaVita, Inc. (a)		1,520		94,909
Express Scripts, Inc. (a)		8,247		387,774
Humana, Inc. (a)		2,544		116,185
Laboratory Corp. of America Holdings (a)		1,560		117,546
McKesson Corp.		4,034		270,924
Medco Health Solutions, Inc. (a)		6,853		377,463
Patterson Cos., Inc.		1,400		39,942
Quest Diagnostics, Inc.		2,212		110,091
Tenet Healthcare Corp. (a)		6,612		28,696
UnitedHealth Group, Inc.		17,051		484,248
WellPoint, Inc. (a)		6,408		313,544
				2,990,563
Health Care Technology — 0.1%
Cerner Corp. (a)		1,044		79,229
Hotels, Restaurants & Leisure — 1.7%
Carnival Corp.		6,500		196,560
Darden Restaurants, Inc.		2,151		83,566
International Game Technology		4,340		68,138
Marriott International, Inc., Class A		3,897		116,676
McDonald’s Corp.		16,117		1,061,627
Starbucks Corp.		11,227		272,816
Starwood Hotels & Resorts Worldwide, Inc.		2,810		116,418
Wyndham Worldwide Corp.		2,765		55,687
Wynn Resorts Ltd.		1,061		80,923
Yum! Brands, Inc.		7,028		274,373
				2,326,784
Household Durables — 0.4%
D.R. Horton, Inc.		4,200		41,286
Fortune Brands, Inc.		2,299		90,075
Harman International Industries, Inc. (a)		1,100		32,879
Leggett & Platt, Inc.		2,123		42,587
Lennar Corp., Class A		2,450		34,080
Newell Rubbermaid, Inc.		4,285		62,732
Pulte Group, Inc. (a)		4,799		39,736
Stanley Black & Decker, Inc.		2,412		121,854
Whirlpool Corp.		1,122		98,534
				563,763
Household Products — 2.6%
Clorox Co.		2,088		129,790
Colgate-Palmolive Co.		7,357		579,437
Kimberly-Clark Corp.		6,236		378,089
The Procter & Gamble Co.		43,201		2,591,196
				3,678,512
IT Services — 3.1%
Automatic Data Processing, Inc.		7,505		302,151
Cognizant Technology Solutions Corp. (a)		4,490		224,769
Computer Sciences Corp.		2,301		104,120
Fidelity National Information Services, Inc.		4,923		132,035
Fiserv, Inc. (a)		2,244		102,461
International Business Machines Corp.		19,236		2,375,261
MasterCard, Inc., Class A		1,446		288,520
Paychex, Inc.		4,778		124,085
SAIC, Inc. (a)		4,389		73,472
Total System Services, Inc.		3,000		40,800
Visa, Inc., Class A		6,781		479,756
The Western Union Co.		10,083		150,338
				4,397,768
Independent Power Producers & Energy Traders — 0.2%
The AES Corp. (a)		9,749		90,081
Constellation Energy Group, Inc.		2,944		94,944
NRG Energy, Inc. (a)		3,830		81,234
				266,259
Industrial Conglomerates — 2.3%
3M Co.		10,661		842,113
General Electric Co.		160,141		2,309,233
Textron, Inc.		4,160		70,595
				3,221,941
Insurance — 4.0%
Aflac, Inc.		7,015		299,330
The Allstate Corp.		8,036		230,874
American International Group, Inc. (a)(b)		2,025		69,741
Aon Corp.		3,969		147,329
Assurant, Inc.		1,678		58,227
Berkshire Hathaway, Inc. (a)		24,854		1,980,615
Chubb Corp.		4,921		246,099
Cincinnati Financial Corp.		2,466		63,795
Genworth Financial, Inc., Class A (a)		7,500		98,025
Hartford Financial Services Group, Inc.		6,589		145,815
Lincoln National Corp.		4,448		108,042
Loews Corp.		5,291		176,243
Marsh & McLennan Cos., Inc.		8,048		181,482
MetLife, Inc.		12,269		463,278
Principal Financial Group, Inc.		4,700		110,168
The Progressive Corp.		10,141		189,840
Prudential Financial, Inc.		6,965		373,742
Torchmark Corp.		1,194		59,115
The Travelers Cos., Inc.		7,431		365,977
UnumProvident Corp.		5,089		110,431
XL Capital Ltd., Class A		5,255		84,133
				5,562,301

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Internet & Catalog Retail — 0.5%
Amazon.com, Inc. (a)		5,127	$	560,176
Expedia, Inc.		3,200		60,096
Priceline.com, Inc. (a)		709		125,167
				745,439
Internet Software & Services — 1.7%
Akamai Technologies, Inc. (a)		2,600		105,482
eBay, Inc. (a)		16,926		331,919
Google, Inc., Class A (a)		3,630		1,615,168
Monster Worldwide, Inc. (a)		1,971		22,962
VeriSign, Inc. (a)		2,818		74,818
Yahoo! Inc. (a)		17,825		246,520
				2,396,869
Leisure Equipment & Products — 0.2%
Eastman Kodak Co. (a)		4,011		17,407
Hasbro, Inc.		1,948		80,063
Mattel, Inc.		5,556		117,565
				215,035
Life Sciences Tools & Services — 0.5%
Life Technologies Corp. (a)		2,753		130,079
Millipore Corp. (a)		861		91,826
PerkinElmer, Inc.		1,809		37,392
Thermo Fisher Scientific, Inc. (a)		6,133		300,823
Waters Corp. (a)		1,394		90,192
				650,312
Machinery — 1.7%
Caterpillar, Inc.		9,435		566,761
Cummins, Inc.		3,000		195,390
Danaher Corp.		7,925		294,176
Deere & Co.		6,351		353,624
Dover Corp.		2,834		118,433
Eaton Corp.		2,501		163,666
Flowserve Corp.		858		72,758
Illinois Tool Works, Inc.		5,794		239,176
PACCAR, Inc.		5,454		217,451
Pall Corp.		1,810		62,210
Parker Hannifin Corp.		2,427		134,601
Snap-On, Inc.		841		34,405
				2,452,651
Media — 3.1%
CBS Corp., Class B		10,303		133,218
Comcast Corp., Class A		42,327		735,220
DIRECTV, Class A (a)		13,633		462,431
Discovery Communications, Inc., Class A (a)		4,217		150,589
Gannett Co., Inc.		3,647		49,089
Interpublic Group of Cos., Inc. (a)		7,392		52,705
The McGraw-Hill Cos., Inc.		4,804		135,185
Meredith Corp.		489		15,223
The New York Times Co., Class A (a)		1,677		14,506
News Corp., Class A		33,750		403,650
Omnicom Group, Inc.		4,630		158,809
Scripps Networks Interactive		1,284		51,797
Time Warner Cable, Inc.		5,280		274,982
Time Warner, Inc.		17,097		494,274
Viacom, Inc., Class B		9,096		285,341
Walt Disney Co.		29,361		924,871
The Washington Post Co., Class B		93		38,175
				4,380,065
Metals & Mining — 1.1%
AK Steel Holding Corp.		1,700		20,264
Alcoa, Inc.		15,199		152,902
Allegheny Technologies, Inc.		1,463		64,650
Cliffs Natural Resources, Inc.		2,060		97,149
Freeport-McMoRan Copper & Gold, Inc., Class B		7,036		416,039
Newmont Mining Corp.		7,354		454,036
Nucor Corp.		4,715		180,490
Titanium Metals Corp. (a)		1,200		21,108
United States Steel Corp.		2,189		84,386
				1,491,024
Multi-Utilities — 1.4%
Ameren Corp.		3,597		85,501
CMS Energy Corp.		3,554		52,066
CenterPoint Energy, Inc.		6,197		81,553
Consolidated Edison, Inc.		4,259		183,563
DTE Energy Co.		2,523		115,074
Dominion Resources, Inc.		8,966		347,343
Integrys Energy Group, Inc.		1,152		50,388
NiSource, Inc.		4,211		61,059
PG&E Corp.		5,557		228,393
Public Service Enterprise Group, Inc.		7,565		237,011
SCANA Corp.		1,713		61,257
Sempra Energy		3,707		173,451
TECO Energy, Inc.		3,315		49,957
Wisconsin Energy Corp.		1,800		91,332
Xcel Energy, Inc.		6,972		143,693
				1,961,641
Multiline Retail — 0.9%
Big Lots, Inc. (a)		1,245		39,952
Family Dollar Stores, Inc.		2,026		76,360
JCPenney Co., Inc.		3,617		77,693
Kohl’s Corp. (a)		4,626		219,735
Macy’s, Inc.		6,263		112,108
Nordstrom, Inc.		2,428		78,157
Sears Holdings Corp. (a)		746		48,229
Target Corp.		11,048		543,230
				1,195,464
Office Electronics — 0.1%
Xerox Corp.		20,719		166,581
Oil, Gas & Consumable Fuels — 8.9%
Anadarko Petroleum Corp.		7,377		266,236
Apache Corp.		5,041		424,402
Cabot Oil & Gas Corp., Class A		1,600		50,112
Chesapeake Energy Corp.		9,762		204,514
Chevron Corp.		30,150		2,045,979
ConocoPhillips		22,363		1,097,800
Consol Energy, Inc.		3,369		113,737
Denbury Resources, Inc. (a)		6,077		88,967
Devon Energy Corp.		6,692		407,677
EOG Resources, Inc.		3,783		372,134
El Paso Corp.		10,712		119,010
Exxon Mobil Corp.		76,667		4,375,402
Hess Corp.		4,362		219,583
Marathon Oil Corp.		10,558		328,248
Massey Energy Co.		1,460		39,931
Murphy Oil Corp.		2,900		143,695
Noble Energy, Inc.		2,617		157,884
Occidental Petroleum Corp.		12,162		938,298
Peabody Energy Corp.		4,081		159,689
Pioneer Natural Resources Co.		1,719		102,195
Range Resources Corp.		2,400		96,360
Southwestern Energy Co. (a)		5,180		200,155
Spectra Energy Corp.		9,696		194,599
Sunoco, Inc.		1,756		61,056
Tesoro Corp.		2,100		24,507

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Oil, Gas & Consumable Fuels (concluded)
Valero Energy Corp.		8,407	$	151,158
Williams Cos., Inc.		8,739		159,749
				12,543,077
Paper & Forest Products — 0.2%
International Paper Co.		6,581		148,928
MeadWestvaco Corp.		2,642		58,652
Weyerhaeuser Co.		3,100		109,120
				316,700
Personal Products — 0.2%
Avon Products, Inc.		6,400		169,600
The Estée Lauder Cos., Inc., Class A		1,800		100,314
				269,914
Pharmaceuticals — 6.1%
Abbott Laboratories		23,155		1,083,191
Allergan, Inc.		4,586		267,180
Bristol-Myers Squibb Co.		25,869		645,173
Eli Lilly & Co.		15,199		509,166
Forest Laboratories, Inc. (a)		4,618		126,672
Johnson & Johnson		41,363		2,442,899
King Pharmaceuticals, Inc. (a)		3,916		29,722
Merck & Co, Inc.		46,803		1,636,701
Mylan, Inc. (a)		4,738		80,736
Pfizer, Inc.		120,885		1,723,820
Watson Pharmaceuticals, Inc. (a)		1,640		66,535
				8,611,795
Professional Services — 0.1%
Dun & Bradstreet Corp.		728		48,864
Equifax, Inc.		1,803		50,592
Robert Half International, Inc.		2,286		53,835
				153,291
Real Estate Investment Trusts (REITs) — 1.4%
Apartment Investment & Management Co., Class A		1,800		34,866
AvalonBay Communities, Inc.		1,244		116,152
Boston Properties, Inc.		2,103		150,028
Equity Residential		4,208		175,221
HCP, Inc.		4,334		139,772
Health Care REIT, Inc.		1,909		80,407
Host Marriott Corp.		9,987		134,625
Kimco Realty Corp.		6,100		81,984
Plum Creek Timber Co., Inc.		2,500		86,325
ProLogis		7,200		72,936
Public Storage		2,042		179,512
Simon Property Group, Inc.		4,390		354,492
Ventas, Inc.		2,400		112,680
Vornado Realty Trust		2,390		174,351
				1,893,351
Real Estate Management & Development — 0.0%
CB Richard Ellis Group, Inc. (a)		4,000		54,440
Road & Rail — 0.8%
CSX Corp.		5,804		288,052
Norfolk Southern Corp.		5,582		296,125
Ryder System, Inc.		821		33,029
Union Pacific Corp.		7,568		526,052
				1,143,258
Semiconductors & Semiconductor Equipment — 2.6%
Advanced Micro Devices, Inc. (a)		8,572		62,747
Altera Corp.		4,546		112,786
Analog Devices, Inc.		4,460		124,256
Applied Materials, Inc.		19,972		240,063
Broadcom Corp., Class A		6,443		212,426
First Solar, Inc. (a)		747		85,031
Intel Corp.		83,434		1,622,791
KLA-Tencor Corp.		2,600		72,488
LSI Corp. (a)		9,896		45,522
Linear Technology Corp.		3,278		91,161
MEMC Electronic Materials, Inc. (a)		3,643		35,993
Microchip Technology, Inc. (b)		2,800		77,672
Micron Technology, Inc. (a)		12,926		109,742
National Semiconductor Corp.		3,741		50,354
Novellus Systems, Inc. (a)		1,442		36,569
Nvidia Corp. (a)		8,500		86,785
Teradyne, Inc. (a)		2,638		25,720
Texas Instruments, Inc.		18,335		426,839
Xilinx, Inc.		4,213		106,420
				3,625,365
Software — 3.8%
Adobe Systems, Inc. (a)		7,901		208,823
Autodesk, Inc. (a)		3,364		81,947
BMC Software, Inc. (a)		2,801		96,999
CA, Inc.		5,858		107,787
Citrix Systems, Inc. (a)		2,822		119,173
Compuware Corp. (a)		3,418		27,276
Electronic Arts, Inc. (a)		5,000		72,000
Intuit, Inc. (a)		4,746		165,018
McAfee, Inc. (a)		2,400		73,728
Microsoft Corp. (d)		114,295		2,629,928
Novell, Inc. (a)		5,582		31,706
Oracle Corp.		58,764		1,261,075
Red Hat, Inc. (a)		2,900		83,926
Salesforce.com, Inc. (a)		1,696		145,551
Symantec Corp. (a)		12,070		167,532
				5,272,469
Specialty Retail — 2.0%
Abercrombie & Fitch Co., Class A		1,251		38,393
AutoNation, Inc. (a)		1,231		24,004
AutoZone, Inc. (a)		439		84,824
Bed Bath & Beyond, Inc. (a)		3,932		145,799
Best Buy Co., Inc.		5,217		176,648
CarMax, Inc. (a)		3,345		66,565
GameStop Corp., Class A (a)		2,282		42,879
The Gap, Inc.		6,734		131,044
Home Depot, Inc.		25,207		707,560
Limited Brands, Inc.		4,079		90,023
Lowe’s Cos., Inc.		21,439		437,784
Office Depot, Inc. (a)		4,340		17,534
O’Reilly Automotive, Inc. (a)		2,100		99,876
RadioShack Corp.		1,883		36,737
Ross Stores, Inc.		1,838		97,947
Staples, Inc.		10,837		206,445
TJX Cos., Inc.		6,120		256,734
Tiffany & Co.		1,937		73,432
Urban Outfitters, Inc. (a)		2,000		68,780
				2,803,008
Textiles, Apparel & Luxury Goods — 0.5%
Coach, Inc.		4,577		167,289
Nike, Inc., Class B		5,841		394,560
Polo Ralph Lauren Corp.		987		72,012
VF Corp.		1,290		91,822
				725,683

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Thrifts & Mortgage Finance — 0.1%
Hudson City Bancorp, Inc.		7,200	$	88,128
People’s United Financial, Inc.		5,442		73,467
				161,595
Tobacco — 1.6%
Altria Group, Inc.		31,162		624,487
Lorillard, Inc.		2,307		166,058
Philip Morris International, Inc.		27,780		1,273,435
Reynolds American, Inc.		2,501		130,352
				2,194,332
Trading Companies & Distributors — 0.1%
Fastenal Co.		2,000		100,380
W.W. Grainger, Inc.		946		94,080
				194,460
Wireless Telecommunication Services — 0.4%
American Tower Corp., Class A (a)		6,071		270,159
MetroPCS Communications, Inc. (a)		4,100		33,579
Sprint Nextel Corp. (a)		44,933		190,516
				494,254
Total Long-Term Investments (Cost — $98,353,434) — 99.5%				139,843,255
Short-Term Securities	Shares		Value
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16%, (c)(e)		334,404	$	334,404
	Beneficial
	Interest
	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (c)(e)(f)	$	703		702,525
Total Short-Term Securities (Cost — $1,036,929) — 0.7%				1,036,929
Total Investments Before Short Positions (Cost — $99,390,363*) — 100.2%				140,880,184
Short Positions (g)	Shares
Questar Corp.-New Shares (a)		2,586		(41,764	)
Total Short Positions (Proceeds — $41,757) — (0.0)%				(41,764	)
Total Investments, Net of Short Positions — 100.2%				140,838,420
Liabilities in Excess of Other Assets — (0.2)%				(247,196	)
Net Assets — 100.0%			$	140,591,224

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	107,105,221
Gross unrealized appreciation	$	47,311,827
Gross unrealized depreciation		(13,536,864)
Net unrealized appreciation	$	33,774,963

(a)	Non-income producing security.
(b)	Security, or a portion of security, is on loan.
(c)	Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/								Shares/
	Beneficial								Beneficial
	Interest								Interest
	Held at								Held at		Value at
	December 31,		Shares			Shares			June 30,		June 30,		Realized
Affiliate	2009		Purchased			Sold			2010		2010		Loss			Income
BlackRock Liquidity Funds, TempFund, Institutional Class		713,028		—			378,264	1		334,404	$	334,404		—		$	1,014
BlackRock Liquidity Series, LLC Money Market Series	$	206,975	$	495,550	2		—		$	702,525	$	702,525		—		$	2,009
The PNC Financial Services Group, Inc.		7,448		1,038			605			7,881	$	445,276	$	(10,476	)	$	1,530

1	Represents net shares sold.
2	Represents net shares purchased.

(d)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(e)	Represents the current yield as of report date.
(f)	Security was purchased with the cash collateral from loaned securities.
(g)	In order to track the performance of its benchmark index, the Fund sold non-index securities that it subsequently received in corporate actions occurring on the opening of market trading on the following business day.

  • Financial futures contracts purchased as of June 30, 2010 were as follows:

				Expiration		Notional		Unrealized
Contracts		Issue		Date		Value		Depreciation
	10		S&P 500 E-MINI		September 2010	$	536,929	$	(23,629	)

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

  •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

  •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Schedule of Investments (concluded)

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1			Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1		$139,843,255			—		—		$139,843,255
Short-Term Securities		334,404		$	702,525		—		1,036,929
Liabilities:
Investments in Securities:
Short Positions		(41,764	)		—		—		(41,764	)
Total		$140,135,895			$702,525		—		$140,838,420

¹ See above Schedule of Investments for values in each industry.

	Derivative Financial Instruments2
Valuation Inputs	Level 1			Level 2		Level 3		Total
Liabilities:
Equity contracts	$	(23,629	)		—		—	$	(23,629	)

² Derivative financial instruments are financial futures contracts which are shown at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned of $674,496) (cost—$98,008,428)	$	139,397,979
Investments at value—affiliated (cost—$1,381,935)		1,482,205
Cash		71,419
Capital shares sold receivable		361,020
Investments sold receivable		41,757
Dividends receivable		191,707
Prepaid expenses		43,706
Securities lending income receivable—affiliated		558
Total assets		141,590,351
Liabilities:
Collateral on securities loaned, at value		702,525
Short positions at value (proceeds—$41,757)		41,764
Capital shares redeemed payable		100,302
Investments purchased payable		71,419
Margin variation payable		3,866
Investment advisory fees payable		36,630
Other accrued expenses payable		40,422
Other affiliates payable		1,574
Distribution fees payable		104
Officer’s and Directors’ fees payable		521
Total liabilities		999,127
Net Assets	$	140,591,224
Net Assets Consist of:
Paid-in capital	$	102,295,891
Undistributed net investment income		1,193,815
Accumulated net realized loss		(4,364,667	)
Net unrealized appreciation/depreciation		41,466,185
Net Assets	$	140,591,224
Net Asset Value
Class I—Based on net assets of $140,224,251 and 11,364,837 shares outstanding, 100 million shares authorized, $0.10 par value	$	12.34
Class II—Based on net assets of $366,973 and 29,971 shares outstanding, 100 million shares authorized, $0.10 par value	$	12.24

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends—unaffiliated	$	1,520,704
Dividends—affiliated		2,544
Securities lending—affiliated		2,009
Total income		1,525,257
Expenses:
Investment advisory		236,713
Accounting services		26,096
Professional		24,118
Printing		10,966
Officer and Directors		11,261
Registration		10,605
Custodian		8,378
Transfer agent—Class I		2,614
Transfer agent—Class II		37
Distribution—Class II		1,624
Miscellaneous		7,514
Total expenses		339,926
Less fees waived by advisor		(627	)
Total expenses after fees waived		339,299
Net investment income		1,185,958
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments—unaffiliated		2,652,569
Investments—affiliated		(10,476	)
Financial futures contracts		156,828
		2,798,921
Net change in unrealized appreciation/depreciation on:
Investments		(14,148,025	)
Short positions		(7	)
Financial futures contracts		(32,400	)
		(14,180,432	)
Total realized and unrealized loss		(11,381,511	)
Net Decrease in Net Assets Resulting from Operations	$	(10,195,553	)

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	1,185,958		$	2,767,866
Net realized gain		2,798,921			933,884
Net change in unrealized appreciation/depreciation		(14,180,432	)		30,582,191
Net increase (decrease) in net assets resulting from operations		(10,195,553	)		34,283,941
Dividends and Distributions to Shareholders From:
Net investment income:
Class I		—			(2,800,063	)
Class II		—			(39,326	)
Net realized gain:
Class I		—			(1,053,974	)
Class II		—			(16,176	)
Decrease in net assets resulting from dividends and distributions to shareholders		—			(3,909,539	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(10,656,343	)		(14,957,256	)
Net Assets:
Total increase (decrease) in net assets		(20,851,896	)		15,417,146
Beginning of period		161,443,120			146,025,974
End of period	$	140,591,224		$	161,443,120
Undistributed net investment income	$	1,193,815		$	7,857

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	13.24		$	10.75	$	18.60	$	17.97	$	15.81	$	15.35
Net investment income1		0.10			0.24		0.30		0.31		0.26		0.24
Net realized and unrealized gain (loss)		(1.00)			2.58		(7.23)		0.66		2.19		0.45
Net increase (decrease) from investment operations		(0.90)			2.82		(6.93)		0.97		2.45		0.69
Dividends and distributions from:
Net investment income		—			(0.24)		(0.33)		(0.34)		(0.29)		(0.23)
Net realized gain		—			(0.09)		(0.59)		—		—		—
Total dividends and distributions		—			(0.33)		(0.92)		(0.34)		(0.29)		(0.23)
Net asset value, end of period	$	12.34		$	13.24	$	10.75	$	18.60	$	17.97	$	15.81
Total Investment Return:2
Based on net asset value		(6.80)%	3		26.19%		(37.22)%		5.38%		15.49%		4.49%
Ratios to Average Net Assets:
Total expenses		0.43%	4		0.43%		0.43%		0.39%		0.40%		0.39%
Total expenses after fees waived		0.43%	4		0.43%		0.43%		0.39%		0.40%		0.39%
Net investment income		1.51%	4		1.92%		1.88%		1.66%		1.58%		1.52%
Supplemental Data:
Net assets, end of period (000)	$	140,224		$	159,036	$	143,897	$	282,113	$	341,200	$	341,855
Portfolio turnover		3%			5%		4%		10%		4%		10%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Financial Highlights (concluded)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	13.12		$	10.66	$	18.46	$	17.97	$	15.80	$	15.34
Net investment income1		0.09			0.21		0.27		0.28		0.26		0.24
Net realized and unrealized gain (loss)		(0.97)			2.56		(7.17)		0.54		2.20		0.45
Net increase (decrease) from investment operations		(0.88)			2.77		(6.90)		0.82		2.46		0.69
Dividends and distributions from:
Net investment income		—			(0.22)		(0.33)		(0.33)		(0.29)		(0.23)
Net realized gain		—			(0.09)		(0.59)		—		—		—
Total dividends and distributions		—			(0.31)		(0.90)		(0.33)		(0.29)		(0.23)
Net asset value, end of period	$	12.24		$	13.12	$	10.66	$	18.46	$	17.97	$	15.80
Total Investment Return:2
Based on net asset value		(6.71)%	3		25.96%		(37.33)%		4.55%		15.56%		4.50%
Ratios to Average Net Assets:
Total expenses		0.58%	4		0.58%		0.58%		0.54%		0.39%		0.39%
Total expenses after fees waived		0.58%	4		0.58%		0.58%		0.54%		0.39%		0.39%
Net investment income		1.34%	4		1.76%		1.79%		1.42%		1.59%		1.53%
Supplemental Data:
Net assets, end of period (000)	$	367		$	2,407	$	2,129	$	1,698	$	1	$	1
Portfolio turnover		3%			5%		4%		10%		4%		10%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Variable Series Funds, Inc.

BlackRock S&P 500 Index V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock S&P 500 Index V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I and Class II Shares have equal 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 II Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available 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 such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (“SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the SEC require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., financial futures contracts), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Upon notification from issuers, some of the dividend

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

income received from a real estate investment trust may be redesignated as a reduction of cost of the related investment and/or realized gain. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as equity risk. These contracts may be transacted on an exchange. Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. Counterparty risk related to exchange-traded financial futures contracts is minimal because of the protection against defaults by the exchange on which they trade.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in the value of equity securities (equity risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. 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 value of the contract. Such receipts or payments are known as margin variation and are recognized by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

Derivative Instruments Categorized by Risk Exposure:

Fair Value of Derivative Instruments as of
June 30, 2010
	Liability Derivatives
	Statement of Assets and
	Liabilities Location		Value
Equity contracts		Net unrealized appreciation/depreciation*	$	23,629

*  Includes cumulative appreciation/depreciation of financial futures contracts as reported in Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.

The Effect of Derivative Instruments on the
Statement of Operations
Six Months Ended June 30, 2010
	Net Realized Gain from
	Financial Futures Contracts
Equity contracts	$	156,828

	Net Change in Unrealized
	Appreciation/Depreciation on
	Financial Futures Contracts
Equity contracts	$	(32,400	)

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Financial futures contracts:
Average number of contracts purchased		26
Average notional value of contracts purchased	$	1,440,501

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 the following annual rates of the Fund’s average daily net assets:

Portion of average daily value of net assets	Rate
Not exceeding $500 million		0.300	%
In excess of $500 million, but not exceeding $1 billion		0.275	%
In excess of $1 billion		0.250	%

The management fee reductions for assets exceeding $500 million are voluntary and may be terminated by the Manager without notice at any time.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,956 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% based upon the average daily net assets attributable to Class II.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting, among other things, to pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral on securities loaned, at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $478 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $4,235,235 and $14,160,445, respectively.

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Series based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

6.  Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		406,489		$	5,432,065
Shares redeemed		(1,055,686	)		(14,181,661	)
Net decrease		(649,197	)	$	(8,749,596	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		987,845		$	11,820,019
Shares issued to shareholders in reinvestment of dividends and distributions		290,649			3,854,037
Total issued		1,278,494			15,674,056
Shares redeemed		(2,653,784	)		(30,417,122	)
Net decrease		(1,375,290	)	$	(14,743,066	)

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		6,229		$	84,620
Shares redeemed		(159,735	)		(1,991,367	)
Net decrease		(153,506	)	$	(1,906,747	)

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		27,397		$	263,055
Shares issued to shareholders in reinvestment of dividends and distributions		4,228			55,502
Total issued		31,625			318,557
Shares redeemed		(47,933	)		(532,747	)
Net decrease		(16,308	)	$	(214,190	)

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend and capital gain distributions on July 23, 2010 to shareholders of record on July 21, 2010 as follows:

	Income Dividend
	Per Share
Class I	$	0.000694
Class II	$	0.000439

	Short-Term Capital Gain
	Distribution Per Share
Class I	$	0.013998
Class II	$	0.013998

	Long-Term Capital Gain
	Distribution Per Share
Class I	$	0.036159
Class II	$	0.036159

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Total Return V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund outperformed its benchmark, the Barclays Capital US Aggregate Bond Index.

What factors influenced performance?

•  The Fund’s strong relative performance for the period is attributed to its allocation to non-agency mortgages (which are not represented in the benchmark index), as well as overweight exposures to commercial mortgage-backed securities (CMBS), asset-backed securities (ABS) and investment-grade agency mortgage-backed securities (MBS). We also actively adjusted the Fund’s yield curve positioning throughout the period, and this benefited performance.

•  Conversely, the Fund’s duration positioning detracted modestly from relative performance during the period.

Describe recent portfolio activity.

•  During the course of the period, we made some asset allocation shifts within the portfolio. Most notably, we trimmed exposure to higher-risk, non-government assets and increased exposure to government-owned and government-related assets.

•  As relative value opportunities presented themselves, we became very active in our sector reallocations. When the period began, the Fund was overweight in non-government sectors, such as non-agency MBS, CMBS, ABS and corporate credit, both investment-grade and high-yield. At this time, the market was rewarding risk, as the economy weakly rebounded amid a continued low federal funds rate and quantitative easing.

•  Midway through the period, it started to appear that risk assets were becoming fairly valued and, in some cases, overvalued (e.g., credit). In light of this, coupled with our concerns that a flight to quality could be prompted by an economic slowdown or an exogenous event, we began reducing risk in the Fund. This involved trimming holdings of credit, CMBS and, to a lesser extent, non-agency MBS. Much of the proceeds from these sales were invested in government-related sectors, such as US Treasuries, agency MBS, FDIC-guaranteed debt and agency debentures.

•  These relative value-based sector reallocations were rewarded when the Greek funding crisis boiled over and eventually spread to the Eurozone. The resulting flight to quality pushed spreads on risk assets wider and caused a rally in government and related sectors. As the period ended, it appeared to us that much of the flight-to-quality trade had run its course, causing us to evaluate the merits of prudently reintroducing risk to the Fund.

Describe Fund positioning at period end.

•  While the Fund had reduced its exposure to risk assets, at period end it remained underweight in government-related sectors in favor of non-government spread sectors. Within government sectors, the Fund is slightly overweight in FDIC-guaranteed debt, while underweight in Treasuries and agency MBS. Within the non-government sectors, the Fund is overweight in high-quality CMBS, ABS and investment-grade corporate debt. The Fund also holds allocations outside of the benchmark index to non-agency MBS, high yield corporates and non-US government bonds. At the end of the period, the Fund’s duration was slightly short relative to the benchmark.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Total		BlackRock Total
	Return V.I.		Return V.I.		Barclays Capital
	Fund(2)--Class I		Fund(2)--Class III		US Aggregate
	Shares(1)		Shares(1)(5)		Bond Index(3)
6/00		10000		10000		10000
6/01		11094		11066		11123
6/02		11889		11830		12082
6/03		13119		13022		13339
6/04		13210		13079		13382
6/05		14092		13918		14292
6/06		13954		13747		14177
6/07		14662		14409		15044
6/08		15046		14749		16116
6/09		14305		13988		17091
6/10		16860		16445		18714

1	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
2	The Fund invests at least 80%, and typically 90% or more, of its net assets in fixed income securities.
3	This unmanaged market-weighted Index is comprised of investment grade corporate bonds (rated BBB or better), mortgages and US Treasury and government agency issues with at least one year to maturity.

Performance Summary as of June 30, 2010

	Standardized			6-Month			Average Annual Total Returns
	30-Day Yield			Total Returns			1 Year			5 Years			10 Years
Class I Shares4		4.75	%		7.08	%		17.86	%		3.65	%		5.36	%
Class III Shares4		—			6.95	5		17.57	5		3.39	5		5.10	5
Barclays Capital US Aggregate Bond Index		—			5.33			9.50			5.54			6.47

4	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the payable date. Insurance-related fees and expenses are not reflected in these returns.
5	The returns for Class III Shares, which have not recommenced as of June 30, 2010, are based upon performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Portfolio Composition	Long-Term Investments
U.S. Government Sponsored Agency Securities		53	%
Corporate Bonds		18
Non-Agency Mortgage-Backed Securities		11
U.S. Treasury Obligations		9
Asset-Backed Securities		5
Foreign Agency Obligations		2
Taxable Municipal Bonds		1
Preferred Securities		1

The Benefits and Risks of Leveraging

The Fund may utilize leverage to seek to enhance the yield and NAV. However, these objectives cannot be achieved in all interest rate environments.

The Fund may utilize leverage through borrowings or issuance of short-term debt or through other techniques, including entering into reverse repurchase agreements and dollar rolls. In general, the concept of leveraging is based on the premise that the financing cost of assets to be obtained from leverage will be based on short-term interest rates, which normally will be lower than the income earned by the Fund on its longer-term portfolio investments. 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 will benefit from the incremental net income.

Furthermore, the value of the Fund’s portfolio investments generally varies inversely with the direction of long-term interest rates, although other factors can influence the value of the portfolio investments. Changes in interest rates can influence the Fund’s NAV positively or negatively in addition to the impact on Fund performance from leverage.

The use of leverage may enhance opportunities for increased returns to the Fund, but as described above, they also create risks as short- or long-term interest rates fluctuate. Leverage also will generally cause greater changes in the Fund’s NAV, market price and dividend rate than a comparable portfolio without leverage. If the income derived from securities purchased with assets received from leverage exceeds the cost of leverage, the Fund’s net income will be greater than if leverage had not been used. Conversely, if the income from the securities purchased is not sufficient to cover the cost of leverage, the Fund’s net income will be less than if leverage had not been used, and therefore the amount available for distribution to shareholders will be reduced. The Fund may be required to sell portfolio securities at inopportune times or below fair market values in order to comply with regulatory requirements applicable to the use of leverage or as required by the terms of 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 will incur expenses in connection with the use of leverage, all of which are borne by Fund shareholders and may reduce investment returns.

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including swaps, options, financial futures contracts, and foreign currency exchange contracts, as specified in Note 2 of the Notes to Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market, credit, interest rate, foreign currency exchange rate and/or other risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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.

Each of the tables 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.”

Each of the tables 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other fund’s shareholder reports.

The expenses shown in the tables are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Including Interest Expense

Actual

Hypothetical2

Beginning

Ending

Expenses Paid

Beginning

Ending

Expenses Paid

Annualized

Account Value

Account Value

During the

Account Value

Account Value

During the

Expense

January 1, 2010

June 30, 2010

Period1

January 1, 2010

June 30, 2010

Period1

Ratio

Class I

$

1,000

$

1,070.80

$

4.06

$

1,000

$

1,020.88

$

3.96

0.79%

Excluding Interest Expense

Actual

Hypothetical2

Beginning

Ending

Expenses Paid

Beginning

Ending

Expenses Paid

Annualized

Account Value

Account Value

During the

Account Value

Account Value

During the

Expense

January 1, 2010

June 30, 2010

Period1

January 1, 2010

June 30, 2010

Period1

Ratio

Class I

$

1,000

$

1,070.80

$

3.23

$

1,000

$

1,021.68

$

3.16

0.63%

1	Expenses are equal to the expense ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half-year divided by 365.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

	Par
Asset-Backed Securities	(000)		Value
321 Henderson Receivables I LLC, Series 2010-1A, Class A, 5.56%, 7/15/59	USD	726	$	731,516
ACE Securities Corp. (a):
Series 2003-OP1, Class A2, 0.71%, 12/25/33		122		100,952
Series 2005-ASP1, Class M1, 1.03%, 9/25/35		2,000		468,246
Bear Stearns Asset-Backed Securities Trust (a):
Series 2005-4, Class A, 0.68%, 1/25/36		121		118,817
Series 2005-HE10, Class A2, 0.64%, 11/25/35		5		4,576
Series 2005-SD1, Class 1A2, 0.65%, 7/25/27		358		348,384
Series 2006-HE8, Class 1A1, 0.42%, 10/25/36		131		128,438
Chase Issuance Trust, Series 2009-A7, Class A7, 0.80%, 9/17/12 (a)		2,045		2,046,357
Countrywide Asset-Backed Certificates (a):
Series 2003-BC3, Class A2, 0.66%, 9/25/33		172		137,244
Series 2004-5, Class A, 0.80%, 10/25/34		272		217,598
Series 2004-13, Class AF4, 4.58%, 1/25/33		1,145		1,124,895
Series 2007-1, Class 2A1, 0.40%, 7/25/37		1,058		1,027,746
IXIS Real Estate Capital Trust, Series 2007-HE1, Class A1, 0.41%, 5/25/37 (a)		723		242,987
Lehman XS Trust, Series 2005-5N, Class 3A2, 0.71%, 11/25/35 (a)		778		251,865
Morgan Stanley ABS Capital I (a):
Series 2005-HE1, Class A2MZ, 0.64%, 12/25/34		155		139,977
Series 2007-NC1, Class A2A, 0.40%, 11/25/36		76		75,100
New Century Home Equity Loan Trust, Series 2005-2, Class A2MZ, 0.61%, 6/25/35 (a)		487		455,630
Option One Mortgage Loan Trust, Series 2003-4, Class A2, 0.99%, 7/25/33 (a)		435		330,621
RAAC, Series 2005-SP2, Class 2A, 0.65%, 6/25/44 (a)		1,484		794,267
Residential Asset Securities Corp., Series 2003-KS5, Class AIIB, 0.64%, 7/25/33 (a)		182		107,324
SLM Student Loan Trust (a):
Series 2002-1, Class A2, 0.43%, 4/25/17		799		796,304
Series 2005-4, Class A2, 0.40%, 4/26/21		529		527,380
Series 2008-5, Class A2, 1.42%, 10/25/16		2,770		2,811,600
Series 2008-5, Class A3, 1.62%, 1/25/18		700		721,562
Series 2008-5, Class A4, 2.02%, 7/25/23	USD	1,890		1,985,220
Series 2010-C, Class A1, 1.00%, 12/15/17 (b)(c)		580		580,000
Santander Drive Auto Receivables Trust (b):
Series 2010-A-A2, 1.39%, 8/15/13		470		468,120
Series 2010-A-A3, 1.83%, 11/17/14		370		370,703
Series 2010-A-A4, 2.39%, 6/15/17		190		190,703
Structured Asset Securities Corp., Series 2004-23XS, Class 2A1, 0.65%, 1/25/35 (a)		497		297,916
USAA Auto Owner Trust, Series 2006-4, Class A4, 4.98%, 10/15/12		1,816		1,836,045
Total Asset-Backed Securities — 9.7%				19,438,093
Corporate Bonds
Aerospace & Defense — 0.0%
L-3 Communications Corp., 5.88%, 1/15/15		70		69,125
Air Freight & Logistics — 0.0%
United Parcel Service, Inc., 6.20%, 1/15/38		40		48,087
Airlines — 0.5%
American Airlines, Inc., Series 2003-1, 3.86%, 1/09/12		337		335,702
Continental Airlines, Inc., Series 2002-1, 6.56%, 8/15/13		600		594,000
				929,702
Beverages — 1.1%
Anheuser-Busch InBev Worldwide, Inc., 3.00%, 10/15/12		2,125		2,181,414
Capital Markets — 2.8%
CDP Financial, Inc., 3.00%, 11/25/14 (b)		1,165		1,175,734
The Goldman Sachs Group, Inc.:
5.25%, 10/15/13		600		632,465
5.38%, 3/15/20		700		691,681
6.00%, 6/15/20		270		278,406
Lehman Brothers Holdings, Inc., 6.75%, 12/28/17 (d)(e)		1,025		513
Morgan Stanley:
2.93%, 5/14/13 (a)		1,320		1,324,722
4.20%, 11/20/14		240		236,985
6.25%, 8/28/17		115		116,913
5.63%, 9/23/19		230		222,505
Series F, 5.55%, 4/27/17		905		897,646
				5,577,570

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

EUR	Euro	LIBOR	London InterBank Offered Rate
GBP	British Pound	RB	Revenue Bonds
GO	General Obligation Bonds	USD	US Dollar

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Chemicals — 0.4%
CF Industries, Inc., 7.13%, 5/01/20	USD	490	$	502,250
NOVA Chemicals Corp.:
6.50%, 1/15/12		80		80,000
3.65%, 11/15/13 (a)		175		160,562
				742,812
Commercial Banks — 2.6%
Corporacion Andina de Fomento, 6.88%, 3/15/12		810		874,891
Dexia Credit Local SA, 2.00%, 3/05/13 (b)		615		614,660
Eksportfinans ASA:
1.88%, 4/02/13		1,620		1,633,268
3.00%, 11/17/14		890		916,534
5.50%, 5/25/16		700		795,578
HSBC Bank Plc, 3.50%, 6/28/15 (b)		440		444,233
				5,279,164
Computers & Peripherals — 0.2%
Seagate Technology International, 10.00%, 5/01/14 (b)		380		433,200
Consumer Finance — 0.3%
SLM Corp., 5.40%, 10/25/11		625		621,301
Containers & Packaging — 0.5%
Ball Corp.:
7.13%, 9/01/16		175		183,094
7.38%, 9/01/19		175		182,000
Crown Americas LLC, 7.63%, 5/15/17 (b)		109		112,815
Owens-Brockway Glass Container, Inc., 7.38%, 5/15/16		490		510,825
				988,734
Diversified Financial Services — 2.7%
Bank of America Corp., 5.63%, 7/01/20		730		735,798
Citigroup, Inc., 6.00%, 12/13/13		730		765,852
FCE Bank Plc:
7.88%, 2/15/11	GBP	300		451,591
7.13%, 1/15/13	EUR	100		122,897
GMAC, Inc., 8.00%, 3/15/20 (b)	USD	460		449,650
General Electric Capital Corp., 6.15%, 8/07/37		440		446,386
JPMorgan Chase & Co., 0.90%, 2/26/13 (a)		330		329,989
JPMorgan Chase Bank NA:
6.00%, 7/05/17		805		871,460
Series BKNT, 6.00%, 10/01/17		745		811,277
Reynolds Group DL Escrow, Inc., 7.75%, 10/15/16 (b)		475		464,312
				5,449,212
Diversified Telecommunication Services — 2.4%
AT&T, Inc., 6.50%, 9/01/37		1,350		1,497,351
New Communications Holdings, Inc., 8.25%, 4/15/17 (b)		400		401,500
Qwest Communications International, Inc.:
7.50%, 2/15/14		100		100,250
Series B, 7.50%, 2/15/14		40		40,100
Qwest Corp., 8.88%, 3/15/12		75		80,437
Telefonica Emisiones SAU, 4.95%, 1/15/15	USD	700		733,290
Verizon Communications, Inc., 8.75%, 11/01/18		1,450		1,884,961
				4,737,889
Electric Utilities — 0.5%
Florida Power & Light Co., 5.95%, 2/01/38		375		428,344
Florida Power Corp., 6.40%, 6/15/38		225		268,910
Southern California Edison Co., Series 08-A, 5.95%, 2/01/38		225		259,985
				957,239
Food Products — 0.8%
Kraft Foods, Inc.:
6.50%, 8/11/17		735		853,716
5.38%, 2/10/20		495		530,418
6.50%, 2/09/40		125		139,791
				1,523,925
Health Care Equipment & Supplies — 0.2%
CareFusion Corp., 6.38%, 8/01/19		325		371,257
Covidien International Finance SA, 2.80%, 6/15/15		130		131,288
				502,545
Health Care Providers & Services — 0.7%
HCA, Inc.:
8.50%, 4/15/19		480		508,800
7.25%, 9/15/20		495		497,475
Tenet Healthcare Corp. (b):
9.00%, 5/01/15		150		158,625
8.88%, 7/01/19		320		339,200
				1,504,100
Household Durables — 0.5%
Centex Corp., 5.13%, 10/01/13		764		765,910
Pulte Homes, Inc., 5.20%, 2/15/15		215		202,100
				968,010
IT Services — 0.4%
Sabre Holdings Corp., 8.35%, 3/15/16		810		773,550
Insurance — 2.1%
Hartford Life Global Funding Trusts, 0.72%, 6/16/14 (a)		1,275		1,199,060
Lincoln National Corp., 7.00%, 6/15/40		180		189,584
Metropolitan Life Global Funding I (b):
2.50%, 1/11/13		1,515		1,532,178
5.13%, 4/10/13		875		946,375
Teachers Insurance & Annuity Association of America, 6.85%, 12/16/39 (b)		295		343,600
				4,210,797
Machinery — 0.1%
Navistar International Corp., 3.00%, 10/15/14 (f)		120		140,700
Media — 3.9%
Clear Channel Worldwide Holdings, Inc. (b):
Series A, 9.25%, 12/15/17		117		116,415
Series B, 9.25%, 12/15/17		468		470,340
Comcast Corp.:
6.45%, 3/15/37		630		681,219
6.95%, 8/15/37		90		102,377
6.40%, 3/01/40		125		134,540

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Corporate Bonds	(000)		Value
Media (concluded)
Cox Communications, Inc., 8.38%, 3/01/39 (b)	USD	475	$	645,683
DISH DBS Corp., 7.75%, 5/31/15		510		525,300
Discovery Communications LLC, 3.70%, 6/01/15		270		276,816
NBC Universal, Inc., 5.15%, 4/30/20 (b)		390		406,765
News America Holdings, Inc., 9.25%, 2/01/13		330		388,575
News America, Inc.:
6.40%, 12/15/35		390		424,452
6.75%, 1/09/38		555		609,552
Rainbow National Services LLC, 10.38%, 9/01/14 (b)		490		510,213
Time Warner Cable, Inc., 5.85%, 5/01/17		340		373,303
Time Warner Cos., Inc., 9.13%, 1/15/13		1,790		2,083,297
				7,748,847
Metals & Mining — 0.3%
AngloGold Ashanti Holdings Plc, 5.38%, 4/15/20		150		152,289
Teck Resources Ltd., 10.75%, 5/15/19		465		569,765
				722,054
Multiline Retail — 0.2%
Dollar General Corp., 11.88%, 7/15/17 (g)		415		472,062
Oil, Gas & Consumable Fuels — 3.6%
BP Capital Markets Plc, 3.13%, 3/10/12		915		845,938
Canadian Natural Resources, Ltd., 6.50%, 2/15/37		360		402,155
Cenovus Energy, Inc., 6.75%, 11/15/39		335		384,616
ConocoPhillips, 4.60%, 1/15/15		810		884,884
Consol Energy, Inc. (b):
8.00%, 4/01/17		289		298,392
8.25%, 4/01/20		186		193,905
Enterprise Products Operating LLC, 6.13%, 10/15/39		275		274,411
Kinder Morgan Energy Partners LP, 5.30%, 9/15/20		290		299,928
MidAmerican Energy Holdings Co., 5.95%, 5/15/37		550		588,996
Nexen, Inc., 6.40%, 5/15/37		450		469,267
Petrobras International Finance Co.:
5.88%, 3/01/18		45		46,313
5.75%, 1/20/20		1,055		1,062,436
Rockies Express Pipeline LLC, 3.90%, 4/15/15 (b)		390		376,921
Shell International Finance BV, 4.00%, 3/21/14		470		497,116
Tennessee Gas Pipeline Co., 7.00%, 10/15/28		135		142,676
Valero Energy Corp., 6.63%, 6/15/37		450		438,140
				7,206,094
Paper & Forest Products — 0.3%
Georgia-Pacific LLC, 8.25%, 5/01/16 (b)		364		388,115
International Paper Co., 7.30%, 11/15/39		205		226,060
				614,175
Pharmaceuticals — 0.4%
Eli Lilly & Co., 3.55%, 3/06/12		435		453,616
Teva Pharmaceutical Finance LLC, 3.00%, 6/15/15	USD	270		275,290
				728,906
Road & Rail — 0.3%
Burlington Northern Santa Fe LLC, 5.75%, 5/01/40		530		560,575
Thrifts & Mortgage Finance — 0.4%
Achmea Hypotheekbank NV, 3.20%, 11/03/14 (b)		790		816,194
Tobacco — 0.3%
Philip Morris International, Inc., 4.50%, 3/26/20		630		639,889
Wireless Telecommunication Services — 2.6%
CellCo.Partnership:
3.75%, 5/20/11		2,030		2,079,185
8.50%, 11/15/18		400		520,056
Cricket Communications, Inc., 7.75%, 5/15/16		408		416,160
Crown Castle Towers LLC, 6.11%, 1/15/40 (b)		845		927,433
Vodafone Group Plc, 4.15%, 6/10/14		1,200		1,259,155
				5,201,989
Total Corporate Bonds — 31.1%				62,349,861
Foreign Agency Obligations
Hellenic Republic Government Bond, 4.60%, 9/20/40	EUR	90		55,212
Inter-American Development Bank, 2.25%, 7/15/15	USD	1,710		1,719,579
Japan Finance Corp., 2.00%, 6/24/11		585		590,073
Landwirtschaftliche Rentenbank:
4.13%, 7/15/13		75		80,598
Series E, 5.25%, 7/02/12		260		280,682
Series E, 4.38%, 1/15/13		170		182,791
Series E, 4.00%, 2/02/15		150		161,387
Mexico Government International Bond, 6.38%, 1/16/13		596		653,514
Province of Ontario Canada:
4.10%, 6/16/14		785		844,188
Series 1, 1.88%, 11/19/12		705		713,234
Russian Foreign Bond Eurobond, 7.50%, 3/31/30		773		871,177
United Mexican States, Series A, 5.13%, 1/15/20		150		156,000
Total Foreign Agency Obligations — 3.2%				6,308,435
Non-Agency Mortgage Backed Securities
Collateralized Mortgage Obligations — 7.6%
Arkle Master Issuer PLC, Series 2010-1A, Class 2A, 1.53%, 5/17/60 (a)(b)		810		799,875
Countrywide Alternative Loan Trust, Series 2006-OC10, Class 2A1, 0.44%, 11/25/36 (a)		130		127,659
Countrywide Home Loan Mortgage Pass-Through Trust:
Series 2006-0A5, Class 2A1, 0.55%, 4/25/46 (a)		356		190,280

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Non-Agency Mortgage Backed Securities	(000)		Value
Collateralized Mortgage Obligations (concluded)
Series 2006-0A5, Class 3A1, 0.55%, 4/25/46 (a)	USD	629	$	358,637
Series 2007-J3, Class A10, 6.00%, 7/25/37		1,555		1,211,546
Credit Suisse Mortgage Capital Certificates, Series 2006-8, Class 3A1, 6.00%, 10/25/21		344		267,535
First Horizon Asset Securities, Inc., Series 2005-AR3, Class 3A1, 5.50%, 8/25/35 (a)		364		343,960
Impac Secured Assets CMN Owner Trust, Series 2004-3 (a):
Class 1A4, 0.75%, 11/25/34		286		250,609
Class M1, 0.95%, 11/25/34		2,200		632,111
JPMorgan Mortgage Trust:
Series 2006-S2, Class 2A2, 5.88%, 7/25/36		150		136,248
Series 2007-S1, Class 1A2, 5.50%, 3/25/22		151		142,464
Residential Accredit Loans, Inc., Series 2006-Q02, Class A1, 0.57%, 2/25/46 (a)		481		187,324
Station Place Securitization Trust, Series 2009-1, Class A, 1.85%, 1/25/40 (a)(b)		945		945,000
Structured Adjustable Rate Mortgage Loan Trust, Series 2007-3, Class 2A1, 5.61%, 4/25/37 (a)		2,353		1,747,476
Structured Asset Securities Corp., Series 2005-GEL2, Class A, 0.63%, 4/25/35 (a)		184		163,160
Thornburg Mortgage Securities Trust, Series 2006-5, Class A1, 0.47%, 10/25/46 (a)		1,067		1,040,856
WaMu Mortgage Pass-Through Certificates, Series 2007-0A4, Class 1A, 1.21%, 5/25/47 (a)		402		234,610
Wells Fargo Mortgage-Backed Securities Trust (a):
Series 2005-AR15, Class 2A1, 5.08%, 9/25/35		26		24,216
Series 2006-AR2, Class 2A5, 4.90%, 3/25/36		1,825		1,533,691
Series 2006-AR3, Class A4, 5.60%, 3/25/36		2,283		1,969,272
Series 2006-AR4, Class 2A4, 5.71%, 4/25/36		400		337,724
Series 2006-AR12, Class 2A1, 6.00%, 9/25/36		518		473,750
Series 2006-AR15, Class A1, 5.49%, 10/25/36		2,531		2,153,133
				15,271,136
Commercial Mortgage-Backed Securities — 12.7%
Bank of America Commercial Mortgage, Inc., Series 2003-2, Class A3, 4.87%, 3/11/41 (a)		2,800		2,949,723
Bear Stearns Commercial Mortgage Securities:
Series 1998-C1, Class A2, 6.44%, 6/16/30		13		12,886
Series 2007-PW18, Class A4, 5.70%, 6/11/50		450		455,120
CS First Boston Mortgage Securities Corp., Series 2002-CP5, Class A1, 4.11%, 12/15/35		702		717,586
Citigroup Commercial Mortgage Trust, Series 2006-C5, Class A4, 5.43%, 10/15/49		230		234,410
Commercial Mortgage Pass-Through Certificates, Series 2004-LB3A, Class A3, 5.09%, 7/10/37 (a)	USD	815		834,431
First Union National Bank Commercial Mortgage:
Series 1999-C4, Class E, 8.01%, 12/15/31 (a)(b)		1,854		1,853,469
Series 2001-C2, Class B, 6.82%, 1/12/43		3,275		3,340,296
Greenwich Capital Commercial Funding Corp., Series 2004-GG1:
Class A4, 4.76%, 6/10/36		3,058		3,086,971
Class A5, 4.88%, 6/10/36		2,720		2,778,747
JPMorgan Chase Commercial Mortgage Securities Corp., Series 2001-CIB2, Class A3, 6.43%, 4/15/35		2,691		2,774,848
RBSCF Trust, Series 2010-RR3, Class WBTA, 6.10%, 4/16/17 (a)(b)		860		901,522
Wachovia Bank Commercial Mortgage Trust (a):
Series 2005-C20, Class A6A, 5.11%, 7/15/42		2,480		2,575,636
Series 2005-C21, Class A3, 5.38%, 10/15/44		775		778,980
Series 2006-C26, Class A3, 6.01%, 6/15/45		1,970		2,096,299
				25,390,924
Total Non-Agency Mortgage-Backed Securities — 20.3%				40,662,060
Preferred Securities
Capital Trusts
Capital Markets — 0.1%
Goldman Sachs Capital II, 5.79% (a)(h)		115		86,825
Lehman Brothers Holdings Capital Trust VII, 5.86% (a)(d)(e)(h)		185		19
				86,844
Diversified Financial Services — 0.4%
JPMorgan Chase & Co., 7.90% (a)(h)		855		881,274
Insurance — 1.4%
Chubb Corp., 6.38%, 3/29/67 (a)		675		648,000
Lincoln National Corp., 7.00%, 5/17/66 (a)		470		391,275
MetLife, Inc., 6.40%, 12/15/66		495		435,600
Progressive Corp., 6.70%, 6/15/67 (a)		650		607,750
Reinsurance Group of America, 6.75%, 12/15/65 (a)		345		285,795
The Travelers Cos., Inc., 6.25%, 3/15/67 (a)		430		403,499
ZFS Finance (USA) Trust V, 6.50%, 5/09/67 (a)(b)		133		119,035
				2,890,954
Total Preferred Securities — 1.9%				3,859,072
Taxable Municipal Bonds
The Board of Trustees of The Leland Stanford Junior University, 4.25%, 5/01/16		300		326,067

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

	Par
Taxable Municipal Bonds	(000)		Value
Chicago Metropolitan Water Reclamation District-Greater Chicago Illinois, GO, Build America Bonds, 5.72%, 12/01/38	USD	315	$	343,123
City of Chicago Illinois, RB, Build America Bonds, 6.40%, 1/01/40		150		162,539
Dallas Area Rapid Transit, RB, Build America Bonds, 6.00%, 12/01/44		170		191,947
Metropolitan Transportation Authority, RB, Build America Bonds, 7.34%, 11/15/39		430		531,871
New York State Dormitory Authority, RB, Build America Bonds, 5.63%, 3/15/39		350		360,626
Port Authority of New York & New Jersey, RB, Consolidated, 159th Series, 6.04%, 12/01/29		255		280,979
State of California, GO:
Build America Bonds, 7.30%, 10/01/39		640		673,357
Build America Bonds, 7.35%, 11/01/39		300		315,675
Build America Bonds, Various Purpose, 7.50%, 4/01/34		200		213,400
Various Purpose, Series 3, 5.45%, 4/01/15		1,575		1,667,957
Total Taxable Municipal Bonds — 2.5%				5,067,541
U.S. Government Sponsored Agency Securities
Agency Obligations — 5.7%
Fannie Mae, 2.63%, 11/20/14 (i)		1,245		1,286,724
Federal Home Loan Bank of Chicago, 5.63%, 6/13/16 (i)		1,285		1,380,009
Federal Home Loan Banks, 5.38%, 5/15/19 (i)		2,940		3,389,676
Freddie Mac:
1.13%, 12/15/11 (i)		3,340		3,366,373
1.75%, 6/15/12		800		815,700
Tennessee Valley Authority, 5.25%, 9/15/39		1,060		1,171,820
				11,410,302
Collateralized Mortgage Obligations — 1.8%
Fannie Mae Mortgage-Backed Securities, 4.83%, 8/01/38 (a)		1,286		1,364,910
Freddie Mac Mortgage-Backed Securities:
5.02%, 4/01/38 (a)		1,051		1,121,175
Series 3068, Class VA, 5.50%, 10/15/16		983		1,029,654
				3,515,739
Federal Deposit Insurance Corporation Guaranteed — 2.2%
Citigroup Funding, Inc. (i):
2.13%, 7/12/12		940		964,368
1.88%, 10/22/12		1,800		1,837,838
General Electric Capital Corp.:
2.00%, 9/28/12 (i)		1,100		1,126,263
2.13%, 12/21/12		445		457,499
				4,385,968
Interest Only Collateralized Mortgage Obligations — 1.3%
Ginnie Mae Mortgage-Backed Securities (a):
Series 2006-69, Class SA, 6.46%, 12/20/36		593		68,869
Series 2007-9, Class BI, 6.35%, 3/20/37	USD	1,486		170,992
Series 2007-27, Class S, 6.16%, 5/20/37		1,085		108,422
Series 2007-36, Class SA, 6.13%, 6/20/37		756		85,501
Series 2009-16, Class SL, 7.10%, 1/20/37		1,773		239,084
Series 2009-33, Class SK, 6.14%, 5/20/39		3,172		316,710
Series 2009-47, Class KS, 5.82%, 6/16/39		4,122		411,893
Series 2009-61, Class ES, 6.51%, 3/20/39		3,632		362,672
Series 2009-106, Class CM, 6.26%, 1/16/34		3,667		439,544
Series 2009-106, Class SL, 5.76%, 4/20/36		2,329		255,979
Series 2009-110, Class CS, 6.04%, 11/16/39		1,553		170,139
				2,629,805
Mortgage-Backed Securities — 85.4%
Fannie Mae Mortgage-Backed Securities (j):
4.00%, 4/01/25-8/15/40		8,163		8,361,356
4.50%, 5/15/40-7/15/40		30,600		31,727,440
5.00%, 8/15/25-8/15/40 (k)		30,182		31,980,840
5.50%, 7/15/25-7/15/40		32,485		34,920,798
6.00%, 2/01/17-7/15/40		33,941		36,880,218
6.50%, 8/15/40		2,800		3,058,563
Freddie Mac Mortgage-Backed Securities:
4.00%, 5/01/25-6/01/25		9,440		9,816,653
4.50%, 4/01/40-7/15/40 (j)		6,680		6,926,051
5.50%, 10/01/34-7/15/40 (j)		3,628		3,894,915
Ginnie Mae Mortgage-Backed Securities (j):
5.00%, 8/15/40		2,100		2,225,333
6.50%, 7/15/40		1,100		1,206,734
				170,998,901
Total U.S. Government Sponsored Agency Securities — 96.4%				192,940,715
U.S. Treasury Obligations
U.S. Treasury Bonds:
8.75%, 8/15/20		750		1,124,414
8.13%, 8/15/21		630		921,572
8.00%, 11/15/21 (i)		850		1,236,219
U.S. Treasury Notes:
0.88%, 2/29/12 (i)		15,090		15,170,731
1.00%, 4/30/12 (i)		875		881,562
1.88%, 6/30/15 (i)		2,420		2,429,264
3.50%, 5/15/20 (i)		1,490		1,559,374
8.75%, 5/15/20 (i)		1,280		1,913,000
8.13%, 5/15/21 (i)(l)		2,035		2,967,284
4.25%, 5/15/39		990		1,046,771
4.25%, 5/15/40 (i)		2,300		2,486,875
Total U.S. Treasury Obligations — 15.8%				31,737,066
Total Long-Term Investments (Cost — $363,246,311) — 180.9%				362,362,843

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Options Purchased	Contracts			Value
Exchange-Traded Put Options — 0.0%
Eurodollar 1-Year Mid-Curve Options, Strike Price USD 97.25, expires 9/01/10		78		$	487
Over-the-Counter Call Swaptions — 1.7%
Receive a fixed rate of 1.15% and pay a floating rate based on 3-month LIBOR, expiring 9/03/10, Broker Deutsche Bank AG		17(m	)		60,524
Receive a fixed rate of 3.65% and pay a floating rate based on 3-month LIBOR, expiring 5/01/11, Broker Credit Suisse International, expiring May 2011 at USD 3.65		5(m	)		254,987
Receive a fixed rate of 3.86% and pay a floating rate based on 3-month LIBOR, expiring 5/19/11, Broker JPMorgan Chase Bank NA		6(m	)		364,836
Receive a fixed rate of 4.21% and pay a floating rate based on 3-month LIBOR, expiring 4/22/13, Broker JPMorgan Chase Bank NA		3(m	)		87,442
Receive a fixed rate of 4.22% and pay a floating rate based on 3-month LIBOR, expiring 4/29/11, Broker Credit Suisse International		8(m	)		713,924
Receive a fixed rate of 4.39% and pay a floating rate based on 3-month LIBOR, expiring 5/08/12, Broker Citibank NA		1(m	)		109,208
Receive a fixed rate of 5.71% and pay a floating rate based on 3-month LIBOR, expiring 5/19/12, Broker Deutsche Bank AG		10(m	)		1,725,340
					3,316,261
Over-the-Counter Put Swaptions — 0.2%
Pay a fixed rate of 1.92% and receive a floating rate based on 3-month LIBOR, expiring 9/02/10, Broker Morgan Stanley Capital Services, Inc.		17(m	)		216
Pay a fixed rate of 1.95% and receive a floating rate based on 3-month LIBOR, expiring 9/18/10, Broker Citibank NA		17(m	)		21,248
Pay a fixed rate of 4.22% and receive a floating rate based on 3-month LIBOR, expiring 4/29/11, Broker Credit Suisse International		8(m	)		84,933
Pay a fixed rate of 4.02% and receive a floating rate based on 3-month LIBOR, expiring 5/05/11, Broker Credit Suisse International		5(m	)		72,316
Pay a fixed rate of 3.86% and receive a floating rate based on 3-month LIBOR, expiring 5/19/11, Broker JPMorgan Chase Bank NA		6(m	)		112,014
Pay a fixed rate of 4.39% and receive a floating rate based on 3-month LIBOR, expiring 5/08/12, Broker Citibank NA		1(m	)		36,392
Pay a fixed rate of 5.71% and receive a floating rate based on 3-month LIBOR, expiring 5/19/12, Broker Deutsche Bank AG		10(m	)		92,870
Pay a fixed rate of 4.21% and receive a floating rate based on 3-month LIBOR, expiring 4/22/13, Broker JPMorgan Chase Bank NA		3			22,565
					442,554
Total Options Purchased (Cost — $2,706,921) — 1.9%					3,759,302
Total Investments Before TBA Sale Commitments and Outstanding Options Written (Cost — $365,953,232*) — 182.8%					366,122,145
	Par
TBA Sale Commitments (j)	(000)
Fannie Mae Mortgage-Backed Securities:
4.00%, 4/01/25-8/15/40	USD	700			(716,686	)
4.50%, 5/15/40-7/15/40		35,300			(36,583,351	)
5.00%, 8/15/25-8/15/40		18,700			(19,784,021	)
5.50%, 7/15/25-7/15/40		16,700			(17,926,415	)
6.00%, 2/01/17-7/15/40		25,710			(27,883,292	)
Freddie Mac Mortgage-Backed Securities
4.00%, 5/01/25-6/01/25		9,400			(9,756,908	)
4.50%, 4/01/40-7/15/40		6,600			(6,835,125	)
5.50%, 10/01/34-7/15/40		3,500			(3,755,391	)
Total TBA Sale Commitments (Proceeds — $122,144,530) — (61.5)%					(123,241,189	)
Options Written	Contracts
Exchange-Traded Call Options — (0.0)%
10-Year US Treasury Bond Future,
Strike Price USD 122.50, expires 8/01/10		33			(45,891	)
Over-the-Counter Call Options — (0.0)%
Euro-Schatz, Strike Price USD 109.50, expires 8/01/10, Broker Citibank NA		71			(19,568	)
Over-the-Counter Call Swaptions — (4.3)%
Pay a fixed rate of 4.12% and receive a floating rate based on 3-month LIBOR, expiring 8/21/10, Broker Goldman Sachs Bank USA		2(m	)		(193,141	)
Pay a fixed rate of 5.56% and receive a floating rate based on 3-month LIBOR, expiring 10/16/10, Broker UBS AG		22(m	)		(4,872,296	)
Pay a fixed rate of 5.40% and receive a floating rate based on 3-month LIBOR, expiring 12/18/10, Broker UBS AG		4(m	)		(921,283	)
Pay a fixed rate of 4.06% and receive a floating rate based on 3-month LIBOR, expiring 5/12/11, Broker Royal Bank of Scotland Plc		4(m	)		(281,854	)
Pay a fixed rate of 4.06% and receive a floating rate based on 3-month LIBOR, expiring 5/13/11, Broker BNP Paribas SA		2(m	)		(147,958	)
Pay a fixed rate of 4.49% and receive a floating rate based on 3-month LIBOR, expiring 12/05/11, Broker Deutsche Bank AG		2(m	)		(219,241	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Options Written	Contracts			Value
Over-the-Counter Call Swaptions (concluded)
Pay a fixed rate of 4.05% and receive a floating rate based on 3-month LIBOR, expiring 6/18/12, Broker Deutsche Bank AG		2(m	)	$	(122,987	)
Pay a fixed rate of 4.14% and receive a floating rate based on 3-month LIBOR, expiring 6/15/12, Broker Deutsche Bank AG,		2(m	)		(138,642	)
Pay a fixed rate of 4.90% and receive a floating rate based on 3-month LIBOR, expiring 3/04/13, Broker Deutsche Bank AG		3(m	)		(294,823	)
Pay a fixed rate of 4.92% and receive a floating rate based on 3-month LIBOR, expiring 3/05/13, Broker Deutsche Bank AG		5(m	)		(491,041	)
Pay a fixed rate of 5.00% and receive a floating rate based on 3-month LIBOR, expiring 4/22/13, Broker JPMorgan Chase Bank NA		3(m	)		(385,297	)
Pay a fixed rate of 4.89% and receive a floating rate based on 3-month LIBOR, expiring 12/03/14, Broker Deutsche Bank AG		2(m	)		(158,828	)
Pay a fixed rate of 4.32% and receive a floating rate based on 3-month LIBOR, expiring 5/28/13, Broker Royal Bank of Scotland Plc		3(m	)		(224,483	)
Pay a fixed rate of 4.76% and receive a floating rate based on 3-month LIBOR, expiring 5/30/17, Broker JPMorgan Chase Bank NA		2(m	)		(146,245	)
					(8,598,119	)
Exchange-Traded Put Options — (0.0)%
10-Year US Treasury Bond Future,
Strike Price USD 119.50, expires 8/01/10		33			(12,890	)
Over-the-Counter Put Swaptions — (0.5)%
Receive a fixed rate of 4.12% and pay a floating rate based on 3-month LIBOR, expiring 8/21/10, Broker Goldman Sachs Bank USA		2(m	)		(323	)
Receive a fixed rate of 2.10% and pay a floating rate based on 3-month LIBOR, expiring 12/02/10 Broker Citibank NA		8(m	)		(5,090	)
Receive a fixed rate of 5.56% and pay a floating rate based on 3-month LIBOR, expiring 10/16/10, Broker UBS AG		23(m	)		(229	)
Receive a fixed rate of 5.40% and pay a floating rate based on 3-month LIBOR, expiring 12/18/10, Broker UBS AG		5(m	)		(682	)
Receive a fixed rate of 4.06% and pay a floating rate based on 3-month LIBOR, expiring 5/12/11, Broker Royal Bank of Scotland Plc		4			(51,520	)
Receive a fixed rate of 4.06% and pay a floating rate based on 3-month LIBOR, expiring 5/13/11, Broker BNP Paribas SA		2			(27,336	)
Receive a fixed rate of 4.49% and pay a floating rate based on 3-month LIBOR, expiring 12/05/11, Broker Deutsche Bank AG		2			(40,432	)
Receive a fixed rate of 4.14% and pay a floating rate based on 3-month LIBOR, expiring 6/15/12, Broker Deutsche Bank AG		2			(73,906	)
Receive a fixed rate of 4.05% and pay a floating rate based on 3-month LIBOR, expiring 6/18/12, Broker Deutsche Bank AG		2			(75,732	)
Receive a fixed rate of 4.90% and pay a floating rate based on 3-month LIBOR, expiring 3/04/13, Broker Deutsche Bank AG		3			(82,804	)
Receive a fixed rate of 4.92% and pay a floating rate based on 3-month LIBOR, expiring 3/05/13, Broker Deutsche Bank AG		5			(133,782	)
Receive a fixed rate of 5.00% and pay a floating rate based on 3-month LIBOR, expiring 4/22/13, Broker JPMorgan Chase Bank NA		4			(101,553	)
Receive a fixed rate of 4.32% and pay a floating rate based on 3-month LIBOR, expiring 5/28/13, Broker Royal Bank of Scotland Plc		3			(148,924	)
Receive a fixed rate of 4.89% and pay a floating rate based on 3-month LIBOR, expiring 12/03/14, Broker Deutsche Bank AG		2			(79,713	)
Receive a fixed rate of 4.76% and pay a floating rate based on 3-month LIBOR, expiring 5/30/17, Broker JPMorgan Chase Bank NA		2			(106,922	)
					(928,948	)
Total Options Written (Premiums Received — $5,810,813) — (4.8)%					(9,605,416	)
Total Investments, Net of TBA Sale Commitments and Option Written — 116.5%					233,275,540
Liabilities in Excess of Other Assets — (16.5)%					(32,997,500	)
Net Assets — 100.0%				$	200,278,040

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	366,015,174
Gross unrealized appreciation	$	11,462,456
Gross unrealized depreciation		(11,355,485	)
Net unrealized appreciation	$	106,971

(a)	Variable rate security. Rate shown is as of report date.
(b)	Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional investors.
(c)	When-issued security. Unsettled when-issued transactions were as follows:

			Unrealized
			Appreciation
Counterparty	Value		(Depreciation)
Credit Suisse International	$	580,000		—

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued)

(d) Issuer filed for bankruptcy and/or is in default of interest payments.

(e)	Non-income producing security.
(f)	Convertible security.
(g)	Represents a payment-in-kind security which may pay interest/dividends in additional face/shares.
(h)	Security is perpetual in nature and has no stated maturity date.
(i)	All or a portion of security has been pledged as collateral in connection with open reverse repurchase agreements.
(j)	Represents or includes a to-be-announced (“TBA”) transaction. Net unsettled TBA transactions as of report date were as follows:

			Unrealized
			Appreciation
Counterparty	Value		(Depreciation)
BNP Paribas	$	3,877,966	$	28,435
Bank of America NA	$	1,661,862	$	68,739
CitiGroup Global Markets	$	684,690	$	8,945
Credit Suisse International	$	(1,063,557)	$	5,513
Deutsche Bank AG	$	(2,681,967)	$	31,515
Goldman Sachs Bank USA	$	7,443,775	$	(46,965	)
Greenwich Capital Markets	$	(4,871,108)	$	(46,741	)
Greenwich Financial Services	$	(5,492,952)	$	(28,631	)
JPMorgan Chase Bank NA	$	3,880	$	3,995
Morgan Stanley Capital Services, Inc	$	(1,712,281)	$	(43,760	)
Nomura Securities International, Inc	$	1,128,737	$	32,234
UBS Securities	$	184,143	$	(101,614	)
Wells Fargo Bank	$	1,064,375	$	(1,875	)

(k)	All or a portion of security has been pledged as collateral in connection with swaps.
(l)	All or a portion of security has been pledged as collateral in connection with open financial futures contracts.
(m)	One contract represents a notional amount of $1 million.

  •  Financial futures contracts purchased as of June 30, 2010 were as follows:

			Expiration	Notional		Unrealized
Contracts		Issue	Date	Amount		Appreciation
	4	10-Year U.S. Treasury Bond	September 2010	$	489,383	$	805
	83	30-Year U.S. Treasury Bond	September 2010	$	10,405,824		176,676
Total						$	177,481

  •  Financial futures contracts sold as of June 30, 2010 were as follows:

			Expiration	Notional		Unrealized
Contracts		Issue	Date	Amount		Depreciation
	96	2-Year U.S. Treasury Bond	September 2010	$	20,939,037	$	(68,463	)
	87	5-Year U.S. Treasury Bond	September 2010	$	10,179,541		(117,045	)
	29	30-Year U.S. Treasury Bond	September 2010	$	3,752,264		(186,298	)
	3	Euro Dollar Future	September 2010	$	744,416		(672	)
	1	Euro Dollar Future	December 2010	$	248,059		(16	)
	17	Euro Dollar Future	March 2011	$	4,204,698		(9,602	)
	14	Euro Dollar Future	June 2011	$	3,452,210		(14,890	)
	17	Euro Dollar Future	September 2011	$	4,182,239		(21,649	)
	33	Euro Dollar Future	December 2011	$	8,137,242		(6,333	)
	13	Euro Dollar Future	March 2012	$	3,177,113		(24,462	)
	5	Euro Dollar Future	June 2012	$	1,222,164		(6,336	)
	5	Euro Dollar Future	September 2012	$	1,219,005		(6,620	)
	5	Euro Dollar Future	December 2012	$	1,215,814		(6,811	)
	5	Euro Dollar Future	March 2013	$	1,213,127		(6,936	)
	1	Euro Dollar Future	June 2013	$	243,459		(16	)
Total						$	(476,149	)

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

Currency	Currency		Settlement	Unrealized
Purchased	Sold	Counterparty	Date	Appreciation
USD 207,076	EUR 165,000	BNP Paribas	7/14/10	$	5,293
USD 451,786	GBP 292,000	Royal Bank of Scotland	7/28/10		15,516
Total				$	20,809

  •  Reverse repurchase agreements outstanding as of June 30, 2010 were as follows:

	Interest			Trade	Maturity	Net Closing		Face
Counterparty	Rate			Date	Date	Amount		Amount
Bank of America NA		0.17	%	6/24/10	Open	$	12,090,114	$	12,090,000
Barclays Capital, Inc.		0.18	%	3/04/10	Open		3,199,484		3,197,581
Barclays Capital, Inc.		0.18	%	3/04/10	Open		3,274,145		3,272,198
Barclays Capital, Inc.		0.26	%	5/14/10	Open		1,086,603		1,086,250
Credit Suisse International		0.20	%	3/05/10	Open		932,926		932,315
Credit Suisse International		0.20	%	3/05/10	Open		1,779,874		1,778,738
Credit Suisse International		0.19	%	3/11/10	Open		2,368,599		2,367,199
JPMorgan Chase Bank NA		0.24	%	5/25/10	Open		3,110,080		3,109,313
Barclays Capital, Inc.		0.05	%	6/29/10	7/01/10		3,607,336		3,607,331
Barclays Capital, Inc.		0.05	%	6/30/10	7/01/10		3,366,660		3,366,656
Barclays Capital, Inc.		(0.04	)	6/30/10	7/01/10		3,775,483		3,775,487
Barclays Capital, Inc.		(0.10	)%	6/30/10	7/01/10		1,562,634		1,562,638
Barclays Capital, Inc.		0.07	%	6/30/10	7/01/10		2,420,005		2,420,000
Barclays Capital, Inc.		(0.02	)%	6/30/10	7/01/10		4,853,128		4,853,131
Total						$	47,427,071	$	47,418,837

  •  Credit default swaps on single-name issues—buy protection outstanding as of June 30, 2010 were as follows:

					Notional		Unrealized
	Pay				Amount		Appreciation
Issuer	Rate		Counterparty	Expiration	(000)		(Depreciation)
Radio Shack Corp.		1.16%	UBS AG	December 2010	$	1,355		1,627

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued)

					Notional		Unrealized
	Pay				Amount		Appreciation
Issuer	Rate		Counterparty	Expiration	(000)		(Depreciation)
Computer Sciences Corp.		0.88%	Morgan Stanley Capital Services, Inc.	June 2011	$	1,185	$	(7,061	)
Wendy’s International, Inc.		2.90%	JPMorgan Chase Bank NA	December 2011	$	435		(8,725	)
NOVA Chemicals Corp.		5.00%	Citibank NA	March 2012	$	35		(319	)
Macy’s, Inc.		7.50%	Morgan Stanley Capital Services, Inc.	June 2012	$	290		(34,027	)
Macy’s, Inc.		8.00%	Morgan Stanley Capital Services, Inc.	June 2012	$	100		(12,704	)
NOVA Chemicals Corp.		5.00%	JPMorgan Chase Bank NA	June 2012	$	45		(66	)
Eastman Chemical Co.		0.68%	Morgan Stanley Capital Services, Inc.	September 2013	$	1,170		(4,173	)
Centex Corp.		4.37%	Deutsche Bank AG	December 2013	$	660		(66,797	)
Centex Corp.		4.40%	JPMorgan Chase Bank NA	December 2013	$	385		(39,351	)
NOVA Chemicals Corp.		5.00%	Goldman Sachs Bank USA	December 2013	$	175		(2,134	)
Seagate Technology Holdings		1.00%	Credit Suisse International	June 2014	$	90		1,199
Seagate Technology Holdings		5.00%	Morgan Stanley Capital Services, Inc.	June 2014	$	215		1,959
Macy’s, Inc.		1.00%	Morgan Stanley International	September 2014	$	100		(769	)
Pulte Homes, Inc.		3.00%	JPMorgan Chase Bank NA	March 2015	$	215		(1,380	)
Sabre Holdings Corp.		5.00%	JPMorgan Chase Bank NA	March 2016	$	405		(174,237	)
Sabre Holdings Corp.		5.00%	JPMorgan Chase Bank NA	March 2016	$	405		(175,956	)
Total							$	(522,914	)

  •  Credit default swaps on traded indexes—sold protection outstanding as of June 30, 2010 were as follows:

Average

Notional

Received

Credit

Amount

Unrealized

Issuer

Rate

Counterparty

Expiration

Rating1

(000)2

Depreciation

Dow Jones CDX North America High Yield

5.00%

Credit Suisse International

June 2015

B

$

3,400

$

(11,833

)

1	Using Standard and Poor’s rating.
2	The maximum potential amount the Fund may pay should a negative event take place as defined under the terms of agreement.

  •  Interest rate swaps outstanding as of June 30, 2010 were as follows:

				Notional		Unrealized
Fixed	Floating			Amount		Appreciation
Rate	Rate	Counterparty	Expiration	(000)		(Depreciation)
1.31%(a)	3-month LIBOR	Deutsche Bank AG	October 2011	$	11,000	$	76,198
1.12%(b)	3-month LIBOR	BNP Paribas SA	January 2012	$	15,100		(66,093	)
1.14%(a)	3-month LIBOR	BNP Paribas SA	February 2012	$	7,800		35,340
1.10%(a)	3-month LIBOR	Goldman Sachs International	March 2012	$	10,000		34,127
1.14%(b)	3-month LIBOR	Deutsche Bank AG	March 2012	$	12,000		(50,359	)
1.24%(b)	3-month LIBOR	JPMorgan Chase Bank NA	April 2012	$	14,400		(83,577	)
1.21%(a)	3-month LIBOR	Citibank NA	May 2012	$	16,700		86,981
1.21%(b)	3-month LIBOR	Goldman Sachs Bank USA	May 2012	$	3,300		(17,484	)
1.29%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2012	$	3,900		(25,056	)
4.88%(a)	3-month LIBOR	Deutsche Bank AG	October 2012	$	17,000		1,440,298
5.02%(a)	3-month LIBOR	Deutsche Bank AG	October 2012	$	12,400		1,106,003
4.67%(a)	3-month LIBOR	Deutsche Bank AG	October 2012	$	3,000		245,833
1.67%(a)	3-month LIBOR	JPMorgan Chase Bank NA	May 2013	$	1,900		20,354
1.72%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2013	$	5,200		59,895
3.05%(b)	3-month LIBOR	Credit Suisse International	August 2014	$	10,800		(555,165	)
2.79%(b)	3-month LIBOR	JPMorgan Chase Bank NA	November 2014	$	1,265		(49,256	)
2.69%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2015	$	4,900		162,504
2.75%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2015	$	4,000		(141,032	)
2.73%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2015	$	3,700		(126,552	)
2.72%(b)	3-month LIBOR	JPMorgan Chase Bank NA	April 2015	$	3,800		(127,670	)
2.76%(a)	3-month LIBOR	JPMorgan Chase Bank NA	April 2015	$	3,800		135,194
2.68%(a)	3-month LIBOR	BNP Paribas SA	April 2015	$	4,900		154,193
2.66%(b)	3-month LIBOR	Royal Bank of Scotland Plc	May 2015	$	4,600		(139,104	)
2.62%(b)	3-month LIBOR	Credit Suisse International	May 2015	$	3,800		(108,574	)
2.49%(b)	3-month LIBOR	Credit Suisse International	May 2015	$	3,300		(74,212	)
2.46%(a)	3-month LIBOR	Deutsche Bank AG	May 2015	$	1,300		26,823
2.23%(a)	3-month LIBOR	Deutsche Bank AG	May 2015	$	12,500		116,581
2.36%(b)	3-month LIBOR	Citibank NA	June 2015	$	2,900		(44,505	)
2.37%(a)	3-month LIBOR	JPMorgan Chase Bank NA	June 2015	$	5,100		78,678
2.34%(a)	3-month LIBOR	Deutsche Bank AG	June 2015	$	13,600		188,738
2.38%(a)	3-month LIBOR	BNP Paribas SA	June 2015	$	6,600		104,956
2.39%(a)	3-month LIBOR	Deutsche Bank AG	June 2015	$	2,100		34,214

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued)

				Notional		Unrealized
Fixed	Floating			Amount		Appreciation
Rate	Rate	Counterparty	Expiration	(000)		(Depreciation)
2.22%(b)	3-month LIBOR	Goldman Sachs International	June 2015	$	4,000	$	(32,242	)
2.23%(b)	3-month LIBOR	Deutsche Bank AG	June 2015	$	9,500		(78,580	)
2.09%(a)	3-month LIBOR	Credit Suisse International	June 2015	$	2,600		4,440
4.31%(a)	3-month LIBOR	Deutsche Bank AG	June 2019	$	2,800		299,564
3.80%(a)	3-month LIBOR	Deutsche Bank AG	June 2019	$	3,300		243,623
3.68%(a)	3-month LIBOR	Deutsche Bank AG	August 2019	$	5,200		329,458
3.50%(a)	3-month LIBOR	Citibank NA	September 2019	$	2,400		114,347
3.47%(a)	3-month LIBOR	Royal Bank of Scotland Plc	September 2019	$	4,800		215,674
3.36%(a)	3-month LIBOR	Goldman Sachs International	October 2019	$	1,600		57,447
3.50%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	November 2019	$	700		(32,763	)
3.62%(a)	3-month LIBOR	Deutsche Bank AG	December 2019	$	1,800		101,912
3.50%(a)	3-month LIBOR	Deutsche Bank AG	December 2019	$	800		36,994
3.89%(a)	3-month LIBOR	Credit Suisse International	January 2020	$	2,800		220,243
3.93%(a)	3-month LIBOR	BNP Paribas SA	January 2020	$	2,400		197,540
3.79%(a)	3-month LIBOR	BNP Paribas SA	February 2020	$	4,100		289,803
3.71%(b)	3-month LIBOR	Deutsche Bank AG	February 2020	$	3,400		(213,765	)
3.75%(a)	3-month LIBOR	Citibank NA	February 2020	$	2,500		165,666
3.78%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2020	$	1,900		(132,167	)
3.70%(a)	3-month LIBOR	Deutsche Bank AG	March 2020	$	8,000		494,208
3.68%(a)	3-month LIBOR	BNP Paribas SA	March 2020	$	3,000		181,681
3.70%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	March 2020	$	2,500		(153,927	)
3.64%(b)	3-month LIBOR	Royal Bank of Scotland Plc	March 2020	$	4,000		(226,411	)
3.77%(a)	3-month LIBOR	Citibank NA	March 2020	$	2,600		175,613
3.68%(b)	3-month LIBOR	Deutsche Bank AG	March 2020	$	1,100		(66,315	)
3.75%(b)	3-month LIBOR	Deutsche Bank AG	March 2020	$	2,500		(164,004	)
3.83%(b)	3-month LIBOR	JPMorgan Chase Bank NA	March 2020	$	1,100		(79,930	)
3.95%(b)	3-month LIBOR	Citibank NA	April 2020	$	500		(41,623	)
3.96%(b)	3-month LIBOR	BNP Paribas SA	April 2020	$	2,100		(176,562	)
4.00%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2020	$	2,000		(174,893	)
4.05%(b)	3-month LIBOR	Credit Suisse International	April 2020	$	1,900		(174,377	)
3.95%(b)	3-month LIBOR	JPMorgan Chase Bank NA	April 2020	$	2,000		(167,232	)
3.92%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	April 2020	$	1,000		80,642
3.80%(a)	3-month LIBOR	Deutsche Bank AG	April 2020	$	2,700		188,940
3.77%(a)	3-month LIBOR	Deutsche Bank AG	April 2020	$	1,600		107,748
3.74%(a)	3-month LIBOR	Royal Bank of Scotland Plc	April 2020	$	2,100		136,235
3.64%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	1,300		73,237
3.72%(a)	3-month LIBOR	JPMorgan Chase Bank NA	May 2020	$	1,500		93,986
3.73%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	2,600		165,176
4.88%(b)	3-month LIBOR	Deutsche Bank AG	May 2020	$	5,400		(646,842	)
3.57%(a)	3-month LIBOR	Goldman Sachs Bank USA	May 2020	$	2,300		115,716
3.45%(a)	3-month LIBOR	Deutsche Bank AG	May 2020	$	200		7,801
3.48%(a)	3-month LIBOR	Credit Suisse International	May 2020	$	1,600		66,944
3.39%(b)	3-month LIBOR	Deutsche Bank AG	May 2020	$	5,100		(174,804	)
3.48%(b)	3-month LIBOR	Deutsche Bank AG	May 2020	$	1,300		(54,602	)
3.60%(b)	3-month LIBOR	JPMorgan Chase Bank NA	May 2020	$	1,700		(75,141	)
3.46%(b)	3-month LIBOR	Royal Bank of Scotland Plc	May 2020	$	400		(15,853	)
2.52%(c)	3-month LIBOR	Deutsche Bank AG	May 2020	$	2,400		27,187
3.60%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	2,100		(84,608	)
3.60%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	May 2020	$	3,500		(142,052	)
3.39%(a)	3-month LIBOR	Goldman Sachs Bank USA	June 2020	$	400		13,449
3.80%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	12,000		(398,579	)
3.43%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	1,500		55,613
3.36%(b)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	700		(21,536	)
3.34%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	2,800		81,389
3.37%(b)	3-month LIBOR	Royal Bank of Scotland Plc	June 2020	$	1,500		(47,483	)
4.80%(b)	3-month LIBOR	Citibank NA	June 2020	$	3,600		(379,750	)
3.39%(b)	3-month LIBOR	Royal Bank of Scotland Plc	June 2020	$	600		73,118
3.39%(a)	3-month LIBOR	Credit Suisse International	June 2020	$	2,200		(19,725	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (continued)

				Notional		Unrealized
Fixed	Floating			Amount		Appreciation
Rate	Rate	Counterparty	Expiration	(000)		(Depreciation)
3.31%(a)	3-month LIBOR	Goldman Sachs International	June 2020	$	1,500	$	39,858
3.26%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	June 2020	$	400		8,531
3.01%(a)	3-month LIBOR	JPMorgan Chase Bank NA	July 2020	$	400		(198	)
3.02%(a)	3-month LIBOR	Royal Bank of Scotland Plc	July 2020	$	800		133
3.05%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2020	$	1,300		3,823
3.06%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	July 2020	$	600		2,088
3.46%(c)	3-month LIBOR	BNP Paribas SA	October 2020	$	2,000		(54,199	)
5.41%(a)	3-month LIBOR	JPMorgan Chase Bank NA	August 2022	$	4,530		1,017,870
4.44%(b)	3-month LIBOR	Royal Bank of Scotland Plc	January 2040	$	1,100		(146,854	)
4.52%(a)	3-month LIBOR	Morgan Stanley Capital Services, Inc.	February 2040	$	1,000		148,534
4.48%(a)	3-month LIBOR	Citibank NA	April 2040	$	300		42,659
Total						$	4,000,144

^(a) Pays floating interest rate and receives fixed rate.

^(b) Pays fixed interest rate and receives floating rate.

^(c) Pays fixed interest amount and receives floating amount at expiration.

  •  Total Return Interest rate swaps outstanding as of June 30, 2010 were as follows:

Interest				Notional
Receivable				Amount		Unrealized
Rate		Counterparty	Expiration	(000)		Appreciation
	2.62%	Morgan Stanley Capital Services, Inc.	May 2020		USD 4,000		81,696(d	)

^(d) Based on the change in the since inception return of the US City Average All Items Consumer Price Index for All Urban Consumers as of June 30, 2010.

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2			Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments:
Assets-Backed Securities		—	$	16,412,501		$	3,025,592	$	19,438,093
Corporate Bonds		—		62,349,861			—		62,349,861
Foreign Agency Obligations		—		6,308,435			—		6,308,435
Non-Agency Mortgage-Backed Securities		—		38,015,663			2,646,397		40,662,060
Preferred Securities..		—		3,859,072			—		3,859,072
Taxable Municipal Bonds		—		5,067,541			—		5,067,541
US Government Sponsored Agency Securities		—		192,940,715			—		192,940,715
US Treasury Obligations		—		31,737,066			—		31,737,066
Liabilities:
TBA Sale Commitments		—		(123,241,189	)		—		(123,241,189	)
Total		—	$	233,449,665		$	5,671,989	$	239,121,654

	Derivative Financial Instruments1
Valuation Inputs	Level 1			Level 2			Level 3		Total
Assets:
Credit contracts		—		$	4,785			—	$	4,785
Foreign currency exchange contracts		—			20,809			—		20,809
Interest rate contracts	$	177,968			13,544,615			—		13,722,583
Other contracts		—			81,696			—		81,696
Liabilities:
Credit contracts		—			(539,532	)		—		(539,532	)
Interest rate contracts		(534,930	)		(15,332,291	)			$	(15,867,221	)
Total	$	(356,962	)	$	(2,219,918	)			$	(2,576,880	)

¹ Derivative financial instruments are swaps, financial futures contracts, foreign currency exchange contracts and options. Financial futures contracts, foreign currency exchange contracts and swaps are shown at the unrealized appreciation/depreciation on the instrument and options are shown at value.

See Notes to Financial Statements.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Schedule of Investments (concluded)

The following table is a reconciliation of Level 3 investments for which significant unobservable inputs were used in determining fair value:

				Non-Agency
	Asset-			Mortgage-
	Backed			Backed
	Securities			Securities		Total
Assets:
Balance, as of December 31, 2009	$	1,420,587		$	940,275	$	2,360,862
Accrued discounts/premiums		—			—		—
Net realized gain (loss)		(105	)		—		(105	)
Net change in unrealized appreciation/depreciation2		50,575			4,725		55,300
Purchases		—			—		—
Sales		(206,507	)		—		(206,507	)
Transfers in3		1,761,042			1,701,397		3,462,439
Transfers out3		—			—		—
Balance, as of June 30, 2010	$	3,025,592		$	2,646,397	$	5,671,989

² Included in the related net change in unrealized appreciation/depreciation in the Statement of Operations. The change in unrealized appreciation/depreciation of securities still held at June 30, 2010 was $55,300.

The following table is a reconciliation of Level 3 derivative financial instruments for which significant unobservable inputs were used to determine fair value:

	Interest Rate
	Contracts
Liabilities:
Balance, as of December 31, 2009	$	(80,082	)
Accrued discounts/premiums		—
Realized gain (loss)		—
Change in unrealized appreciation/depreciation		80,082
Purchases		—
Sales		—
Transfers in3		—
Transfers out3		—
Balance, as of June 30, 2010		—

³ The Fund’s policy is to recognize transfers in and transfers out as of the event or the change in circumstances that caused the transfer.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$365,953,232)	$	366,122,145
Unrealized appreciation on swaps		9,872,281
Unrealized appreciation on foreign currency exchange contracts		20,809
Cash		623,749
Foreign currency at value (cost—$1,880)		1,904
Investments sold receivable		137,504,363
TBA sale commitments receivable		122,144,530
Interest receivable		1,871,374
Swaps receivable		1,506,828
Swap premiums paid		379,152
Capital shares sold receivable		95,775
Principal paydowns receivable		35,251
Margin variation payable		29,615
Options written receivable		26,141
Prepaid expenses		35,290
Other assets		268,474
Total assets		640,537,681
Liabilities:
TBA sale commitments at value (proceeds—$122,144,530)		123,241,189
Reverse repurchase agreements		47,418,837
Options written at value (premiums received—$5,810,813)		9,605,416
Unrealized depreciation on swaps		6,325,188
Cash collateral on swaps		470,000
Investments purchased payable		249,945,331
Swaps payable		990,075
Income dividends payable		838,071
Swap premiums received		1,138,999
Investment advisory fees payable		80,307
Capital shares redeemed payable		29,931
Interest expense payable		8,240
Other affiliates payable		2,073
Officer’s and Directors’ fees payable		542
Other accrued expenses payable		56,622
Other liabilities		108,820
Total liabilities		440,259,641
Net Assets	$	200,278,040
Net Assets Consist of:
Paid-in capital	$	234,467,077
Distributions in excess of net investment income		(167,674	)
Accumulated net realized loss		(32,705,126	)
Net unrealized appreciation/depreciation		(1,316,237	)
Net Assets	$	200,278,040
Net Asset Value:
Class I—Based on net assets of $200,278,040 and 17,786,770 shares outstanding, 600 million shares authorized, $0.10 par value	$	11.26

See Notes to Financial Statements.

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Interest	$	5,430,406
Expenses:
Investment advisory		480,357
Accounting services		29,835
Custodian		24,039
Professional		21,456
Printing		16,063
Officer and Directors		10,566
Transfer agent		2,430
Miscellaneous		33,380
Total expenses excluding interest expense		618,126
Interest expense		157,432
Total expenses		775,558
Net investment income		4,654,848
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		1,591,229
Financial futures contracts		(235,207	)
Swaps		(205,859	)
Borrowed bonds		(135,597	)
Options written		2,092,344
Foreign currency transactions		345,757
		3,452,667
Net change in unrealized appreciation/depreciation on:
Investments		7,753,690
Financial futures contracts		(725,114	)
Swaps		2,663,636
Borrowed bonds		(199,298	)
Options written		(3,754,314	)
Foreign currency transactions		(103,639	)
		5,634,961
Total realized and unrealized gain		9,087,628
Net Increase in Net Assets Resulting from Operations	$	13,742,476

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 19

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	4,654,848		$	11,688,845
Net realized gain (loss)		3,452,667			(24,186,527	)
Net change in unrealized appreciation/depreciation		5,634,961			46,936,371
Net increase in net assets resulting from operations		13,742,476			34,438,689
Dividends to Shareholders From:
Net investment income		(5,694,472	)		(13,451,829	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(9,316,863	)		(37,140,382	)
Net Assets:
Total decrease in net assets		(1,268,859	)		(16,153,522	)
Beginning of period		201,546,899			217,700,421
End of period	$	200,278,040		$	201,546,899
Undistributed (distributions in excess of) net investment income	$	(167,674	)	$	871,950

See Notes to Financial Statements.

20 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Statement of Cash Flows

	Six Months Ended
	June 30, 2010
	(Unaudited)
Cash Provided by Operating Activities
Net increase in net assets resulting from operations	$	13,742,476
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided by operating activities:
Decrease in interest receivable		394,632
Increase in swaps receivable		(751,990	)
Increase in other assets		(149,646	)
Decrease in margin variation receivable		41,395
Decrease in investment advisory fees payable		(12,292	)
Decrease in interest expense payable		(9,651	)
Increase in other affiliates payable		237
Increase in accrued expenses payable		2,671
Increase in swaps payable		750,660
Increase in cash held as collateral in connection with swaps		470,000
Increase in other liabilities		70,687
Increase in officers and directors payable		220
Net periodic and termination payments of swaps		2,633,383
Net realized and unrealized gain		(7,795,530	)
Amortization of premium and discount on investments		311,804
Premiums received from options written		4,908,409
Proceeds from sales and paydowns of long-term investments		2,024,035,820
Purchases of long-term investments		(2,026,124,359	)
Net Proceeds from sales of short-term securities		7,771,327
Premiums paid on closing options written		(2,759,410	)
Cash provided by operating activities		17,530,843
Cash Used for Financing Activities
Proceeds from issuance of Common Shares		2,786,644
Cash payments from Common Shares		(18,211,226	)
Cash receipts from borrowings		555,896,682
Cash payments from borrowings		(561,559,767	)
Cash used for financing activities		(21,087,667	)
Cash Impact from Foreign Exchange Fluctuations
Cash impact from foreign exchange fluctuations		20
Cash
Net decrease in cash		(3,556,804	)
Cash at beginning of period		4,182,457
Cash at end of period	$	625,653
Cash Flow Information
Cash paid for interest	$	167,083
Noncash Financing Activities:
Capital shares issued in reinvestment of dividends paid to shareholders	$	5,934,491

A Statement of Cash Flows is presented when the Fund has a significant amount of borrowing during the period, based on the average borrowing outstanding in relation to total assets.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 21

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009			2008			2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	10.82		$	9.79		$	11.77		$	11.91	$	11.95	$	12.31
Net investment income1		0.26			0.57			0.58			0.56		0.55		0.46
Net realized and unrealized gain (loss)		0.48			1.12			(1.97)			(0.14)		(0.03)		(0.22)
Net increase (decrease) from investment operations		0.74			1.69			(1.39)			0.42		0.52		0.24
Dividends from net investment income		(0.30)			(0.66)			(0.59)			(0.56)		(0.56)		(0.60)
Net asset value, end of period	$	11.26		$	10.82		$	9.79		$	11.77	$	11.91	$	11.95
Total Investment Return:2
Based on net asset value		7.08%	3		17.79%			(12.13)%			3.65%		4.39%		1.98%
Ratios to Average Net Assets:
Total expenses		0.79%	4		0.66%			0.75%			0.57%		0.55%		0.53%
Total expenses excluding interest expense		0.63%	4		0.63%			0.61%			0.57%		0.55%		0.53%
Net investment income		4.73%	4		5.54%			5.20%			4.78%		4.70%		3.71%
Supplemental Data:
Net assets, end of period (000)	$	200,278		$	201,547		$	217,700		$	345,744	$	434,871	$	508,247
Portfolio turnover		562%	5		757%	6		787%	7		326%		272%		235%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.
5	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 416%.
6	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 492%.
7	Includes mortgage dollar roll transactions. Excluding these transactions, the portfolio turnover rate would have been 548%.

See Notes to Financial Statements.

22 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Total Return V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Total Return V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Fund’s Board of Directors (the “Board”). The Fund values its bond investments on the basis of last available bid prices or current market quotations 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, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. Financial futures contracts traded on exchanges are valued at their last sale price. To-be-announced (“TBA”) commitments are valued on the basis of last available bid prices or current market quotations provided by pricing services. 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 and trades and values of the underlying reference instruments. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be value at amortized cost, which approximates fair value.

Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business 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. Over-the-counter (“OTC”) options and 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.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 23

receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investments are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Asset-Backed and Mortgaged-Backed Securities: The Fund may invest in asset-backed securities. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally 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 subject to such a prepayment feature will have the effect of shortening the maturity of the security. If the 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.

The Fund may purchase certain mortgage pass-through securities. There are a number of important differences among the agencies and instrumentalities of the US Government that issue mortgage-related securities and among the securities that they issue. For example, mortgage-related securities guaranteed by the Government National Mortgage Association (“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 the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and Federal National Mortgage Association (“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 and are supported by the right of the issuer to borrow from the Treasury.

Borrowed Bond Agreements: In a borrowed bond agreement, the Fund borrows securities from a third party, with the commitment that the securities will be returned to the lender on an agreed-upon date. Borrowed bond agreements are primarily entered into to enable the Fund to settle short bond positions. To support the borrowing, the Fund’s prime broker or third party broker takes possession of collateral of securities or cash that will be released upon termination of the borrowing. The value of the underlying collateral securities or cash approximates the market value of the borrowed bond transaction, including accrued interest. To the extent that borrowed bond transactions exceed one business day, the value of the collateral in the possession of the Fund’s prime broker or third party broker is marked to market on a daily basis to ensure the adequacy of the collateral. In the event of default by the counterparty and the value of noncash collateral increases, the Fund’s amount of loss is the unrealized gain of the

24 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

collateral. Full realization of the collateral by the Fund may be limited if the value of an investment purchased with the cash collateral by the lender decreases. The Fund may also experience delays in gaining access to the collateral.

Multiple Class Pass-Through Securities: The Fund may invest in multiple class pass-through securities, including collateralized mortgage obligations (“CMOs”) and commercial mortgage-backed securities. These multiple class securities may be issued by GNMA, US 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, and multiple class pass-through securities represent direct ownership interests in, a pool of residential or commercial mortgage loans or mortgage pass-through securities (the “Mortgage Assets”), the payments on which are used to make payments on the CMOs or multiple pass-through securities. 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 pre-payments of principal, the Fund may not fully recoup its initial investment in IOs.

Capital Trusts: These securities are typically issued by corporations, generally in the form of interest-bearing notes with preferred securities characteristics, or by an affiliated business trust of a corporation, generally in the form of beneficial interests in subordinated debentures or similarly structured securities. The securities can be structured as either fixed or adjustable coupon securities that can have either a perpetual or stated maturity date. 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. Payments on these securities are treated as interest rather than dividends for federal income tax purposes. These securities can have a rating that is slightly below that of the issuing company’s senior debt securities.

TBA Commitments: The Fund may enter into TBA commitments pursuant to which it agrees to purchase or sell mortgage-backed securities for a fixed price, with payment and delivery at a scheduled future date beyond the customary settlement period for the mortgage-backed security. 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. The Fund generally enters into TBA transactions with the intent to take possession of or deliver out 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, which is in addition to the risk of decline in the value of the Fund’s other assets.

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

Treasury Roll Transactions: A treasury roll transaction involves the sale of a Treasury security, with an agreement to repurchase the same security at an agreed upon price and date. Treasury rolls constitute a borrowing and the difference between the sale and repurchase price represents interest expense at an agreed upon rate. Whether such a transaction produces a positive impact on performance depends upon whether the income on the securities purchased with the proceeds received from the sale of the security exceeds the interest expense incurred by the Fund. For accounting purposes, treasury rolls are not considered purchases and sales and any gains or losses incurred on the treasury rolls will be deferred until the Treasury securities are disposed.

Treasury roll transactions involve the risk that the market value of the securities that the Fund is required to purchase may decline below the agreed upon purchase price of those securities. If investment performance of securities purchased with

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 25

proceeds from these transactions does not exceed the income, capital appreciation and gain or loss that would have been realized on the securities sold as part of the treasury roll, the use of this technique will adversely impact the investment performance of the Fund.

Reverse Repurchase Agreements: The Fund may enter into reverse repurchase agreements with qualified third party broker-dealers. In a reverse repurchase agreement, the Fund sells securities to a bank or broker-dealer and agrees to repurchase the same securities at a mutually agreed upon date and price. 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. The 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 and also the risk that the market value of the securities that the Fund is obligated to repurchase under the agreement may decline below the repurchase price. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds of the agreement may be restricted while the other party, or its trustee or receiver, determines whether or not to enforce the Fund’s obligation to repurchase the securities.

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

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (“SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., dollar rolls, TBAs beyond normal settlement, financial futures contracts, foreign currency exchange contracts, swaps, short sales, structured options and written options), or certain borrowings (e.g., reverse repurchase agreements and treasury rolls) the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis.

Dividends and Distributions: Dividends from net investment income are declared daily and paid monthly. Distributions of capital gains are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as credit risk, interest rate risk, foreign currency exchange rate risk or other risk (inflation

26 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

risk). These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty. 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 received on the options should the counterparty fail to perform under the contracts. Options written by the Fund do not give rise to counterparty credit risk, as options written obligate the Fund to perform and not the counterparty. Counterparty risk related to exchange-traded financial futures contracts and options is deemed to be minimal due to the protection against defaults provided by the exchange on which these contracts trade.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between the Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from their counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Financial Futures Contracts: The Fund purchases or sells financial futures contracts and options on financial futures contracts to gain exposure to, or economically hedge against, changes in interest rates (interest rate risk). Financial futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or yield. 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 value of the contract. Such receipts or payments are known as margin variation and are recognized by the Fund as unrealized gains or losses. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. The use of financial futures transactions involves the risk of an imperfect correlation in the movements in the price of financial futures contracts, interest rates and the underlying assets.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Options: The Fund purchases and writes call and put options to increase or decrease its exposure to underlying instruments (interest rate risk and/or credit risk) and/or, in the case of options written, to generate gains from options premiums. A call option gives the purchaser of the option the right (but not the obligation) to buy, and obligates the seller to sell (when the option is exercised), the underlying instrument at the exercise 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 price at any time or at a specified time during the option period. When the Fund purchases (writes) an option, an amount equal to the premium paid (received) by the Fund is reflected as an asset (liability). The amount of the asset (liability) is subsequently marked-to-market to reflect the current market value of the option

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 27

purchased (written). When an instrument is purchased or sold through an exercise of an option, the related premium paid (or received) is added to (or deducted from) the basis of the instrument acquired or deducted from (or added to) the proceeds of the instrument sold. When an option expires (or the Fund enters into a closing transaction), the Fund realizes a gain or loss on the option to the extent of the premiums received or paid (or gain or loss to the extent the cost of the closing transaction exceeds the premium received or paid). When the Fund writes a call option, such option is “covered,” meaning that the Fund holds the underlying instrument subject to being called by the option counterparty, or cash in an amount sufficient to cover the obligation. When the Fund writes a put option, such option is covered by cash in an amount sufficient to cover the obligation.

Options on swaps (swaptions) are similar to options on securities except that instead of selling or purchasing the right to buy or sell a security, the writer or purchaser of the swap option is granting or buying the right to enter into a previously agreed upon interest rate swap agreement at any time before the expiration of the option.

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 the Fund may not be able to enter into a closing transaction due to an illiquid market. Exercise of an option written could result in the Fund purchasing or selling a security at a price different from the current market value.

Swaps: The Fund enters into swap agreements, in which the Fund and a counterparty agree to make periodic net payments on a specified notional amount. These periodic payments received or made by the Fund are recorded in the Statement of Operations as realized gains or losses, respectively. Any upfront fees paid are recorded as assets and any upfront fees received are recorded as liabilities and amortized over the term of the swap. Swaps are marked-to-market daily and changes in value are recorded as unrealized appreciation (depreciation). When the swap is terminated, the Fund will record a realized gain or loss 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 contracts is the premium received or paid. 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.

•  Credit default swaps—The Fund enters into credit default swaps to manage its exposure to the market or certain sectors of the market, to reduce its risk exposure to defaults of corporate and/or sovereign issuers or to create exposure to corporate and/or sovereign issuers to which it is not otherwise exposed (credit risk). The Fund enters into credit default agreements to provide a measure of protection against the default of an issuer (as buyer protection) and/or gain credit exposure to an issuer to which it is not otherwise exposed (as seller of protection). 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 on single-name issuers are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a negative credit event take place (e.g., bankruptcy, failure to pay, obligation accelerators, repudiation, moratorium or restructuring). Credit default swaps on traded indexes are agreements in which the buyer pays fixed periodic payments to the seller in consideration for a guarantee from the seller to make a specific payment should a write-down, principal or interest shortfall or default of all or individual underlying securities included in the index occurs. As a buyer, if an underlying credit event occurs, the Fund will either receive from the seller an amount equal to the notional amount of the swap and deliver the referenced security or underlying securities comprising of an index or 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 of an 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 of an 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 of an index.

•  Interest rate swaps—The Fund enters into interest rate swaps to gain or reduce exposure to or manage duration, the yield curve or interest rate risk by economically hedging the value of the fixed rate bonds which may decrease when interest rates rise (interest rate risk). Interest rate swaps are agreements in which one party pays a stream of interest payments, either fixed or floating rate, for another party’s stream of

28 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

interest payments, either fixed or floating, on the same notional amount for a specified period of time. Interest rate floors, which are a type of interest rate swap, are agreements in which one party agrees to make payments to the other party to the extent that interest rates fall below a specified rate or floor in return for a premium. In more complex swaps, the notional principal amount may decline (or amortize) over time.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Interest rate contracts	Net unrealized appreciation/depreciation*; Unrealized appreciation on swaps; Investments at value — unaffiliated**	$	13,722,583	Net unrealized appreciation/depreciation*; Unrealized depreciation on swaps; Options written at value	$	15,867,221
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts		20,809
Credit contracts	Unrealized appreciation on swaps		4,785	Unrealized depreciation on swaps		539,532
Other contracts	Unrealized appreciation on swaps		81,696
Total		$	13,829,873		$	16,406,753

*	Includes cumulative appreciation/depreciation of financial futures contracts as reported in Schedule of Investments. Only current day’s margin variation is reported within the Statement of Assets and Liabilities.
**	Includes options purchased at value as reported in the Schedule of Investments.

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
Net Realized Gain (Loss) from
	Financial								Foreign
	Futures								Currency
	Contracts			Swaps			Options***		Transactions
Interest rate contracts	$	(235,207	)	$	229,671		$	963,589		—
Foreign currency exchange contracts		—			—			—	$	361,864
Credit contracts		—			(435,530	)	$	25,351		—
Total	$	(235,207	)	$	(205,859	)	$	988,940	$	361,864

Net Change in Unrealized Appreciation/Depreciation on
	Financial								Foreign
	Futures								Currency
	Contracts			Swaps		Options***			Transactions
Interest rate contracts	$	(725,114	)	$	1,864,249	$	(3,468,003	)		—
Foreign currency exchange contracts		—			—		—		$	(105,533	)
Credit contracts		—			717,691		—			—
Other contracts		—			81,696		—			—
Total	$	(725,114	)	$	2,663,636	$	(3,468,003	)	$	(105,533	)

***  Options purchased are included in the net realized gain (loss) from investments and net change in unrealized appreciation/depreciation on investments.

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Financial futures contracts:
Average number of contracts purchased		64
Average number of contracts sold		431
Average notional value of contracts purchased	$	7,822,346
Average notional value of contracts sold	$	80,694,329
Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		3
Average number of contracts-US dollars sold		1
Average US dollar amounts purchased	$	2,159,298
Average US dollar amounts sold	$	1,055,426
Options:
Average number of contracts purchased		313
Average number of contracts sold		293
Average notional value of contracts purchased	$	175,998,250
Average notional value of contracts sold	$	218,314,250
Credit default swaps:
Average number of contracts-buy protection		30
Average notional value-buy protection	$	14,941,500
Interest rate swaps:
Average number of contracts-pays fixed rate		32
Average number of contracts-receives fixed rate		41
Average notional value-pays fixed rate	$	123,477,500
Average notional value-receives fixed rate	$	173,630,000
Total return swaps:
Average number of contracts	$	1
Average notional value	$	2,000,000

3. Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 the following annual rates of the Fund’s and the Company’s BlackRock High Income V.I. Fund’s aggregate average daily net assets:

Portfolio of average daily value of net assets	Rate
Not exceeding $250 million	0.50	%
In excess of $250 million, but not exceeding $500 million	0.45	%
In excess of $500 million, but not exceeding $750 million	0.40	%
In excess of $750 million	0.35	%

For the six months ended June 30, 2010, the aggregate average daily net assets of the Fund and

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 29

the Company’s BlackRock Total Return V.I. Fund was approximately $324,114,000.

The Manager entered into a sub-advisory agreement with BlackRock Financial Management, Inc. (“BFM”), an affiliate of the Manager. The Manager pays BFM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,502 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC, an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4. Investments:

Purchases and sales of investments including paydowns, mortgage dollar roll and TBA transactions and excluding short-term securities and US government securities for the six months ended June 30, 2010, were $1,157,980,912 and $1,114,252,039, respectively.

Purchases and sales of US government securities for the six months ended June 30, 2010, were $411,254,040 and $408,112,207, respectively.

For the six months ended June 30, 2010, purchases and sales of mortgage dollar rolls were $395,372,906 and $395,934,188, respectively.

Transactions in options written for the six months ended June 30, 2010, were as follows:

	Calls						Puts
				Premiums						Premiums
	Contracts			Received			Contracts			Received
Outstanding options, beginning of period		66		$	2,658,315			310		$	4,020,012
Options written		166			2,451,914			104			2,482,635
Options closed		(26	)		(1,010,527	)		(203	)		(2,320,877	)
Options expired		(44	)		(1,192,997	)		(109	)		(1,277,662	)
Outstanding options, end of period		162		$	2,906,705			102		$	2,904,108

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

For the six months ended the Fund’s daily average amount of outstanding transactions considered as borrowings from treasury rolls and reverse repurchase agreements was approximately

30 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

$64,463,000 and the daily weighted average interest rate was 0.50%.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2014	$	6,556,672
2015		303,454
2016		3,889,225
2017		24,152,425
Total	$	34,901,776

7.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statements of Assets and Liabilities, less any collateral held by the Fund.

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. Please see the Schedule of Investments for these securities. 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.

8.  Capital Share Transactions:

Transactions in capital shares were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		260,363		$	2,880,649
Shares issued to shareholders in reinvestment of dividends		539,546			5,934,492
Total issued		799,909			8,815,141
Shares redeemed		(1,640,331	)		(18,132,004	)
Net decrease		(840,422	)	$	(9,316,863	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		197,019		$	2,067,653
Shares issued to shareholders in reinvestment of dividends		1,311,891			13,407,434
Total issued		1,508,910			15,475,087
Shares redeemed		(5,118,730	)		(52,615,469	)
Net decrease		(3,609,820	)	$	(37,140,382	)

9.  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.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 31

BlackRock Utilities and

Telecommunications V.I. Fund

Semi-Annual Report (Unaudited)
June 30, 2010

BlackRock Variable Series Funds, Inc.
BlackRock Utilities and Telecommunications V.I. Fund
Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund underperformed its custom benchmark, comprised of 70% S&P 500 Utilities Index and 30% S&P 500 Telecommunication Services Index, the broad-market S&P 500 Index and the S&P 500 Utilities Index.

What factors influenced performance?

•  Detracting from Fund performance relative to the custom benchmark for the period were security selection within the wireless telecommunication services industry; exposure to the energy and industrials sectors (which are not represented in the Fund’s custom benchmark); an overweight in the independent power producers & energy traders industry; and stock selection in the multi-utilities industry.

•  Conversely, positive contributions to relative performance during the period came from an overweight and favorable stock selection in the diversified telecommunication services industry; a strong overweight in the wireless telecommunication services industry; and the Fund’s cash weighting. Additional relative outperformance came from security selection among independent power producers & energy traders.

Describe recent portfolio activity.

•  Throughout the first half of 2010, we continued to reduce the Fund’s exposure to European markets. With regard to European utilities, several new events had the potential to negatively impact our outlook for these companies. In particular, new taxes on nuclear energy production in Germany and concern regarding tariffs in France and Spain prompted us to reduce or eliminate select holdings. Politics in Europe are unpredictable, and with a debt crisis in some markets, certain growing or profitable utility companies may become a source through which these countries can gain revenue. Continued pressures in the European telecommunications space, due to increased competition and lower prices in general, caused us to reduce our weighting in this industry as well. Proceeds from the sale of these securities were used to increase exposure to more defensive companies, such as US electric utilities.

Describe Fund positioning at period end.

•  At period end, the Fund was positioned to reflect conservatism in the current economic environment. We have been placing an emphasis on US-based companies, especially in light of the challenges evident in many overseas markets. At the sector level, we have been adding to the Fund’s electric utilities holdings as opposed to telecommunications holdings, given signs of a stronger rebound in power demand, a more favorable competitive landscape and a higher degree of pricing stability.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Total Return Based on a $10,000 Investment

							70% S&P
	BlackRock Utilities						500 Utilities
	and Telecommunications						Index/30% S&P
	V.I. Fund(2)-Class		S&P 500		S&P 500		Telecommunication Services
	I Shares(1)		Index(3)		Utilities Index(4)		Index(5)
6/00		10000		10000		10000		10000
6/01		9617		8517		12112		10486
6/02		8041		6985		8258		6919
6/03		7924		7002		7913		6924
6/04		8940		8341		8822		7637
6/05		11805		8868		12173		9862
6/06		13213		9633		12893		10664
6/07		17728		11617		16256		13868
6/08		18771		10093		17334		13619
6/09		12979		7447		12442		10161
6/10		13550		8521		13155		10693

1	Assuming transaction costs, if any, and other operating expenses, including investment advisory fees. Does not include insurance-related fees and expenses.
2	The Fund invests at least 80% of its assets in a diversified portfolio of equity and debt securities issued by utility companies.
3	This unmanaged Index covers 500 industrial, utility, transportation and financial companies of the U.S. markets (mostly New York Stock Exchange (“NYSE”) issues), representing about 75% of NYSE market capitalization and 30% of NYSE issues.
4	This unmanaged capitalization Index is comprised of all stocks designed to measure the performance of electric and natural gas utilities within the S&P 500 Index.
5	This composite index is comprised 70% of the S&P 500 Utilities Index and 30% of the S&P 500 Telecommunication Services Index, which is comprised of all stocks designed to measure the performance of telecommunications services companies within the S&P 500 Index.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares6		(8.43	)%		4.40	%		2.79	%		3.08	%
S&P 500 Index		(6.65	)		14.43			(0.79	)		(1.59	)
S&P 500 Utilities Index		(7.14	)		5.73			1.56			2.78
70% S&P 500 Utilities Index/ 30% S&P 500 Telecommunication Services Index		(7.48	)		5.24			1.63			0.67

⁶  Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Industry Allocation	Long-Term Investments
Electric Utilities		35	%
Multi-Utilities		20
Diversified Telecommunication Services		11
Independent Power Producers & Energy Traders		10
Wireless Telecommunications Services		9
Gas Utilities		6
Oil, Gas & Consumable Fuels		5
Water Utilities		2
Media		1
Commercial Services & Supplies		1

For Fund compliance purposes, the Fund’s industry classifications refer to any 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 Fund management. This definition may not apply for purposes of this report, which may combine industry sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 in the first line under the heading entitled “Expenses Paid During the Period.”

The table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

Actual

Hypothetical2

Beginning

Ending

Beginning

Ending

Annualized

Account Value

Account Value

Expenses Paid

Account Value

Account Value

Expenses Paid

Expense

January 1, 2010

June 30, 2010

During the Period1

January 1, 2010

June 30, 2010

During the Period1

Ratio

Class I

$

1,000

$

915.70

$

4.51

$

1,000

$

1,020.09

$

4.76

0.95%

1	Expenses are equal to the expense ratio, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Derivative Financial Instruments

The Fund may invest in various derivative instruments, including foreign currency exchange contracts, as specified in Note 2 of the Notes to Financials Statements, which may constitute forms of economic leverage. Such instruments are used to obtain exposure to a market without owning or taking physical custody of securities or to hedge market and/or foreign currency exchange rate risks. Such derivative instruments involve risks, including the imperfect correlation between the value of a derivative instrument and the underlying asset, possible default of the counterparty to the transaction or illiquidity of the derivative instrument. The Fund’s ability to successfully use a derivative instrument depends on the investment advisor’s ability to accurately predict pertinent market movements, which cannot be assured. The use of derivative instruments may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for distressed values, may limit the amount of appreciation the Fund can realize on an investment, may result in lower dividends paid to shareholders or may cause the Fund to hold a security that it might otherwise sell. The Fund’s investments in these instruments are discussed in detail in the Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Commercial Services & Supplies — 0.7%
Tetra Tech, Inc. (a)		9,000	$	176,490
Diversified Telecommunication Services — 10.8%
AT&T Inc.		35,047		847,787
BCE, Inc.		8,600		251,722
Cable & Wireless Communications Plc		30,000		25,885
Cable & Wireless Worldwide		30,000		38,817
CenturyTel, Inc.		3,600		119,916
Qwest Communications International, Inc.		81,600		428,400
Swisscom AG		300		101,706
TW Telecom, Inc. (a)		5,500		91,740
Telefonica SA		6,388		118,336
Verizon Communications, Inc.		18,300		512,766
Windstream Corp.		12,055		127,301
				2,664,376
Electric Utilities — 34.0%
American Electric Power Co., Inc.		28,500		920,550
CEZ AS		1,500		61,053
CPFL Energia SA — ADR		1,700		113,815
Cia Energetica de Minas Gerais — ADR		7,040		103,277
Cleco Corp.		3,800		100,358
DPL, Inc.		21,900		523,410
Duke Energy Corp.		33,943		543,088
EDP — Energias do Brasil SA		10,200		200,327
Edison International		15,600		494,832
Electricite de France SA		2,500		95,117
Entergy Corp.		11,500		823,630
Exelon Corp.		6,500		246,805
FirstEnergy Corp.		10,600		373,438
ITC Holdings Corp.		14,500		767,195
Iberdrola SA		16,500		92,739
NV Energy, Inc.		4,600		54,326
NextEra Energy, Inc.		21,900		1,067,844
Northeast Utilities, Inc.		6,000		152,880
PPL Corp.		7,800		194,610
Pinnacle West Capital Corp.		2,600		94,536
Progress Energy, Inc.		5,700		223,554
The Southern Co.		29,400		978,432
Westar Energy, Inc.		7,900		170,719
				8,396,535
Gas Utilities — 5.5%
EQT Corp.		4,700		169,858
Energen Corp.		6,100		270,413
New Jersey Resources Corp.		6,050		212,960
Questar Corp.		12,500		568,625
UGI Corp.		5,600		142,464
				1,364,320
Independent Power Producers & Energy Traders — 9.2%
The AES Corp. (a)		25,800		238,392
AES Tiete SA (Preference Shares)		11,600		132,645
Calpine Corp. (a)		18,500		235,320
Cia Energetica de Sao Paulo, Preference ‘B’ Shares		7,300		99,531
Constellation Energy Group, Inc.		20,100		648,225
International Power Plc		36,500		163,044
NRG Energy, Inc. (a)		35,500		752,955
				2,270,112
Internet Software & Services — 0.4%
Equinix, Inc. (a)		1,300		105,586
Media — 0.8%
Comcast Corp., Special Class A		11,500		188,945
Multi-Utilities — 19.5%
CMS Energy Corp.		30,000		439,500
CenterPoint Energy, Inc.		14,200		186,872
Centrica Plc		31,000		136,803
Consolidated Edison, Inc.		8,500		366,350
DTE Energy Co.		2,400		109,464
Dominion Resources, Inc.		25,000		968,500
NSTAR		7,400		259,000
OGE Energy Corp.		3,500		127,960
PG&E Corp.		14,900		612,390
Public Service Enterprise Group, Inc.		24,700		773,851
Sempra Energy		6,800		318,172
United Utilities Group Plc		9,500		74,341
Wisconsin Energy Corp.		5,500		279,070
Xcel Energy, Inc.		8,100		166,941
				4,819,214
Oil, Gas & Consumable Fuels — 4.7%
Cabot Oil & Gas Corp., Class A		1,600		50,112
EOG Resources, Inc.		2,200		216,414
Petrohawk Energy Corp. (a)		3,000		50,910
Range Resources Corp.		2,100		84,315
Southwestern Energy Co. (a)		5,100		197,064
Spectra Energy Corp.		11,621		233,234
Talisman Energy, Inc.		5,600		85,008
Williams Cos., Inc.		12,800		233,984
				1,151,041
Water Utilities — 2.3%
American States Water Co.		1,000		33,140
American Water Works Co., Inc.		11,100		228,660
Aqua America, Inc.		8,800		155,584
California Water Service Group		4,000		142,800
Cia Saneamento, Preference Shares (a)(b)		108		—
				560,184
Wireless Telecommunication Services — 9.1%
America Movil, SA de CV — ADR		6,400		304,000
American Tower Corp., Class A (a)		3,800		169,100
Cellcom Israel Ltd.		4,900		122,500
Crown Castle International Corp. (a)		4,700		175,122
Millicom International Cellular SA		2,200		178,354
NII Holdings, Inc. (a)		4,800		156,096
NTELOS Holdings Corp.		5,100		87,720
Rogers Communications, Inc., Class B		4,300		140,485
SBA Communications Corp., Class A (a)		10,500		357,105
Sprint Nextel Corp. (a)		35,000		148,400

Portfolio Abbreviations

To simplify the listings of portfolio holdings in the Schedule of Investments, the names and descriptions of many of the securities have been abbreviated according to the following list:

ADR	American Depositary Receipts	GBP	British Pound
CAD	Canadian Dollar	USD	US Dollar
EUR	Euro

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Schedule of Investments (concluded) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Wireless Telecommunication Services (concluded)
Vivo Participacoes SA — ADR		3,700	$	95,904
Vodafone Group Plc — ADR		15,637		323,217
				2,258,003
Total Investments (Cost — $22,914,588*) — 97.0%				23,954,806
Other Assets Less Liabilities — 3.0%				732,617
Net Assets — 100.0%			$	24,687,423

  *  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	22,934,450
Gross unrealized appreciation	$	2,906,546
Gross unrealized depreciation		(1,886,190	)
Net unrealized appreciation	$	1,020,356

(a)	Non-income producing security.
(b)	Convertible security.

  •  Investments in companies considered to be an affiliate of the Fund, during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares					Shares
	Held at					Held at
	December 31,		Net			June 30,
Affiliate	2009		Activity			2010		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		245,805		(245,805	)		—	$	286

  •  Foreign currency exchange contracts as of June 30, 2010 were as follows:

				Unrealized
Currency	Currency		Settlement	Appreciation
Purchased	Sold	Counterparty	Date	(Depreciation)
USD 151,710	EUR 124,448	State Street Bank and Trust Co.	7/02/10	$	(473	)
USD 8,839	GBP 5,870	State Street Bank and Trust Co.	7/02/10		68
USD 3,404	CAD 3,597	State Street Bank and Trust Co.	7/06/10		26
Total				$	(379	)

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments and derivatives, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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 derivatives)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following tables summarize the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments and derivatives:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Common Stocks:
Commercial Services & Supplies	$	176,490		—		—	$	176,490
Diversified Telecommunication Services		2,379,632	$	284,744		—		2,664,376
Electric Utilities		8,147,626		248,909		—		8,396,535
Gas Utilities		1,364,320		—		—		1,364,320
Independent Power Producers & Energy Traders		2,107,068		163,044		—		2,270,112
Internet Software & Services		105,586		—		—		105,586
Media		188,945		—		—		188,945
Multi-Utilities		4,608,070		211,144		—		4,819,214
Oil, Gas & Consumable Fuels		1,151,041		—		—		1,151,041
Water Utilities		560,184		—		—		560,184
Wireless Telecommunication Services		2,258,003		—		—		2,258,003
Total	$	23,046,965	$	907,841		—	$	23,954,806

Derivative Financial Instruments1
Valuation Inputs	Level 1		Level 2			Level 3		Total
Assets:
Foreign currency exchange contracts		—	$	94			—	$	94
Liabilities:
Foreign currency exchange contracts		—		(473	)		—		(473	)
Total		—	$	(379	)		—	$	(379	)

¹ Derivative financial instruments are foreign currency exchange contracts, which are shown at the unrealized appreciation/depreciation on the instrument.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (cost—$22,914,588)	$	23,954,806
Foreign currency at value (cost—$35,307)		35,568
Unrealized appreciation on foreign currency exchange contracts		94
Investments sold receivable		642,787
Dividends receivable		91,183
Dividends receivable—affiliated		115
Prepaid expenses		18,241
Total assets		24,742,794
Liabilities:
Bank overdraft		29,263
Unrealized depreciation on foreign currency exchange contracts		473
Investment advisory fees payable		12,555
Other affiliates payable		959
Capital shares redeemed payable		951
Officer’s and Directors’ fees payable		471
Other accrued expenses payable		10,699
Total liabilities		55,371
Net Assets	$	24,687,423
Net Assets Consist of:
Paid-in capital	$	23,332,305
Undistributed net investment income		268,000
Undistributed net realized gain		46,828
Net unrealized appreciation/depreciation		1,040,290
Net Assets	$	24,687,423
Net Asset Value:
Class I—Based on net assets of $24,687,423 and 3,197,671 shares outstanding, 100 million shares authorized, $0.10 par value	$	7.72

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends	$	571,455
Foreign taxes withheld		(10,670	)
Dividends—affiliated		286
Total income		561,071
Expenses:
Investment advisory		81,132
Professional		15,632
Officer and Directors		8,702
Accounting services		7,803
Custodian		4,525
Transfer agent		2,409
Printing		1,707
Miscellaneous		6,912
Total expenses		128,822
Less fees waived by advisor		(119	)
Total expenses after fees waived		128,703
Net investment income		432,368
Realized and Unrealized Gain (Loss):
Net realized gain (loss) from:
Investments		463,922
Foreign currency transactions		(13,616	)
		450,306
Net change in unrealized appreciation/depreciation on:
Investments		(3,271,223	)
Foreign currency transactions		(1,483	)
		(3,272,706	)
Total realized and unrealized loss		(2,822,400	)
Net Decrease in Net Assets Resulting from Operations	$	(2,390,032	)

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	432,368		$	898,031
Net realized gain (loss)		450,306			(168,473	)
Net change in unrealized appreciation/depreciation		(3,272,706	)		3,088,479
Net increase (decrease) in net assets resulting from operations		(2,390,032	)		3,818,037
Dividends and Distributions to Shareholders From:
Net investment income		(192,846	)		(887,326	)
Net realized gain		—			(211,710	)
Decrease in net assets resulting from dividends and distributions to shareholders		(192,846	)		(1,099,036	)
Capital Share Transactions:
Net decrease in net assets derived from capital share transactions		(2,313,167	)		(3,011,569	)
Net Assets:
Total decrease in net assets		(4,896,045	)		(292,568	)
Beginning of period		29,583,468			29,876,036
End of period	$	24,687,423		$	29,583,468
Undistributed net investment income	$	268,000		$	28,478

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Utilities and Telecommunications V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	8.49		$	7.69	$	12.60	$	11.93	$	10.06	$	9.03
Net investment income1		0.13			0.25		0.25		0.22		0.31		0.24
Net realized and unrealized gain (loss)		(0.84)			0.86		(4.43)		2.87		2.19		1.03
Net increase (decrease) from investment operations		(0.71)			1.11		(4.18)		3.09		2.50		1.27
Dividends and distributions from:
Net investment income		(0.06)			(0.25)		(0.26)		(0.23)		(0.32)		(0.24)
Net realized gain		—			(0.06)		(0.47)		(2.19)		(0.31)		—
Total dividends and distributions		(0.06)			(0.31)		(0.73)		(2.42)		(0.63)		(0.24)
Net asset value, end of period	$	7.72		$	8.49	$	7.69	$	12.60	$	11.93	$	10.06
Total Investment Return:2
Based on net asset value		(8.43)%	3		14.87%		(33.85)%		26.38%		25.23%		14.14%
Ratios to Average Net Assets:
Total expenses		0.95%	4		0.94%		0.88%		0.76%		0.77%		0.83%
Total expenses after fees waived		0.95%	4		0.94%		0.88%		0.76%		0.77%		0.83%
Net investment income		3.20%	4		3.23%		2.38%		1.67%		2.86%		2.48%
Supplemental Data:
Net assets, end of period (000)	$	24,687		$	29,583	$	29,876	$	55,613	$	55,049	$	51,441
Portfolio turnover		12%			24%		16%		25%		47%		29%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.,

BlackRock Utilities and Telecommunications V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Utilities and Telecommunications V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the Financial Statements. Actual results could differ from those estimates.

On May 12, 2010, the Board of Directors (the “Board”) approved the following changes to the Fund effective October 1, 2010: A change in the Fund’s name, its investment objective and its 80% investment policy, along with its other investment strategies. The Fund will change its name to “BlackRock Equity Dividend V.I. Fund.”

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board. Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

Securities and other assets and liabilities denominated in foreign currencies are translated into US dollars using exchange rates determined as of the close of business on the New York Stock Exchange (“NYSE”). Foreign currency exchange contracts are valued at the mean between the bid and ask prices and are determined as of the close of business on the NYSE. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Generally, trading in foreign instruments is substantially completed each day at various times prior to the close of business on the NYSE. Occasionally, events affecting the values of such instruments may occur between the foreign market close and the close of business on the NYSE that may not be reflected in the computation of the Fund’s net assets. If events (for example, a company announcement, market volatility or a natural disaster) occur during such periods that are expected to materially affect the value of such instruments, those instruments may be Fair Value Assets and be valued at their fair values, as determined in good faith by the investment advisor using a pricing service and/or policies approved by the Board. 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 business on the NYSE, which follows the close of the local markets.

Foreign Currency Transactions: The Fund’s books and records are maintained in US dollars. Purchases and sales of investment securities are recorded at the rates of exchange prevailing on the date the transactions are entered into. Generally, when the US dollar rises in value against foreign

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

currency, the Fund’s investments denominated in that currency will lose value because its currency is worth fewer US dollars; the opposite effect occurs if the US dollar falls in relative value.

The Fund reports foreign currency related transactions as components of realized gain (loss) for financial reporting purposes, whereas such components are treated as ordinary income for federal income tax purposes.

Segregation and Collateralization: In cases in which the 1940 Act and the interpretive positions of the Securities and Exchange Commission (the “SEC”) require that the Fund either delivers collateral or segregates assets in connection with certain investments (e.g., foreign currency exchange contracts), the Fund will, consistent with SEC rules and/or certain interpretive letters issued by the SEC, segregate collateral or designate on its books and records cash or other liquid securities having a market value at least equal to the amount that would otherwise be required to be physically segregated. Furthermore, based on requirements and agreements with certain exchanges and third party broker-dealers, each party has requirements to deliver/deposit securities as collateral for certain investments.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, is recognized on the accrual basis. Under the applicable foreign tax laws, a withholding tax at various rates may be imposed on capital gains, dividends and interest.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Derivative Financial Instruments:

The Fund engages in various portfolio investment strategies using derivative contracts both to increase the returns of the Fund and to economically hedge, or protect, its exposure to certain risks such as foreign currency exchange rate risk. These contracts may be transacted on an exchange or OTC.

Losses may arise if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument or if the counterparty does not perform under the contract. The Fund’s maximum risk of loss from counterparty credit risk on OTC derivatives is generally the aggregate unrealized gain netted against any collateral pledged by/posted to the counterparty.

The Fund may mitigate counterparty risk by procuring collateral and through netting provisions included within an International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreement implemented between a Fund and each of its respective counterparties. The ISDA Master Agreement allows the Fund to offset with each separate counterparty certain derivative financial instrument’s payables and/or receivables with collateral held. The amount of collateral moved to/from applicable counterparties is generally based upon minimum transfer amounts of up to $500,000. To the extent amounts due to the Fund from its counterparties are not fully collateralized contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. See Note 1 “Segregation and Collateralization” for information with respect to collateral practices. In addition, the Fund manages counterparty risk by entering into

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

agreements only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Certain ISDA Master Agreements allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA Master Agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty.

Foreign Currency Exchange Contracts: The Fund enters into foreign currency exchange contracts as an economic hedge against either specific transactions or portfolio instruments or to gain exposure to foreign currencies (foreign currency exchange rate risk). A foreign currency exchange contract is an agreement between two parties to buy and sell a currency at a set exchange rate on a future date. Foreign currency exchange contracts, when used by the Fund, help to manage the overall exposure to the currency backing some of the investments held by the Fund. The contract is marked-to-market daily and the change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the value at the time it was opened and the value at the time it was closed. The use of foreign currency exchange contracts involves the risk that the value of a foreign currency contract changes unfavorably due to movements in the value of the referenced foreign currencies and the risk that a counterparty to the contract does not perform its obligations under the agreement.

Derivative Instruments Categorized by Risk Exposure:

Fair Values of Derivative Instruments as of June 30, 2010
	Asset Derivatives			Liability Derivatives
	Statement			Statement
	of Assets			of Assets
	and			and
	Liabilities			Liabilities
	Location	Value		Location	Value
Foreign currency exchange contracts	Unrealized appreciation on foreign currency exchange contracts	$	94	Unrealized depreciation on foreign currency exchange contracts	$	473

The Effect of Derivative Instruments on the Statement of Operations
Six Months Ended June 30, 2010
	Foreign
	Currency
	Transactions
Net Realized Gain from
Foreign currency transactions	$	3,837
Net Change in Unrealized Appreciation/Depreciation on
Foreign currency transactions	$	(379	)

For the six months ended June 30, 2010, the average quarterly balance of outstanding derivative financial instruments was as follows:

Foreign currency exchange contracts:
Average number of contracts-US dollars purchased		4
Average number of contracts-US dollars sold		1
Average US dollar amounts purchased	$	81,976
Average US dollar amounts sold	$	69,028

3.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.60% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds, however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

For the six months ended June 30, 2010, the Fund reimbursed the Manager $241 for certain accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock.

PNC Global Investment Servicing (U.S.) Inc. (“PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

4.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $3,193,992 and $5,683,002, respectively.

5.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of a 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

6.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards in the amount of $383,615 available to offset future realized capital gains, which expires December 31, 2017.

7.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations. Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a significant portion of its assets in securities in the electric utilities and multi-utilities industries. Changes in economic conditions affecting the electric utilities and multi-utilities industries would have a greater impact on the Fund, and could affect the value, income and/or liquidity of positions in such securities.

8.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		41,975		$	344,797
Shares issued to shareholders in reinvestment of dividends		23,234			192,846
Total issued		65,209			537,643
Shares redeemed		(351,274	)		(2,850,810	)
Net decrease		(286,065	)	$	(2,313,167	)

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		165,197		$	1,280,635
Shares issued to shareholders in reinvestment of dividends and distributions		143,693			1,099,036
Total issued		308,890			2,379,671
Shares redeemed		(709,230	)		(5,391,240	)
Net decrease		(400,340	)	$	(3,011,569	)

9.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following item was noted:

The Fund paid a net investment income dividend of $0.080021 per share on July 23, 2010 to shareholders of record on July 21, 2010.

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Value Opportunities V.I. Fund

Semi-Annual Report (Unaudited)

June 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Portfolio Management Commentary

How did the Fund perform?

•  For the six-month period ended June 30, 2010, the Fund outperformed its benchmark, the Standard & Poor’s (S&P) SmallCap 600 Value Index.

What factors influenced performance?

•  Fund holdings in the information technology (IT) sector significantly outpaced benchmark constituents, contributing to the outperformance for the period. Strong stock selection in the communications equipment, software and internet software & services industries added the greatest value.

•  In the industrials sector, positive stock selection among machinery companies, airlines and road & rail shippers boosted relative returns.

•  Elsewhere, strong stock selection among metals & mining companies and oil, gas & consumable fuels names contributed to strong relative results in the materials and energy sectors.

•  Conversely, the Fund’s relative results were hindered by disappointing performance in the health care sector, primarily due to poor stock selection among health care providers & services names and biotechnology stocks. Additionally, King Pharmaceuticals, Inc. was a notable detractor, as shares slumped after an FDA advisory panel did not support the approval of an experimental painkiller.

•  Stock selection in the consumer discretionary sector also was a detractor from performance. Stocks in the sector were volatile during the period, as investors weighed strong first quarter earnings against the headwinds of macro uncertainty and wary consumers.

Describe recent portfolio activity.

•  In consumer discretionary, we added primarily to specialty retailers, initiating positions in The Talbots, Inc. and The Wet Seal, Inc., Class A. In health care, we focused on adding to existing positions, particularly among pharmaceuticals, life sciences tools & services and health care providers & services companies. We also increased the Fund’s allocations to professional services and machinery stocks in the industrials sector and added exposure to oil & gas exploration & production companies in energy.

•  Conversely, we reduced the Fund’s weighting in the IT, financials and utilities sectors. In particular, we trimmed exposure to semiconductor-related names and real estate investment trusts and exited positions in the electric utilities El Paso Electric Co., Cleco Corp. and Portland General Electric Co.

Describe Fund positioning at period end.

•  At period end, the Fund had a healthy mix of companies that we believe are poised to benefit as investor sentiment improves. At the sector level, the Fund remained positioned for a slow-growth environment with overweights in health care, energy and materials, and underweights in industrials, financials, consumer staples and utilities.

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 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Total Return Based on a $10,000 Investment

	BlackRock Value		BlackRock Value		BlackRock Value
	Opportunities V.I.		Opportunities V.I.		Opportunities V.I.		S&P SmallCap
	Fund(1)-Class I		Fund(1)-Class II		Fund(1)-Class III		600 Value
	Shares(2)		Shares(2)		Shares(2)		Index(3)
6/00		10000		10000		10000		10000
6/01		12613		12595		12582		11656
6/02		12194		12153		12134		12321
6/03		11809		11756		11721		11524
6/04		15603		15505		15312		15639
6/05		16744		16616		16395		17492
6/06		19610		19432		19101		20538
6/07		22955		22709		22269		23850
6/08		18966		18739		18379		19302
6/09		12842		12667		12418		14607
6/10		15745		15505		15188		18042

1	The Fund invests primarily in common stocks of small cap companies and emerging growth companies that Fund management believes have special investment value.
2	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 November 18, 2003, the commencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.
3	This unmanaged Index measures performance of the small-capitalization value sector of the US equity market.

Performance Summary as of June 30, 2010

	6-Month			Average Annual Total Returns
	Total Returns			1 Year			5 Years			10 Years
Class I Shares4		(1.38	)%		22.60	%		(1.22	)%		4.64	%
Class II Shares4		(1.45	)		22.40			(1.37	)		4.48
Class III Shares4		(1.50	)		22.30			(1.52	)		4.27	5
S&P SmallCap 600 Value Index		(1.51	)		23.51			0.62			6.08

4	Average annual and cumulative total investment returns are based on changes in net asset values for the periods shown, and assume reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. Insurance-related fees and expenses are not reflected in these returns.
5	The returns for Class III Shares prior to November 18, 2003, the commencement of operations of Class III Shares, are based on performance of the Fund’s Class I Shares. The returns for Class III Shares, however, are adjusted to reflect the distribution (12b-1) fees applicable to Class III Shares.

Past performance is not indicative of future results.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 3

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Fund Information as of June 30, 2010

	Percent of
Sector Allocation	Long-Term Investments
Financials		22	%
Industrials		18
Information Technology		14
Consumer Discretionary		14
Health Care		12
Utilities		6
Materials		6
Energy		6
Consumer Staples		2

For Fund compliance purposes, the Fund’s sector classifications refer to any one or more of the sector sub-classifications used by one or more widely recognized market indexes or ratings group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine sector sub-classifications for reporting ease.

Disclosure of Expenses

Shareholders of this Fund may incur the following charges: (a) expenses related to transactions, including sales charges, redemption fees and exchange fees; and (b) operating expenses including advisory fees, distribution fees including 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on January 1, 2010 and held through June 30, 2010) 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 table 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 table 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 this Fund and other funds, compare the 5% hypothetical example with the 5% hypothetical examples that appear in other funds’ shareholder reports.

The expenses shown in the table are intended to highlight shareholders’ ongoing costs only and do not reflect any transactional expenses, such as sales charges, redemption fees or exchange fees. 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.

							Hypothetical
	Actual						(5% annual return before expenses)2
	Beginning		Ending				Beginning		Ending
	Account Value		Account Value		Expenses Paid		Account Value		Account Value		Expenses Paid		Annualized
	January 1, 2010		June 30, 2010		During the Period1		January 1, 2010		June 30, 2010		During the Period1		Expense Ratio
Class I	$	1,000	$	986.20	$	4.19	$	1,000	$	1,020.58	$	4.26		0.85	%
Class II	$	1,000	$	985.50	$	4.92	$	1,000	$	1,019.84	$	5.01		1.00	%
Class III	$	1,000	$	985.00	$	5.41	$	1,000	$	1,019.35	$	5.51		1.10	%

1	For each class of the Fund, expenses are equal to the annualized expense ratio for the class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period shown).
2	Hypothetical 5% annual return before expenses is calculated by pro rating the number of days in the most recent fiscal half year divided by 365.

4 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Schedule of Investments June 30, 2010 (Unaudited) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Aerospace & Defense — 2.4%
Ceradyne, Inc. (a)		33,500	$	715,895
Curtiss-Wright Corp.		57,400		1,666,896
Esterline Technologies Corp. (a)		31,300		1,485,185
Moog, Inc., Class A (a)		21,600		696,168
Triumph Group, Inc.		8,650		576,349
				5,140,493
Airlines — 0.9%
AirTran Holdings, Inc. (a)		171,600		832,260
Alaska Air Group, Inc. (a)		23,800		1,069,810
				1,902,070
Automobiles — 0.5%
Thor Industries, Inc.		41,100		976,125
Biotechnology — 0.7%
Exelixis, Inc. (a)		112,000		388,640
PDL BioPharma, Inc.		198,600		1,116,132
				1,504,772
Capital Markets — 0.2%
Piper Jaffray Cos. (a)		14,000		451,080
Chemicals — 3.2%
Arch Chemicals, Inc.		39,900		1,226,526
Ferro Corp. (a)		102,700		756,899
Huntsman Corp.		147,700		1,280,559
OM Group, Inc. (a)		37,400		892,364
Rockwood Holdings, Inc. (a)		56,800		1,288,792
Spartech Corp. (a)		139,500		1,429,875
				6,875,015
Commercial Banks — 8.7%
Bank of Hawaii Corp.		39,300		1,900,155
Community Bank System, Inc. (b)		65,700		1,447,371
Cullen/Frost Bankers, Inc.		32,400		1,665,360
East-West Bancorp, Inc.		50,500		770,125
First Financial Bankshares, Inc.		4,200		201,978
First Financial Corp.		15,000		387,150
First Horizon National Corp. (a)(b)		116,768		1,336,990
First Midwest Bancorp, Inc.		142,700		1,735,232
Glacier Bancorp, Inc.		101,600		1,490,472
Independent Bank Corp./MA		38,200		942,776
National Penn Bancshares, Inc.		201,400		1,210,414
Pinnacle Financial Partners, Inc. (a)		87,400		1,123,090
Popular, Inc. (a)		117,966		316,149
PrivateBancorp, Inc.		75,100		832,108
S&T Bancorp, Inc. (b)		38,900		768,664
Texas Capital Bancshares, Inc. (a)		39,500		647,800
United Bankshares, Inc. (b)		50,100		1,199,394
Whitney Holding Corp.		82,600		764,050
				18,739,278
Communications Equipment — 2.6%
ADC Telecommunications, Inc. (a)		202,100		1,497,561
Harmonic, Inc. (a)		171,700		934,048
Ixia (a)		101,398		871,009
JDS Uniphase Corp. (a)		113,500		1,116,840
Tellabs, Inc.		202,200		1,292,058
				5,711,516
Construction & Engineering — 0.9%
URS Corp. (a)		47,000		1,849,450
Consumer Finance — 0.2%
Ezcorp, Inc. (a)		26,000		482,300
Containers & Packaging — 1.1%
Packaging Corp. of America		49,800		1,096,596
Rock-Tenn Co., Class A		25,300		1,256,651
				2,353,247
Diversified Consumer Services — 0.3%
Service Corp. International		81,300		601,620
Electric Utilities — 1.4%
Allete, Inc.		36,900		1,263,456
UIL Holdings Corp.		74,600		1,867,238
				3,130,694
Electrical Equipment — 0.6%
Regal-Beloit Corp.		25,100		1,400,078
Electronic Equipment, Instruments & Components — 0.7%
Ingram Micro, Inc., Class A (a)		101,800		1,546,342
Energy Equipment & Services — 2.3%
CARBO Ceramics, Inc. (b)		29,800		2,151,262
Oil States International, Inc. (a)		22,600		894,508
Pioneer Drilling Co. (a)		97,000		549,990
Superior Energy Services, Inc. (a)		70,000		1,306,900
				4,902,660
Food & Staples Retailing — 0.5%
BJ’s Wholesale Club, Inc. (a)		30,600		1,132,506
Food Products — 0.9%
Dean Foods Co. (a)		15,400		155,078
Diamond Foods, Inc.		20,800		854,880
Hain Celestial Group, Inc. (a)		49,908		1,006,644
				2,016,602
Gas Utilities — 2.5%
Nicor, Inc.		21,500		870,750
South Jersey Industries, Inc.		49,400		2,122,224
Southwest Gas Corp.		82,200		2,424,900
				5,417,874
Health Care Equipment & Supplies — 3.2%
CONMED Corp. (a)		103,300		1,924,479
Exactech, Inc. (a)		8,600		146,888
Hansen Medical, Inc. (a)		285,000		607,050
Kinetic Concepts, Inc. (a)		20,100		733,851
Merit Medical Systems, Inc. (a)		47,300		760,111
OraSure Technologies, Inc. (a)		604,700		2,799,761
				6,972,140
Health Care Providers & Services — 4.4%
Coventry Health Care, Inc. (a)		96,400		1,704,352
Health Net, Inc. (a)		141,300		3,443,481
Healthways, Inc. (a)		92,600		1,103,792
LCA-Vision, Inc. (a)		119,200		660,368
MedCath Corp. (a)		33,200		260,952
PharMerica Corp. (a)		119,100		1,746,006
WellCare Health Plans, Inc. (a)		28,000		664,720
				9,583,671
Hotels, Restaurants & Leisure — 1.2%
Brinker International, Inc.		38,000		549,480
Burger King Holdings, Inc.		11,600		195,344
Jack in the Box, Inc. (a)		90,290		1,756,140
				2,500,964
Household Durables — 0.6%
Furniture Brands International, Inc. (a)		50,600		264,132
MDC Holdings, Inc.		42,200		1,137,290
				1,401,422

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 5

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Household Products — 0.2%
Cellu Tissue Holdings, Inc. (a)		60,600	$	470,862
IT Services — 0.7%
Convergys Corp. (a)		159,200		1,561,752
Insurance — 3.4%
Allied World Assurance Holdings Ltd.		24,100		1,093,658
Amerisafe, Inc. (a)		32,500		570,375
Fidelity National Title Group, Inc., Class A		60,000		779,400
The Hanover Insurance Group, Inc.		16,900		735,150
Infinity Property & Casualty Corp.		20,200		932,836
ProAssurance Corp. (a)		28,500		1,617,660
RLI Corp.		22,100		1,160,471
Symetra Financial Corp.		47,700		572,400
				7,461,950
Internet Software & Services — 2.0%
IAC/InterActiveCorp. (a)		120,900		2,656,173
ValueClick, Inc. (a)		165,900		1,773,471
				4,429,644
Leisure Equipment & Products — 0.4%
Leapfrog Enterprises, Inc. (a)		198,000		795,960
Life Sciences Tools & Services — 2.1%
Affymetrix, Inc. (a)		319,800		1,886,820
Furiex Pharmaceuticals, Inc. (a)		8,400		85,344
Pharmaceutical Product Development, Inc.		100,800		2,561,328
				4,533,492
Machinery — 8.0%
AGCO Corp. (a)		61,000		1,645,170
Altra Holdings, Inc. (a)		149,100		1,941,282
Astec Industries, Inc. (a)		45,500		1,261,715
Briggs & Stratton Corp.		108,400		1,844,968
CIRCOR International, Inc.		45,700		1,169,006
EnPro Industries, Inc. (a)		59,200		1,666,480
IDEX Corp.		65,000		1,857,050
Kennametal, Inc.		34,100		867,163
RBC Bearings, Inc. (a)		46,800		1,356,732
Robbins & Myers, Inc.		120,500		2,619,670
Terex Corp. (a)		63,900		1,197,486
				17,426,722
Media — 1.9%
Harte-Hanks, Inc.		211,400		2,209,130
Playboy Enterprises, Inc., Class B (a)		308,500		1,295,700
Regal Entertainment Group, Series A		52,800		688,512
				4,193,342
Metals & Mining — 1.5%
Carpenter Technology Corp.		71,200		2,337,496
Stillwater Mining Co. (a)		83,700		972,594
				3,310,090
Multi-Utilities — 2.0%
NorthWestern Corp.		50,200		1,315,240
OGE Energy Corp.		51,600		1,886,496
Vectren Corp.		49,900		1,180,634
				4,382,370
Multiline Retail — 1.8%
Big Lots, Inc. (a)		47,200		1,514,648
Fred’s, Inc.		75,700		837,242
Saks, Inc. (a)		192,400		1,460,316
				3,812,206
Oil, Gas & Consumable Fuels — 3.4%
Cabot Oil & Gas Corp., Class A		25,600		801,792
Frontier Oil Corp.		49,100		660,395
Oasis Petroleum, Inc. (a)		89,800		1,302,100
SM Energy Co.		47,500		1,907,600
Ship Finance International Ltd. (b)		68,100		1,217,628
Whiting Petroleum Corp. (a)		13,500		1,058,670
World Fuel Services Corp.		17,400		451,356
				7,399,541
Personal Products — 0.4%
Alberto-Culver Co.		28,000		758,520
Pharmaceuticals — 1.3%
King Pharmaceuticals, Inc. (a)		358,100		2,717,979
Professional Services — 1.1%
Kelly Services, Inc., Class A (a)		66,500		988,855
Kforce, Inc. (a)		34,400		438,600
Resources Connection, Inc. (a)		75,100		1,021,360
				2,448,815
Real Estate Investment Trusts (REITs) — 7.2%
AMB Property Corp.		44,000		1,043,240
Acadia Realty Trust		100,100		1,683,682
American Campus Communities, Inc.		88,800		2,423,352
BioMed Realty Trust, Inc.		144,400		2,323,396
HRPT Properties Trust		191,800		1,191,078
Inland Real Estate Corp.		163,200		1,292,544
Lexington Corporate Properties Trust (b)		210,050		1,262,401
The Macerich Co.		37,647		1,404,986
Omega Healthcare Investors, Inc.		29,700		591,921
Potlatch Corp.		27,600		986,148
Senior Housing Properties Trust		27,000		542,970
Winthrop Realty Trust		60,300		772,443
				15,518,161
Real Estate Management & Development — 0.6%
The St. Joe Co. (a)(b)		54,400		1,259,904
Road & Rail — 2.7%
Marten Transport Ltd. (a)		91,900		1,909,682
Railamerica, Inc. (a)		163,000		1,616,960
Vitran Corp., Inc. (a)		171,600		2,270,268
				5,796,910
Semiconductors & Semiconductor Equipment — 5.1%
Actel Corp. (a)		80,400		1,030,728
DSP Group, Inc. (a)		212,700		1,359,153
Fairchild Semiconductor International, Inc. (a)		146,336		1,230,686
Intersil Corp., Class A		142,400		1,724,464
MKS Instruments, Inc. (a)		86,400		1,617,408
PMC-Sierra, Inc. (a)		126,800		953,536
Teradyne, Inc. (a)		156,400		1,524,900
Zoran Corp. (a)		157,500		1,502,550
				10,943,425
Software — 2.5%
Bottomline Technologies, Inc. (a)		164,003		2,136,959
Novell, Inc. (a)		186,400		1,058,752
TIBCO Software, Inc. (a)		177,500		2,140,650
				5,336,361
Specialty Retail — 6.2%
Charming Shoppes, Inc. (a)(b)		439,300		1,647,375
The Children’s Place Retail Stores, Inc. (a)		43,400		1,910,468
Collective Brands, Inc. (a)		98,300		1,553,140
Dress Barn, Inc. (a)		75,800		1,804,798
Genesco, Inc. (a)		64,300		1,691,733
Jo-Ann Stores, Inc. (a)		45,100		1,691,701

See Notes to Financial Statements.

6 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Schedule of Investments (continued) (Percentages shown are based on Net Assets)

Common Stocks	Shares		Value
Specialty Retail (concluded)
Penske Auto Group, Inc. (a)		68,400	$	777,024
The Talbots, Inc. (a)(b)		141,000		1,453,710
The Wet Seal, Inc., Class A (a)		265,000		967,250
				13,497,199
Textiles, Apparel & Luxury Goods — 0.8%
Jones Apparel Group, Inc.		67,300		1,066,705
Steven Madden Ltd. (a)		21,150		666,648
				1,733,353
Thrifts & Mortgage Finance — 1.7%
Dime Community Bancshares, Inc.		111,500		1,374,795
Provident Financial Services, Inc.		145,600		1,702,064
Provident New York Bancorp		74,100		655,785
				3,732,644
Trading Companies & Distributors — 1.5%
Applied Industrial Technologies, Inc.		51,497		1,303,904
H&E Equipment Services, Inc. (a)		106,600		798,434
WESCO International, Inc. (a)		36,500		1,228,955
				3,331,293
Total Common Stocks — 98.5%				213,444,414
Warrants (c)	Shares		Value
Commercial Banks — 0.2%
Texas Capital Bancshares, Inc. (Expires 1/16/19)		67,800	$	528,840
Total Warrants — 0.2%				528,840
Total Long-Term Investments (Cost — $213,438,980) — 98.7%				213,973,254
Short-Term Securities
BlackRock Liquidity Funds, TempFund, Institutional Class, 0.16% (d)(e)		1,917,952		1,917,952
	Beneficial
	Interest
	(000)
BlackRock Liquidity Series, LLC Money Market Series, 0.27% (d)(e)(f)	$	11,484		11,484,200
Total Short-Term Securities (Cost — $13,402,152) — 6.2%				13,402,152
Total Investments (Cost — $226,841,132*) — 104.9%				227,375,406
Liabilities in Excess of Other Assets — (4.9)%				(10,715,542	)
Net Assets — 100.0%			$	216,659,864

*  The cost and unrealized appreciation (depreciation) of investments as of June 30, 2010, as computed for federal income tax purposes were as follows:

Aggregate cost	$	232,557,424
Gross unrealized appreciation	$	18,407,194
Gross unrealized depreciation		(23,589,212	)
Net unrealized depreciation	$	(5,182,018	)

(a)	Non-income producing security.
(b)	Security, or a portion of security, is on loan.
(c)	Warrants entitle the Fund to purchase a predetermined number of shares of common stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date.

(d)  Investments in companies considered to be an affiliate of the Fund during the period, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, as amended, were as follows:

	Shares/					Shares/
	Beneficial					Beneficial
	Interest		Shares/			Interest
	Held at		Beneficial			Held at		Value at
	December 31,		Interest			June 30,		June 30,		Realized
	2009		Sold			2010		2010		Gain		Income
BlackRock Liquidity Funds, TempFund, Institutional Class		2,473,939		(555,987	)1		1,917,952	$	1,917,952		—	$	3,672
BlackRock Liquidity Series, LLC Money Market Series	$	20,332,250	$	(8,848,050	)1	$	11,484,200	$	11,484,200		—	$	76,988
iShares Dow Jones U.S. Real Estate Index Fund		24,600		(24,600	)		—		—	$	20,114		—

¹ Represents net shares/beneficial interest sold.

(e)	Represents the current yield as of report date.
(f)	Security was purchased with the cash collateral from loaned securities.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 7

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Schedule of Investments (concluded)

  •  For Fund compliance purposes, the Fund’s industry classifications refer to any one or more of the industry sub-classifications used by one or more widely recognized market indexes or rating group indexes, and/or as defined by Fund management. This definition may not apply for purposes of this report, which may combine such industry sub-classifications for reporting ease.

  •  Fair Value Measurements—Various inputs are used in determining the fair value of investments, which are as follows:

      •  Level 1—price quotations in active markets/exchanges for identical assets and liabilities

      •  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)

The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. For information about the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to Note 1 of the Notes to Financial Statements.

The following table summarizes the inputs used as of June 30, 2010 in determining the fair valuation of the Fund’s investments:

Valuation Inputs	Level 1		Level 2		Level 3		Total
Assets:
Investments in Securities:
Long-Term Investments1	$	213,973,254		—		—	$	213,973,254
Short-Term Securities		1,917,952	$	11,484,200		—		13,402,152
Total	$	215,891,206	$	11,484,200		—	$	227,375,406

¹ See above Schedule of Investments for values in each industry.

See Notes to Financial Statements.

8 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Statement of Assets and Liabilities June 30, 2010 (Unaudited)

Assets:
Investments at value—unaffiliated (including securities loaned of $11,073,685) (cost—$213,438,980)	$	213,973,254
Investments at value—affiliated (cost—$13,402,152)		13,402,152
Investments sold receivable		782,795
Dividends receivable		222,181
Capital shares sold receivable		69,194
Securities lending income receivable—affiliated		6,258
Prepaid expenses		33,030
Total assets		228,488,864
Liabilities:
Collateral on securities loaned, at value		11,484,200
Investment advisory fees payable		142,273
Investments purchased payable		107,066
Capital shares redeemed payable		47,660
Distribution fees payable		2,195
Other affiliates payable		1,920
Officer’s and Directors’ fees payable		569
Other accrued expenses payable		43,117
Total liabilities		11,829,000
Net Assets	$	216,659,864
Net Assets Consist of:
Paid-in capital	$	352,469,798
Undistributed net investment income		558,347
Accumulated net realized loss		(136,902,555	)
Net unrealized appreciation/depreciation		534,274
Net Assets	$	216,659,864
Net Asset Value:
Class I—Based on net assets of $204,821,146 and 15,065,416 shares outstanding, 100 million shares authorized, $0.10 par value	$	13.60
Class II—Based on net assets of $4,412,009 and 325,434 shares outstanding, 100 million shares authorized, $0.10 par value	$	13.56
Class III—Based on net assets of $7,426,709 and 664,554 shares outstanding, 100 million shares authorized, $0.10 par value	$	11.18

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 9

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Statement of Operations Six Months Ended June 30, 2010 (Unaudited)

Investment Income:
Dividends—unaffiliated	$	1,313,239
Securities lending—affiliated		76,988
Dividends—affiliated		3,672
Total income		1,393,899
Expenses:
Distribution—Class II		3,668
Distribution—Class III		8,689
Transfer agent—Class I		2,367
Transfer agent—Class II		51
Transfer agent—Class III		73
Investment advisory		891,073
Accounting services		38,507
Professional		21,996
Printing		19,541
Custodian		15,705
Officer and Directors		11,074
Miscellaneous		8,695
Total expenses		1,021,439
Less fees waived by advisor		(2,236	)
Total expenses after fees waived		1,019,203
Net investment income		374,696
Realized and Unrealized Gain (Loss):
Net realized gain from:
Investments—unaffiliated		4,849,793
Investments—affiliated		20,114
Litigation proceeds		801,868
		5,671,775
Net change in unrealized appreciation/depreciation on investments		(8,759,490	)
Total realized and unrealized loss		(3,087,715	)
Net Decrease in Net Assets Resulting from Operations	$	(2,713,019	)

See Notes to Financial Statements.

10 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2010			Year Ended
Increase (Decrease) in Net Assets:	(Unaudited)			December 31, 2009
Operations:
Net investment income	$	374,696		$	1,285,066
Net realized gain (loss)		5,671,775			(89,640,359	)
Net change in unrealized appreciation/depreciation		(8,759,490	)		133,274,646
Net increase (decrease) in net assets resulting from operations		(2,713,019	)		44,919,353
Dividends to Shareholders From:
Net investment income:
Class I		—			(1,262,301	)
Class II		—			(21,968	)
Class III		—			(30,463	)
Decrease in net assets resulting from dividends to shareholders		—			(1,314,732	)
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share transactions		(8,340,679	)		10,273,247
Net Assets:
Total increase (decrease) in net assets		(11,053,698	)		53,877,868
Beginning of period		227,713,562			173,835,694
End of period	$	216,659,864		$	227,713,562
Undistributed net investment income	$	558,347		$	183,651

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 11

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Financial Highlights

	Class I
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	13.79		$	10.81	$	19.11	$	23.41	$	24.93	$	26.17
Net investment income1		0.02			0.08		0.12		0.03		0.07		0.07
Net realized and unrealized gain (loss)		(0.21)			2.98		(7.80)		(0.22)		3.12		2.58
Net increase (decrease) from investment operations		(0.19)			3.06		(7.68)		(0.19)		3.19		2.65
Dividends and distributions from:
Net investment income		—			(0.08)		(0.12)		(0.04)		(0.08)		(0.07)
Net realized gain		—			—		(0.50)		(4.07)		(4.63)		(3.82)
Total dividends and distributions		—			(0.08)		(0.62)		(4.11)		(4.71)		(3.89)
Net asset value, end of period	$	13.60		$	13.79	$	10.81	$	19.11	$	23.41	$	24.93
Total Investment Return:2
Based on net asset value		(1.38)%	3,4		28.34%		(40.04)%		(0.89)%		12.82%		10.38%
Ratios to Average Net Assets:
Total expenses		0.85%	5		0.88%		0.87%		0.84%		0.84%		0.84%
Total expenses after fees waived		0.85%	5		0.88%		0.87%		0.84%		0.84%		0.84%
Net investment income		0.32%	5		0.73%		0.72%		0.14%		0.27%		0.28%
Supplemental Data:
Net assets, end of period (000)	$	204,821		$	217,029	$	164,193	$	351,954	$	443,153	$	482,681
Portfolio turnover		29%			121%		127%		103%		72%		80%

1	Based on average shares outstanding.
2	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
3	Aggregate total investment return.
4	Includes proceeds received from a settlement of litigation which impacted the Fund’s total return. Not including these proceeds, the total return would have been (1.74)%.
5	Annualized.

See Notes to Financial Statements.

12 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Financial Highlights (continued)

	Class II
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007			2006		2005
Per Share Operating Performance:
Net asset value, beginning of period	$	13.76		$	10.79	$	19.06	$	23.35		$	24.87	$	26.11
Net investment income (loss)1		0.01			0.06		0.09		—	2		0.03		0.04
Net realized and unrealized gain (loss)		(0.21)			2.97		(7.77)		(0.23)			3.11		2.57
Net increase (decrease) from investment operations		(0.20)			3.03		(7.68)		(0.23)			3.14		2.61
Dividends and distributions from:
Net investment income		—			(0.06)		(0.09)		—			(0.03)		(0.03)
Net realized gain		—			—		(0.50)		(4.06)			(4.63)		(3.82)
Total dividends and distributions		—			(0.06)		(0.59)		(4.06)			(4.66)		(3.85)
Net asset value, end of period	$	13.56		$	13.76	$	10.79	$	19.06		$	23.35	$	24.87
Total Investment Return:3
Based on net asset value		(1.45)%	4,5		28.12%		(40.14)%		(1.03)%			12.67%		10.24%
Ratios to Average Net Assets:
Total expenses		1.00%	6		1.03%		1.02%		0.99%			0.99%		0.99%
Total expenses after fees waived		1.00%	6		1.03%		1.02%		0.99%			0.99%		0.99%
Net investment income (loss)		0.18%	6		0.49%		0.56%		(0.02)%			0.12%		0.14%
Supplemental Data:
Net assets, end of period (000)	$	4,412		$	4,740	$	4,898	$	11,281		$	14,991	$	16,489
Portfolio turnover		29%			121%		127%		103%			72%		80%

1	Based on average shares outstanding.
2	Amount is less than $(0.01) per share.
3	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
4	Aggregate total investment return.
5	Includes proceeds received from a settlement of litigation which impacted the Fund’s total return. Not including these proceeds, the total return would have been (1.82)%.
6	Annualized.

See Notes to Financial Statements.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 13

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Financial Highlights (concluded)

	Class III1
	Six Months Ended
	June 30, 2010			Year Ended December 31,
	(Unaudited)			2009		2008		2007		2006			2005
Per Share Operating Performance:
Net asset value, beginning of period	$	11.35		$	8.91	$	15.93	$	20.20	$	59.70		$	90.00
Net investment income (loss)2		0.01			0.04		0.07		(0.02)		—	3		0.10
Net realized and unrealized gain (loss)		(0.18)			2.46		(6.50)		(0.20)		7.30			8.40
Net increase (decrease) from investment operations		(0.17)			2.50		(6.43)		(0.22)		7.30			8.50
Dividends and distributions from:
Net investment income		—			(0.06)		(0.09)		—		(0.50)			(0.60)
Net realized gain		—			—		(0.50)		(4.05)		(46.30)			(38.20)
Total dividends and distributions		—			(0.06)		(0.59)		(4.05)		(46.80)			(38.80)
Net asset value, end of period	$	11.18		$	11.35	$	8.91	$	15.93	$	20.20		$	59.70
Total Investment Return:4
Based on net asset value		(1.50)%	5,6		28.06%		(40.21)%		(1.15)%		12.28%			10.11%
Ratios to Average Net Assets:
Total expenses		1.10%	7		1.13%		1.12%		1.10%		1.08%			1.09%
Total expenses after fees waived		1.10%	7		1.13%		1.12%		1.10%		1.08%			1.09%
Net investment income (loss)		0.11%	7		0.45%		0.49%		(0.12)%		(0.02)%			0.11%
Supplemental Data:
Net assets, end of period (000)	$	7,427		$	5,944	$	4,745	$	8,037	$	7,810		$	27,600
Portfolio turnover		29%			121%		127%		103%		72%			80%

1	On December 14, 2007, the Fund declared a 1 for 10 stock split. The net asset values and other per share information listed above have been restated to reflect the stock split.
2	Based on average shares outstanding.
3	Amount is less than $(0.01) per share.
4	Where applicable, total investment returns exclude insurance-related fees and expenses and include the reinvestment of dividends and distributions.
5	Aggregate total investment return.
6	Includes proceeds received from a settlement of litigation which impacted the Fund’s total return. Not including these proceeds, the total return would have been (1.85)%.
7	Annualized.

See Notes to Financial Statements.

14 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.

BlackRock Value Opportunities V.I. Fund

Notes to Financial Statements (Unaudited)

1.  Organization and Significant Accounting Policies:

BlackRock Variable Series Funds, Inc. (the “Company”), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company that is comprised of 16 separate funds. 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 here are for the BlackRock Value Opportunities V.I. Fund (“the Fund”), which are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”), which may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Class I, Class II and Class III Shares have equal 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 II and Class III Shares bear certain expenses related to the distribution of such shares.

The following is a summary of significant accounting policies followed by the Fund:

Valuation: The Fund’s policy is to fair value its financial instruments at market value using independent dealers or pricing services selected under the supervision of the Board of Directors (the “Board”). Equity investments traded on a recognized securities exchange or the NASDAQ Global Market System are valued at the last reported sale price that day or the NASDAQ official closing price, if applicable. For equity investments traded on more than one exchange, the last reported sale 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 are valued at the last available bid price. If no bid price is available, the prior day’s price will be used, unless it is determined that such prior day’s price no longer reflects the fair value of the security. Investments in open-end investment companies are valued at net asset value each business day. Short-term securities with remaining maturities of 60 days or less may be valued at amortized cost, which approximates fair value.

The Fund values its investment in BlackRock Liquidity Series, LLC Money Market Series (the “Money Market Series”) at fair value, which is ordinarily based upon its pro rata ownership in the net assets of the underlying fund. The Money Market Series seeks current income consistent with maintaining liquidity and preserving capital. Although the Money Market Series is not registered under the 1940 Act, its investments will follow the parameters of investments by a money market fund that is subject to Rule 2a-7 promulgated by the Securities and Exchange Commission (the “SEC”) under the 1940 Act. The Fund may withdraw up to 25% of its investment daily, although the manager of the Money Market Series, in its sole discretion, may permit an investor to withdraw more than 25% on any one day.

In the event that application of these methods of valuation results in a price for an investment which is deemed not to be representative of the market value of such investment or is not available, the investment will be valued in accordance with a policy approved by the Board as reflecting fair value (“Fair Value Assets”). When determining the price for Fair Value Assets, the investment advisor and/or the sub-advisor seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm’s-length transaction. Fair value determinations shall be based upon all available factors that the investment advisor and/or sub-advisor deems relevant. The pricing of all Fair Value Assets is subsequently reported to the Board or a committee thereof.

Investment Transactions and Investment Income: 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 dates. Dividends from foreign securities where the ex-dividend date may have passed are subsequently recorded when the Fund has determined the ex-dividend date. Upon notification from issuers, some 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 of premium and accretion of discount on debt securities, is recognized on the accrual basis. Income and realized and unrealized gains and losses are allocated daily to each class based on its relative net assets.

Dividends and Distributions: Dividends and distributions paid by the Fund are recorded on the

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 15

ex-dividend dates. The amount and timing of dividends and distributions are determined in accordance with federal income tax regulations, which may differ from US GAAP.

Securities Lending: The Fund may lend securities to financial institutions that provide cash as collateral, which will be maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Fund and any additional required collateral is delivered to the Fund on the next business day. Securities lending income, as disclosed in the Statement of Operations, represents the income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the securities lending agent. Loans of securities are terminable at any time and the borrower, after notice, is required to return borrowed securities within the standard time period for settlement of securities transactions. In the event that the borrower defaults on its obligation to return borrowed securities because of insolvency or for any other reason, the Fund could experience delays and costs in gaining access to the collateral. The Fund also could suffer a loss if the value of an investment purchased with cash collateral falls below the market value of loaned securities or if the value of an investment purchased with cash collateral falls below the value of the original cash collateral received.

Income Taxes: 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 federal income tax provision is required.

The Fund files US federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund’s US federal tax returns remains open for each of the four years ended December 31, 2009. The statutes of limitations on the Fund’s state and local tax returns may remain open for an additional year depending upon the jurisdiction. There are no uncertain tax positions that require recognition of a tax liability.

Other: Expenses directly related to the Fund or its classes are charged to that Fund or class. Other operating expenses shared by several funds are pro rated among those funds on the basis of relative net assets or other appropriate methods. Other expenses of the Fund are allocated daily to each class based on its relative net assets. The Fund has an arrangement with the custodian whereby fees may be reduced by credits earned on uninvested cash balances, which if applicable are shown as fees paid indirectly in the Statement of Operations. The custodian imposes fees on overdrawn cash balances, which can be offset by accumulated credits earned or may result in additional custody charges.

2.  Investment Advisory Agreement and Other Transactions with Affiliates:

The PNC Financial Services Group, Inc. (“PNC”), Bank of America Corporation (“BAC”) and Barclays Bank PLC (“Barclays”) are the largest stockholders of BlackRock, Inc. (“BlackRock”). Due to the ownership structure, PNC is an affiliate of the Fund for 1940 Act purposes, but BAC and Barclays are not.

The Company, on behalf of the Fund, entered into an Investment Advisory Agreement with BlackRock Advisors, LLC (the “Manager”), the Fund’s investment advisor, an indirect, wholly owned subsidiary of BlackRock, to provide investment advisory and administration services. The Manager is responsible for the management of the Fund’s portfolio and provides the necessary 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 0.75% of the Fund’s average daily net assets.

The Manager entered into a sub-advisory agreement with BlackRock Investment Management, LLC (“BIM”), an affiliate of the Manager. The Manager pays BIM for services it provides, a monthly fee that is a percentage of the investment advisory fees paid by the Fund to the Manager.

The Manager and Merrill Lynch Life Agency, Inc. (“MLLA”) have contractually agreed to limit the operating expenses paid by the Fund, (excluding: interest, taxes, brokerage fees and commissions, distribution fees imposed on Class II and Class III Shares and other extraordinary expenses such as litigation costs), to 1.25% of its average daily net assets. Any such expenses in excess of 1.25% of average daily net assets will be reimbursed to the Fund by the Manager, which in turn, will be reimbursed by MLLA.

The Manager voluntarily agreed to waive its advisory fees by the amount of investment advisory fees the Fund pays to the Manager indirectly through its investment in affiliated money market funds; however the Manager does not waive its advisory fees by the amount of investment advisory fees paid through its investment in other affiliated investment companies, if any. This amount is shown as fees waived by advisor in the Statement of Operations.

For the six months ended June 30, 2010, the Fund reimbursed the Manager $2,195 for certain

16 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

accounting services, which is included in accounting services in the Statement of Operations.

The Company entered into a Distribution Agreement and Distribution Plan with BlackRock Investments, LLC (“BRIL”), an affiliate of BlackRock. Pursuant to the Distribution Plan and in accordance with Rule 12b-1 under the 1940 Act, the Fund pays BRIL ongoing service and distribution fees. The fees are accrued daily and paid monthly at the annual rate of 0.15% and 0.25% based upon the average daily net assets attributable to Class II and Class III.

PNC Global Investment Servicing (U.S.) Inc (PNCGIS”), an indirect, wholly owned subsidiary of PNC and an affiliate of the Manager, serves as transfer agent and dividend disbursing agent. Effective July 1, 2010, PNCGIS was sold to The Bank of New York Mellon Corporation and is no longer considered an affiliate of the Manager. At the close of the sale, PNCGIS changed its name to BNY Mellon Investment Servicing (US) Inc. Transfer agency fees borne by the Fund are comprised of those fees charged for all shareholder communications including mailing of shareholder reports, dividend and distribution notices, and proxy materials for shareholder meetings, as well as per account and per transaction fees related to servicing and maintenance of shareholder accounts, including the issuing, redeeming and transferring of shares, check writing, anti-money laundering services, and customer identification services.

The Company received an exemptive order from the SEC permitting it to, among other things, pay an affiliated securities lending agent a fee based on a share of the income derived from the securities lending activities and has retained BIM as the securities lending agent. BIM may, on behalf of the Fund, invest cash collateral received by the Fund for such loans, among other things, in a private investment company managed by the Manager or in registered money market funds advised by the Manager or its affiliates. The market value of securities on loan and the value of the related collateral are shown in the Statement of Assets and Liabilities as securities loaned and collateral on securities loaned, at value, respectively. The cash collateral invested by BIM is disclosed in the Schedule of Investments. The share of income earned by the Fund on such investments is shown as securities lending—affiliated in the Statement of Operations. For the six months ended June 30, 2010, BIM received $19,240 in securities lending agent fees related to securities lending activities for the Fund.

Certain officers and/or directors of the Company are officers and/or directors of BlackRock or its affiliates. The Fund reimburses the Manager for compensation paid to the Company’s Chief Compliance Officer.

3.  Investments:

Purchases and sales of investments, excluding short-term securities for the six months ended June 30, 2010, were $65,744,043 and $72,481,718, respectively.

4.  Borrowings:

The Company, on behalf of the Fund, along with certain other funds managed by the Manager and its affiliates, is a party to a $500 million credit agreement with a group of lenders, which expires in November 2010. The Fund may borrow under the credit agreement to fund shareholder redemptions. The Fund paid its pro rata share of 0.02% upfront fee on the aggregate commitment amount which was allocated to the Fund based on its net assets as of October 31, 2009, a commitment fee of 0.10% per annum based on the Fund’s pro rata share of the unused portion of the credit agreement, which is included in Miscellaneous in the Statement of Operations, and interest at a rate equal to the higher of (a) the one-month LIBOR plus 1.25% per annum and (b) the Fed Funds rate plus 1.25% per annum on amounts borrowed. The Fund did not borrow under the credit agreement during the six months ended June 30, 2010.

5.  Capital Loss Carryforwards:

As of December 31, 2009, the Fund had capital loss carryforwards available to offset future realized capital gains through the indicated expiration dates:

Expires December 31,
2016	$	24,264,136
2017		109,743,320
Total	$	134,007,456

6.  Concentration, Market and Credit Risk:

In the normal course of business, the Fund invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk) or failure of the issuer of a security to meet all its obligations (issuer credit risk). The value of securities held by the Fund may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; and currency and interest rate and price fluctuations.

JUNE 30, 2010 BLACKROCK VARIABLE SERIES FUNDS, INC. 17

Similar to issuer credit risk, the Fund may be exposed to counterparty credit risk, or the risk that an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that it 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 generally approximated by their value recorded in the Fund’s Statement of Assets and Liabilities, less any collateral held by the Fund.

The Fund invests a significant portion of its assets in securities in the financials sector. Changes in economic conditions affecting the financials sector would have a greater impact on the Fund and could affect the value, income and/or liquidity of positions in such securities.

7.  Capital Share Transactions:

Transactions in capital shares for each class were as follows:

Class I Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		368,413		$	5,477,379
Shares redeemed		(1,038,792	)		(15,476,883	)
Net decrease	��	(670,379	)	$	(9,999,504	)

Class I Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		2,786,719		$	35,713,279
Shares issued to shareholders in reinvestment of dividends		92,820			1,262,301
Total issued		2,879,539			36,975,580
Shares redeemed		(2,333,814	)		(25,432,344	)
Net increase		545,725		$	11,543,236

Class II Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		3,881		$	57,129
Shares redeemed		(22,851	)		(336,459	)
Net decrease		(18,970	)	$	(279,330	)

Class II Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		17,557		$	189,362
Shares issued to shareholders in reinvestment of dividends		1,642			21,968
Total issued		19,199			211,330
Shares redeemed		(128,750	)		(1,412,970	)
Net decrease		(109,551	)	$	(1,201,640	)

Class III Shares
Six Months Ended June 30, 2010	Shares			Amount
Shares sold		237,172		$	3,073,868
Shares redeemed		(96,250	)		(1,135,713	)
Net increase		140,922		$	1,938,155

Class III Shares
Year Ended December 31, 2009	Shares			Amount
Shares sold		137,858		$	1,259,922
Shares issued to shareholders in reinvestment of dividends		2,759			30,463
Total issued		140,617			1,290,385
Shares redeemed		(149,374	)		(1,358,734	)
Net decrease		(8,757	)	$	(68,349	)

8.  Subsequent Events:

Management’s evaluation of the impact of all subsequent events on the Fund’s financial statements was completed through the date the financial statements were issued and the following items were noted:

The Fund paid a net investment income dividend on July 23, 2010 to shareholders of record on July 21, 2010 as follows:

		Dividend Per Share
Class I	$	0.011423
Class II	$	0.011423
Class III	$	0.011401

18 BLACKROCK VARIABLE SERIES FUNDS, INC. JUNE 30, 2010

BlackRock Variable Series Funds, Inc.,

Disclosure of Investment Advisory Agreement and Sub-Advisory Agreements

Disclosure of Investment Advisory Agreements and Sub-Advisory Agreements

The Board of Directors (the “Board,” and the members of which are referred to as “Board Members”) of BlackRock Balanced Capital V.I. Fund (the “Balanced Capital V.I. Fund”), BlackRock Basic Value V.I. Fund (the “Basic Value V.I. Fund”), BlackRock Capital Appreciation V.I. Fund (the “Capital Appreciation V.I. Fund”), BlackRock Global Allocation V.I. Fund (the “Global Allocation V.I. Fund”), BlackRock Global Opportunities V.I. Fund (the “Global Opportunities V.I. Fund”), BlackRock Government Income V.I. Fund (the “Government Income V.I. Fund”), BlackRock High Income V.I. Fund (the “High Income V.I. Fund”), BlackRock International Value V.I. Fund (the “International Value V.I. Fund”), BlackRock Large Cap Core V.I. Fund (the “Large Cap Core V.I. Fund”), BlackRock Large Cap Growth V.I. Fund (the “Large Cap Growth V.I. Fund”), BlackRock Large Cap Value V.I. Fund (the “Large Cap Value V.I. Fund”), BlackRock Money Market V.I. Fund (the “Money Market V.I. Fund”), BlackRock S&P 500 Index V.I. Fund (the “S&P 500 Index V.I. Fund”), BlackRock Total Return V.I. Fund (the “Total Return V.I. Fund”), BlackRock Utilities and Telecommunications V.I. Fund (the “Utilities and Telecommunications V.I. Fund”) and BlackRock Value Opportunities V.I. Fund (the “Value Opportunities V.I. Fund”) (each, a “Fund,” and collectively, the “Funds”), each a series of BlackRock Variable Series Funds, Inc. (the “Corporation”), met on April 13, 2010 and May 11-12, 2010 to consider the approval of the Corporation’s investment advisory agreements (collectively, the “Advisory Agreements”), on behalf of each Fund, with BlackRock Advisors, LLC (the “Manager”), each Fund’s investment advisor. The Board also considered the approval of the sub-advisory agreements (collectively, the “Sub-Advisory Agreements”) between the Manager and each of (a) BlackRock Investment Management, LLC; (b) BlackRock Financial Management, Inc.; (c) BlackRock International Limited; and (d) BlackRock Institutional Management Corporation (collectively, the “Sub-Advisors”) with respect to the Funds, as applicable. The Manager and the Sub-Advisors are referred to herein as “BlackRock.” The Advisory Agreements and the Sub-Advisory Agreements are referred to herein as the “Agreements.”

Activities and Composition of the Board

The Board consists of fourteen individuals, eleven of whom are 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 the Funds 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 Chairman 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 composed of Independent Board Members (except for the Performance Oversight Committee and the Executive Committee, each of which also has one interested Board Member) and is chaired by Independent Board Members. The Board also has one ad hoc committee, the Joint Product Pricing Committee, which consists of Independent Board Members and directors/trustees of the boards of certain other BlackRock-managed funds, who are not “interested persons” of their respective funds.

The Agreements

Pursuant to the 1940 Act, the Board is required to consider the continuation of the Agreements on an annual basis. In connection with this process, the Board assessed, among other things, the nature, scope and quality of the services provided to each Fund by the personnel of BlackRock and its affiliates, including investment management, administrative and shareholder services, oversight of fund accounting and custody, marketing services and assistance in meeting applicable legal and regulatory requirements.

From time to time throughout the year, the Board, acting directly and through its committees, considers at each of its meetings factors that are relevant to its annual consideration of the renewal of the Agreements, including the services and support provided by BlackRock to each Fund and its shareholders. Among the matters the Board considered were: (a) investment performance for one-, three- and five-year periods, as applicable, against peer funds, and applicable benchmarks, if any, as well as senior management and portfolio managers’ analysis of the reasons for any over performance or underperformance against its peers and/or benchmark, as applicable; (b) fees, including advisory, administration, if applicable, and other amounts paid to BlackRock and its affiliates by each Fund for services, such as transfer agency, marketing and distribution, call center and fund accounting; (c) Fund operating expenses; (d) the resources devoted to and compliance reports relating to each Fund’s investment objective, policies and restrictions, (e) each Fund’s compliance with its Code of Ethics and compliance policies and procedures; (f) the nature, cost and character of

non-investment management services provided by BlackRock and its affiliates; (g) BlackRock’s and other service providers’ internal controls; (h) BlackRock’s implementation of the proxy voting policies approved by the Board; (i) the use of brokerage commissions and execution quality of portfolio transactions; (j) BlackRock’s implementation of each Fund’s valuation and liquidity procedures; (k) an analysis of contractual and actual management fees for products with similar investment objectives across the open-end fund, closed-end fund and institutional account product channels; and (l) periodic updates on BlackRock’s business.

Board Considerations in Approving the Agreements

The Approval Process:  Prior to the April 13, 2010 meeting, the Board requested and received materials specifically relating to the Agreements. The Board is engaged in a process with BlackRock to periodically review the nature and scope of the information provided to better assist its deliberations. The materials provided in connection with the April meeting included (a) information independently compiled and prepared by Lipper, Inc. (“Lipper”) on Fund fees and expenses, and the investment performance of each Fund as compared with a peer group of funds as determined by Lipper (collectively, “Peers”); (b) information on the profitability of the Agreements to BlackRock and a discussion of fall-out benefits to BlackRock and its affiliates and significant shareholders; (c) a general analysis provided by BlackRock concerning investment advisory fees charged to other clients, such as institutional clients and closed-end funds, under similar investment mandates, as well as the performance of such other clients, as applicable; (d) the impact of economies of scale; (e) a summary of aggregate amounts paid by each Fund to BlackRock; (f) sales and redemption data regarding each Fund’s shares; and (g) if applicable, a comparison of management fees to similar BlackRock open-end funds, as classified by Lipper.

At an in-person meeting held on April 13, 2010, the Board reviewed materials relating to its consideration of the Agreements. As a result of the discussions that occurred during the April 13, 2010 meeting, the Board presented BlackRock with questions and requests for additional information and BlackRock responded to these requests with additional written information in advance of the May 11-12, 2010 Board meeting.

At an in-person meeting held on May 11-12, 2010, the Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreements between the Manager and the Corporation, on behalf of each Fund, and the Sub-Advisory Agreements between the Manager and the Sub-Advisors with respect to each Fund, as applicable, each for a one-year term ending June 30, 2011. In approving the continuation of the Agreements, the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment performance of each Fund and BlackRock; (c) the advisory fee and the cost of the services and profits to be realized by BlackRock and its affiliates from their relationship with each Fund; (d) economies of scale; and (e) other factors deemed relevant by the Board Members.

The Board also considered other matters it deemed important to the approval process, such as payments made to BlackRock or its affiliates relating to the distribution of Fund shares, services related to the valuation and pricing of Fund portfolio holdings, direct and indirect benefits to BlackRock and its affiliates and significant shareholders from their relationship with each Fund 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 controlling, and each Board Member may have attributed different weights to the various items considered.

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

The Board, including the Independent Board Members, reviewed the nature, extent and quality of services provided by BlackRock, including the investment advisory services and the resulting performance of each Fund. Throughout the year, the Board compared Fund performance to the performance of a comparable group of mutual funds, and the performance of a relevant benchmark, if any. The Board met with BlackRock’s senior management personnel responsible for investment operations, including the senior investment officers. The Board also reviewed the materials provided by each Fund’s portfolio management team discussing Fund performance and the Fund’s investment objective, strategies and outlook.

The Board considered, among other factors, the number, education and experience of BlackRock’s investment personnel generally and each Fund’s portfolio management team, investments by portfolio managers in the funds they manage, BlackRock’s portfolio trading capabilities, BlackRock’s use of technology, BlackRock’s commitment to compliance and BlackRock’s approach to training and retaining portfolio managers and other research, advisory and management personnel. The Board also reviewed a general description of BlackRock’s compensation structure with respect to each Fund’s portfolio management team and BlackRock’s ability to attract and retain high-quality talent.

In addition to advisory services, the Board considered the quality of the administrative and non-investment advisory services provided to each Fund. BlackRock and its affiliates and significant shareholders provide each Fund with certain administrative, transfer agency, shareholder and other services (in addition to any such services provided to a Fund by third parties) and officers and other personnel as are necessary for the operations of the Fund. In addition to investment advisory services, BlackRock and its affiliates provide each Fund with other services, including (i) preparing disclosure documents, such as the prospectus, the statement of additional information and periodic shareholder reports; (ii) assisting with daily accounting and pricing; (iii) overseeing and coordinating the activities of other service providers; (iv) organizing Board meetings and preparing the materials for such Board meetings; (v) providing legal and compliance support; and (vi) performing other administrative functions necessary for the operation of the Fund, such as tax reporting, fulfilling regulatory filing requirements, and call center services. The Board reviewed the structure and duties of BlackRock’s fund administration, accounting, legal and compliance departments and considered BlackRock’s policies and procedures for assuring compliance with applicable laws and regulations.

B.  The Investment Performance of each Fund and BlackRock

The Board, including the Independent Board Members, also reviewed and considered the performance history of each Fund. In preparation for the April 13, 2010 meeting, the Board was provided with reports, independently prepared by Lipper, which included a comprehensive analysis of each Fund’s performance. The Board also reviewed a narrative and statistical analysis of the Lipper data that was prepared by BlackRock, which analyzed various factors that affect Lipper’s rankings. In connection with its review, the Board received and reviewed information regarding the investment performance of each Fund as compared to a representative group of similar funds as determined by Lipper and to all funds in the Fund’s applicable Lipper category. The Board was provided with a description of the methodology used by Lipper to select peer funds. The Board regularly reviews the performance of each Fund throughout the year. The Board attaches more importance to performance over relatively long periods of time, typically three to five years.

The Board noted that the Balanced Capital V.I. Fund ranked in the fourth, fourth and third quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Balanced Capital V.I. Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the performance was affected by the underperformance of Balanced Capital V.I. Fund’s equity segment due to its fundamental orientation, preference for growth visibility and valuation discipline kept it out of many of the high beta cyclical stocks that outperformed during 2009. In 2008, the Balanced Capital V.I. Fund’s fixed income segment detracted from aggregate performance due primarily to an overweight to high quality spread assets (agency and non-agency mortgages, commercial mortgage backed securities and asset backed securities) and an underweight to U.S. Treasuries.

The Board noted that the Basic Value V.I. Fund ranked in the first quartile against its Lipper Performance Universe for each of the one-, three- and five-year periods reported.

The Board noted that the Capital Appreciation V.I. Fund ranked in the third, first and second quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively.

The Board noted that the Global Allocation V.I. Fund ranked in the fourth, first and first quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively.

The Board noted that the Global Opportunities V.I. Fund ranked in the third, first and first quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively.

The Board noted that the Government Income V.I. Fund ranked in the fourth quartile against its Lipper Performance Universe for each of the one-, three- and five-year periods reported. The Board and BlackRock reviewed the reasons for the Government Income V.I. Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the longer term performance has been significantly impacted by 2008’s underperformance, which was due mainly to the Government Income V.I. Fund’s traditionally above-benchmark exposure to agency mortgage-backed securities, and the Government Income V.I. Fund’s close to 20% allocation in non-government debt, most notably to the non-agency mortgage-backed securities and commercial mortgage-backed securities markets.

The Board noted that the High Income V.I. Fund ranked in the first, second and third quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively.

The Board noted that the International Value V.I. Fund ranked in the second, third and second quartiles against its Lipper Performance Universe

for the one-, three- and five-year periods reported, respectively.

The Board noted that the Large Cap Core V.I. Fund ranked in the fourth, fourth and third quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Large Cap Core V.I. Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, the Large Cap Core V.I. Fund’s fundamental orientation, preference for growth visibility and valuation discipline kept it out of many of the high beta cyclical stocks that outperformed during 2009. The Large Cap Core V.I. Fund’s holdings in issuers focused on information technology, industrials, energy and consumer staples detracted from the Large Cap Core V.I. Fund’s performance for the three-year and five-year periods.

The Board noted that the Large Cap Growth V.I. Fund ranked in the fourth quartile against its Lipper Performance Universe for each of the one-, three- and five-year periods reported. The Board and BlackRock reviewed the reasons for the Large Cap Growth V.I. Fund’s underperformance during these periods compared with its Peers. The Board was informed that, among other things, for the one-, three-, and five-year periods, underperformance was driven by stock selection in issuers focused on information technology, industrials and energy.

The Board noted that the Large Cap Value V.I. Fund ranked in the fourth, third and second quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Large Cap Value V.I. Fund’s underperformance during the one- and three-year periods compared with its Peers. The Board was informed that, among other things, during the one-year period, the Large Cap Value V.I. Fund’s fundamental orientation, preference for growth visibility and valuation discipline kept it out of many of the high beta cyclical stocks that outperformed during the year. In the three-year period, security selection in issuers focused on energy and materials detracted from performance.

The Board noted that the Money Market V.I. Fund ranked in the third, second and second quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively.

The Board noted that the S&P 500 Index V.I. Fund ranked in the second quartile against its Lipper Performance Universe for each of the one-, three- and five-year periods reported.

The Board noted that the Total Return V.I. Fund ranked in the first, fourth and fourth quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Total Return V.I. Fund’s underperformance during the three- and five-year periods compared with its Peers. The Board was informed that, among other things, performance in 2008 suffered primarily due to an overweight to high quality spread assets (agency and non-agency mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities) and an underweight to Treasuries.

The Board noted that the Utilities and Telecommunications V.I. Fund ranked in the fourth, third and second quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Utilities and Telecommunications V.I. Fund’s underperformance during the one- and three-year periods compared with its Peers. The Board was informed that, among other things, the Utilities and Telecommunications V.I. Fund underperformed for the one-year period mainly because of a combination of stock selection and an underweight position in the integrated utilities industry. For the three-year period, an average underweight of approximately 5% in the integrated utilities industry detracted from relative performance, as did stock selection within the industry.

The Board noted that the Value Opportunities V.I. Fund ranked in the second, fourth and fourth quartiles against its Lipper Performance Universe for the one-, three- and five-year periods reported, respectively. The Board and BlackRock reviewed the reasons for the Value Opportunities V.I. Fund’s underperformance during the three- and five-year periods compared with its Peers. The Board was informed that, among other things, underperformance over the trailing three- and five-year periods was driven by weak relative results in 2009, as well as difficult performance in 2008 and 2006. In 2008, stock selection and allocation within the volatile financials sector hampered performance comparisons with the Value Opportunities V.I. Fund’s Peers. In 2006, stock selection within the financials sector proved to be the primary driver of disappointing results.

The Board and BlackRock discussed BlackRock’s strategy for improving the Balanced Capital V.I. Fund’s, Government Income V.I. Fund’s, Large Cap Core V.I. Fund’s, Large Cap Growth V.I. Fund’s, Large Cap Value V.I. Fund’s, Total Return V.I. Fund’s, Utilities and Telecommunications V.I. Fund’s and Value Opportunities V.I. Fund’s performance and BlackRock’s commitment to providing the resources necessary to assist each of these Fund’s portfolio managers and to improve the Fund’s performance.

The Board noted that BlackRock has made changes to the organization of the overall fixed income group management structure designed to

result in a strengthened leadership team with clearer accountability.

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

The Board, including the Independent Board Members, reviewed each Fund’s contractual advisory fee rate compared with the other funds in its Lipper category. It also compared each Fund’s total expenses, as well as actual management fees, to those of other funds in its Lipper category. The Board considered the services provided and the fees charged by BlackRock to other types of clients with similar investment mandates, including separately managed institutional accounts.

The Board received and reviewed statements relating to BlackRock’s financial condition and profitability with respect to the services it provided each Fund. The Board was also provided with a profitability analysis that detailed the revenues earned and the expenses incurred by BlackRock for services provided to each Fund. The Board reviewed BlackRock’s profitability with respect to each Fund and other funds the Board currently oversees for the year ended December 31, 2009 compared to available aggregate profitability data provided for the year ended December 31, 2008. The Board reviewed BlackRock’s profitability with respect to other fund complexes managed by the Manager and/or its affiliates. The Board reviewed BlackRock’s assumptions and methodology of allocating expenses in the profitability analysis, noting 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, expense allocations and business mix, and the difficulty of comparing profitability as a result of those factors.

The Board noted that, in general, individual fund or product line profitability of other advisors is not publicly available. Nevertheless, to the extent such information was available, the Board considered BlackRock’s operating margin, in general, compared to the operating margin for leading investment management firms whose operations include advising open-end funds, among other product types. That data indicates that operating margins for BlackRock with respect to its registered funds are generally consistent with margins earned by similarly situated publicly traded competitors. In addition, the Board considered, among other things, certain third party data comparing BlackRock’s operating margin with that of other publicly-traded asset management firms. That third party data indicates that larger asset bases do not, in themselves, translate to higher profit margins.

In addition, the Board considered the cost of the services provided to each Fund by BlackRock, and BlackRock’s and its affiliates’ profits relating to the management and distribution of each Fund and the other funds advised by BlackRock and its affiliates. As part of its analysis, the Board reviewed BlackRock’s methodology in allocating its costs to the management of each Fund. The Board also considered whether BlackRock has the financial resources necessary to attract and retain high quality investment management personnel to perform its obligations under the Agreements and to continue to provide the high quality of services that is expected by the Board.

The Board noted that the Balanced Capital V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Balanced Capital V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Balanced Capital V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Basic Value V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Basic Value V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Basic Value V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Capital Appreciation V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Capital Appreciation V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Capital Appreciation V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Global Allocation V.I. Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the Global Allocation V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the Global Allocation V.I. Fund’s actual management fee rate (a combination of the advisory fee rate and the administration fee rate), after giving effect to any expense reimbursements or fee waivers by BlackRock, was lower than or equal to the median actual management fee rate paid by the Global Allocation V.I. Fund’s Peers, after giving

effect to any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Global Allocation V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Global Opportunities V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Global Opportunities V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Global Opportunities V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Government Income V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Government Income V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Government Income V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the High Income V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the High Income V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that the High Income V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the aggregate assets of the High Income V.I. Fund, combined with the assets of the Total Return V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the High Income V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the International Value V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the International Value V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the International Value V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Large Cap Core V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Large Cap Core V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that the Large Cap Core V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Large Cap Core V.I. Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Large Cap Core V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Large Cap Growth V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Large Cap Growth V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Large Cap Growth V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Large Cap Value V.I. Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the Large Cap Value V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the Large Cap Value V.I. Fund’s contractual management fee rate (a combination of the advisory fee rate and the administration fee rate) was reasonable relative to the median contractual management fee rate paid by the Large Cap Value V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Large Cap Value V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Money Market V.I. Fund’s contractual advisory fee rate was above the median contractual advisory fee rate paid by the Money Market V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that the Money Market V.I. Fund has an advisory fee arrangement that includes breakpoints that adjust the fee rate downward as the size of the Money Market V.I. Fund increases above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Money Market V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the S&P 500 Index V.I. Fund’s contractual advisory fee rate was above the

median contractual advisory fee rate paid by the S&P 500 Index V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted, however, that the S&P 500 Index V.I. Fund’s contractual management fee rate (a combination of the advisory fee rate and the administration fee rate) was lower than or equal to the median contractual management fee rate paid by the S&P 500 Index V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the S&P 500 Index V.I. Fund’s total net expenses on a class-by-class basis, as applicable. Additionally, the Board noted that BlackRock has voluntarily agreed to waive or reimburse management fees for the S&P 500 Index V.I. Fund.

The Board noted that the Total Return V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Total Return V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. 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 the High Income V.I. Fund, increase above certain contractually specified levels. The Board further noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Total Return V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Utilities and Telecommunications V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Utilities and Telecommunications V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Utilities and Telecommunications V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

The Board noted that the Value Opportunities V.I. Fund’s contractual advisory fee rate was lower than or equal to the median contractual advisory fee rate paid by the Value Opportunities V.I. Fund’s Peers, in each case, before taking into account any expense reimbursements or fee waivers. The Board also noted that BlackRock has contractually agreed to waive fees or reimburse expenses in order to limit, to a specified amount, the Value Opportunities V.I. Fund’s total net expenses on a class-by-class basis, as applicable.

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. The Board also considered the extent to which each Fund benefits from such economies and whether there should be changes in the advisory fee rate or structure in order to enable the Fund to participate in these economies of scale, for example through the use of, as applicable, contractual breakpoints, or revised contractual or voluntary breakpoints in the advisory fee based upon the asset level of the Fund, and in the case of High Income V.I. Fund and Total Return V.I. Fund, based on the combined assets of those two funds.

E.  Other Factors Deemed Relevant by the Board Members

The Board, including the Independent Board Members, also took into account other ancillary or “fall-out” benefits that BlackRock or its affiliates and significant shareholders may derive from their respective relationships with each Fund, both tangible and intangible, such as BlackRock’s ability to leverage its investment professionals who manage other portfolios, an increase in BlackRock’s profile in the investment advisory community, and the engagement of BlackRock’s affiliates and significant shareholders as service providers to each Fund, including for administrative, transfer agency and distribution 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 noted that BlackRock may use and benefit from third party research obtained by soft dollars generated by certain mutual fund transactions to assist in managing all or a number of its other client accounts. The Board further noted that BlackRock completed the acquisition of a complex of exchange-traded funds (“ETFs”) on December 1, 2009, and that BlackRock’s funds may invest in such ETFs without any offset against the management fees payable by the funds to BlackRock.

In connection with its consideration of the Agreements, the Board also received information regarding BlackRock’s brokerage and soft dollar practices. The Board received reports from BlackRock which included information on brokerage commissions and trade execution practices throughout the year.

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

Conclusion

The Board, including the Independent Board Members, unanimously approved the continuation of the Advisory Agreements between the Manager and the Corporation, on behalf of each Fund, for a one-year term ending June 30, 2011 and the Sub-Advisory Agreements between the Manager and the Sub-Advisors, with respect to the Fund, as applicable, for a one-year term ending June 30, 2011. As part of its approval, the Board considered the detailed review of BlackRock’s fee structure, as it applies to each Fund, being conducted by the ad hoc Joint Product Pricing Committee. Based upon its evaluation of all of the aforementioned factors in their totality, the Board, including the Independent Board Members, was satisfied that the terms of the Agreements were fair and reasonable and in the best interest of each Fund and its shareholders. In arriving at a decision to approve the Agreements, 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. The contractual fee arrangements for each Fund reflect the results of several years of review by the Board Members and predecessor Board Members, and discussions between such Board Members (and predecessor Board Members) and BlackRock. Certain aspects of the arrangements may be the subject of more attention in some years than in others, and the Board Members’ conclusions may be based in part on their consideration of these arrangements in prior years.

BlackRock Variable Series Funds, Inc.

Officers and Directors

Officers and Directors

Robert M. Hernandez

Chairman of the Board and Director

Fred G. Weiss

Vice Chairman of the Board, and

Chairman of the Audit

Committee and Director

James H. Bodurtha, Director

Bruce R. Bond, Director

Donald W. Burton, Director

Richard S. Davis, Director

Stuart E. Eizenstat, Director

Laurence D. Fink, Director

Kenneth A. Froot, Director

Henry Gabbay, Director

John F. O’Brien, Director

Roberta Cooper Ramo, Director

David H. Walsh, Director

Richard R. West, Director

Anne F. Ackerley, President and
Chief Executive Officer

Jeffrey Holland, CFA, Vice President

Brendan Kyne, Vice President

Brian Schmidt, Vice President

Neal J. Andrews, Chief Financial Officer

Jay M. Fife, Treasurer

Brian P. Kindelan

Chief Compliance Officer of the Funds

Howard B. Surloff, Secretary

Investment Advisor

BlackRock Advisors, LLC

Wilmington, DE 19809

Sub-Advisors

BlackRock Financial Management, Inc.

New York, NY 10055

BlackRock Investment Management, LLC

Plainsboro, NJ 08536

BlackRock International Limited
Edinburgh, EH3 8JB, United Kingdom

BlackRock Institutional Management Corp.

Wilmington, DE 19809

Custodian

The Bank of New York Mellon¹
New York, NY 10286

Brown Brothers Harriman & Co.²
Boston, MA 02109

Transfer Agent

BNY Mellon Investment Servicing (US) Inc.

Wilmington, DE 19809

Accounting Agent

State Street Bank and Trust Co.

Princeton, NJ 08540

Distributor

BlackRock Investments, LLC

New York, NY 10022

Independent Registered Public Accounting Firm

Deloitte & Touche LLP

Princeton, NJ 08540

Legal Counsel

Willkie, Farr & Gallagher LLP

New York, NY 10019

Address of the Funds

100 Bellevue Parkway

Wilmington, DE 19809

¹ For all Funds except BlackRock Global Allocation V.I. Fund, BlackRock International Value V.I. Fund and BlackRock Large Cap Growth V.I. Fund.

² For BlackRock Global Allocation V.I. Fund, BlackRock International Value V.I. Fund and BlackRock Large Cap Growth V.I. Fund.

BlackRock Variable Series Funds, Inc.

Additional Information

General Information

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 (1) without charge, upon request by calling (800) 441-7762; (2) at http://www.blackrock.com; and (3) on the Securities and Exchange Commission’s (the “SEC”) website at http://www.sec.gov.

Availability of Proxy Voting Record

Information about how the Funds voted proxies relating to securities held in each Fund’s portfolio during the most recent 12 month period ended June 30 is available, upon request and without charge (1) at http://www.blackrock.com or by calling (800) 441-7762 and (2) on the SEC’s website at http://www.sec.gov.

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 Form N-Q. The Funds’ Forms N-Q are available on the SEC’s website at http://www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Funds’ Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7762.

BlackRock Privacy Principles

BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, “Clients”) and to safeguarding their nonpublic 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 personal nonpublic 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 to nonaffiliated third parties any nonpublic personal information about its Clients, except as permitted by law or as is necessary to service Client accounts. These nonaffiliated 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 to nonpublic 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 the nonpublic personal information of its Clients, including procedures relating to the proper storage and disposal of such information.

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 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.

Investment in foreign securities involves special risks including fluctuating foreign exchange rates, foreign government regulations, differing degrees of liquidity and the possibility of substantial volatility due to adverse political, economic or other developments.

#16897– 6/10

Item 2 — Code of Ethics — Not Applicable to this semi-annual report

Item 3 — Audit Committee Financial Expert — Not Applicable to this semi-annual report

Item 4 — Principal Accountant Fees and Services — Not Applicable to this semi-annual report

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 for Closed-End Management Investment Companies — Not Applicable

Item 8 — Portfolio Managers of Closed-End Management Investment Companies — Not Applicable

Item 9 — Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers — Not Applicable

Item 10 — Submission of Matters to a Vote of Security Holders — The registrant’s Nominating and Governance Committee will consider nominees to the board of directors recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations that include biographical information and set forth the qualifications of the proposed nominee to the registrant’s Secretary. There have been no material changes to these procedures.

Item 11 — Controls and Procedures

11(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 in Rule 30a-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 Rule 30a-3(b) under the 1940 Act and Rule 15(d)-15(b) under the Securities Exchange Act of 1934, as amended.

11(b) — There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 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 — Exhibits attached hereto

12(a)(1) — Code of Ethics — Not Applicable to this semi-annual report

12(a)(2) — Certifications — Attached hereto

12(a)(3) — Not Applicable

12(b) — Certifications — Attached hereto

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, Inc.

By:	/s/ Anne F. Ackerley
	Anne F. Ackerley
	Chief Executive Officer of BlackRock Variable Series Funds, Inc.

Date: September 2, 2010

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/ Anne F. Ackerley
	Anne F. Ackerley
	Chief Executive Officer (principal executive officer) of BlackRock Variable Series Funds, Inc.

Date: September 2, 2010

By:	/s/ Neal J. Andrews
	Neal J. Andrews
	Chief Financial Officer (principal financial officer) of BlackRock Variable Series Funds, Inc.

Date: September 2, 2010